Department of Defense awards $7.8M contract for VKF Switchgear to Siemens Industry Inc

Contract Overview

Contract Amount: $7,826,873 ($7.8M)

Contractor: Siemens Industry Inc

Awarding Agency: Department of Defense

Start Date: 2025-12-23

End Date: 2027-09-05

Contract Duration: 621 days

Daily Burn Rate: $12.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: VKF SWITCHGEAR (REPLACE 6.9 KV SWITCHGEAR-VKF, FAC, 651)

Place of Performance

Location: ARNOLD AFB, COFFEE County, TENNESSEE, 37389

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $7.8 million to SIEMENS INDUSTRY INC for work described as: VKF SWITCHGEAR (REPLACE 6.9 KV SWITCHGEAR-VKF, FAC, 651) Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. The contract duration of 621 days suggests a significant project requiring specialized equipment. 3. Siemens Industry Inc. is a major player in the power distribution and specialty transformer manufacturing sector. 4. The fixed-price contract type aims to provide cost certainty for the government. 5. The absence of small business participation warrants further investigation into subcontracting opportunities. 6. This award represents a specific need within the Air Force's operational infrastructure.

Value Assessment

Rating: fair

The contract value of $7.8 million for VKF switchgear appears to be within a reasonable range for specialized industrial equipment, though a direct comparison is difficult without more specific technical details. The firm fixed-price structure provides cost predictability. However, the lack of competition means there is no direct benchmark to assess if this price represents the best value achievable in a competitive market. Further analysis of the specific technical requirements and market pricing for similar switchgear would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Siemens Industry Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple offers and allows for price discovery through market forces. While sole-source awards can be justified for unique capabilities or urgent needs, they often result in higher prices compared to competitively bid contracts due to the absence of market pressure.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the most cost-effective solution. Without competitive bids, it is harder to ensure the government is obtaining the best possible price for this critical equipment.

Public Impact

The Department of the Air Force will benefit from the acquisition of essential VKF switchgear. This contract ensures the continued operational readiness and power distribution capabilities at a specific Air Force facility. The geographic impact is localized to the facility where the switchgear will be installed in Tennessee. The contract supports specialized manufacturing and potentially installation jobs within the electrical equipment sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value for taxpayers.
Lack of transparency in the justification for a sole-source award.
No indication of small business participation or subcontracting opportunities.

Positive Signals

Firm fixed-price contract provides cost certainty.
Siemens Industry Inc. is a reputable manufacturer in the power distribution sector.
Contract duration aligns with the expected lifecycle of such critical infrastructure components.

Sector Analysis

The contract falls within the Power, Distribution, and Specialty Transformer Manufacturing industry, a segment of the broader electrical equipment manufacturing sector. This industry is characterized by high technical specifications, significant capital investment, and often involves specialized components for critical infrastructure. Spending in this area is driven by the need for reliable power systems in military, industrial, and utility applications. Comparable spending benchmarks would typically involve other large-scale procurements of switchgear and related power distribution equipment for government or industrial clients.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there any immediate indication of subcontracting requirements for small businesses. The sole-source nature of the award further limits the potential for small business involvement. This could mean missed opportunities for small businesses to participate in the supply chain for critical defense infrastructure, potentially impacting the small business ecosystem in this specialized manufacturing area.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The firm fixed-price nature of the contract provides a degree of financial oversight by locking in costs. Transparency regarding the justification for the sole-source award and the specific technical requirements would be key areas for public and internal oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Infrastructure Modernization Programs
Air Force Facility Maintenance and Operations
Electrical Power Systems Procurement
Industrial Equipment Manufacturing Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
No small business participation indicated

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.8 million to SIEMENS INDUSTRY INC. VKF SWITCHGEAR (REPLACE 6.9 KV SWITCHGEAR-VKF, FAC, 651)

Who is the contractor on this award?

The obligated recipient is SIEMENS INDUSTRY INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $7.8 million.

What is the period of performance?

Start: 2025-12-23. End: 2027-09-05.

What is the specific technical justification for awarding this contract on a sole-source basis to Siemens Industry Inc.?

The provided data does not include the specific technical justification for the sole-source award. Typically, sole-source procurements are justified when a unique capability is required, only one vendor can meet the requirement, or in cases of urgent and compelling need where competition is not feasible. For this VKF switchgear, the justification would likely detail proprietary technology, unique compatibility requirements with existing Air Force infrastructure, or a critical and time-sensitive operational need that only Siemens could fulfill within the required timeframe. Without this documentation, it is difficult to fully assess the necessity of bypassing the competitive process.

How does the $7.8 million contract value compare to similar VKF switchgear procurements by the Department of Defense or other federal agencies?

Directly comparing the $7.8 million contract value for VKF switchgear is challenging without more specific technical details (e.g., voltage rating, capacity, specific features) and the exact quantity procured. However, based on the general nature of industrial switchgear for critical facilities, this value suggests a significant procurement. Federal procurement databases and market research reports for similar power distribution equipment can provide benchmarks. Given the sole-source nature, it's plausible that a competitively bid contract for equivalent equipment might have yielded a lower price. Further analysis would require identifying comparable contracts with detailed specifications and award amounts.

What are the potential risks associated with a sole-source award for critical infrastructure components like switchgear?

The primary risk of a sole-source award for critical infrastructure components like switchgear is the potential for inflated pricing due to the lack of competitive pressure. This can lead to a suboptimal use of taxpayer funds. Another risk is reduced innovation, as vendors may have less incentive to offer cutting-edge solutions or cost-saving alternatives when they are the only option. Furthermore, sole-source awards can create vendor lock-in, making future procurements or maintenance more expensive and less flexible. There's also a potential for reduced transparency in the procurement process, making it harder to verify the fairness and reasonableness of the award.

What is Siemens Industry Inc.'s track record with the Department of Defense for similar switchgear procurements?

Siemens Industry Inc. is a major global player in the electrical equipment and automation sector, and it is highly probable they have a substantial track record with the Department of Defense (DoD) and other federal agencies for supplying various types of switchgear and power distribution equipment. To assess their specific track record for VKF switchgear or comparable items, one would typically review historical contract awards in federal procurement databases (like SAM.gov or FPDS). This would reveal the volume, value, and performance history of their previous contracts with the DoD, including any reported issues or successes. Their established presence suggests a capacity to meet DoD requirements.

What are the implications of the contract duration (621 days) for the operational readiness of the Air Force facility?

A contract duration of 621 days, spanning approximately 20 months, indicates a substantial project involving the delivery and potential installation or integration of the VKF switchgear. This duration suggests that the equipment is not a simple off-the-shelf item but likely requires manufacturing, testing, and possibly complex integration into existing power systems at the Air Force facility. The extended timeline implies that the facility's power infrastructure may be undergoing significant upgrades or replacements. The operational readiness implications depend on whether this is a planned upgrade, a replacement for failing equipment, or a new installation, and whether temporary power solutions are in place during the transition period.

Industry Classification

NAICS: Manufacturing › Electrical Equipment Manufacturing › Power, Distribution, and Specialty Transformer Manufacturing

Product/Service Code: ELECTRIC WIRE, POWER DISTRIB EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA910125R0013

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1000 E DEERFIELD PKWY, BUFFALO GROVE, IL, 60089

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

Financial Breakdown

Contract Ceiling: $17,734,292

Exercised Options: $9,878,407

Current Obligation: $7,826,873

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NOT OBTAINED - WAIVED

Parent Contract

Parent Award PIID: FA910125DB007

IDV Type: IDC

Timeline