Duke Energy awarded $47.7M contract for electric power distribution at Camp Lejeune through a non-competitive process

Contract Overview

Contract Amount: $47,686,285 ($47.7M)

Contractor: Duke Energy Progress, LLC

Awarding Agency: Department of Defense

Start Date: 2019-07-31

End Date: 2026-12-31

Contract Duration: 2,710 days

Daily Burn Rate: $17.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CAMP LEJEUNE UESC TO II

Place of Performance

Location: CAMP LEJEUNE, ONSLOW County, NORTH CAROLINA, 28542

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $47.7 million to DUKE ENERGY PROGRESS, LLC for work described as: CAMP LEJEUNE UESC TO II Key points: 1. Contract awarded via a sole-source justification, raising questions about potential cost savings from competition. 2. The contract spans over seven years, indicating a long-term need for reliable power infrastructure. 3. Performance is tied to a firm-fixed-price structure, offering cost certainty for the government. 4. The award is for electric power distribution, a critical utility for military base operations. 5. The contractor, Duke Energy Progress, is a major utility provider in the region.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the lack of competitive bids. The firm-fixed-price structure provides cost certainty, but without comparison to other offers, it's difficult to assess if the pricing represents optimal value for money. The duration of the contract suggests a significant investment, and the absence of competition means potential savings from a bidding process were not realized. Further analysis would require understanding the specific services and infrastructure upgrades included in the $47.7 million.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This typically occurs when only one responsible source can provide the required services or supplies. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the best possible value. While sole-source awards can be necessary in specific circumstances, they warrant careful scrutiny to ensure they are justified and that the pricing is fair.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

Military personnel and their families at Camp Lejeune benefit from reliable electricity. Essential base operations, including training, housing, and administrative functions, are supported. The contract ensures the continuity of critical infrastructure services for national defense. The workforce implications are likely related to Duke Energy's existing operational staff in North Carolina.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Long contract duration may obscure opportunities for re-evaluation of market prices.
Lack of transparency in the justification for sole-sourcing.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Award to an established utility provider suggests reliability.
Contract supports critical infrastructure for a major military installation.

Sector Analysis

The electric power distribution sector is a mature and essential utility service. Contracts for such services to large government installations often involve significant dollar values due to the scale of demand and infrastructure requirements. While this specific award is sole-source, the broader market for electric utilities is competitive, with major providers like Duke Energy operating within regulated frameworks. Benchmarking this contract's value against similar long-term utility agreements for military bases would be informative.

Small Business Impact

This contract does not appear to have a small business set-aside component. Given the nature of utility provision and the sole-source award, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available through this specific contract vehicle. The primary contractor is a large utility company.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and facilities management divisions. Transparency is limited due to the sole-source nature. Accountability would be measured by the contractor's adherence to the firm-fixed-price terms and the reliable delivery of electric power services as stipulated in the contract. Inspector General involvement would typically be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

Base Operations Support Contracts
Utility Privatization Programs
Department of Defense Energy Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.7 million to DUKE ENERGY PROGRESS, LLC. CAMP LEJEUNE UESC TO II

Who is the contractor on this award?

The obligated recipient is DUKE ENERGY PROGRESS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $47.7 million.

What is the period of performance?

Start: 2019-07-31. End: 2026-12-31.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION,' which typically signifies a sole-source justification. Common reasons for sole-sourcing include unique capabilities of a single provider, urgent and compelling needs where competition is impractical, or when a specific existing system requires support from its original manufacturer. Without access to the official justification document (e.g., a Justification and Approval - J&A), the precise rationale remains unknown. However, for utility services at a large military installation like Camp Lejeune, it's plausible that Duke Energy's existing infrastructure and service area coverage in North Carolina made them the only viable or most practical option, potentially avoiding costly new infrastructure development by another provider.

How does the total contract value of $47.7 million compare to historical spending on electric power at Camp Lejeune?

Comparing the $47.7 million total contract value to historical spending requires access to past contract data for electric power at Camp Lejeune. The current contract spans from July 31, 2019, to December 31, 2026, a period of approximately 7.5 years. This averages to roughly $6.36 million per year. To assess if this is comparable, one would need to examine previous contracts for similar services at the base. If prior contracts were shorter, more expensive annually, or covered less scope, this current award might represent better value or a different service level. Conversely, if historical spending was significantly lower, it could indicate increased costs or expanded services. Without historical data, a direct comparison is not possible.

What are the potential risks associated with a long-term, sole-source utility contract?

The primary risks associated with a long-term, sole-source utility contract include a lack of price competition, potentially leading to higher costs for the government over the contract's life. Without competitive pressure, the contractor may have less incentive to innovate or improve efficiency. There's also a risk of vendor lock-in, where the government becomes dependent on a single provider, making it difficult and costly to switch even if performance or pricing becomes unsatisfactory. Furthermore, the absence of regular competitive re-bidding can obscure changes in market rates or technological advancements that could offer better value. Finally, sole-source awards can sometimes be perceived as less transparent, potentially raising concerns about fairness and the best use of taxpayer funds.

What specific services are included under this electric power distribution contract?

The contract specifies 'Electric Power Distribution' as the service. This typically encompasses the operation, maintenance, and repair of the electrical grid infrastructure within the boundaries of Camp Lejeune. It likely includes managing substations, power lines, transformers, and other equipment necessary to deliver reliable electricity to all facilities on the base. The scope may also involve upgrades to aging infrastructure, load management, and ensuring compliance with safety and environmental regulations. The firm-fixed-price nature suggests a defined scope of work for the total amount, though specific deliverables would be detailed in the contract's statement of work.

Does Duke Energy Progress have a track record of providing similar services to other military installations?

Duke Energy Progress, as a major utility provider in North Carolina, likely has extensive experience in managing and maintaining large-scale power distribution networks. While the provided data doesn't explicitly detail contracts with other military installations, it is common for large utility companies to serve government facilities within their service territories. Their established infrastructure, regulatory compliance, and operational capacity suggest they are well-equipped for such a role. Verifying specific past performance with other bases would require searching federal procurement databases for contracts awarded to Duke Energy Progress or its parent company for similar utility services.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Electric Power Distribution

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Duke Energy Corporation

Address: 410 S WILMINGTON ST, RALEIGH, NC, 27601

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $83,557,698

Exercised Options: $82,194,154

Current Obligation: $47,686,285

Actual Outlays: $33,553,592

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $11,913,374

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P14BSD1055

IDV Type: IDC

Timeline