Redacted JA Central Maine Power Contract.pdf

DEPARTMENT OF THE NAVY

NAVAL FACILITIES ENGINEERING SYSTEMS COMMAND, MID-ATLANTIC

9324 VIRGINIA AVENUE

NORFOLK, VIRGINIA 23511-3095

J&A No. ML-25-17

JUSTIFICATION AND APPROVAL

FOR USE OF OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity.

Naval Facilities Engineering Systems Command, Mid-Atlantic, (NAVFAC MIDLANT), Norfolk, Virginia.

2. Description of the Action Being Approved.

Award of a utility contract on a sole source basis to Central Maine Power (CMP), for all aspects of electric service related to the delivery and operation of electricity.

3. Description of Supplies/Services.

CMP and NAVFAC are allowed to contract electric service subject to terms and conditions set forth through contracts and task orders. The location of electric services may be constrained by jurisdictional limits of both CMP and NAVFAC, but generally are for premises within the footprint of CMP in southern and central Maine. Electric service includes basic electric utility service, such as provisions for a connection to commercial electric grid, but also includes services that impact the electric rate.

These services include, but are not limited to, construction for facilities such as, substations for additional capacity for connection to the commercial grid, administration of transmission, distribution and supply services for electricity, metering services and energy services including renewable energy service. These provisions are subject to CMP allowances under the jurisdictional regulation requirements. The estimated annual value of total electric utility services is and will be funded through the Operations and Maintenance, Navy utilities funds (UT SIC) but other funding may be involved depending on task order. The total estimated amount for this proposed 10 year contract under FAR 41.103(b) is . The immediate need is for increased electrical capacity service for the Portsmouth Naval Shipyard, Kittery, Maine.

4. Statutory Authority Permitting Other Than Full and Open Competition.

Pursuant to FAR 6.302-1, this acquisition will be acquired under the authority of 10 U.S.C.

3204(a)(1) and FAR 41. CMP is a regulated utility under the jurisdiction of the Maine Public Utilities Commission (MPUC). CMP electric services are provided to customers within certain areas in Maine subject to MPUC regulation. CMP is the only utility available that provides total electric utility services in its jurisdictional area, which includes the Portsmouth Naval Shipyard in Kittery, Maine (PNSY).

5. Rationale Justifying Use of Cited Statutory Authority.

As CMP is a regulated electric utility, FAR 41.201 infers that services for electricity in a utility franchised area be acquired non-competitively, but require actions to determine “that such competition would not be inconsistent with state law governing the provision of electric utility service”. Since CMP is the only utility that provides for complete electric service in certain areas, the regulation authority, MPUC, reviews and approves CMP costs and business practices on a frequent basis. This provides for control of the cost of services including acquiring subcontractors for augmenting energy services that CMP may provide.

Attempts to obtain electric service from other providers would be inconvenient, inefficient and may be inconsistent with state and local jurisdiction laws. CMP has been used for electric service for decades and no other total electric service company is readily available.

6. Description of Efforts Made to Solicit Offers from as Many Offerors as Practicable.

CMP is a regulated utility in the State of Maine, and as noted above, in Paragraph 4, is the only utility available to provide total electrical utility services in the area that includes PNSY.

For transmission services, CMP utilizes the federally regulated retail transmission organization, ISO-NE, transmission cost for a small fee. The fee is regulated by the MPUC. The fee is currently per month for charges that are generally over per month. Although, it is possible to compete for transmission services, contract terms to obtain such service could be rather complex, difficult to properly evaluate, and may actually result in restrictions in generation competition. NAVFAC has not entered into any competitive agreements for transmission services. External grid generation providers that could procure transmission services have shown no interest in offering transmission service.

NAVFAC Mid-Atlantic through the Defense Logistics Agency (DLA) has solicited for competitive services for generation over the last two decades and has had separate generation contracts during various years (generally contracts are 2 or 3 years). Currently, the majority of generation services for PNSY are through a separate entity than CMP for generation services, which not only allows for a separate rate structure but also can dictate the characteristic of supply (e.g. may be used to specify a certain amount of renewable energy). There have been periods where other competitive offers were determined to be more expensive than the CMP supply rate (the standard offer). In these cases, CMP was utilized for the generation services which is allowed by the regulated tariff.

Smaller accounts for areas outside of the base of PNSY have remained with the CMP for total electric service (generation and transmission) and will continue under this new utilities service agreement with CMP.

This contract would not interfere with the allowance for separate external grid generation supply services but rather, allow for supply under CMP if determined to be economically beneficial and allow for continued transmission service under CMP.

7. Determination of Fair and Reasonable Cost.

The Contracting Officer shall determine reasonableness of the anticipated cost to the Government for the services covered by this J&A. Cost and price proposals shall be reviewed and evaluated through consultation with NAVFAC Mid-Atlantic Utilities and Energy Management PW64. Generally, for connection and distribution electric services, most costs will be compared to, if not dictated by, regulated schedules.

8. Actions to Remove Barriers to Future Competition.

For the reasons set forth in Paragraphs 5 & 6, NAVFAC MIDLANT has no plans at this time to compete future contracts for the types of services covered by this document. If another potential source emerges, NAVFAC MIDLANT will assess whether competition for future requirements is feasible on a task by task basis.