State Department awards $10.1M for switchgear, raising questions about competition and value

Contract Overview

Contract Amount: $10,145,555 ($10.1M)

Contractor: Pacarctic, LLC

Awarding Agency: Department of State

Start Date: 2024-06-05

End Date: 2026-04-30

Contract Duration: 694 days

Daily Burn Rate: $14.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PURCHASE AND INSTALLATION OF SWITCH GEARS

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20520

State: District of Columbia Government Spending

Plain-Language Summary

Department of State obligated $10.1 million to PACARCTIC, LLC for work described as: PURCHASE AND INSTALLATION OF SWITCH GEARS Key points: 1. The contract's value of over $10 million for switchgear suggests a significant infrastructure investment. 2. The 'NOT AVAILABLE FOR COMPETITION' designation warrants scrutiny regarding the justification for sole-source procurement. 3. The duration of the contract (694 days) indicates a medium-term project with ongoing service needs. 4. The firm-fixed-price structure aims to control costs, but the lack of competition may inflate the price. 5. The absence of small business set-aside flags potential missed opportunities for smaller contractors. 6. The contract's focus on facilities support services aligns with the State Department's operational needs.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source procurements for switchgear installation. The firm-fixed-price contract type suggests an attempt to cap costs, but the lack of competition means there's no direct market comparison to assess if the $10.1 million represents a fair price. Without competitive bids, it's difficult to determine if taxpayers are receiving optimal value for money. Further analysis of the specific requirements and the contractor's proposed costs would be needed for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' designation, indicating that a competitive bidding process was not utilized. The specific justification for this sole-source award is not provided in the data. Typically, sole-source awards are made when only one responsible source can provide the required supplies or services. The lack of competition means there were no other bidders, and therefore no direct price discovery through a bidding process.

Taxpayer Impact: The absence of competition for this $10.1 million contract means taxpayers may not benefit from the cost savings typically achieved through a competitive bidding process. This could result in a higher overall expenditure for the government.

Public Impact

The primary beneficiary of this contract is the Department of State, ensuring the functionality and reliability of its facilities. The services delivered include the purchase and installation of essential switchgear, critical for power distribution and management. The geographic impact is concentrated in the District of Columbia, where the State Department's facilities are located. The contract supports the operational infrastructure necessary for the State Department's diplomatic and administrative functions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
The sole-source justification needs thorough review to ensure it was appropriate and documented.
Without competitive bids, it's harder to verify if the chosen contractor offers the best technical solution at the most reasonable price.
The absence of small business participation could limit opportunities for smaller, specialized firms in this sector.

Positive Signals

The firm-fixed-price contract type provides cost certainty for the government, mitigating budget risks.
The award to PACARCTIC, LLC suggests they are perceived as capable of meeting the State Department's specific needs.
The contract duration allows for a structured and potentially efficient installation and integration process.
The focus on essential infrastructure like switchgear ensures the continued operational integrity of critical facilities.

Sector Analysis

The market for electrical switchgear and related services is a significant segment within the broader facilities support and construction industries. This contract falls under the category of specialized electrical infrastructure, crucial for maintaining reliable power in large government facilities. Comparable spending benchmarks for similar large-scale switchgear installations in federal buildings can vary widely based on size, complexity, and specific technological requirements. The market typically involves a mix of large industrial suppliers and specialized installation contractors.

Small Business Impact

The data indicates that this contract was not awarded as a small business set-aside, and there is no information suggesting subcontracting opportunities for small businesses. This means that the primary award went to PACARCTIC, LLC without specific provisions to ensure small business participation. Consequently, the contract may not contribute to the government's small business contracting goals, and the broader small business ecosystem may not directly benefit from this particular award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting officers and potentially its Office of Inspector General (OIG). The OIG is responsible for investigating fraud, waste, and abuse in the department's programs and operations. Transparency regarding the sole-source justification and the performance monitoring of PACARCTIC, LLC would be key accountability measures. The firm-fixed-price nature of the contract provides some level of cost accountability, but the lack of competition limits the government's ability to ensure the most cost-effective solution was chosen.

Related Government Programs

Federal Facilities Maintenance Contracts
Department of State Infrastructure Modernization
Electrical Power System Upgrades
Government Building Services
Sole-Source Procurement Justifications

Risk Flags

Sole-source award without clear justification
Potential for inflated pricing due to lack of competition
Limited transparency in contractor selection
Absence of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $10.1 million to PACARCTIC, LLC. PURCHASE AND INSTALLATION OF SWITCH GEARS

Who is the contractor on this award?

The obligated recipient is PACARCTIC, LLC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $10.1 million.

What is the period of performance?

Start: 2024-06-05. End: 2026-04-30.

What is the specific justification provided by the Department of State for awarding this contract on a sole-source basis to PACARCTIC, LLC?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. However, the specific justification document or rationale behind this determination is not included in the dataset. Typically, sole-source awards are justified under circumstances such as urgent and compelling needs, unique capabilities of a single contractor, or when only one source is capable of meeting the requirement. Without access to the official justification, it is impossible to definitively state why competitive bidding was bypassed for this $10.1 million switchgear purchase and installation. Further inquiry with the Department of State would be necessary to obtain this critical information and assess the appropriateness of the sole-source designation.

How does the $10.1 million contract value compare to similar switchgear purchase and installation contracts awarded by the federal government?

Directly comparing the $10.1 million value of this sole-source contract for switchgear purchase and installation to similar federal contracts is challenging without more specific details about the scope of work, the type and capacity of the switchgear, and the complexity of the installation. However, for large federal facilities, multi-million dollar contracts for electrical infrastructure upgrades, including switchgear, are not uncommon. The key concern here is the lack of competition. If this were a competitively awarded contract, we could benchmark the price against multiple bids. As a sole-source award, the $10.1 million figure lacks a direct market validation, making it difficult to ascertain if it represents a fair market price or if it is potentially inflated due to the absence of competitive pressure.

What are the potential risks associated with awarding a contract of this magnitude on a sole-source basis?

Awarding a contract of $10.1 million on a sole-source basis carries several potential risks. Firstly, there is a significant risk of overpayment, as the government does not benefit from the price reductions typically achieved through competitive bidding. Without competing offers, the selected contractor may not have the same incentive to offer the most cost-effective solution. Secondly, there's a risk that the government may not be receiving the best available technology or the most qualified contractor, as the selection process bypassed a comparative evaluation of multiple potential sources. Thirdly, sole-source awards can raise concerns about fairness and transparency in government contracting, potentially leading to perceptions of favoritism or a lack of due diligence. Finally, it limits opportunities for other qualified businesses to compete for government work, potentially hindering market innovation and broader economic participation.

What is the track record of PACARCTIC, LLC in performing similar federal contracts, particularly those involving electrical infrastructure or facilities support?

Information regarding PACARCTIC, LLC's specific track record in performing federal contracts, especially those related to electrical infrastructure or facilities support, is not detailed in the provided data. To assess their performance history, one would typically need to consult databases like the Federal Procurement Data System (FPDS) or the Contractor Performance Assessment Reporting System (CPARS). These systems would offer insights into past contract awards, performance ratings, and any history of disputes or issues. Without this information, it is difficult to evaluate PACARCTIC, LLC's experience and reliability for a contract of this nature and magnitude. A thorough review of their past performance would be crucial for understanding their capabilities and ensuring successful project execution.

What are the implications of the firm-fixed-price contract type for cost control and contractor performance in this specific scenario?

The firm-fixed-price (FFP) contract type is generally favored for its cost control benefits, as it shifts the risk of cost overruns to the contractor. For this $10.1 million switchgear contract, the FFP structure means PACARCTIC, LLC is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently. However, the effectiveness of FFP in ensuring value is diminished when the contract is awarded sole-source. While the government has price certainty, it lacks assurance that the fixed price itself is competitive or represents the best value. The contractor's performance is still subject to oversight, but the primary risk mitigation related to price is inherent in the competitive process, which was absent here.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: ELECTRIC WIRE, POWER DISTRIB EQPT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3800 CENTERPOINT DR STE 502, ANCHORAGE, AK, 99503

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, DoT Certified Disadvantaged Business Enterprise, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $10,145,555

Exercised Options: $10,145,555

Current Obligation: $10,145,555

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 19AQMM18D0117

IDV Type: IDC

Timeline