DoD's $23.2M Microgrid Contract Awarded to Duke Energy Progress for Camp Johnson Resilience

Contract Overview

Contract Amount: $23,199,986 ($23.2M)

Contractor: Duke Energy Progress, LLC

Awarding Agency: Department of Defense

Start Date: 2022-09-30

End Date: 2027-01-31

Contract Duration: 1,584 days

Daily Burn Rate: $14.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: UTILITY ENERGY SERVICE CONTRACT (UESC)/ENERGY RESILIENCE & CONSERVATION INVESTMENT PROGRAM(ERCIP)P-1487 MICROGRID CAMP JOHNSON

Place of Performance

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

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $23.2 million to DUKE ENERGY PROGRESS, LLC for work described as: UTILITY ENERGY SERVICE CONTRACT (UESC)/ENERGY RESILIENCE & CONSERVATION INVESTMENT PROGRAM(ERCIP)P-1487 MICROGRID CAMP JOHNSON Key points: 1. Contract focuses on enhancing energy resilience and conservation through a microgrid system. 2. The award was not competitively procured, raising questions about potential cost savings. 3. Performance period spans over four years, indicating a significant, long-term investment. 4. The contract type is Firm Fixed Price, which shifts cost overrun risk to the contractor. 5. This initiative aligns with broader DoD goals for energy security and operational continuity. 6. The project is located in North Carolina, impacting regional energy infrastructure.

Value Assessment

Rating: fair

Benchmarking the value of this specific UESC/ERCIP contract is challenging without detailed cost breakdowns and comparable microgrid projects. However, the firm-fixed-price structure suggests a defined cost expectation. The scale of the project, involving a microgrid for a military installation, implies significant infrastructure investment. Further analysis would require comparing the per-kilowatt-hour cost or the overall project cost against similar resilience projects at other federal facilities or in the commercial sector.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition. This approach is often used when a specific contractor possesses unique capabilities or when there's a compelling reason to award to a particular entity, such as existing infrastructure or specialized knowledge. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. The government relied on negotiation rather than market competition to establish the contract's value.

Public Impact

The primary beneficiary is the Department of Defense, specifically the U.S. Marine Corps at Camp Johnson, ensuring reliable power for critical operations. The contract delivers enhanced energy resilience and conservation capabilities, reducing reliance on the main grid during outages. The geographic impact is localized to Camp Johnson in North Carolina, improving its operational readiness and sustainability. Workforce implications may include specialized roles for installation, maintenance, and operation of the microgrid system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings for taxpayers.
Lack of competition may reduce incentives for contractor efficiency beyond contract requirements.
Long-term nature of the contract requires ongoing monitoring for performance and cost-effectiveness.

Positive Signals

Focus on energy resilience directly supports military operational continuity and national security.
Firm-fixed-price contract shifts cost overrun risk to the contractor.
Investment in microgrid technology aligns with modernization and sustainability goals.

Sector Analysis

This contract falls within the Energy sector, specifically focusing on utility energy services and renewable energy infrastructure. Utility Energy Service Contracts (UESCs) and the Energy Resilience and Conservation Investment Program (ERCIP) are key government initiatives aimed at improving energy efficiency and resilience at federal facilities. The market for microgrid solutions is growing, driven by increasing concerns about grid reliability, cybersecurity threats, and the need for energy independence, particularly for critical infrastructure like military bases.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss: false' and 'sb: false'. The prime contractor, Duke Energy Progress, LLC, is a large utility company. There is potential for small businesses to be involved as subcontractors, particularly in areas like construction, installation, or specialized equipment supply, but this is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on the subcontracting opportunities created.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a UESC/ERCIP project, it likely involves specific energy performance metrics and reporting requirements. Transparency is facilitated through contract awards databases, but detailed project performance and cost audits would be internal to the agency or potentially subject to Inspector General review if specific concerns arise. The firm-fixed-price nature simplifies some aspects of financial oversight compared to cost-plus contracts.

Related Government Programs

Utility Energy Service Contracts (UESCs)
Energy Resilience and Conservation Investment Program (ERCIP)
Department of Defense Energy Initiatives
Microgrid Development
Federal Energy Management Program (FEMP)

Risk Flags

Sole-source award lacks competitive pricing validation.
Potential for cost overruns if not tightly managed, despite FFP.
Dependence on a single contractor for critical infrastructure resilience.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.2 million to DUKE ENERGY PROGRESS, LLC. UTILITY ENERGY SERVICE CONTRACT (UESC)/ENERGY RESILIENCE & CONSERVATION INVESTMENT PROGRAM(ERCIP)P-1487 MICROGRID CAMP JOHNSON

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 $23.2 million.

What is the period of performance?

Start: 2022-09-30. End: 2027-01-31.

What is the historical spending pattern for similar microgrid or energy resilience projects within the Department of Defense?

The Department of Defense has been increasingly investing in energy resilience and microgrids across various installations. While specific dollar amounts vary widely based on project scope, scale, and technology, historical data indicates a growing trend. For instance, the Army, Navy, and Air Force have each awarded numerous contracts for microgrid development, energy storage, and renewable energy integration over the past decade. These projects often range from a few million dollars for smaller upgrades to tens or even hundreds of millions for comprehensive base-wide systems. Factors influencing historical spending include evolving threats, technological advancements, and policy mandates for energy security. Analyzing past awards for similar-sized installations or comparable resilience needs can provide a benchmark, though each project's unique requirements and location influence its final cost.

How does the awarded price compare to industry benchmarks for microgrid installations of similar capacity?

Directly comparing the $23.2 million award to industry benchmarks for microgrids is complex without knowing the specific capacity (kW/MW), energy storage (kWh/MWh), and technology mix (e.g., solar, generators, battery types) included in this contract. However, microgrid projects for critical facilities can be substantial investments. Benchmarks often consider cost per kilowatt of generation capacity or cost per kilowatt-hour of energy storage. For military installations, which require high reliability and often integrate multiple energy sources, costs can be at the higher end of the spectrum. The sole-source nature of this award means a direct competitive benchmark isn't available, necessitating comparison against publicly documented projects with similar technical specifications and resilience goals, which can be challenging to find due to proprietary data and varying project scopes.

What are the specific performance metrics and expected outcomes for this microgrid project?

While the provided data doesn't detail specific performance metrics, UESC/ERCIP contracts typically include stringent requirements for energy savings, resilience, and operational availability. For this microgrid project at Camp Johnson, expected outcomes likely include: 1) Guaranteed uptime and power availability during grid outages, measured by duration and frequency of uninterrupted power. 2) Reduction in energy consumption and associated costs through optimized generation and load management. 3) Integration of renewable energy sources (if applicable) to meet sustainability goals. 4) Enhanced cybersecurity measures for the microgrid control system. Performance is usually verified through post-installation audits and ongoing monitoring against baseline energy use and grid reliability data.

What is Duke Energy Progress, LLC's track record with federal energy contracts, particularly microgrids?

Duke Energy Progress, LLC, as part of the larger Duke Energy corporation, has a significant track record in utility operations and energy infrastructure development. While specific details on their past federal microgrid contracts are not provided here, Duke Energy has been involved in various energy projects, including renewable energy installations and grid modernization efforts. Their experience as a major utility provider suggests a strong capability in managing complex energy systems, grid integration, and regulatory compliance. For federal contracts, particularly those involving resilience and conservation, they would likely leverage their existing expertise in power generation, distribution, and customer service. A deeper dive into federal contract databases and Duke Energy's project portfolio would reveal specific past performance on similar government energy initiatives.

What are the potential risks associated with a sole-source award for a project of this magnitude?

The primary risk associated with a sole-source award for a $23.2 million project is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the most cost-effective solution. There's also a risk that the chosen contractor might not be the absolute best fit in terms of innovation or specific technical expertise compared to what a competitive process might uncover. Furthermore, sole-source awards can sometimes face greater scrutiny regarding justification and fairness. Ensuring robust negotiation and clear performance standards becomes critical to mitigate these risks and achieve the desired project outcomes despite the absence of open competition.

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: $23,199,986

Exercised Options: $23,199,986

Current Obligation: $23,199,986

Actual Outlays: $8,460,333

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