DoD's $90M electrical services contract with Georgia Power Company raises questions about competition and value

Contract Overview

Contract Amount: $89,939,795 ($89.9M)

Contractor: Georgia Power Company

Awarding Agency: Department of Defense

Start Date: 2006-09-08

End Date: 2016-08-31

Contract Duration: 3,645 days

Daily Burn Rate: $24.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: ESTIMATED ELECTRICAL SERVICES FOR MAIN POST AND EAMC

Place of Performance

Location: FORT GORDON, RICHMOND County, GEORGIA, 30905

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $89.9 million to GEORGIA POWER COMPANY for work described as: ESTIMATED ELECTRICAL SERVICES FOR MAIN POST AND EAMC Key points: 1. The contract's value of nearly $90 million over a decade suggests significant long-term reliance on Georgia Power. 2. The lack of competition for this essential service raises concerns about potential overpricing and limited innovation. 3. Performance context is limited as the contract type is 'NOT AVAILABLE FOR COMPETITION', making direct comparisons difficult. 4. The contract's duration and fixed-price nature may offer cost predictability but could also lock in potentially suboptimal rates. 5. Positioned within the Defense sector, this contract highlights the critical infrastructure needs of military installations. 6. The absence of small business set-aside flags indicates a focus on large, established utility providers for this service.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available, comparable sole-source utility contracts for electrical distribution services at military installations of this scale. The firm fixed-price structure provides cost certainty, but without competitive bidding, it's difficult to ascertain if the pricing reflects true market value or if taxpayers are receiving optimal value for money. The significant duration of the contract (nearly 10 years) further complicates value assessment, as market conditions and technology could change substantially over that period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, being listed as 'NOT AVAILABLE FOR COMPETITION'. This indicates that the Department of the Army identified Georgia Power Company as the sole provider for electrical distribution services at the specified location. The lack of a competitive bidding process means that multiple potential suppliers were not evaluated, and the price was likely negotiated directly with the incumbent provider.

Taxpayer Impact: Sole-source contracts for essential services like electricity can lead to higher costs for taxpayers as there is no market pressure to drive down prices. This limits the government's ability to secure the best possible rates.

Public Impact

Military personnel and their families stationed at the main post and EAMC benefit from reliable electrical power. Essential base operations, including command and control, housing, and training facilities, are supported by these services. The geographic impact is localized to the specific Department of the Army installations served by Georgia Power. The contract supports the workforce of Georgia Power, ensuring continued employment for utility workers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Long-term contract duration could prevent adoption of more cost-effective or technologically advanced solutions.
Sole-source nature limits transparency in pricing and service level agreements.
Absence of performance metrics makes it difficult to assess service quality beyond basic delivery.

Positive Signals

Ensures reliable and continuous electrical power to critical military infrastructure.
Provides cost certainty through a firm fixed-price contract structure.
Leverages an established utility provider with existing infrastructure in the region.

Sector Analysis

The energy utility sector, particularly electric power distribution, is characterized by high infrastructure costs, regulatory oversight, and often natural monopolies within specific geographic areas. For federal agencies, securing reliable electricity is paramount for operational continuity. Contracts in this space typically involve long-term agreements with established utility providers. Benchmarks for spending are highly dependent on the specific installation's size, energy demands, and regional utility rates, making direct comparisons difficult without granular data.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting subcontracting opportunities for small businesses. The nature of utility services often involves large, established providers with extensive infrastructure, making it less common for small businesses to directly compete for such contracts. The focus is likely on the primary utility provider's capabilities and existing service agreements.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and facilities management divisions. Given it's a sole-source utility contract, the oversight would likely focus on ensuring service delivery meets agreed-upon standards and that pricing, while negotiated, remains within reasonable parameters for essential services. Transparency is limited due to the non-competitive nature, and specific Inspector General jurisdiction would depend on allegations of fraud, waste, or abuse.

Related Government Programs

Department of Defense Utility Contracts
Federal Energy Procurement
Military Base Infrastructure Support
Georgia Power Company Federal Contracts

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency
Long-Term Vendor Lock-in

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $89.9 million to GEORGIA POWER COMPANY. ESTIMATED ELECTRICAL SERVICES FOR MAIN POST AND EAMC

Who is the contractor on this award?

The obligated recipient is GEORGIA 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 $89.9 million.

What is the period of performance?

Start: 2006-09-08. End: 2016-08-31.

What is the historical spending pattern for electrical services at this specific military installation prior to this contract?

Detailed historical spending data for electrical services at this specific installation prior to the 2006 award of this contract is not readily available in the provided data. However, the contract's estimated value of nearly $90 million over its duration suggests a substantial and consistent requirement for electrical power. Typically, military installations have significant energy demands due to housing, training facilities, command centers, and other operational infrastructure. Without prior contract details, it's difficult to establish a precise spending trend, but the scale of this award indicates a long-standing and critical need for reliable electrical distribution services.

How does the per-kilowatt-hour cost compare to other federal facilities or commercial rates in Georgia?

A direct per-kilowatt-hour cost comparison is not feasible with the provided data. The contract is for 'Electric Power Distribution' and is valued at $89,939,795.47, but it does not specify the total kilowatt-hours to be consumed or the rate structure. Utility contracts are often complex, involving demand charges, energy charges, and various surcharges. Furthermore, as a sole-source contract with Georgia Power, the pricing is likely based on their regulated tariffs or negotiated rates specific to the government's load profile at the installation. Benchmarking would require access to Georgia Power's specific government rate schedules and a detailed breakdown of energy consumption, which is not publicly available.

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

The primary risk associated with a sole-source contract for essential utility services is the potential for inflated costs due to the absence of competition. Without competing bids, the government may pay a premium that could have been avoided. Another risk is a lack of incentive for the sole provider to innovate or improve service efficiency, as there is no competitive pressure. Furthermore, long-term sole-source agreements can create vendor lock-in, making it difficult and costly to switch providers even if better options become available later. This can also reduce transparency in pricing and service level negotiations, potentially leading to suboptimal outcomes for the contracting agency and taxpayers.

What performance standards or service level agreements are typically included in such utility contracts?

While specific performance standards and service level agreements (SLAs) for this particular contract are not detailed in the provided data, typical utility contracts for essential services like electrical distribution usually include provisions for reliability, uptime, response times for outages, and power quality. For military installations, these standards are often stringent due to the critical nature of operations. Contracts may specify maximum allowable outage durations, frequency of interruptions, and voltage/frequency stability requirements. Penalties for failing to meet these standards and potential incentives for exceeding them might also be included, although the effectiveness of such clauses can be limited in sole-source scenarios.

What is Georgia Power Company's track record with federal government contracts, particularly with the Department of Defense?

Georgia Power Company has a history of providing utility services to federal government entities, including military installations. As a major utility provider in Georgia, it is expected to have numerous contracts, both competed and sole-source, for electricity supply and distribution. While specific details on their performance across all federal contracts are not provided here, their long-standing role suggests a capacity to meet the demands of such clients. Federal agencies typically vet potential contractors, and sole-source awards, while lacking competition, are generally granted when a specific provider is deemed essential or uniquely capable. Further investigation into past performance reviews or contract compliance issues would be needed for a comprehensive assessment.

Could this contract have been competed, or were there genuine reasons for a sole-source award?

The determination of whether this contract could have been competed rests on factors not fully detailed in the provided data, such as the specific infrastructure ownership and service territory of Georgia Power. In many regions, established utility companies hold exclusive rights to provide electricity distribution within defined areas, often including military bases located within those territories. If Georgia Power is the sole entity with the necessary infrastructure (poles, wires, substations) physically present and capable of serving the installation, then a sole-source award might be justified under regulations allowing for such awards when only one responsible source can provide the required supply. However, agencies are generally required to explore competition to the maximum extent possible, so a thorough justification would have been necessary.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Southern CO Services Inc (UEI: 006925341)

Address: 241 RALPH MCGILL BLVD NE, ATLANTA, GA, 30308

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $133,536,265

Exercised Options: $133,536,265

Current Obligation: $89,939,795

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P06BSD0472

IDV Type: IDC

Timeline