Pentagon Expands $7 Billion Power Purchase Agreement to Cover Biomass

The Department of Defense announced 51 new contracts worth $2.14 billion on Monday. It also amended a 52nd contract -- the very same $7 billion alternative energy "Power Purchase Agreement" that we've been hearing so much about lately and the subject of today's story.

The contract in question is described as a $7 billion potential multiple vendor indefinite-delivery/indefinite-quantity, firm-fixed-price, non-option, non-multiyear contract, and it was awarded to a total of 13 separate companies out of the 52 companies that bid on the contract. For the most part, these companies were either small, privately owned firms or subsidiaries of foreign-listed firms not trading on American stock exchanges -- or both. A few "name-brand" firms did win slots in the contract, however, namely:

  • Honeywell International (NYSE: HON  )
  • Siemens (NASDAQOTH: SIEGY  ) Government Technologies
  • Vectren  (NYSE: VVC  ) subsidiary Energy Systems Group
  • and an entity described as the MidAmerican/Clark Joint Venture -- MidAmerican is a subsidiary of Warren Buffett's Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  )

Each of these 13 firms will now be able to bid on "task orders" to be funded out of the $7 billion that the Pentagon has allocated for spending on "energy from renewable and alternative energy production facilities that are designed, financed, constructed, operated and maintained by private sector entities."

In the case of Monday's contract, the companies named will be competing for the right to supply energy derived from "biomass technology." But complicating matters further, they will also be bidding against some three dozen other companies also competing to sell solar, wind, and geothermal alternative energies to the Pentagon.

So far, Siemens has won slots in three of the four alternative energy competitions announced under the Pentagon's Power Purchase Agreement -- for wind, solar, and now biomass.


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