Department of the Navy awards $15.6M contract for electrical system upgrades to LOTOS S.R.L

Contract Overview

Contract Amount: $15,658,064 ($15.7M)

Contractor: Lotos S.R.L.

Awarding Agency: Department of Defense

Start Date: 2007-09-21

End Date: 2011-07-31

Contract Duration: 1,409 days

Daily Burn Rate: $11.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ELECTRICAL SYSTEM UPGRADE

Plain-Language Summary

Department of Defense obligated $15.7 million to LOTOS S.R.L. for work described as: ELECTRICAL SYSTEM UPGRADE Key points: 1. The contract value of $15.6 million for electrical system upgrades appears to be within a reasonable range for such projects, though specific benchmarking is needed. 2. Full and open competition was utilized, suggesting a potentially competitive pricing environment. 3. The contract duration of 1409 days indicates a significant, long-term project. 4. The award to LOTOS S.R.L. represents a single contractor's role in a critical infrastructure upgrade. 5. The firm-fixed-price contract type shifts cost risk to the contractor. 6. The absence of small business set-aside or subcontracting data warrants further investigation into small business participation.

Value Assessment

Rating: fair

The contract value of $15.6 million for electrical system upgrades is substantial. Without specific details on the scope of work, the exact nature of the electrical systems involved, and the location of the upgrade, a precise value-for-money assessment is challenging. However, for a project spanning over three years and involving significant infrastructure work, this amount is not inherently excessive. Benchmarking against similar large-scale electrical system upgrade contracts within the Department of Defense or other federal agencies would provide a clearer picture of whether this represents a competitive price point.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The fact that there were 4 bidders suggests a moderate level of competition for this particular contract. While more bidders generally lead to better price discovery, four offers can still result in competitive pricing, especially for specialized services like electrical system upgrades.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, driving down prices and potentially leading to better quality services.

Public Impact

The primary beneficiaries of this contract are the Department of the Navy, which will receive upgraded electrical systems, ensuring operational readiness and safety. The services delivered include the modernization and enhancement of critical electrical infrastructure. The geographic impact is localized to the Navy facility where the upgrades are being performed. The workforce implications include employment opportunities for electricians, technicians, and project managers involved in the execution of the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics or quality assurance reporting makes it difficult to assess the contractor's performance beyond contract completion.
The long duration of the contract (1409 days) could introduce risks related to material cost fluctuations or technological obsolescence if not managed carefully.
Limited information on small business subcontracting raises concerns about the extent of small business participation in this significant federal contract.

Positive Signals

The use of a firm-fixed-price contract type effectively transfers cost overrun risk to the contractor, which is a positive signal for budget predictability.
The award was made under full and open competition, suggesting a robust bidding process that likely yielded a competitive price.
The contract was awarded to LOTOS S.R.L., indicating a specific entity has been selected to deliver these critical infrastructure upgrades.

Sector Analysis

Electrical system upgrades fall under the broader construction and facilities maintenance sector. This contract represents a significant investment in maintaining and modernizing critical infrastructure for a major federal agency. The market for such services is competitive, with numerous firms capable of undertaking large-scale electrical projects. Comparable spending benchmarks would typically be found in large-scale renovation or new construction projects for government facilities, where electrical system modernization is a key component.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses, and there is no explicit information regarding small business subcontracting. This suggests that small businesses may not have been a primary focus for this particular award. Further investigation would be needed to determine if any subcontracting opportunities were made available to small businesses and what their participation level was. The absence of set-aside provisions could limit the direct economic impact on the small business ecosystem for this specific contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant contracting command within the Department of the Navy. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver the specified work within the agreed-upon price. Transparency is facilitated by the public nature of federal contract awards, though detailed performance reports are often not publicly disclosed. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Construction
Base Realignment and Closure (BRAC) projects
Facilities Engineering and Maintenance
Department of Defense Infrastructure Modernization

Risk Flags

Potential for cost overruns if contractor underestimates scope or faces unforeseen conditions.
Risk of material price escalation due to long contract duration.
Uncertainty regarding the extent of small business participation.
Need for detailed performance monitoring to ensure quality despite fixed price.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.7 million to LOTOS S.R.L.. ELECTRICAL SYSTEM UPGRADE

Who is the contractor on this award?

The obligated recipient is LOTOS S.R.L..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $15.7 million.

What is the period of performance?

Start: 2007-09-21. End: 2011-07-31.

What specific electrical systems were upgraded, and what was the scope of work involved in this $15.6 million contract?

The provided data indicates the contract was for 'ELECTRICAL SYSTEM UPGRADE' and falls under the 'Other Building Finishing Contractors' North American Industry Classification System (NAICS) code. However, the specific details of the electrical systems upgraded (e.g., power distribution, lighting, control systems, emergency power) and the precise scope of work (e.g., replacement, repair, modernization, installation of new components) are not detailed in the summary data. This level of detail is typically found in the contract's Statement of Work (SOW) or Performance Work Statement (PWS), which would outline the technical requirements, deliverables, and performance standards. Without access to these documents, it's impossible to fully ascertain the extent of the upgrades and their criticality to the Navy's operations.

How does the awarded amount of $15.6 million compare to similar electrical system upgrade contracts awarded by the Department of the Navy or other federal agencies?

Benchmarking the $15.6 million award requires comparing it to similar projects in terms of scope, complexity, location, and duration. Electrical system upgrades can vary significantly in cost depending on the size of the facility, the age and condition of the existing infrastructure, and the specific technologies being implemented. For a large-scale, multi-year upgrade project at a Department of Defense facility, $15.6 million might be considered within a typical range. However, without specific comparable contract data, it's difficult to definitively state whether this represents excellent, good, or fair value. A comprehensive analysis would involve searching federal procurement databases for contracts with similar NAICS codes (like 238390) and service descriptions awarded over the past few years to identify average costs per square foot or per system component.

What are the potential risks associated with a firm-fixed-price contract of this magnitude and duration (1409 days)?

A firm-fixed-price (FFP) contract shifts the majority of cost risk to the contractor. For a project valued at $15.6 million and spanning nearly four years, potential risks include contractor underestimation of costs, unforeseen site conditions, or significant fluctuations in material prices. If the contractor miscalculates expenses or encounters unexpected challenges, they may incur losses. Conversely, if the contractor is highly efficient, they could realize substantial profit. The long duration increases the likelihood of market volatility for materials and labor. Effective oversight by the government is crucial to ensure the contractor maintains quality and adheres to the contract terms despite the fixed price, and to manage any potential change orders that could impact the price.

Given the 'full and open competition' and 4 bidders, what does this imply about the contractor's track record and the overall market for these services?

The fact that the contract was awarded under 'full and open competition' with four bidders suggests that the market for electrical system upgrades of this nature is sufficiently robust to attract multiple qualified companies. This level of competition generally indicates that the government had a reasonable pool of potential offerors to choose from, which can lead to competitive pricing and a wider selection of technical approaches. For LOTOS S.R.L., winning this contract implies they met the technical, past performance, and price requirements set forth by the Department of the Navy. It suggests they have the capacity and expertise to handle a project of this scale. However, without specific details on the past performance evaluations of all bidders, it's hard to definitively assess LOTOS S.R.L.'s specific track record relative to competitors beyond their ability to win this bid.

What are the implications of the contract not having small business set-aside provisions or explicit subcontracting requirements mentioned?

The absence of explicit small business set-aside provisions or reported subcontracting goals for this $15.6 million contract suggests that the primary focus of the procurement strategy was likely on obtaining the best overall value through full and open competition, rather than specifically maximizing small business participation. This does not necessarily mean small businesses were excluded, as they could have participated as subcontractors to the prime contractor, LOTOS S.R.L. However, without specific subcontracting plans or reporting, it's difficult to quantify the extent of small business involvement or its economic impact. Federal agencies are generally encouraged to award a certain percentage of their contracting dollars to small businesses, and the lack of explicit provisions here might indicate a missed opportunity to further that goal, depending on the specific circumstances and availability of qualified small businesses for this type of specialized work.

Industry Classification

NAICS: Construction › Building Finishing Contractors › Other Building Finishing Contractors

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N3319107R0227

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Dioscuri SPA (UEI: 339105055)

Address: VIA FIRENZE 136, ACI CASTELLO

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $15,658,064

Exercised Options: $15,658,064

Current Obligation: $15,658,064

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline