Department of the Army's $32M electric power contract with Plumas-Sierra Rural Electric Cooperative shows potential value concerns
Contract Overview
Contract Amount: $32,024,788 ($32.0M)
Contractor: Plumas-Sierra Rural Electric Co-Operative
Awarding Agency: Department of Defense
Start Date: 2015-10-01
End Date: 2025-09-30
Contract Duration: 3,652 days
Daily Burn Rate: $8.8K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: IGF::OT::IGF ELECTRIC SERVICE - 1 OCT 15 - 30 SEP 16 FOR A TEN YEAR PERIOD TO BE FUNDED ANNUALLY BASED ON AN AVERAGE ANNUAL ESTIMATE OF 15,178,200 KWH AND 34,426 KW
Place of Performance
Location: HERLONG, LASSEN County, CALIFORNIA, 96113
Plain-Language Summary
Department of Defense obligated $32.0 million to PLUMAS-SIERRA RURAL ELECTRIC CO-OPERATIVE for work described as: IGF::OT::IGF ELECTRIC SERVICE - 1 OCT 15 - 30 SEP 16 FOR A TEN YEAR PERIOD TO BE FUNDED ANNUALLY BASED ON AN AVERAGE ANNUAL ESTIMATE OF 15,178,200 KWH AND 34,426 KW Key points: 1. The contract's long duration and annual funding mechanism warrant scrutiny for potential overspending. 2. Limited competition raises questions about price discovery and potential for inflated costs. 3. The fixed price contract type offers some cost certainty, but the absence of competitive bidding is a risk indicator. 4. Performance context is limited due to the nature of the service (electric power distribution). 5. This contract positions the Army within the utility services sector, a common area for federal procurement. 6. The contract's value, while significant, needs benchmarking against similar electric utility contracts.
Value Assessment
Rating: fair
The contract's total value is not immediately apparent due to its annual funding structure over a ten-year period. The average annual estimate of $15.18 million kWh and $34.43 million kW suggests a substantial ongoing need. However, without a clear total contract value or competitive bidding, assessing value for money is challenging. Benchmarking against similar electric power distribution contracts for federal facilities is crucial to determine if the pricing is competitive.
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. This significantly limits price discovery and suggests that the contractor, Plumas-Sierra Rural Electric Cooperative, was the only viable option or was selected without a competitive process. The lack of competition raises concerns about whether the government is receiving the best possible pricing and terms.
Taxpayer Impact: Taxpayers may be paying a premium for electric power due to the absence of competitive bidding, potentially leading to higher overall costs for this essential service.
Public Impact
The primary beneficiary is the Department of the Army, ensuring a consistent supply of electricity for its operations. The service delivered is essential electric power distribution, critical for maintaining facility functionality. The geographic impact is localized to the area served by Plumas-Sierra Rural Electric Cooperative in California. Workforce implications are likely minimal for the federal government, as the service is provided by a utility cooperative.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher prices for taxpayers.
- Long-term contract structure without clear total value could obscure cost overruns.
- Sole-source award limits transparency in pricing negotiations.
Positive Signals
- Ensures a critical utility service for a federal agency.
- Fixed price contract provides some cost predictability annually.
- The contractor is a rural electric cooperative, potentially serving a specific community need.
Sector Analysis
The contract falls within the Utilities sector, specifically electric power distribution. Federal agencies are significant consumers of utility services, often requiring long-term agreements to ensure reliable supply. The market for electric power distribution is typically localized, with established providers serving specific geographic areas. The value of this contract, estimated at over $15 million annually, is substantial within this sector for a single facility or installation.
Small Business Impact
This contract does not appear to involve small business set-asides, as it was awarded to Plumas-Sierra Rural Electric Cooperative, a rural electric cooperative. There is no indication of subcontracting opportunities for small businesses within the provided data.
Oversight & Accountability
Oversight mechanisms for this contract would typically involve contract officers and potentially the agency's Inspector General. However, the sole-source nature and the focus on a utility service may mean less granular oversight compared to complex service or product contracts. Transparency is limited by the lack of competitive bidding, making it harder to assess the fairness of the pricing.
Related Government Programs
- Department of Defense Utility Contracts
- Federal Electric Power Procurement
- Sole-Source Utility Services
- Rural Electric Cooperative Contracts
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Long contract duration
- Annual funding mechanism
Tags
defense, department-of-the-army, electric-power-distribution, sole-source, definitive-contract, firm-fixed-price, california, utility-services, long-term-contract, annual-funding
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $32.0 million to PLUMAS-SIERRA RURAL ELECTRIC CO-OPERATIVE. IGF::OT::IGF ELECTRIC SERVICE - 1 OCT 15 - 30 SEP 16 FOR A TEN YEAR PERIOD TO BE FUNDED ANNUALLY BASED ON AN AVERAGE ANNUAL ESTIMATE OF 15,178,200 KWH AND 34,426 KW
Who is the contractor on this award?
The obligated recipient is PLUMAS-SIERRA RURAL ELECTRIC CO-OPERATIVE.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $32.0 million.
What is the period of performance?
Start: 2015-10-01. End: 2025-09-30.
What is the total estimated value of this contract over its ten-year period?
The provided data indicates an average annual estimate of 15,178,200 kWh and 34,426 kW, with an average annual estimate of $15,178,200. However, the contract is funded annually and the total value over the ten-year period (2015-2025) is not explicitly stated. If we use the average annual estimate of $15,178,200, the total estimated value would be approximately $151,782,000. It's important to note that the actual spending could vary based on annual appropriations and actual energy consumption.
Why was this contract awarded on a sole-source basis?
The data explicitly states the contract was 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. While the specific justification is not provided, common reasons for sole-source awards in utility services include situations where only one provider can physically serve the location, or if there are unique circumstances or urgent needs that preclude a competitive process. For electric power, it often relates to the existing infrastructure and service territory of a utility cooperative.
How does the annual estimated cost compare to similar federal electric power contracts?
Benchmarking this contract's annual estimated cost of approximately $15.18 million requires detailed comparison with similar contracts for electric power distribution to federal facilities of comparable size and energy usage. Without access to a comprehensive database of federal utility contracts and their specific terms, a precise comparison is difficult. However, given the sole-source nature, there is a heightened risk that the pricing may not be as competitive as it could be if the contract had undergone a competitive bidding process.
What are the risks associated with a ten-year contract for electric power?
A ten-year contract for electric power, especially one funded annually, carries several risks. Firstly, energy prices can fluctuate significantly over a decade, potentially leading to the government overpaying if prices fall or being locked into higher rates if prices rise substantially. Secondly, technological advancements in energy generation and efficiency might emerge, making the current service less optimal. Finally, the long duration without a clear total commitment can obscure potential cost efficiencies or opportunities for renegotiation if the government's needs change.
What is the track record of Plumas-Sierra Rural Electric Cooperative in serving federal contracts?
The provided data does not offer information on the track record of Plumas-Sierra Rural Electric Cooperative specifically with federal contracts beyond this award. As a rural electric cooperative, its primary mission is typically to serve its member-owners in rural areas. Its ability to fulfill the requirements of a federal agency like the Department of the Army would depend on its capacity, infrastructure, and experience in meeting such demands. Further investigation into the cooperative's history and performance would be necessary.
Are there any performance metrics or service level agreements associated with this contract?
The provided data does not specify any performance metrics or service level agreements (SLAs) for this contract. For essential services like electric power distribution, performance is often implicitly tied to reliability and continuity of service. However, formal SLAs would typically be detailed in the contract's statement of work, outlining specific requirements for uptime, response times to outages, and power quality. The absence of this information in the summary data makes it difficult to assess performance expectations.
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
Address: 73233 STATE ROUTE 70 STE A, PORTOLA, CA, 96122
Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $32,024,788
Exercised Options: $32,024,788
Current Obligation: $32,024,788
Actual Outlays: $8,335,462
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2015-10-01
Current End Date: 2025-09-30
Potential End Date: 2025-09-30 00:00:00
Last Modified: 2024-12-05
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