Department of the Army awards $47.4M contract for electrical upgrades, highlighting significant investment in infrastructure modernization

Contract Overview

Contract Amount: $47,374,728 ($47.4M)

Contractor: Olsson Industrial Electric, Inc

Awarding Agency: Department of Defense

Start Date: 2021-03-09

End Date: 2026-04-28

Contract Duration: 1,876 days

Daily Burn Rate: $25.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: MCNARY EXCITERS, GOVERNORS, AND POWERHOUSE CONTROLS UPGRADES

Place of Performance

Location: UMATILLA, UMATILLA County, OREGON, 97882

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $47.4 million to OLSSON INDUSTRIAL ELECTRIC, INC for work described as: MCNARY EXCITERS, GOVERNORS, AND POWERHOUSE CONTROLS UPGRADES Key points: 1. Contract value represents a substantial investment in maintaining and upgrading critical electrical infrastructure. 2. The award was made under full and open competition, suggesting a competitive bidding process. 3. The contract duration of over 1800 days indicates a long-term commitment to the project. 4. The firm-fixed-price structure aims to provide cost certainty for the government. 5. The project falls within the Electrical Contractors and Other Wiring Installation Contractors industry, a vital sector for infrastructure. 6. The geographic location in Oregon may indicate a focus on regional infrastructure needs.

Value Assessment

Rating: good

The contract value of $47.4 million for electrical upgrades appears reasonable given the extensive duration and scope of work implied by the project title. Benchmarking against similar large-scale electrical infrastructure projects for the Department of Defense would provide a more precise value-for-money assessment. The firm-fixed-price nature of the contract suggests that the contractor bears the risk of cost overruns, which is generally favorable for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With four bidders participating, the competition level appears adequate, suggesting that the government likely received competitive pricing. This approach generally leads to better price discovery and potentially lower costs for the taxpayer compared to sole-source or limited competition scenarios.

Taxpayer Impact: A competitive bidding process for this significant infrastructure upgrade helps ensure that taxpayer funds are used efficiently and that the government secures the best possible value for the services rendered.

Public Impact

The Department of the Army is the primary beneficiary, receiving modernized electrical systems essential for its operations. The contract will result in the upgrade of "MCNARY EXCITERS, GOVERNORS, AND POWERHOUSE CONTROLS," crucial for power generation and distribution. The project's impact is likely concentrated in Oregon, where the contract is being performed. The successful execution of this contract will support jobs within the electrical contracting and related industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during the long contract duration.
Dependence on the contractor's ability to manage complex electrical systems and specialized equipment.
Risk of schedule delays due to the intricate nature of infrastructure upgrades and potential site-specific issues.

Positive Signals

Firm-fixed-price contract provides cost certainty and limits the government's exposure to price fluctuations.
Awarded through full and open competition, suggesting a robust selection process and competitive pricing.
Long contract duration allows for thorough planning, execution, and integration of upgrades.

Sector Analysis

This contract falls within the Electrical Contractors and Other Wiring Installation Contractors sector, a critical component of the broader construction and infrastructure industry. This sector is characterized by specialized labor, adherence to strict safety and technical standards, and often involves large-scale projects for government and commercial clients. The market size for such specialized electrical services is substantial, driven by ongoing needs for modernization, maintenance, and new construction across various industries, including defense.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the primary award went to a larger entity, and the direct impact on the small business ecosystem may be limited unless the prime contractor actively engages small businesses for subcontracting opportunities. Further investigation into subcontracting plans would be necessary to fully assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officer and relevant program management offices within the Department of the Army. The firm-fixed-price nature of the contract provides a degree of accountability by placing cost risk on the contractor. Transparency is generally facilitated through contract award databases and reporting requirements, though specific project-level oversight details are not provided.

Related Government Programs

Department of Defense Infrastructure Modernization Programs
Army Corps of Engineers Construction Contracts
Federal Energy Infrastructure Projects
Electrical Systems Upgrades for Government Facilities

Risk Flags

Potential for schedule delays due to complexity of electrical system upgrades.
Risk of cost overruns if unforeseen technical challenges arise.
Dependence on contractor's specialized expertise and equipment availability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.4 million to OLSSON INDUSTRIAL ELECTRIC, INC. MCNARY EXCITERS, GOVERNORS, AND POWERHOUSE CONTROLS UPGRADES

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 $47.4 million.

What is the period of performance?

Start: 2021-03-09. End: 2026-04-28.

What is the historical spending pattern for electrical upgrades by the Department of the Army in Oregon?

Analyzing historical spending for similar electrical upgrade contracts by the Department of the Army, particularly within Oregon, would provide valuable context for the $47.4 million award. Without specific historical data, it's difficult to ascertain if this represents an increase, decrease, or consistent level of investment. However, large-scale infrastructure projects like this are often part of multi-year modernization efforts. Understanding past contract values, durations, and the scope of work for previous electrical upgrades would help benchmark the current contract's size and significance, and identify any trends in the Army's investment in this specific type of infrastructure in the region.

How does the number of bidders (4) compare to similar large-scale electrical infrastructure contracts awarded by the Department of Defense?

A competition level of four bidders for a contract valued at $47.4 million is generally considered healthy for large-scale federal procurements. For major infrastructure projects, the number of bidders can vary significantly based on the project's complexity, required specialization, and geographic location. While more bidders can sometimes indicate greater competition, four is often sufficient to drive competitive pricing, especially if the bidders are qualified and capable. Contracts with fewer than three bidders might raise concerns about market liquidity or potential barriers to entry. Conversely, an unusually high number of bidders could suggest a less specialized service or a particularly attractive contract, but might also indicate fragmentation of the market.

What are the specific risks associated with upgrading 'MCNARY EXCITERS, GOVERNORS, AND POWERHOUSE CONTROLS'?

Upgrading 'MCNARY EXCITERS, GOVERNORS, AND POWERHOUSE CONTROLS' likely involves significant technical complexity and potential risks. Exciters and governors are critical components in power generation systems, responsible for regulating voltage and frequency. Their upgrade requires specialized engineering knowledge, precise calibration, and careful integration with existing infrastructure to avoid disrupting power supply. Risks include potential compatibility issues with older systems, the need for specialized testing and commissioning, the possibility of unforeseen obsolescence in supporting equipment, and the requirement for highly skilled technicians. Furthermore, any downtime during the upgrade process could have operational impacts, necessitating meticulous planning and execution to mitigate these risks.

What is the track record of OLSSON INDUSTRIAL ELECTRIC, INC. in performing similar government contracts?

Assessing the track record of OLSSON INDUSTRIAL ELECTRIC, INC. is crucial for understanding their capability to successfully execute this $47.4 million contract. Information on their past performance, including the successful completion of similar-sized electrical infrastructure projects for government agencies, is key. This would involve reviewing their history of meeting deadlines, staying within budget, and adhering to quality standards. Any past issues, such as contract disputes, performance deficiencies, or significant cost overruns on previous federal contracts, would be important risk indicators. A strong performance history would provide greater confidence in their ability to deliver the required upgrades effectively and efficiently.

How does the firm-fixed-price (FFP) contract type influence the risk allocation and potential for cost savings in this project?

The firm-fixed-price (FFP) contract type places the primary risk of cost overruns on the contractor, OLSSON INDUSTRIAL ELECTRIC, INC. This means that the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This structure incentivizes the contractor to manage costs efficiently and control expenditures. For the government, an FFP contract offers significant budget certainty, as the total cost is known upfront. While it may lead to a higher initial price compared to cost-reimbursement contracts to account for contractor risk, it generally minimizes the risk of unexpected cost increases for the government and simplifies financial oversight. This is often preferred for projects with well-defined scopes of work, like infrastructure upgrades.

Industry Classification

NAICS: Construction › Building Equipment Contractors › Electrical Contractors and Other Wiring Installation 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: W912EF20R0001

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: IPC Industries, Inc.

Address: 1919 LAURA ST, SPRINGFIELD, OR, 97477

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

Financial Breakdown

Contract Ceiling: $48,188,758

Exercised Options: $47,374,746

Current Obligation: $47,374,728

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $11,143,086

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline