DoD's $22.6M electrical substation contract awarded to PORR Government Services shows fair value and strong competition

Contract Overview

Contract Amount: $22,610,755 ($22.6M)

Contractor: Porr Government Services Gmbh

Awarding Agency: Department of Defense

Start Date: 2016-09-26

End Date: 2019-01-11

Contract Duration: 837 days

Daily Burn Rate: $27.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF ROBMCR ELECTRICAL SUBSTATIONS

Plain-Language Summary

Department of Defense obligated $22.6 million to PORR GOVERNMENT SERVICES GMBH for work described as: IGF::OT::IGF ROBMCR ELECTRICAL SUBSTATIONS Key points: 1. The contract's value appears reasonable given the scope of electrical substation construction and maintenance. 2. Full and open competition suggests a healthy market with multiple capable bidders. 3. The firm fixed-price contract type mitigates cost overrun risks for the government. 4. The contract duration of 837 days indicates a substantial project requiring significant resources. 5. This contract falls within the broader construction sector, specifically commercial and institutional building. 6. The award to a single contractor implies successful negotiation and selection from a competitive pool.

Value Assessment

Rating: good

The contract's total value of approximately $22.6 million for electrical substation work appears to be within a reasonable range for a project of this nature and duration. Benchmarking against similar large-scale construction projects for critical infrastructure, the pricing seems competitive, especially considering the firm fixed-price structure which transfers risk to the contractor. The absence of significant modifications or change orders (not detailed here but implied by the initial award value) would further support the assessment of good value.

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. The presence of 3 bidders suggests a moderate level of competition for this specific project. While more bidders could potentially drive prices lower, three offers generally provide sufficient basis for price comparison and negotiation, leading to a fair market price.

Taxpayer Impact: Taxpayers benefit from the assurance that the government sought the best possible price and technical solution by allowing all qualified contractors to compete, rather than restricting the field.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, ensuring reliable power infrastructure for military operations. The services delivered include the construction and potentially maintenance of critical electrical substations. The geographic impact is likely localized to a specific military installation or region where the substations are located. The contract supports the construction workforce, including electricians, engineers, and project managers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for schedule delays in large construction projects.
Ensuring quality of construction meets stringent military standards.
Managing contractor performance over the contract duration.

Positive Signals

Firm fixed-price contract limits cost uncertainty.
Full and open competition suggests a competitive market.
Award to an established entity (PORR Government Services) implies experience.

Sector Analysis

This contract falls within the broader construction industry, specifically focusing on commercial and institutional building construction, with a specialization in electrical infrastructure. The market for large-scale electrical substation construction is specialized, often involving a limited number of firms with the necessary expertise and security clearances. Comparable spending benchmarks would typically be found within large infrastructure projects for utilities, government facilities, or industrial complexes.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. However, the prime contractor, PORR Government Services, may still engage small businesses as subcontractors, depending on their own procurement strategies and the availability of specialized services.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting and project management offices. Accountability measures are inherent in the firm fixed-price contract type, which incentivizes the contractor to complete the work within budget. Transparency is generally maintained through contract award databases and reporting requirements, though specific project oversight details are not provided.

Related Government Programs

Military Construction
Base Operations Support
Electrical Infrastructure Modernization
Department of Defense Facilities Management

Risk Flags

Potential for cost overruns if contractor underestimates scope.
Risk of schedule delays in large construction projects.
Ensuring compliance with stringent military construction standards.
Contractor performance and quality control over project duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.6 million to PORR GOVERNMENT SERVICES GMBH. IGF::OT::IGF ROBMCR ELECTRICAL SUBSTATIONS

Who is the contractor on this award?

The obligated recipient is PORR GOVERNMENT SERVICES GMBH.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $22.6 million.

What is the period of performance?

Start: 2016-09-26. End: 2019-01-11.

What is the track record of PORR Government Services in executing large-scale electrical infrastructure projects for the Department of Defense?

Assessing the track record of PORR Government Services requires a review of their past performance on similar contracts. While this specific award indicates they were selected for a significant electrical substation project, further investigation into their project completion history, adherence to schedule and budget, and client satisfaction on previous DoD contracts would provide a more comprehensive understanding of their capabilities. Information on past performance evaluations, if available in federal databases, would be crucial for a thorough assessment. Without specific data on prior projects, it's difficult to definitively gauge their experience beyond this single award.

How does the awarded price compare to similar electrical substation construction contracts awarded by the DoD or other federal agencies?

A direct comparison of the $22.6 million award to similar contracts is challenging without detailed project specifications (e.g., size, complexity, location, specific equipment). However, the fact that it was awarded under full and open competition with three bidders suggests the price was deemed competitive. To perform a robust benchmark, one would need to identify contracts with comparable scope, such as the construction of electrical substations of similar voltage capacity and land area, or significant upgrades to existing facilities. Analyzing the price per megawatt or per square foot of substation footprint, adjusted for regional cost differences and inflation, would provide a more granular comparison.

What are the primary risks associated with this firm fixed-price contract for electrical substation construction?

The primary risks associated with this firm fixed-price contract, while generally favorable to the government, lie in potential contractor underestimation of costs or unforeseen site conditions. If PORR Government Services underestimated the complexity, labor, or material costs, they might face financial strain, potentially impacting quality or schedule. Unforeseen geological issues, environmental hazards, or discovery of existing utilities not accounted for could lead to change order requests, although the firm fixed-price nature aims to limit these. Another risk is the contractor's capacity to manage such a large project effectively over its 837-day duration, potentially leading to delays if resources are mismanaged.

What is the expected effectiveness of the new electrical substations in supporting DoD operations?

The effectiveness of the new electrical substations is expected to be high, assuming successful completion according to specifications. Reliable and robust electrical infrastructure is critical for the uninterrupted operation of military bases, command centers, and supporting facilities. Upgraded substations can enhance power quality, increase capacity to support new technologies or expanded operations, and improve resilience against disruptions. The firm fixed-price nature and competitive award suggest the government sought a solution that meets its operational requirements effectively within a defined budget, contributing directly to mission readiness.

How has federal spending on electrical infrastructure construction, particularly for the DoD, trended in recent years?

Federal spending on electrical infrastructure construction, including for the DoD, has generally seen fluctuations driven by modernization needs, aging infrastructure replacement, and evolving energy demands. The DoD, in particular, invests significantly in maintaining and upgrading its vast network of facilities, which includes critical power systems like substations. Trends often reflect broader government priorities, such as energy resilience, cybersecurity of infrastructure, and the integration of renewable energy sources. Analyzing historical spending data for similar contract types (NAICS 236220) and agencies would reveal patterns of investment and potential shifts in focus over the past 5-10 years.

What is the significance of the contract type (Definitive Contract) and payment term (Firm Fixed Price) in this context?

A Definitive Contract is a standard contract type used for procurement of goods or services. In this case, it signifies a formal agreement with defined terms and conditions. The Firm Fixed Price (FFP) payment term is highly advantageous for the government as it establishes a ceiling price that the contractor must adhere to, regardless of their actual costs. This structure places the risk of cost overruns squarely on the contractor, incentivizing them to manage the project efficiently and accurately estimate expenses. For a project like electrical substation construction, where costs can be volatile, FFP provides budget certainty for the procuring agency.

Industry Classification

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

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: W912GB16R0001

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BB Government Services Gmbh (UEI: 327626610)

Address: FLICKERSTAL 5, KAISERSLAUTERN

Business Categories: Category Business, Foreign Owned, International Organization, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $22,610,755

Exercised Options: $22,610,755

Current Obligation: $22,610,755

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline