By Mission and Installation Contracting Command Public Affairs OfficeMay 28, 2019
JOINT BASE SAN ANTONIO-FORT SAM HOUSTON, Texas (May 28, 2019) -- The award of a $1.35 billion energy service contract in April for Fort Detrick, Maryland, is allowing installation leaders to avert eminent mission failure of existing utility support equipment and backup generators that have exceeded their useful life while also saving the government millions.
A team led by the Mission and Installation Contracting Command-Fort Sam Houston Energy and Environmental Division at Joint Base San Antonio-Fort Sam Houston, Texas, awarded the contract to Keenan Fort Detrick Energy, LLC in support of the 21st Signal Command and Communication Campus. The contract supersedes one originally awarded in 2006.
"The problem is that there were no funds to replace the outdated equipment. Coupled with the DOD's commitment to keep out of the utility business, it appeared that a different contracting approach was needed," said Dan Nascimento, a contracting officer with MICC-Fort Sam Houston.
The addition of the 21st Signal Command to the existing privately owned Central Utility Plant provided an opportunity to convert the existing contract into an energy production facility contract, utilizing 10 U.S.C. 2922(a) authority.
"The challenge for the MICC was a timeline of seven months to complete the objective," said Mariel Cortezano, a contract specialist.
This meant the team had a limited window to secure a complete rewrite of the current terms and conditions, new lease agreement with the Army Corps of Engineers, new bond rates and refinancing, countless peer reviews, and obtain signatures on a justification and approval document that went to some of the highest levels in the DOD and Army before April 15, 2019.
"The MICC strategy was to form an integrated product team to meet the challenge and wherever possible reduce costs and obtain the best value possible for the government. The effort paid off in savings of over $11 million from the original contractor's Signal Command proposal, and an estimated savings over the lifetime of the contract exceeding $270 million," Nascimento said.
Nascimento explained that under the old contract, the government would never have ownership of the privatized utility. This meant that at the end of the contract, the contractor could remove all their equipment and leave the government with empty buildings. The new contract now provides the government ownership of the energy production facility in 30 years, and be in a superior bargaining position to either privatize the infrastructure or operate the plant as a government-owned facility.
"The value of ownership is easily over $300 million to the government when the contract ends. Overall, the benefits of this contract are well over $500 million," said Joe Ochoa, a price analyst.
The acquisition team consisted of Cortezano and Ochoa. Providing the team legal counsel were Dan Keys, the 418th Contracting Support Brigade chief attorney at Fort Hood, Texas, Josh Randolph from the Installation Management Command, and Mark Connor, the associate deputy general counsel for the Army.
The team had a lot of top-level support from the Pentagon down throughout various levels of Army Contracting Command management. Playing a critical role in the acquisition were Veronica Romero, chief of the MICC-Fort Sam Houston Energy and Environmental Division; Ray Harris, MICC-Fort Sam Houston director; Col. Jason Jefferis, director of the Field Directorate Office-Fort Sam Houston; Clay Cole, deputy to the MICC commanding general; and Paul Cramer, the deputy assistant secretary of the Army for installations, housing and partnerships.
"They provided endless encouragement for the team and cleared obstacles that seemed unsurmountable. Without their support this contract would never have been a success," Nascimento said.
About the MICC:
Headquartered at JBSA-Fort Sam Houston, Texas, the Mission and Installation Contracting Command consists of about 1,500 military and civilian members who are responsible for contracting goods and services in support of Soldiers as well as readying trained contracting units for the operating force and contingency environment when called upon. MICC contracts are vital in feeding more than 200,000 Soldiers every day, providing many daily base operations support services at installations, facilitate training in the preparation of more than 100,000 conventional force members annually, training more than 500,000 students each year, and maintaining more than 14.4 million acres of land and 170,000 structures.