J&A for Natural Gas Utility Services at Harrison Village Commissary

1. Contracting Office – Defense Commissary Agency, CCQE (Enterprise) Division, 1300 Eisenhower Ave, Fort Gregg-Adams, VA 23801

2. Type of Contract Action – The type of action contemplated is a new utility contract, rates will be in accordance with rates regulated under the Indiana Utility Regulators Commission per Title 170 of the Indiana Administrative Code, an indefinite quantity, which will fluctuate depending on actual usage. This effort will utilize DWCF funding.

3. Description of Supplies/Services –This action is for natural gas utility services for the Harrison Village Commissary, Indiana.

4. Authority Cited - The statutory authority permitting other than full and open competition that is applicable to this Justification and Approval (J&A) is 10 U.S.C. 3204(a)(1), Only one responsible source and no other supplies or services will satisfy agency requirements as implemented by FAR 6.302-1(b)(3).

5. Reason for Authority Cited – The State of Indiana, under the Indiana Utility Regulatory Commission, regulates natural gas utility companies within the state borders. Natural gas utility in the State of Indiana have service territories and are only permitted to provide service in their service territory. The Harrison Village Area, within Marion County (Indianapolis), is serviced by Citizens Energy group and this natural gas utility is the only source available to provide these services, as indicated by the State of Indiana Code.

6. Efforts to Obtain Competition – There is no competition for this service; as indicated in Paragraph 5, there is only one possible natural gas utility service provider in the Harrison Village Commissary area, Citizens Energy Group, as authorized by the State of Indiana.

7. Fair and Reasonable Cost Determination – This contract action will be fair and reasonable based on regulations established by the Indiana Utility Regulatory Commission under Title 170 of the Indiana Administrative Code; and in accordance with DFARS 241.201(3) which states “Rates established by an independent regulatory body – (iii) are a valid basis on which prices can

be determined fair and reasonable”.

8. Market Research – The GSA Areawide Public Utility contract listing does not include a natural gas contract for this area. There are Air Force contracts for natural gas supply, however none for the Harrison Village area; therefore, an interagency contract is not possible. The State of Indiana Code 8-1-2-1 “Utility Regulation; Definitions”, states; “Utility” as used in this chapter means every plant or equipment within the state used for: (2) the production, transmission, delivery, or furnishing of heat, light water, or power, either directly or indirectly to the public…”. The State of Indiana allows third party suppliers for the natural gas supply only, transportation is provided by the utility in that service area. Competing the natural gas supply is not a viable decision due to (1) the third party supplier of natural gas is not subject to regulation by the Indiana Utility Regulatory Commission; (2) using a third party supplier for natural gas itself will require two contracts, one with Citizens Energy Group as the utility provider (transportation and meter readings) and one with the third party supplier for the natural gas; and (3) the utility, Citizens Energy Group, assesses additional administrative fees to the third party suppliers, which are generally passed along to their consumers. The State of Indiana has the Norther Indiana Public Service Company’s (NIPSCO) Choice Program, which allows customers in northern Indiana to choose from third party suppliers. However, the Harrison Village commissary is not within that service area and the Indiana Office of Utility Consumer Counselor NIPSCO fact sheet warns consumers that this is not a cost savings service and there is no guarantee of lower bills. Due to these issues, Citizens Energy Group is the only utility able to provide this service and is regulated by the State of Indiana.

9. Actions to Increase/Foster Competition – As stated under Paragraph 5, only one utility

company can service an existing service territory. Therefore, Indiana State law prohibits

competition for this service.

10. Other Factors – N/A