Army Corps of Engineers awards $41M for McNary Lock and Dam electrical upgrades, highlighting infrastructure needs

Contract Overview

Contract Amount: $41,081,887 ($41.1M)

Contractor: Olsson Industrial Electric, Inc

Awarding Agency: Department of Defense

Start Date: 2014-05-12

End Date: 2019-10-24

Contract Duration: 1,991 days

Daily Burn Rate: $20.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF REPLACEMENT OF THE MCNARY 4160/480 VOLT STATION SERVICE, MCNARY LOCK AND DAM, UMATILLA, OREGON; US ARMY CORPS OF ENGINEERS, WALLA WALLA DISTRICT

Place of Performance

Location: UMATILLA, UMATILLA County, OREGON, 97882

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $41.1 million to OLSSON INDUSTRIAL ELECTRIC, INC for work described as: IGF::OT::IGF REPLACEMENT OF THE MCNARY 4160/480 VOLT STATION SERVICE, MCNARY LOCK AND DAM, UMATILLA, OREGON; US ARMY CORPS OF ENGINEERS, WALLA WALLA DISTRICT Key points: 1. The contract addresses critical infrastructure at the McNary Lock and Dam, a key component of the Columbia River system. 2. A single award to Olsson Industrial Electric, Inc. suggests a focused procurement process for specialized electrical services. 3. The duration of the contract (nearly 2000 days) indicates a complex, long-term project requiring sustained effort. 4. The firm-fixed-price structure aims to control costs, but potential for change orders exists in long-duration projects. 5. This award falls within the broader category of facility sustainment and modernization for federal infrastructure. 6. The project's success hinges on the contractor's ability to manage complex electrical systems in an operational environment.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns or comparable project data. The award amount of $41,081,887 for a multi-year electrical infrastructure project at a major dam suggests a significant investment. However, the lack of detailed cost information and comparison to similar projects makes a definitive value-for-money assessment difficult. The firm-fixed-price contract type provides some cost certainty, but the long duration could introduce risks if not managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of five bidders suggests a reasonable level of competition for this specialized electrical upgrade project. This competitive process should have helped ensure a fair market price was achieved, although the specific details of the bidding process and the winning proposal are not publicly available.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best value for public funds. Full and open competition generally leads to more favorable pricing and encourages contractors to offer their most competitive terms.

Public Impact

The primary beneficiaries are the operators and users of the McNary Lock and Dam, ensuring continued reliable operation. The project delivers essential upgrades to the electrical service systems, enhancing safety and operational efficiency. The geographic impact is localized to Umatilla, Oregon, where the dam is situated, but the dam's function supports regional navigation and power generation. Workforce implications include employment opportunities for skilled electricians and technicians involved in the project's execution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration increases the risk of cost overruns due to unforeseen issues or material price fluctuations.
Complexity of upgrading operational electrical systems without disrupting dam functions presents significant technical challenges.
Dependence on a single contractor for a critical infrastructure project requires robust oversight.

Positive Signals

Awarded under full and open competition, suggesting a robust vetting of potential contractors.
Firm-fixed-price contract type provides a degree of cost control for the government.
The project addresses essential infrastructure maintenance, crucial for long-term operational reliability.

Sector Analysis

This contract falls within the construction and engineering services sector, specifically focusing on electrical infrastructure for heavy civil projects. The market for such specialized services is competitive, with a mix of large engineering firms and specialized electrical contractors. The Army Corps of Engineers is a major procurer of such services for maintaining and upgrading its vast network of dams, locks, and waterways, often requiring contractors with specific expertise in high-voltage systems and industrial environments.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Given the specialized nature and scale of the project, it is likely that larger firms with the necessary expertise and bonding capacity were the primary bidders. Further analysis would be needed to determine if small businesses were involved as subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the US Army Corps of Engineers, Walla Walla District. Mechanisms likely include contract administration, regular progress reviews, site inspections, and quality assurance checks. Transparency is generally maintained through contract award databases and public reporting, though detailed project-specific oversight activities are not usually public.

Related Government Programs

McNary Lock and Dam Operations and Maintenance
US Army Corps of Engineers Civil Works Program
Columbia River Navigation and Power Generation Infrastructure
Federal Infrastructure Modernization Projects

Risk Flags

Long contract duration may increase risk of cost escalation.
Complexity of upgrading operational electrical systems.
Potential for unforeseen site conditions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.1 million to OLSSON INDUSTRIAL ELECTRIC, INC. IGF::OT::IGF REPLACEMENT OF THE MCNARY 4160/480 VOLT STATION SERVICE, MCNARY LOCK AND DAM, UMATILLA, OREGON; US ARMY CORPS OF ENGINEERS, WALLA WALLA DISTRICT

Who is the contractor on this award?

The obligated recipient is OLSSON INDUSTRIAL ELECTRIC, INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $41.1 million.

What is the period of performance?

Start: 2014-05-12. End: 2019-10-24.

What is the track record of Olsson Industrial Electric, Inc. with the US Army Corps of Engineers?

Olsson Industrial Electric, Inc. has a history of contracts with the US Army Corps of Engineers, as evidenced by this award. Analyzing their past performance on similar projects, particularly those involving large-scale electrical infrastructure or dam facilities, would provide insight into their capabilities and reliability. A review of past contract awards, completion times, and any reported performance issues or disputes would be necessary to fully assess their track record with the agency. Without specific data on prior engagements, it's difficult to definitively state their historical performance level.

How does the awarded amount compare to similar electrical upgrade projects at other Army Corps of Engineers facilities?

Comparing the $41 million award for the McNary Lock and Dam electrical upgrade to similar projects requires access to a database of Army Corps of Engineers contracts with detailed scopes of work and award amounts. Projects involving the replacement or upgrade of station service systems at other major dams or locks would be the most relevant benchmarks. Factors such as the age of the facility, the complexity of the existing electrical infrastructure, and the specific technological upgrades required can significantly influence project costs. A preliminary assessment suggests the amount is substantial, reflecting the critical nature and complexity of upgrading power systems at a large operational facility.

What are the primary risks associated with a long-duration (1991 days) firm-fixed-price contract for electrical infrastructure?

The primary risks associated with a long-duration firm-fixed-price contract for electrical infrastructure include potential cost escalation due to unforeseen site conditions, material price volatility over the contract period, and the possibility of scope creep through change orders if the initial requirements are not perfectly defined. For the contractor, the risk lies in accurately estimating all costs for a project spanning several years. For the government, the risk is that the fixed price may become uncompetitive if market conditions change significantly, or that the contractor may cut corners on quality to maintain profitability if unforeseen challenges arise. Robust contract management and clear initial scope definition are crucial to mitigate these risks.

How effective is the firm-fixed-price contract type in ensuring value for money for this type of infrastructure project?

The firm-fixed-price (FFP) contract type is generally intended to provide cost control and predictability for the government, shifting most of the cost risk to the contractor. For infrastructure projects like the McNary Lock and Dam electrical upgrade, FFP can be effective if the scope of work is well-defined and the risks are understood. It incentivizes the contractor to perform efficiently to maximize profit. However, for complex, long-duration projects where unforeseen issues are likely, FFP can sometimes lead to contractors being overly conservative in their bids or seeking change orders to cover unexpected costs, potentially negating some of the initial cost savings. The success in achieving value for money depends heavily on the accuracy of the initial estimate and the contractor's ability to manage risks.

What is the historical spending pattern for electrical upgrades at the McNary Lock and Dam or similar facilities?

Historical spending patterns for electrical upgrades at facilities like the McNary Lock and Dam are typically characterized by periodic, significant investments rather than consistent annual spending. Major overhauls or replacements of core electrical systems occur as equipment ages or technology advances. The Army Corps of Engineers manages a large portfolio of aging infrastructure, leading to a continuous need for modernization projects. Spending on such projects can fluctuate based on budget allocations, infrastructure condition assessments, and national priorities for infrastructure investment. This $41 million award represents a substantial, likely infrequent, capital investment for this specific facility.

Industry Classification

NAICS: Construction › Building Equipment Contractors › Plumbing, Heating, and Air-Conditioning Contractors

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912EF14R0001

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Itochu Corporation (UEI: 690535638)

Address: 1919 LAURA ST, SPRINGFIELD, OR, 97477

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,081,887

Exercised Options: $41,081,887

Current Obligation: $41,081,887

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $3,893,305

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline