DoD's $34M Utility Contract Awarded to Southern California Gas Company for 1053 Days

Contract Overview

Contract Amount: $34,193,527 ($34.2M)

Contractor: Southern California GAS Company

Awarding Agency: Department of Defense

Start Date: 2023-09-30

End Date: 2026-08-18

Contract Duration: 1,053 days

Daily Burn Rate: $32.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: UESC BOA

Place of Performance

Location: SAN CLEMENTE, ORANGE County, CALIFORNIA, 92672

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $34.2 million to SOUTHERN CALIFORNIA GAS COMPANY for work described as: UESC BOA Key points: 1. Contract awarded on a sole-source basis, raising questions about price competitiveness. 2. Long-term duration of over 1000 days suggests a need for stable utility services. 3. The contract's value is significant, requiring careful oversight to ensure value for money. 4. Focus on utility regulation and administration indicates a critical infrastructure support role. 5. Geographic concentration in California may limit broader market participation. 6. Lack of competition data makes benchmarking performance and cost challenging.

Value Assessment

Rating: fair

The contract value of $34.2 million over approximately 3 years represents a substantial commitment. Without competitive bidding, it is difficult to definitively assess if this represents excellent value for money. Benchmarking against similar utility contracts for military installations is challenging due to the sole-source nature. However, the fixed-price structure provides some cost certainty for the government.

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 among multiple vendors. This approach is typically used when only one vendor can provide the required services, often due to unique capabilities or existing infrastructure. The lack of competition means there was no direct price negotiation driven by multiple bids, potentially leading to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the lowest possible prices, potentially resulting in less favorable terms for taxpayers.

Public Impact

The Department of the Navy benefits from reliable utility services essential for its operations in California. This contract ensures the regulation and administration of critical utilities like electric and gas. The primary geographic impact is within California, supporting naval facilities in the region. The contract supports the operational readiness of military installations by ensuring essential service provision.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Long-term duration may not adapt to changing market conditions or technological advancements.
Lack of transparency in the procurement process due to sole-source nature.

Positive Signals

Ensures continuity of essential utility services for military operations.
Fixed-price contract provides cost predictability.
Award to an established utility provider suggests reliability.

Sector Analysis

This contract falls within the Utilities sector, specifically focusing on the regulation and administration of electric, gas, and other utilities. The market for utility services to large government installations is often specialized, with established providers like Southern California Gas Company playing a key role. While specific benchmarks for sole-source utility contracts are scarce, the overall utility sector is vast, with significant government spending on infrastructure and services.

Small Business Impact

There is no indication that this contract included small business set-asides. As a sole-source award to a large utility provider, it is unlikely to involve significant subcontracting opportunities for small businesses unless explicitly mandated. The primary focus appears to be on securing essential utility services rather than fostering small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and financial management departments. Accountability measures are inherent in the fixed-price contract structure, requiring the contractor to deliver services as specified. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Utility Services Contracts
Base Operations Support Contracts
Energy Management Contracts
Public Utilities Commission Regulations

Risk Flags

Sole-source award may limit price competition.
Long contract duration could impact adaptability to future needs.
Lack of detailed performance metrics in provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.2 million to SOUTHERN CALIFORNIA GAS COMPANY. UESC BOA

Who is the contractor on this award?

The obligated recipient is SOUTHERN CALIFORNIA GAS COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $34.2 million.

What is the period of performance?

Start: 2023-09-30. End: 2026-08-18.

What is the historical spending pattern for utility services at this specific Department of the Navy installation?

Analyzing historical spending for utility services at the specific Department of the Navy installation is crucial for context. Without access to specific installation data, we can infer that consistent utility provision is a long-term requirement. Previous contracts, whether sole-source or competed, would provide a baseline for cost trends and service levels. A significant increase or decrease in the current contract's value compared to historical spending could indicate changes in service scope, pricing, or market conditions. Understanding past procurement strategies (e.g., sole-source vs. competitive) would also shed light on why this current award is sole-source and whether it represents a deviation or a continuation of established practice.

How does the pricing of this contract compare to similar utility contracts awarded by other federal agencies for comparable services?

Benchmarking this contract's pricing against similar federal utility contracts is challenging due to its sole-source nature and the specific regulatory context. Typically, competitive bidding allows for direct price comparisons. However, one could look at contracts for utility provision at other military bases or federal facilities in California or similar regions. Factors like the type of utilities covered (gas, electric, water), the volume of consumption, and the regulatory environment significantly influence pricing. If comparable contracts were competitively procured, their pricing could serve as a reference point, highlighting potential overpricing in this sole-source award. Conversely, if other sole-source awards exist for similar services, the comparison becomes more nuanced, focusing on the specific terms and duration.

What are the specific risks associated with a sole-source award for essential utility services?

Sole-source awards for essential utility services carry several risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures of a bidding process. This can result in taxpayers paying more than necessary. Secondly, without competitive evaluation, there's a reduced incentive for the contractor to innovate or improve service efficiency beyond the contract's minimum requirements. There's also a potential risk of vendor lock-in, making it difficult and costly to switch providers in the future. Furthermore, the absence of a competitive process can sometimes mask underlying issues with the contractor's performance or financial stability, as these factors might be more rigorously scrutinized during a competitive procurement.

What is the track record of Southern California Gas Company in performing similar government contracts?

Southern California Gas Company (SoCalGas) is a major utility provider in California, and its track record with government contracts, particularly for essential services like gas and electricity, is likely extensive. While specific performance details on past government contracts are not provided here, large utility companies typically have established processes for managing regulatory compliance, service delivery, and infrastructure maintenance. Their experience often includes serving large industrial and commercial clients, which can translate to managing the demands of military installations. However, the performance on this specific contract will depend on factors such as adherence to service level agreements, responsiveness to issues, and compliance with all contractual and regulatory obligations.

What are the potential long-term implications of this contract on energy infrastructure resilience for the Department of Defense?

This contract's long-term implications for energy infrastructure resilience depend on several factors. By securing a dedicated provider for essential utilities like gas and electricity, the Department of Defense ensures a stable supply crucial for operational continuity. The fixed-price nature provides budget predictability. However, the sole-source aspect raises questions about whether this arrangement fosters the most resilient and cost-effective infrastructure over time. A sole-source award might not incentivize the contractor to invest in cutting-edge resilience technologies or explore alternative energy sources as aggressively as a competitive environment might. The long duration (over 1000 days) suggests a need for stability, but it also means the DoD is committed to this provider and pricing structure for an extended period, potentially missing opportunities for more advanced or diversified energy solutions.

Industry Classification

NAICS: Public Administration › Administration of Economic Programs › Regulation and Administration of Communications, Electric, Gas, and Other Utilities

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 555 W 5TH ST, LOS ANGELES, CA, 90013

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

Financial Breakdown

Contract Ceiling: $34,505,605

Exercised Options: $34,505,605

Current Obligation: $34,193,527

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6247321G4403

IDV Type: BOA

Timeline