JA 26-0044_KEA UESC Award - Redacted.pdf

DEFENSE LOGISTICS AGENCY

ENERGY

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

J&A Tracking Number: 26-0044

Justification for Other than Full and Open Competition

Utility Energy Service Contracts SP060424R0423

1. Summary/Introduction:

The Defense Logistics Agency (DLA) Energy, a component of DLA, is the contracting activity for the development of a Utility Energy Service Contract (UESC) on behalf of the United States Coast Guard (USCG) for an effort at the USCG Base Kodiak on Kodiak Island, Alaska. The purpose of Solicitation SP060424R0423, issued on July 26, 2024, is to solicit the Kodiak Electric Association, Inc. (KEA), the servicing utility, to assist the USCG in pursuing energy conservation and energy resilience improvements at USCG Base Kodiak using an UESC. The contract is scheduled for award on September 30, 2026, with an estimated total contract value of

The period of performance is up to 25 years from date of award.

KEA is a rural electric cooperative which generates, transmits and distributes power in Kodiak, Alaska. To stay nearly 100% renewable and operational as an isolated grid, KEA utilizes several renewable energy resources, the primary being Terror Lake Hydroelectric plant providing approximately 80% of its capacity. The remaining generation is provided by a combination of six wind turbines, two large-scale flywheels and a battery energy storage system (BESS) with diesel generation facilities as back up. KEA has six active substations, nineteen distribution feeders, thirty-three miles of transmission lines and 350 miles of distribution lines which serve approximately 6,000 meters. KEA serves as the utility to City of Kodiak, Chiniak, Pasaghsak, the Port Lions area, and serves the USCG Base Kodiak area.

The Energy Policy Act of 1992 (EPACT) (codified as 42 U.S.C. § 8256) authorizes and encourages agencies to participate in programs to increase energy efficiency and for water conservation or the management of electricity demand conducted by gas, water, or electric utilities and generally available to customers of such utilities. Market research confirms there is no General Service’s Administration (GSA) Areawide Contract for this region. GSA awards areawide contracts to utilities so that federal agencies can order the delivery of energy commodities (electricity, natural gas, water, etc.) from their serving utilities. Upon having market research and coordination with Base Kodiak, KEA serves as Base Kodiak’s sole utility provider, with no other utility providers servicing USCG Base Kodiak. Base Kodiak does not have a natural gas supplier and owns its own wells and water treatment system providing water and wastewater for the base.

A Notice of Intent to Award (NOITA) a sole source Investment Grade Audit (IGA) for USCG Kodiak was posted on SAM.gov on September 24, 2025, allowing interested offerors fifteen (15) days to respond to the posting. DLA Energy did not receive any responses.

Justification for Other Than Full and Open Competition (Cont’d) Page 2 of 7

(SP060424R0423 – KODIAK ELECTRIC ASSOCIATION)

Pursuant to FAR Part 6.103-1, if there is only one responsible source and no other supplies or services will satisfy agency requirements, this acquisition is exempt from full and open competition.

2. Nature and/or description of the action being approved (FAR 6.104-1(a)(2)):

This action seeks approval to award a Firm Fixed Price (FFP) Utility Energy Service Contract (UESC) for the implementation of the energy conservation and energy resilience measures identified in the IGA at USCG Base Kodiak. Upon Government acceptance, the IGA will serve as the Performance Work Statement (PWS) for the contract award.

Approval of other than full and open competition is requested because the action is limited to one source. KEA is the sole servicing utility provider for USCG Base Kodiak and maintains 100% ownership of the electrical distribution infrastructure serving the installation. As the exclusive utility provider and owner of the utility infrastructure, KEA is uniquely positioned and authorized to implement the proposed energy conservation and resilience measures under a UESC. No other source has the authority, access, or ownership interest necessary to provide the required services.

The contract will be awarded as a new FFP UESC contract to implement the approved scope of work identified in the IGA. This action is required to address the energy conservation, energy resilience, and facility infrastructure requirements of USCG Base Kodiak, and to achieve projected energy savings and operational improvements identified through the audit process.

Funding for this effort will be provided using Fiscal Year 2026 Operating Expenses (OE) funds.

3. Description of supplies or services required to meet the agency’s need (including estimated value) (FAR 6.104-1(a)(3)):

KEA will provide energy conservation and demand-side management services to reduce energy consumption and directly or indirectly reduce peak-period demand. These services will also address the base’s most pressing mission-level gaps and resiliency needs affecting critical facilities, ensuring energy security and resilience. Additionally, KEA will provide energy-related operations, maintenance, and repair services for 280 facilities, identified in the NOITA. These services are considered commercial services because they are of a type customarily offered and provided by electric utilities to both governmental and non-governmental customers in the commercial marketplace, including energy management, infrastructure modernization, utility system improvements, and related operations and maintenance support.

As part of the UESC process, a Notice of Interest was sent to KEA on July 26, 2024, requesting its interest and capability to offer UESC services to USCG Base Kodiak. On August 1, 2024, KEA responded confirming its ability and interest to perform the UESC. On September 23, 2024, as the servicing utility, pursuant to FAR 6.302-1 and 42 U.S.C. § 8256, DLA Energy requested a Preliminary Assessment (PA) from KEA to identify viable energy conservation and resilience solutions for USCG Base Kodiak. On January 1, 2025, KEA submitted its PA to the

Justification for Other Than Full and Open Competition (Cont’d) Page 3 of 7

Government for review and approval. On February 3, 2025, the Government approved the PA and issued a Request for Proposal (RFP) to KEA for the costs associated with developing the scope of work and submitting an IGA. The IGA serves as the foundational scope of work for the UESC by providing a detailed account of energy and water consumption across all facilities. It includes a comprehensive cost and savings analysis of potential energy and water conservation opportunities and a formal project proposal featuring financing, implementation, and savings verification plans.

The proposed IGA includes four (4) Energy Conservation Measures (ECMs) designed to modernize aging infrastructure and enhance base energy and water resilience. Key improvements include upgrades to the central heating plant and associated heating systems, building automation systems, lighting, water and wastewater systems, and electrical infrastructure. The total estimated contract value is

4. Identification of the statutory authority permitting other than full and open competition (FAR 6.104-1(a)(4)):

This J&A is based upon the authority of 10 U.S.C. §3204(a)(1), as implemented by Federal Acquisition Regulation 6.103-1. The services required by the agency are only available from one responsible source and no other type of services will satisfy agency requirements.

5. Demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires using the authority cited (FAR 6.104-1(a)(5)):

The Regulatory Commission of Alaska (RCA) regulates public utilities by certifying qualified providers and ensuring the delivery of safe, adequate services at reasonable rates and terms.

KEA’s designated service area encompasses Kodiak Island, including USCG Base Kodiak.

Market research and coordination with the base confirm that there is no GSA Areawide Utility Contract for the region, and KEA is the sole electricity provider capable of serving USCG Base Kodiak. No alternative utilities exist for electric service on the installation. Furthermore, USCG Base Kodiak does not have a natural gas supplier and instead operates its own wells and water treatment systems. While one facility is serviced by the City of Kodiak, it’s excluded from the scope of this project.

6. Description of the efforts made to ensure that offers are/were solicited from as many potential sources as is/was practicable, including whether a notice was or will be publicized as required by Subpart 5.1 and, if not, which exception under 5.101(b) applies (FAR 6.104- 1(a)(6)):

On September 24, 2025, DLA Energy posted a NOITA to a sole source on Sam.gov (SP060424R0423). No responses were received, resulting in no additional competition for this requirement. Consequently, KEA remains the only source available to meet the base’s needs.

KEA is the servicing utility for Base Kodiak, and no other Utilities provide electricity or natural gas, or water services to Base Kodiak. Pursuant to FAR 41.204(c)(1), any Federal agency

Justification for Other Than Full and Open Competition (Cont’d) Page 4 of 7 requiring utility services within an area covered by an areawide contract shall acquire services under that areawide contract. The GSA administers the utility areawide contracting programs and maintains the official list of utility areawide contracts. According to GSA’s Areawide Public Utility records, no contract coverage exists within the Kodiak franchised service area.

USCG Base Kodiak maintains a single electricity provider and lacks a natural gas supplier.

USCG Base Kodiak operates on its own wells and water treatment systems for most infrastructure. One facility serviced by the City of Kodiak is excluded from the project. As such, KEA is the sole utility provider for the designated area. The Energy Policy Act of 1992 (EPACT) (codified as 42 U.S.C. § 8256) authorizes and encourages agencies to participate in programs to increase energy efficiency and for water conservation or the management of electricity demand conducted by gas, water, or electric utilities and generally available to customers of such utilities. 42 U.S.C. § 8256 authorizes government agencies to take advantage of the expertise, rebates, and other financial incentives offered to customers of serving distribution utility providers for reducing energy consumption. As the sole servicing utility, pursuant to 6.103-1 Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements’, in conjunction with 42 U.S.C. § 8256, DLA Energy solicited KEA for its UESC services.

7. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable (FAR 6.104-1(a)(7)):

The Contracting Officer determines that the anticipated cost to the Government will be fair and reasonable. The contracting officer will determine if the price is fair and reasonable using the techniques in FAR 15.404(a) and will document it in the Price Reasonableness Memorandum.

8. Description of the market research conducted and the results or a statement of the reason market research was not conducted (FAR 6.104-1(a)(8)):

Market research confirms that USCG Base Kodiak maintains a single electricity provider and lacks a natural gas supplier. USCG Base Kodiak operates its own wells and water treatment system to provide water and wastewater services for the majority of its infrastructure; while one facility is serviced by the City of Kodiak, it is explicitly excluded from the proposed project scope.

In accordance with FAR 41.204(c)(1), Federal agencies with a requirement for utility services within an area covered by a General Services Administration (GSA) Areawide Contract are required to acquire such services under that areawide contract unless an authorized exception applies. Market research determined that no GSA Areawide contract exists for utility services supporting USCG Base Kodiak. Therefore, pursuant to FAR 41.205, in the absence of an areawide contract or interagency agreement, utility services must be acquired through a separate contract subject to applicable acquisition regulations and agency contracting authority.

Market research further determined that KEA is the sole utility service provider for the designated service area and the only entity capable of providing electrical utility services to

Justification for Other Than Full and Open Competition (Cont’d) Page 5 of 7

USCG Base Kodiak. Based on this determination, a letter of interest was sent to KEA on July 26, 2024, to confirm its capability and interest in executing the UESC. On August 2, 2024, KEA formally expressed its interest and capability to perform the UESC at USCG Base Kodiak.

9. Any other facts supporting the use of other than full and open competition, such as (FAR 6.104-1(a)(9)):

(i) When 6.103-1 is cited for follow-on acquisitions as described in 6.103-1(c)(2), an estimate of the cost to the Government that would be duplicated and how the estimate was derived.

Not Applicable.

(ii) When 6.103-2 is cited, estimated cost, or other rationale as to whether and how much the Government would be harmed.

Not Applicable.

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition (FAR 6.104-1(a)(10)):

A Letter of Interest was sent to KEA on July 26, 2024, as part of the UESC process. No other sources were contacted regarding this requirement because market research determined that KEA is the sole electric utility provider serving USCG Base Kodiak and maintains ownership and operational control of the electrical distribution infrastructure serving the installation. As the exclusive servicing utility for the area, KEA is the only entity authorized and capable of providing utility-based energy conservation, resilience, and related UESC services at the installation. Consequently, contacting additional sources would not have resulted in identifying any other responsible source capable of meeting the requirement.

11. Actions that may be taken to remove or overcome barriers to competition before any subsequent acquisition for the supplies or services are required (FAR 6.104-1(a)(11)):

There are no feasible actions that DLA Energy can take to overcome the competition barriers for this UESC requirement due to absolute geographical and infrastructural limitations. KEA owns 100% of the local electrical distribution infrastructure, and because Kodiak Island is geographically isolated from the mainland grid, KEA is the sole legally and physically capable utility provider for USCG Base Kodiak, as well as the City of Kodiak, Chiniak, Pasaghsak, and Port Lions. Consequently, competition is impossible, and no administrative or agency action can overcome these physical barriers.

Additionally, DLA Energy typically utilizes GSA’s Areawide Utility Contracts, which functions as IDIQ-type contracts, to issue orders for utility services. Although GSA maintains areawide utility contracts with utility providers across the nation, there is currently no GSA Areawide Utility Contract with a utility provider serving the Kodiak service area. Also, USCG Base

Justification for Other Than Full and Open Competition (Cont’d) Page 6 of 7

Kodiak does not have a natural gas supplier and instead operates its own wells and water treatment system which provide water for the installation.