DoD's $18.6M construction contract for substation repair at MCAS Iwakuni shows strong competition

Contract Overview

Contract Amount: $18,628,030 ($18.6M)

Contractor: Nippo Corporation

Awarding Agency: Department of Defense

Start Date: 2022-01-12

End Date: 2026-06-10

Contract Duration: 1,610 days

Daily Burn Rate: $11.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: N4008420D0072, IDIQ MULTIPLE AWARD CONSTRUCTION CONTRACT (BIG- MACC) AT U.S. MCAS IWAKUNI, JAPAN, TASK ORDER N4008422F4106, REPAIR SUBSTATION NO.1 B568 (ID#3546775)

Plain-Language Summary

Department of Defense obligated $18.6 million to NIPPO CORPORATION for work described as: N4008420D0072, IDIQ MULTIPLE AWARD CONSTRUCTION CONTRACT (BIG- MACC) AT U.S. MCAS IWAKUNI, JAPAN, TASK ORDER N4008422F4106, REPAIR SUBSTATION NO.1 B568 (ID#3546775) Key points: 1. The contract was awarded under a multiple-award IDIQ, indicating a pre-competed framework for construction services. 2. The firm-fixed-price contract type suggests that cost risks are largely borne by the contractor. 3. With 4 bids received, the competition level appears healthy for this type of specialized construction work. 4. The project's focus on critical infrastructure (substation repair) highlights its importance for base operations. 5. The duration of the contract (over 4 years) suggests a significant scope of work or phased approach.

Value Assessment

Rating: good

Benchmarking the specific unit costs for substation repair is challenging without detailed project specifications. However, the total award value of $18.6 million for a multi-year repair project at a major military installation suggests a reasonable investment for critical infrastructure maintenance. The firm-fixed-price structure shifts cost overrun risk to the contractor, which can be advantageous for the government if managed effectively. Further analysis would require comparing the scope and complexity to similar substation repair projects at other DoD facilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The solicitation resulted in four bids, which suggests a moderate level of competition for this specific task order. While four bidders indicate some level of market interest, it is on the lower end for a large-scale construction project, potentially limiting the downward pressure on pricing compared to a scenario with more numerous offers.

Taxpayer Impact: The full and open competition, despite receiving four bids, provides a baseline for fair pricing. Taxpayers benefit from the opportunity for multiple qualified contractors to compete, which generally leads to more competitive pricing than sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the U.S. Marine Corps Air Station (MCAS) Iwakuni personnel and operations, ensuring reliable power supply. The contract delivers essential repair services for critical electrical infrastructure, enhancing base resilience. The geographic impact is localized to MCAS Iwakuni in Japan, supporting U.S. military presence in the Pacific. The project will likely involve skilled construction labor, potentially including local hires or U.S. military construction personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise during substation repair, despite the firm-fixed-price structure.
Dependence on the contractor's ability to source specialized parts and skilled labor in Japan.
Risk of schedule delays due to logistical challenges or environmental factors specific to the Iwakuni region.

Positive Signals

Awarded under a pre-existing IDIQ contract, suggesting contractor vetting and streamlined acquisition.
Firm-fixed-price contract type aligns incentives for contractor efficiency and cost control.
The project addresses critical infrastructure, ensuring operational continuity for a key military installation.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on specialized electrical infrastructure repair. The U.S. military's global presence necessitates significant investment in maintaining and upgrading facilities, making construction contracts a substantial part of the DoD's spending. Comparable spending benchmarks would involve analyzing other large-scale repair and renovation projects at military bases, both domestically and internationally, to assess cost-effectiveness.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). The prime contractor, NIPPO CORPORATION, is likely a large business. There is no information provided regarding subcontracting plans or goals. Therefore, the direct impact on the small business ecosystem is minimal unless the prime contractor actively engages small businesses for subcontracting opportunities, which is not specified here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and engineering divisions at MCAS Iwakuni. The firm-fixed-price nature of the contract implies that the government's primary oversight will focus on ensuring the work is completed according to specifications, on schedule, and within the agreed-upon price. Transparency is facilitated through the Federal Procurement Data System (FPDS), where contract awards are recorded. Inspector General jurisdiction may be involved if significant issues of fraud, waste, or abuse arise.

Related Government Programs

Department of Defense Construction Contracts
Military Base Infrastructure Maintenance
Electrical Substation Repair Services
IDIQ Multiple Award Construction Contracts (MACC)
Naval Facilities Engineering Command (NAVFAC) Projects

Risk Flags

Potential for schedule delays due to overseas logistics.
Contractor performance risk on critical infrastructure repair.
Limited competition (4 bidders) may impact price optimization.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.6 million to NIPPO CORPORATION. N4008420D0072, IDIQ MULTIPLE AWARD CONSTRUCTION CONTRACT (BIG- MACC) AT U.S. MCAS IWAKUNI, JAPAN, TASK ORDER N4008422F4106, REPAIR SUBSTATION NO.1 B568 (ID#3546775)

Who is the contractor on this award?

The obligated recipient is NIPPO CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $18.6 million.

What is the period of performance?

Start: 2022-01-12. End: 2026-06-10.

What is the track record of NIPPO CORPORATION in performing similar large-scale construction projects for the U.S. military?

NIPPO CORPORATION is a Japanese construction company with a history of undertaking significant infrastructure projects. While specific details on their past performance exclusively with the U.S. military are not provided in this data snippet, their ability to win a competitive bid for a substantial project like this suggests they possess the necessary qualifications and experience. A deeper dive into their contract history, client references, and past performance evaluations within the Federal Procurement Data System (FPDS) or through direct inquiries would be necessary to fully assess their track record. This would include examining the timeliness, quality, and cost-effectiveness of their previous government contracts, particularly those involving critical infrastructure repair or work in overseas locations.

How does the awarded amount compare to the estimated cost or budget for this substation repair project?

The provided data indicates an award amount of $18,628,030.16. However, the original estimated cost or the allocated budget for this specific task order is not included. Without this information, it is impossible to definitively state whether the contract was awarded above, below, or at the estimated value. Typically, the award amount reflects the price proposed by the winning contractor, which is evaluated against the government's independent government cost estimate (IGCE). A significant difference between the award and the IGCE could signal potential issues with the bidding process or the accuracy of the estimates. Further investigation into the contract file or related documentation would be required to access the estimated cost.

What are the key performance indicators (KPIs) used to measure the success of this substation repair contract?

Key performance indicators for this substation repair contract would likely focus on several critical areas. Firstly, adherence to the schedule (delivery date of 2026-06-10) and completion of milestones within defined timelines would be crucial. Secondly, the quality of the repair work, ensuring it meets all technical specifications and industry standards, would be paramount to prevent future failures. Thirdly, cost control, although mitigated by the firm-fixed-price structure, would involve monitoring the contractor's adherence to the awarded amount and managing any approved change orders. Finally, safety performance, ensuring compliance with all safety regulations during construction, would be a vital KPI. The contract may also include specific performance standards related to the reliability and efficiency of the repaired substation post-completion.

What is the historical spending trend for similar substation repair or electrical infrastructure projects at MCAS Iwakuni or within the Navy's Pacific region?

Analyzing historical spending trends for similar projects at MCAS Iwakuni or within the Navy's Pacific region requires access to comprehensive procurement databases. This specific data point does not provide historical context. However, it is reasonable to assume that military bases, especially those with significant operational demands like MCAS Iwakuni, require ongoing investment in electrical infrastructure maintenance and upgrades. Factors influencing spending trends would include the age of the existing infrastructure, technological advancements, changes in operational requirements, and overall defense budget allocations. A review of past contracts awarded by Naval Facilities Engineering Command (NAVFAC) for similar services in the region would reveal patterns in contract values, competition levels, and the types of contractors engaged.

Are there any identified risks associated with performing construction work in Japan for a U.S. military installation, and how are they mitigated?

Performing construction work in Japan for a U.S. military installation presents several potential risks. These can include logistical challenges related to importing materials and equipment, navigating local regulations and labor laws (even within base perimeters), potential language barriers, and geopolitical considerations. For this specific contract, the U.S. Department of the Navy likely has established protocols and experienced personnel to manage these risks. Mitigation strategies could involve pre-qualifying contractors with experience in overseas operations, incorporating specific clauses in the contract addressing logistical support and compliance, providing on-site government representatives familiar with the local environment, and potentially utilizing local resources where feasible and cost-effective. The selection of NIPPO CORPORATION, a Japanese firm, may inherently mitigate some of these risks due to their familiarity with the local operating environment.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N4008418R0069

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1-19-11, KYOBASHI, CHUO-KU

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $18,628,030

Exercised Options: $18,628,030

Current Obligation: $18,628,030

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N4008420D0072

IDV Type: IDC

Timeline