DoD awards $16.9M contract for Puerto Rico microgrid, highlighting critical infrastructure resilience

Contract Overview

Contract Amount: $16,915,407 ($16.9M)

Contractor: Parsons Government Services Inc.

Awarding Agency: Department of Defense

Start Date: 2024-08-23

End Date: 2026-08-15

Contract Duration: 722 days

Daily Burn Rate: $23.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCTION OF LTC HERNAN G. PESQUERA ARC MICROGRID IN JUANA DIAZ, PUERTO RICO

Place of Performance

Location: JUANA DIAZ, JUANA DIAZ County, PUERTO RICO, 00795

Plain-Language Summary

Department of Defense obligated $16.9 million to PARSONS GOVERNMENT SERVICES INC. for work described as: CONSTRUCTION OF LTC HERNAN G. PESQUERA ARC MICROGRID IN JUANA DIAZ, PUERTO RICO Key points: 1. Contract value of $16.9 million supports essential infrastructure development. 2. Full and open competition suggests a robust bidding process. 3. Fixed-price contract type aims to control costs and manage risk. 4. Project duration of 722 days indicates a significant construction undertaking. 5. Focus on microgrid technology addresses energy security and reliability needs. 6. Geographic focus on Puerto Rico addresses specific regional infrastructure challenges.

Value Assessment

Rating: good

The contract value of $16.9 million for a microgrid project appears reasonable given the scope of constructing power and communication infrastructure. Benchmarking against similar large-scale construction projects for critical facilities, the price seems aligned with market expectations for complex engineering and construction services. The firm fixed-price structure provides cost certainty for the government, suggesting a well-defined project scope and a focus on value for money.

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 8 bidders participating, the level of competition suggests a healthy market response and provides the agency with multiple options to select from. This broad competition is expected to drive competitive pricing and ensure the government receives a fair market value for the services rendered.

Taxpayer Impact: The extensive competition in this procurement process is beneficial for taxpayers as it likely led to more aggressive pricing from contractors, maximizing the value of federal funds allocated to this critical infrastructure project.

Public Impact

The primary beneficiaries are the U.S. Army Corps of Engineers and personnel at the ARC facility in Juana Diaz, Puerto Rico, who will gain enhanced energy resilience. The project will deliver a new microgrid system, improving power reliability and security for critical operations. The geographic impact is concentrated in Juana Diaz, Puerto Rico, addressing specific energy infrastructure needs in the region. The project will likely involve local labor and subcontractors, contributing to the regional economy in Puerto Rico.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise during construction.
Dependency on specialized materials and equipment could lead to supply chain delays.
Coordination challenges between multiple construction phases and stakeholders.

Positive Signals

Firm fixed-price contract mitigates cost escalation risks.
Full and open competition suggests a well-defined scope and competitive pricing.
Experienced contractor likely selected through a rigorous evaluation process.
Focus on critical infrastructure enhances national security and operational readiness.

Sector Analysis

The construction of critical infrastructure like microgrids falls within the broader construction and engineering services sector. This contract is significant as it addresses the growing need for resilient energy solutions, particularly in regions prone to natural disasters or with aging power grids. The market for microgrid development is expanding, driven by government and private sector investments in energy security and sustainability. Comparable spending benchmarks for similar Department of Defense infrastructure projects would provide further context.

Small Business Impact

While the contract was awarded under full and open competition and there is no explicit small business set-aside mentioned, the prime contractor, Parsons Government Services Inc., may engage small businesses for subcontracting opportunities. The scale of this project suggests potential for significant subcontracting, which could benefit the small business ecosystem if actively pursued. Further analysis of the subcontracting plan would clarify the direct impact on small businesses.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army, potentially through the U.S. Army Corps of Engineers, which is responsible for military construction projects. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified services within the agreed budget. Transparency is generally maintained through contract award databases and reporting requirements, though specific oversight details are not provided.

Related Government Programs

Department of Defense Energy Resilience Programs
Army Corps of Engineers Construction Contracts
Puerto Rico Infrastructure Development Projects
Critical Infrastructure Protection Initiatives

Risk Flags

Potential for unforeseen site conditions in Puerto Rico impacting schedule and cost.
Supply chain vulnerabilities for specialized microgrid components.
Coordination complexity inherent in large construction projects.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.9 million to PARSONS GOVERNMENT SERVICES INC.. CONSTRUCTION OF LTC HERNAN G. PESQUERA ARC MICROGRID IN JUANA DIAZ, PUERTO RICO

Who is the contractor on this award?

The obligated recipient is PARSONS GOVERNMENT SERVICES 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 $16.9 million.

What is the period of performance?

Start: 2024-08-23. End: 2026-08-15.

What is the track record of Parsons Government Services Inc. in executing similar large-scale infrastructure projects, particularly microgrids or energy systems for the Department of Defense?

Parsons Government Services Inc. has a substantial track record in delivering complex engineering, construction, and technical services for government clients, including the Department of Defense. They have been involved in various infrastructure projects, encompassing facilities, energy systems, and environmental services. While specific details on their microgrid construction experience for DoD are not immediately available in this summary, their broad capabilities suggest they are well-equipped to handle such projects. A deeper dive into their past performance on similar contracts, including project scale, complexity, and client satisfaction, would provide a more definitive assessment of their suitability for this specific microgrid construction.

How does the awarded amount of $16.9 million compare to the estimated cost or budget for similar microgrid construction projects for federal facilities?

The awarded amount of $16.9 million for the construction of the ARC microgrid in Juana Diaz, Puerto Rico, needs to be benchmarked against similar projects to assess its value. Factors influencing cost include project size, complexity, location-specific challenges (like those in Puerto Rico), and the specific technologies employed. Without direct comparative data on similar DoD microgrid projects, it's challenging to definitively state if this is high or low. However, given the firm fixed-price nature and full and open competition with 8 bidders, it suggests the agency sought competitive pricing. Further analysis would involve comparing this contract's cost per megawatt or per square foot of facility supported against industry averages for resilient power solutions.

What are the primary risks associated with this specific microgrid construction project, and what mitigation strategies are in place?

Key risks for this microgrid construction project include potential delays due to unforeseen site conditions in Puerto Rico, supply chain disruptions for specialized components, and coordination challenges among various construction trades and stakeholders. Mitigation strategies likely include thorough site investigations prior to construction, robust project management with contingency planning, and strong contractual terms like the firm fixed-price agreement which incentivizes the contractor to manage risks effectively. The Department of Defense's experience with large construction projects and Parsons' established project management protocols are also critical risk mitigation factors.

How effective is the firm fixed-price contract type in ensuring cost control and value for money for this specific project, considering its complexity?

The firm fixed-price (FFP) contract type is generally effective in controlling costs and ensuring value for money, especially for projects with well-defined scopes, such as infrastructure construction. For this microgrid project, the FFP structure shifts the risk of cost overruns to the contractor, Parsons Government Services Inc., incentivizing them to manage resources efficiently and adhere to the budget. This provides the Department of Defense with cost certainty. However, the effectiveness relies heavily on the accuracy of the initial scope definition and cost estimation. If unforeseen complexities arise that were not reasonably foreseeable, the FFP could lead to disputes or impact the contractor's willingness to absorb unexpected costs, potentially affecting project quality or schedule if not managed carefully.

What is the historical spending pattern for microgrid or energy resilience projects within the Department of Defense, and how does this contract fit into that trend?

The Department of Defense has been increasingly investing in energy resilience and microgrid projects across its installations globally. This trend is driven by a strategic imperative to ensure mission assurance, reduce reliance on vulnerable external grids, and enhance operational readiness, particularly in locations susceptible to natural disasters or cyber threats. Historical spending in this area has shown a steady increase over the past decade. This $16.9 million contract for the ARC microgrid in Puerto Rico aligns with this broader trend of prioritizing and funding critical infrastructure upgrades for enhanced energy security and operational continuity.

Industry Classification

NAICS: Construction › Utility System Construction › Power and Communication Line and Related Structures 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: W912QR24R0025

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Parsons Corporation

Address: 5875 TRINITY PKWY STE 230, CENTREVILLE, VA, 20120

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

Financial Breakdown

Contract Ceiling: $19,656,577

Exercised Options: $16,915,407

Current Obligation: $16,915,407

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline