Tinker AFB electric utility privatization contract awarded to Oklahoma Gas and Electric Company for over $111 million

Contract Overview

Contract Amount: $111,816,134 ($111.8M)

Contractor: Oklahoma GAS and Electric Company

Awarding Agency: Department of Defense

Start Date: 2010-09-21

End Date: 2026-09-30

Contract Duration: 5,853 days

Daily Burn Rate: $19.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PRIVITAZATION OF ELECTRIC UTILITY SERVICES AT TINKER AFB, OK

Place of Performance

Location: TINKER AFB, OKLAHOMA County, OKLAHOMA, 73145

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $111.8 million to OKLAHOMA GAS AND ELECTRIC COMPANY for work described as: PRIVITAZATION OF ELECTRIC UTILITY SERVICES AT TINKER AFB, OK Key points: 1. Contract value exceeds $111 million over its duration, indicating a significant investment in utility services. 2. Awarded under full and open competition, suggesting a competitive bidding process. 3. The contract is a definitive contract with a firm fixed price, providing cost certainty. 4. Duration of the contract is substantial, spanning over 5800 days, requiring long-term planning. 5. The service area is Oklahoma, potentially impacting local infrastructure and services. 6. The contract is for electric power distribution, a critical utility service.

Value Assessment

Rating: good

The contract value of over $111 million for electric power distribution services at Tinker AFB appears reasonable given the long duration and the nature of utility infrastructure. Benchmarking against similar privatization contracts for military bases would provide a more precise value-for-money assessment. The firm fixed-price structure offers predictability, but the overall cost-effectiveness depends on the operational efficiencies achieved by the contractor compared to government-provided services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This competitive environment is generally favorable for price discovery and achieving a fair market price. The presence of at least two bidders (implied by 'no': 2) suggests a degree of market interest and competition for this type of service.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the most cost-effective solution for essential utility services, potentially avoiding inflated prices associated with less competitive procurements.

Public Impact

The primary beneficiary is the Department of the Air Force at Tinker AFB, ensuring reliable electric power distribution. The contract supports the operational readiness and infrastructure needs of a major military installation. The geographic impact is localized to Tinker AFB in Oklahoma. The contract likely involves the utilization of existing utility infrastructure and potentially local workforce for maintenance and operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to vendor lock-in and reduced flexibility for future service needs.
Dependence on a single private entity for critical infrastructure like electricity poses a potential risk if the contractor faces financial or operational difficulties.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Awarded through full and open competition, suggesting a competitive market for these services.
Privatization can potentially lead to operational efficiencies and cost savings compared to government-managed utilities.

Sector Analysis

This contract falls within the Utilities and Energy sector, specifically focusing on electric power distribution. The privatization of utility services at military installations is a common practice aimed at leveraging private sector expertise and efficiency. Comparable spending benchmarks would involve analyzing other utility privatization contracts at federal facilities, considering factors like base size, energy demand, and contract terms.

Small Business Impact

The data indicates that small business participation was not a primary focus, as the contract was not set aside for small businesses and the contractor is a large utility company. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in the provided information. The impact on the small business ecosystem would likely be indirect, through potential support services required by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Air Force contracting and facility management departments at Tinker AFB. Accountability measures are embedded in the firm fixed-price contract terms, with performance standards and potential penalties for non-compliance. Transparency is generally maintained through contract award databases, though detailed operational oversight specifics are usually internal.

Related Government Programs

Military Base Operations Support Contracts
Utility Privatization Programs
Electric Power Generation and Distribution Contracts

Risk Flags

Long-term contract duration
Dependence on single utility provider for critical infrastructure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $111.8 million to OKLAHOMA GAS AND ELECTRIC COMPANY. PRIVITAZATION OF ELECTRIC UTILITY SERVICES AT TINKER AFB, OK

Who is the contractor on this award?

The obligated recipient is OKLAHOMA GAS AND ELECTRIC COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $111.8 million.

What is the period of performance?

Start: 2010-09-21. End: 2026-09-30.

What is the historical spending pattern for electric power distribution at Tinker AFB prior to this privatization contract?

Historical spending data for electric power distribution at Tinker AFB prior to this privatization contract is not directly available in the provided data. However, the award of this definitive contract in 2010 for over $111 million suggests a significant and ongoing requirement for these services. To understand historical patterns, one would need to access previous government utility bills or contracts for Tinker AFB, potentially from the period before 2010. This would allow for a comparison of costs and service levels to assess the long-term financial implications and potential savings or increases resulting from the privatization initiative.

How does the per-unit cost of electricity under this contract compare to commercial rates in Oklahoma?

A direct per-unit cost comparison of electricity under this contract to commercial rates in Oklahoma is challenging without specific consumption data and the detailed pricing structure within the contract. The contract is for electric power distribution, which includes infrastructure maintenance and service delivery, not just raw energy purchase. Oklahoma Gas and Electric Company (OG&E) is the prime contractor, and they also serve commercial customers. However, military bases often have unique demand profiles and may negotiate different rates than standard commercial tariffs. To perform a robust comparison, one would need to analyze the total contract value against the estimated kilowatt-hour (kWh) consumption over the contract period and compare this effective rate to OG&E's published commercial rates for similar load profiles, while accounting for the added value of guaranteed service and infrastructure management provided under the contract.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The provided data does not explicitly detail the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for a critical utility service like electric power distribution at a military installation, typical KPIs would likely include metrics such as power outage duration and frequency, response times for service restoration, adherence to safety standards, and maintenance schedule compliance. SLAs would define the acceptable thresholds for these KPIs, with potential financial penalties or incentives tied to performance. The contracting officer's representative (COR) and relevant Air Force facility management personnel would be responsible for monitoring these metrics and ensuring the contractor meets the contractual obligations.

What is the track record of Oklahoma Gas and Electric Company in managing similar utility privatization contracts for the Department of Defense?

Oklahoma Gas and Electric Company (OG&E) is a major utility provider in Oklahoma and has a long history of serving residential, commercial, and industrial customers. While the provided data confirms their role in this specific Tinker AFB contract, it does not detail their broader track record with other Department of Defense (DoD) utility privatization efforts. To assess their experience, one would need to research other contracts awarded to OG&E or its subsidiaries for similar services at other military installations. Information on their performance, any past issues, or commendations on previous government contracts would be crucial for evaluating their capability and reliability in managing such critical infrastructure.

What are the potential risks associated with the long duration (nearly 16 years) of this contract?

The long duration of this contract, spanning from 2010 to 2026 (approximately 16 years), presents several potential risks. Firstly, it could lead to vendor lock-in, making it difficult and costly for the Air Force to switch providers or renegotiate terms if market conditions or technological advancements make alternative solutions more attractive. Secondly, the fixed-price nature over such an extended period might not adequately account for significant fluctuations in energy prices or unforeseen infrastructure upgrade costs, potentially leading to either the contractor absorbing losses or seeking contract modifications. Lastly, maintaining oversight and ensuring continued optimal performance from the contractor over such a long timeframe requires sustained diligence from the government's contracting and technical teams.

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: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 321 N HARVEY, OKLAHOMA CITY, OK, 73102

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

Financial Breakdown

Contract Ceiling: $120,456,134

Exercised Options: $111,816,134

Current Obligation: $111,816,134

Actual Outlays: $11,424,567

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline