Department of the Navy awards $36.5M contract for oil and gas pipeline construction in Guam

Contract Overview

Contract Amount: $36,494,092 ($36.5M)

Contractor: Gilbane Federal

Awarding Agency: Department of Defense

Start Date: 2017-09-22

End Date: 2023-07-12

Contract Duration: 2,119 days

Daily Burn Rate: $17.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF CIR SASA VALLEY

Place of Performance

Location: SANTA RITA, GUAM County, GUAM, 96915

Plain-Language Summary

Department of Defense obligated $36.5 million to GILBANE FEDERAL for work described as: IGF::OT::IGF CIR SASA VALLEY Key points: 1. Contract value represents a significant investment in critical infrastructure for naval operations. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. Long contract duration (2119 days) indicates a complex, multi-year project requiring sustained effort. 4. Fixed-price contract type shifts performance risk to the contractor, providing cost certainty for the government. 5. The project is situated in a strategic geographic location, highlighting its importance for national security. 6. The award to a single contractor suggests specialized capabilities were required for this specific construction task.

Value Assessment

Rating: good

The contract value of $36.5 million for oil and gas pipeline construction appears reasonable given the project's scope and duration. Benchmarking against similar large-scale infrastructure projects, particularly those in remote or strategic locations like Guam, would provide further context. The firm fixed-price nature of the contract offers predictable costs for the Department of the Navy, although it places the onus of cost overruns on the contractor. Without specific per-unit cost data or detailed project specifications, a precise value-for-money assessment is challenging, but the competitive award process is a positive indicator.

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 presence of 3 bidders suggests a healthy level of competition for this specialized construction project. A competitive bidding process generally leads to better price discovery and can result in more favorable terms for the government. The fact that multiple firms vied for this contract implies that the market has sufficient capacity and interest in undertaking such projects.

Taxpayer Impact: The full and open competition for this contract likely resulted in a more cost-effective outcome for taxpayers by driving down prices through competitive bidding. It also ensures that the government has access to a wider pool of qualified contractors, potentially leading to better quality and service delivery.

Public Impact

Naval operations in the Pacific region benefit from improved fuel infrastructure. Construction services are delivered in Guam, supporting local economic activity and potentially creating jobs. The project enhances the logistical capabilities of the U.S. military in a key strategic area. The workforce implications include employment opportunities for skilled construction labor in Guam and potentially from the mainland.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration increases the risk of cost escalation due to inflation or unforeseen project delays.
Geographic isolation of Guam can lead to higher logistical costs for materials and personnel.
Dependence on a single contractor for a critical infrastructure project poses a risk if the contractor faces financial or operational difficulties.

Positive Signals

Firm fixed-price contract provides cost certainty and shifts risk to the contractor.
Full and open competition suggests a well-vetted selection process and potential for competitive pricing.
Awarding to a single contractor implies specialized expertise was identified and secured for this specific need.

Sector Analysis

This contract falls within the construction sector, specifically related to energy infrastructure. The market for oil and gas pipeline construction is specialized, requiring significant engineering, project management, and safety expertise. Comparable spending benchmarks would involve looking at other large-scale military or civilian energy infrastructure projects, particularly those involving pipeline construction in challenging or remote environments. The Department of Defense is a significant investor in such infrastructure to support its global operations.

Small Business Impact

While this contract was awarded under full and open competition and does not appear to have a specific small business set-aside, the prime contractor, Gilbane Federal, may engage small businesses for subcontracting opportunities. The nature of large-scale construction projects often involves a tiered subcontracting structure. Analysis of the prime contractor's past performance and subcontracting plans would be necessary to fully assess the impact on the small business ecosystem. It is possible that specialized components or services could be sourced from small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer's representative (COR) within the Department of the Navy, ensuring compliance with contract terms and performance standards. The firm fixed-price nature provides a degree of accountability by linking payment to successful project completion. Transparency is facilitated through contract award databases like FPDS. The Inspector General's office for the Department of Defense may conduct audits or investigations if specific concerns regarding waste, fraud, or abuse arise during the contract's lifecycle.

Related Government Programs

Naval Facilities Engineering Command (NAVFAC) Contracts
Military Construction Projects
Energy Infrastructure Contracts
Defense Logistics Agency Contracts
Pacific Command Infrastructure Support

Risk Flags

Long contract duration
Geographic isolation
Potential for cost overruns (contractor risk)
Dependence on single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.5 million to GILBANE FEDERAL. IGF::OT::IGF CIR SASA VALLEY

Who is the contractor on this award?

The obligated recipient is GILBANE FEDERAL.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $36.5 million.

What is the period of performance?

Start: 2017-09-22. End: 2023-07-12.

What is Gilbane Federal's track record with similar large-scale construction projects for the Department of Defense?

Gilbane Federal has a substantial track record with the Department of Defense, often undertaking complex construction and facilities management projects. Their portfolio includes a variety of infrastructure development, barracks construction, and renovation projects across numerous military installations. For instance, they have been involved in significant projects at bases in the continental U.S. and overseas. Their experience often encompasses large-scale, multi-year efforts requiring robust project management and adherence to stringent military construction standards. A review of their past performance ratings and any past performance issues or successes related to pipeline or energy infrastructure projects would provide a clearer picture of their capability and reliability for this specific contract.

How does the awarded amount compare to the estimated cost or budget for this pipeline construction project?

The awarded amount of $36,494,092.23 represents the final negotiated price for the oil and gas pipeline construction. Without access to the government's initial cost estimates or the bids submitted by other competitors, it is difficult to definitively state how competitive the price is relative to the government's expectation. However, the fact that it was awarded under full and open competition with three bidders suggests that the price was deemed acceptable by the contracting officer, likely falling within or close to the government's independent government cost estimate. Further analysis would require comparing this figure to similar pipeline projects of comparable scale and complexity, adjusted for location and specific technical requirements.

What are the primary risks associated with a firm fixed-price contract for a project of this duration and complexity?

A firm fixed-price (FFP) contract, while offering cost certainty to the government, places significant risk on the contractor. For a project spanning over 2000 days (nearly six years) and involving complex pipeline construction, the primary risks for the contractor include unforeseen cost increases due to inflation, material price volatility, labor shortages, or unexpected site conditions. Scope creep, if not managed tightly through contract modifications, can also erode profit margins. Conversely, the government's risk is primarily related to contractor performance; if the contractor struggles or defaults, project delays and potential cost increases for the government (through contract termination and re-procurement) become a concern. Robust oversight and clear contract terms are crucial to mitigate these risks.

What is the strategic importance of this oil and gas pipeline construction in Guam for the Department of the Navy?

Guam is a critical strategic hub for U.S. military operations in the Indo-Pacific region. Enhancing its fuel infrastructure, including oil and gas pipelines, is vital for ensuring the sustained operational readiness of naval forces, including aircraft carriers, submarines, and other vessels. Reliable fuel supply chains are essential for power projection, logistical support, and emergency response capabilities. This pipeline project likely supports existing or planned fuel storage facilities and distribution networks, reducing reliance on less secure or more costly methods of fuel transfer, such as by tanker trucks or barges, and bolstering the base's self-sufficiency and resilience.

How does the number of bidders (3) impact the potential for cost savings and quality of service for this contract?

Having three bidders for this contract suggests a moderate level of competition. While more bidders generally lead to greater price pressure and potentially lower costs, three bidders indicate that the market for this specialized construction service is not overly concentrated. This number is often considered sufficient to ensure a competitive outcome, preventing a situation where only one or two firms dominate the market. It implies that the government likely received multiple viable proposals, allowing for a meaningful comparison of technical approaches and pricing. The quality of service is also likely to be positively influenced, as contractors aim to differentiate themselves not just on price but also on their proposed technical solutions and past performance.

Industry Classification

NAICS: Construction › Utility System Construction › Oil and Gas Pipeline and Related Structures Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N3943014R1405

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2730 SHADELANDS DR, WALNUT CREEK, CA, 94598

Business Categories: Category Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $36,494,092

Exercised Options: $36,494,092

Current Obligation: $36,494,092

Actual Outlays: $3,071,796

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N3943015D1634

IDV Type: IDC

Timeline