VA awards $20M for solar PV system, exceeding initial estimates by over $26M

Contract Overview

Contract Amount: $20,065,847 ($20.1M)

Contractor: Hicaps Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2014-09-29

End Date: 2016-10-25

Contract Duration: 757 days

Daily Burn Rate: $26.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ''IGF::OT::IGF'' SOLAR PV SYSTEM FOR THE NORTH LAS VEGAS VAMC IN NORTH LAS VEGAS, NV.

Place of Performance

Location: NORTH LAS VEGAS, CLARK County, NEVADA, 89086

State: Nevada Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $20.1 million to HICAPS INC for work described as: ''IGF::OT::IGF'' SOLAR PV SYSTEM FOR THE NORTH LAS VEGAS VAMC IN NORTH LAS VEGAS, NV. Key points: 1. The contract value significantly surpassed the initial estimate, indicating potential cost overruns or scope changes. 2. Competition was limited, with only one bid received, raising questions about price discovery and potential for higher costs. 3. The fixed-price contract type offers some cost certainty, but the initial estimate discrepancy warrants further scrutiny. 4. The project aims to enhance energy resilience and sustainability at the North Las Vegas VA Medical Center. 5. The contractor, HICAPS INC, has a track record with government contracts, but specific performance on similar projects needs review. 6. The project falls under construction services for power and communication lines, a specialized sector.

Value Assessment

Rating: questionable

The contract award of $20,065,847.01 is notably higher than the initial estimate of $2,650,700, a difference of over $17.4 million. This substantial variance suggests a significant underestimation of project costs or a considerable expansion of the project's scope. Benchmarking against similar solar PV installations for federal facilities is difficult without more detailed project specifications, but such a large deviation from the initial estimate is a red flag for value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which is an unusual designation. While it implies an initial intent for open competition, the exclusion of sources and the receipt of only one bid suggest that the competition was effectively limited. This lack of robust competition may have contributed to the final award price being significantly higher than the initial estimate.

Taxpayer Impact: The limited competition means taxpayers may not have benefited from the most competitive pricing available, potentially leading to a higher overall expenditure for this project.

Public Impact

Veterans receiving care at the North Las Vegas VAMC will benefit from improved facility resilience and potentially lower long-term energy costs. The project delivers a solar photovoltaic system, contributing to renewable energy generation and environmental sustainability goals. The geographic impact is localized to North Las Vegas, Nevada, directly serving the VA facility and its immediate community. The project likely involved a construction workforce, contributing to local employment opportunities in skilled trades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost overrun compared to initial estimates.
Limited competition with only one bid received.
Unclear rationale for excluding other potential sources in the competition phase.
Potential for inflated pricing due to lack of competitive pressure.

Positive Signals

Project aims to improve energy infrastructure for a critical federal facility.
Fixed-price contract type provides some cost predictability once awarded.
Contribution to renewable energy goals.

Sector Analysis

The contract falls within the construction sector, specifically focusing on renewable energy infrastructure. The market for solar PV installations for federal agencies is growing as agencies pursue sustainability goals and energy independence. Comparable spending benchmarks are difficult to establish without specific project details, but the scale of this project suggests a significant investment in on-site power generation.

Small Business Impact

There is no indication that this contract included a small business set-aside. The sole bid received came from HICAPS INC, and further analysis would be needed to determine if they are a small business. The lack of set-aside and limited competition means potential subcontracting opportunities for small businesses in the construction and solar installation fields may not have been maximized.

Oversight & Accountability

The contract is subject to oversight by the Department of Veterans Affairs, including its Office of Inspector General. The fixed-price nature of the contract provides a degree of accountability for the contractor's performance within the agreed-upon scope and price. Transparency regarding the reasons for excluding sources and the evaluation of the single bid would enhance oversight.

Related Government Programs

VA Energy Infrastructure Projects
Federal Renewable Energy Contracts
Department of Veterans Affairs Construction Contracts
Solar Power System Procurement

Risk Flags

Significant Cost Variance
Limited Competition
Potential for Underestimation
Unclear Competition Rationale

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $20.1 million to HICAPS INC. ''IGF::OT::IGF'' SOLAR PV SYSTEM FOR THE NORTH LAS VEGAS VAMC IN NORTH LAS VEGAS, NV.

Who is the contractor on this award?

The obligated recipient is HICAPS INC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $20.1 million.

What is the period of performance?

Start: 2014-09-29. End: 2016-10-25.

What was the specific reason for the significant discrepancy between the initial estimate and the final award amount?

The substantial difference between the initial estimate ($2,650,700) and the final award ($20,065,847.01) for the SOLAR PV SYSTEM project warrants detailed investigation. Potential reasons include a gross underestimation of project complexity and material costs in the initial estimate, significant scope creep during the procurement process, or unforeseen market conditions affecting material and labor prices. The contracting agency, Department of Veterans Affairs, should provide a clear justification for this variance. Without this explanation, it raises concerns about the accuracy of the agency's initial budgeting and planning processes for such projects.

What led to only one bid being submitted for this contract?

The fact that only one bid was received for the SOLAR PV SYSTEM contract, despite being advertised under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' is a critical issue. Possible explanations include overly restrictive technical specifications that only one firm could meet, a lack of market research to ensure sufficient competition, unrealistic timelines or requirements, or the exclusion of qualified sources without adequate justification. The VA's procurement process should aim to foster robust competition to ensure fair pricing and access to the best available solutions. The limited competition here suggests potential flaws in the solicitation strategy.

How does HICAPS INC's past performance on similar projects compare to the requirements of this contract?

Assessing HICAPS INC's past performance is crucial for understanding the risk associated with this $20 million solar PV system contract. Information regarding their experience with large-scale solar installations, particularly for federal agencies or similar complex environments, would be necessary. Key performance indicators such as on-time completion, adherence to budget (especially on fixed-price contracts), quality of work, and client satisfaction on previous projects should be reviewed. Without this data, it's difficult to definitively assess their capability to successfully execute this project, especially given the significant cost difference from the initial estimate.

What are the potential long-term cost savings or benefits anticipated from this solar PV system for the North Las Vegas VAMC?

The primary anticipated benefit of the solar PV system is the generation of renewable energy, which can lead to long-term cost savings on electricity bills for the North Las Vegas VAMC. Additionally, it enhances the facility's energy resilience by providing a backup power source, reducing reliance on the grid, and potentially mitigating disruptions during outages. The system also contributes to the VA's broader sustainability goals and reduces the facility's carbon footprint. Quantifying these savings requires detailed analysis of projected energy generation, current utility rates, and maintenance costs over the system's lifespan.

What is the typical cost range for similar solar PV system installations for federal facilities of this size?

Determining a typical cost range for similar solar PV system installations is complex and depends heavily on project specifics like system size (kW/MW), technology used, site conditions, and integration requirements. However, the initial estimate of approximately $2.65 million for a project that ultimately awarded at over $20 million suggests a significant underestimation or a vastly different scope. Industry benchmarks for large-scale commercial or federal solar installations can range from $1.50 to $3.00 per watt, depending on these factors. A $20 million project could potentially support a system of 6.7 MW to 13.3 MW, which would be a substantial installation.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: TWO STEP

Solicitation ID: VA701-14-R-0179

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 600 N REGIONAL RD, GREENSBORO, NC, 27409

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Service Disabled Veteran Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $20,065,847

Exercised Options: $20,065,847

Current Obligation: $20,065,847

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline