DoD's $36M electric power distribution contract awarded to Virginia Electric and Power Company shows fair value

Contract Overview

Contract Amount: $35,970,713 ($36.0M)

Contractor: Virginia Electric and Power Company

Awarding Agency: Department of Defense

Start Date: 2004-06-24

End Date: 2014-12-31

Contract Duration: 3,842 days

Daily Burn Rate: $9.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Place of Performance

Location: FORT EUSTIS, NEWPORT NEWS (CITY) County, VIRGINIA, 23604

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $36.0 million to VIRGINIA ELECTRIC AND POWER COMPANY for work described as: Key points: 1. Contract value appears reasonable given the long duration and scope of electric power distribution services. 2. Full and open competition suggests a healthy market for these services, potentially leading to better pricing. 3. The contract's long duration (over 10 years) may introduce risks related to technological obsolescence and changing energy needs. 4. Performance context is limited without specific details on service delivery and uptime metrics. 5. This contract falls within the broader energy and utilities sector supporting federal infrastructure. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

The contract's total value of approximately $36 million over more than 10 years averages around $3.5 million annually. This appears to be a fair price for comprehensive electric power distribution services, especially considering the potential scale and complexity of supporting a Department of Defense installation. Benchmarking against similar long-term utility contracts is difficult without more specific service level agreements, but the price seems within a reasonable range for such a critical infrastructure service.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were likely invited to bid. The presence of three bidders (no) suggests a competitive environment for electric power distribution services. This level of competition is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which helps ensure that the awarded price is not excessively high and that public funds are used efficiently.

Public Impact

The Department of the Army benefits from reliable electric power distribution, essential for its operations. Services delivered include the maintenance and operation of electrical distribution systems. The geographic impact is localized to the specific Department of the Army installation in Virginia (VA). Workforce implications include potential jobs for electricians, technicians, and support staff involved in power distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 10 years) increases risk of price becoming uncompetitive due to market shifts or technological advancements.
Lack of specific performance metrics makes it difficult to assess the contractor's actual value and efficiency.
Absence of small business participation could limit broader economic impact and potentially higher subcontracting costs.

Positive Signals

Awarded under full and open competition, suggesting a competitive market and potentially fair pricing.
Contractor (Virginia Electric and Power Company) is a known utility provider, implying established infrastructure and expertise.
Long-term nature of the contract provides stability for both the government and the contractor in ensuring consistent service delivery.

Sector Analysis

This contract falls within the Utilities and Energy sector, specifically focusing on electric power distribution. The market for utility services to federal installations is often characterized by long-term contracts and significant infrastructure requirements. While specific market size data for federal electric power distribution is not readily available, the overall U.S. electric power industry is a multi-billion dollar sector. This contract represents a portion of federal spending on essential infrastructure maintenance and operation.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). There is no explicit information on subcontracting plans. The lack of small business involvement in prime contracts of this nature can sometimes limit opportunities for smaller firms to participate in federal contracting, though they may still be involved as subcontractors if the prime contractor has such requirements.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Department of the Army contracting office. Accountability measures would be outlined in the contract's terms and conditions, including performance standards and payment schedules. Transparency is generally facilitated through contract award databases like FPDS, though detailed operational oversight information is often internal.

Related Government Programs

Federal Energy Management Program
Department of Defense Utilities Privatization Program
Base Realignment and Closure (BRAC) related infrastructure support

Risk Flags

Long contract duration may lead to price inflexibility.
Lack of detailed performance metrics hinders value assessment.
Absence of small business set-aside may limit economic impact.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.0 million to VIRGINIA ELECTRIC AND POWER COMPANY. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is VIRGINIA ELECTRIC AND POWER COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $36.0 million.

What is the period of performance?

Start: 2004-06-24. End: 2014-12-31.

What is the historical spending trend for electric power distribution services by the Department of the Army?

Analyzing historical spending trends for electric power distribution by the Department of the Army requires access to comprehensive procurement data over several fiscal years. While this specific contract spans from 2004 to 2014, broader trends would involve examining annual outlays for similar services across various Army installations. Factors influencing these trends include changes in energy prices, infrastructure upgrades, base consolidation or expansion, and shifts in energy sourcing strategies (e.g., renewable energy adoption). Without a broader dataset, it's challenging to establish a definitive trend, but long-term contracts like this one suggest a need for stable, predictable utility services.

How does the awarded price compare to industry benchmarks for similar electric power distribution contracts?

Benchmarking this contract's price requires detailed comparison with similar contracts, considering factors like geographic location, service scope (e.g., generation, transmission, distribution, maintenance), contract duration, and specific service level agreements. The average annual cost of approximately $3.5 million for this $36 million, 10+ year contract appears reasonable for supporting a federal installation. However, without granular data on the specific services provided and the operational demands of the facility, a precise benchmark is difficult. Utility rates can vary significantly by region and regulatory environment. The full and open competition suggests the price was likely competitive within its market.

What are the potential risks associated with a contract duration exceeding 10 years for electric power distribution?

Contracts with durations exceeding 10 years, like this one, carry inherent risks. Firstly, energy markets are subject to price volatility and technological advancements; a long-term fixed price could become disadvantageous if market prices drop significantly or new, more efficient technologies emerge. Secondly, the physical infrastructure for power distribution may require upgrades or modernization over such a long period, and the contract's terms must clearly define responsibilities for these capital investments. Thirdly, changes in regulatory requirements or environmental standards could necessitate costly adaptations. Finally, the government's energy needs or operational footprint might change, making the contracted services less relevant or requiring modifications.

What performance metrics were likely used to evaluate the contractor's success under this contract?

While specific performance metrics are not detailed in the provided data, typical evaluations for electric power distribution contracts would likely include metrics related to reliability (e.g., uptime percentage, frequency and duration of outages), response times for service calls and repairs, adherence to safety standards, and compliance with environmental regulations. For a contract of this nature, ensuring consistent power delivery is paramount. Performance would also be assessed against the terms of the Service Level Agreement (SLA), which would define specific quantitative and qualitative standards the contractor must meet to receive full payment and avoid penalties.

What is the track record of Virginia Electric and Power Company in fulfilling federal contracts for utility services?

Virginia Electric and Power Company, often operating under the brand Dominion Energy, has a long history of providing utility services in Virginia. Their track record with federal contracts would involve examining past performance on similar agreements with various government agencies. Generally, established utility providers like Dominion Energy possess the infrastructure, expertise, and regulatory compliance experience necessary for such roles. However, a thorough assessment would require reviewing specific contract histories, including any past performance issues, awards, or disputes, which are not detailed in the provided summary data.

How does the competition level (3 bidders) impact the value proposition for the government?

A competition level involving three bidders for this electric power distribution contract suggests a moderately competitive market. Three bidders generally provide enough choice to foster price discovery and encourage vendors to offer competitive terms. This number is often seen as a healthy balance, avoiding the complexities of very large bid pools while still ensuring multiple viable options. The government likely benefited from receiving multiple proposals, allowing for comparison and negotiation to secure a fair price and suitable service offerings. A lower number of bidders might indicate market concentration or barriers to entry, potentially leading to less competitive pricing.

Industry Classification

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

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Dominion Energy, Inc. (UEI: 101715035)

Address: 701 EAST CARY STREET, RICHMOND, VA, 04

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $20,817,696

Exercised Options: $20,817,696

Current Obligation: $35,970,713

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline