DoD's $51.8M UESC contract for energy efficiency with Duke Energy Progress, LLC awarded via sole-source

Contract Overview

Contract Amount: $51,781,501 ($51.8M)

Contractor: Duke Energy Progress, LLC

Awarding Agency: Department of Defense

Start Date: 2020-04-30

End Date: 2043-03-01

Contract Duration: 8,340 days

Daily Burn Rate: $6.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: UESC ECM IMPLEMENTATION AND FINANCING COST

Place of Performance

Location: CHERRY POINT, CRAVEN County, NORTH CAROLINA, 28533

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $51.8 million to DUKE ENERGY PROGRESS, LLC for work described as: UESC ECM IMPLEMENTATION AND FINANCING COST Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Long contract duration of over 20 years suggests a need for sustained energy management services. 3. The contract is for Energy Conservation Measures (ECM) implementation and financing, indicating a focus on long-term infrastructure upgrades. 4. Awarded by the Department of the Navy, this contract aligns with military efforts to improve energy resilience and reduce operational costs. 5. The fixed-price contract type aims to provide cost certainty, but the sole-source nature warrants scrutiny of the pricing structure. 6. The absence of a small business set-aside raises questions about opportunities for smaller firms in this energy infrastructure project.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The fixed-price nature provides some cost certainty, but the absence of competition means the government may not have secured the best possible pricing. Without comparable sole-source UESC contracts for similar scope and duration, it's difficult to definitively assess value for money. The long-term financing component also adds complexity to a direct cost comparison.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or in the interest of the government. The lack of competition means there were no other bidders to compare against, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government did not leverage market forces to drive down costs, potentially resulting in a less favorable price than if multiple vendors had competed.

Public Impact

The Department of the Navy benefits from improved energy efficiency and potentially reduced utility costs at its facilities in North Carolina. The contract supports the delivery of energy conservation measures, which can include upgrades to lighting, HVAC, and other energy-consuming systems. The geographic impact is focused on North Carolina, where Duke Energy Progress operates. The contract may have implications for the local workforce involved in the installation and maintenance of energy efficiency technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Long contract duration (over 20 years) increases exposure to potential cost overruns or inefficiencies over time.
Lack of transparency in the sole-source justification makes it difficult to assess the necessity and fairness of the award.
Fixed-price contract with a long duration could still be subject to scope creep or change orders that increase costs.

Positive Signals

Focus on energy efficiency aligns with federal sustainability goals.
Long-term financing component can help manage upfront capital costs for infrastructure upgrades.
Fixed-price contract provides a degree of cost predictability for the government.
Award to an established utility provider like Duke Energy suggests a level of reliability and expertise.

Sector Analysis

This contract falls within the Energy sector, specifically focusing on energy efficiency and infrastructure upgrades for federal facilities. Utility Energy Service Contracts (UESCs) are a common mechanism for federal agencies to finance energy conservation projects. The market for such services involves utility companies and specialized energy service companies (ESCOs). The total federal spending on energy efficiency projects can be substantial, with UESCs representing a significant portion of this investment.

Small Business Impact

The contract data indicates that this was not a small business set-aside, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to a large utility company suggests that the primary focus was on the capabilities and infrastructure of the prime contractor rather than promoting small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The fixed-price nature of the contract provides a baseline for accountability. However, the sole-source award necessitates careful review of performance metrics and financial expenditures to ensure value for money. Transparency regarding the specific energy conservation measures implemented and their achieved savings would be crucial for effective oversight.

Related Government Programs

Utility Energy Service Contracts (UESCs)
Energy Conservation Measures (ECMs)
Department of Defense Energy Programs
Federal Energy Management Program (FEMP)

Risk Flags

Sole Source Award
Long Contract Duration
Lack of Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.8 million to DUKE ENERGY PROGRESS, LLC. UESC ECM IMPLEMENTATION AND FINANCING COST

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 $51.8 million.

What is the period of performance?

Start: 2020-04-30. End: 2043-03-01.

What specific energy conservation measures are included in this contract, and what are their projected energy savings?

The provided data does not detail the specific energy conservation measures (ECMs) included in this UESC contract. Typically, ECMs can encompass a wide range of upgrades such as lighting retrofits, HVAC system improvements, building envelope enhancements, water conservation measures, and renewable energy installations. The projected energy savings would be a critical component of the contract's justification and would be detailed in the contract's technical exhibits and financial analyses. These savings are usually calculated based on baseline energy usage and the anticipated performance of the new or upgraded systems, forming the basis for the contract's financing and repayment structure.

How was the pricing for this sole-source contract determined, and what benchmarks were used?

As a sole-source contract, the pricing was not determined through a competitive bidding process. Instead, Duke Energy Progress, LLC, likely developed a proposal based on its standard pricing for UESC projects, incorporating the costs of implementing specific energy conservation measures and the financing costs over the contract's long duration. The Department of the Navy would have reviewed this proposal to ensure it was fair and reasonable, potentially using internal cost models or historical data from similar, though not necessarily identical, sole-source agreements. However, without a competitive process, direct benchmarking against market rates from multiple providers is not possible, making a definitive assessment of price reasonableness challenging.

What is the track record of Duke Energy Progress, LLC in executing similar UESC contracts for the federal government?

Duke Energy Progress, LLC, as a major utility provider, has a significant history of engaging in energy-related projects, including those with government entities. While specific details on their past UESC contract performance for the federal government are not provided in this data, utility companies of this scale typically have established processes and experience in managing large-scale infrastructure and energy efficiency projects. Their track record would likely be assessed by the Department of the Navy during the sole-source justification process, considering factors such as project completion, adherence to schedules, and the realization of energy savings in previous engagements.

What are the potential risks associated with a sole-source UESC contract of this duration?

A primary risk of a sole-source UESC contract, especially one spanning over 20 years, is the potential for inflated costs due to the lack of competitive pressure. The government may not be receiving the most cost-effective solution. Additionally, long-term contracts carry risks related to technological obsolescence, changes in energy markets, and the contractor's sustained performance and financial stability. Scope creep or unforeseen implementation challenges could also lead to cost increases, even within a fixed-price structure, if not managed meticulously. The government's ability to adapt to changing energy needs or technologies over such a long period might also be constrained.

How does this contract align with the Department of the Navy's broader energy resilience and sustainability goals?

This contract directly supports the Department of the Navy's energy resilience and sustainability goals by investing in energy conservation measures. Improving energy efficiency reduces the overall energy demand, which enhances resilience by lessening reliance on external energy sources and potentially lowering operational costs. Such projects are often part of a larger strategy to modernize infrastructure, reduce greenhouse gas emissions, and ensure reliable energy supply for critical naval operations, aligning with federal mandates and departmental objectives for environmental stewardship and operational readiness.

What is the historical spending pattern for UESC contracts within the Department of the Navy or Department of Defense?

The provided data does not include historical spending patterns for UESC contracts within the Department of the Navy or the broader Department of Defense. However, UESCs are a recognized and utilized contracting vehicle for federal agencies seeking to implement energy efficiency projects without upfront capital appropriations. Spending on UESCs can fluctuate based on agency priorities, available funding mechanisms, and the identification of suitable projects. Analyzing historical spending would require access to broader federal procurement databases and reports that track UESC awards across different agencies and fiscal years.

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: $51,781,501

Exercised Options: $51,781,501

Current Obligation: $51,781,501

Actual Outlays: $2,147,480

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