DoD awards $29.9M contract for Wolf Creek Powerplant generator transformer replacement

Contract Overview

Contract Amount: $29,876,694 ($29.9M)

Contractor: Yellowstone Electric CO

Awarding Agency: Department of Defense

Start Date: 2025-03-20

End Date: 2029-01-01

Contract Duration: 1,383 days

Daily Burn Rate: $21.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: WOLF CREEK POWERPLANT GENERATOR STEP-UP UNIT (GSU) TRANSFORMER REPLACEMENT PROJECT

Place of Performance

Location: JAMESTOWN, RUSSELL County, KENTUCKY, 42629

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to YELLOWSTONE ELECTRIC CO for work described as: WOLF CREEK POWERPLANT GENERATOR STEP-UP UNIT (GSU) TRANSFORMER REPLACEMENT PROJECT Key points: 1. Contract value appears reasonable given the specialized nature of power generation equipment. 2. Full and open competition suggests a competitive bidding process was utilized. 3. The contract duration of over 3 years indicates a significant project scope. 4. The fixed-price contract type shifts risk to the contractor. 5. This project supports critical energy infrastructure for the Department of Defense. 6. The award is for a single, high-value component replacement.

Value Assessment

Rating: good

The contract value of approximately $29.9 million for a generator step-up transformer replacement at a military powerplant is within a reasonable range for such specialized, high-capacity equipment. Benchmarking against similar large-scale power infrastructure projects for federal agencies suggests that this price reflects the complexity, engineering, and manufacturing involved. The firm fixed-price structure also provides cost certainty for the government, assuming the contractor can manage their own cost overruns.

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 two bids suggests a moderate level of competition for this specialized requirement. While two bidders is not extensive, it does provide a basis for price comparison and ensures that the award was not made without considering alternatives.

Taxpayer Impact: Full and open competition, even with two bidders, generally benefits taxpayers by encouraging competitive pricing and ensuring the government receives fair market value for specialized equipment.

Public Impact

The primary beneficiary is the Department of Defense, ensuring reliable power generation at the Wolf Creek Powerplant. The service delivered is the replacement of a critical generator step-up unit (GSU) transformer. The geographic impact is localized to the Wolf Creek Powerplant facility in Kentucky. The project will likely involve specialized manufacturing and installation labor, potentially supporting jobs in the electrical equipment manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during installation.
Reliance on a single contractor for a critical component replacement could pose supply chain risks.
The limited number of bidders (2) might indicate a niche market with less price pressure.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Full and open competition process allows for a broad range of potential suppliers.
The project addresses a critical infrastructure need, enhancing operational readiness.

Sector Analysis

The market for large power transformers, particularly those meeting stringent military specifications, is specialized and dominated by a few key manufacturers. This contract falls within the industrial manufacturing and defense infrastructure sectors. Comparable spending benchmarks for similar high-voltage transformer replacements in industrial or utility settings can range from tens to hundreds of millions of dollars, depending on capacity and complexity. The $29.9 million award appears to be within the expected range for a critical component of this nature.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false. Given the specialized and high-value nature of manufacturing and installing a large generator step-up transformer, it is unlikely that small businesses would be primary bidders or subcontractors for the main contract. However, the prime contractor may engage small businesses for ancillary services or components.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of the Army, falling under the purview of the Department of Defense. Oversight will likely be managed by contracting officers and program managers within the Army. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Power Generation Equipment Procurement
Defense Infrastructure Modernization
Critical Infrastructure Replacement Projects
Electrical Transformer Manufacturing

Risk Flags

Critical Infrastructure Replacement
Specialized Manufacturing Requirement
Long Project Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 million to YELLOWSTONE ELECTRIC CO. WOLF CREEK POWERPLANT GENERATOR STEP-UP UNIT (GSU) TRANSFORMER REPLACEMENT PROJECT

Who is the contractor on this award?

The obligated recipient is YELLOWSTONE ELECTRIC CO.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $29.9 million.

What is the period of performance?

Start: 2025-03-20. End: 2029-01-01.

What is the track record of YELLOWSTONE ELECTRIC CO in delivering similar large-scale transformer projects for the federal government?

Information regarding YELLOWSTONE ELECTRIC CO's specific track record with large-scale transformer projects for the federal government is not detailed in the provided data. A comprehensive review would require examining past performance evaluations, contract history, and any reported issues or successes on similar procurements. Federal procurement databases and contractor performance systems would be the primary sources for this analysis. Understanding their experience with projects of comparable size, complexity, and criticality is essential for assessing future performance risk.

How does the awarded price of $29.9 million compare to market rates for similar generator step-up transformers?

The awarded price of $29.9 million for a generator step-up unit (GSU) transformer replacement is difficult to benchmark precisely without detailed specifications of the transformer's capacity (MVA rating), voltage levels, cooling type, and specific environmental or operational requirements. However, for large-scale industrial or power generation applications, GSU transformers can range significantly in cost. Prices can easily reach into the millions, and for very high-capacity units or those with specialized features for military applications, costs can escalate. The $29.9 million figure appears to be within a plausible range for a critical, high-capacity unit, but a definitive comparison would necessitate access to detailed technical specifications and broader market data on comparable sales.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential delays in manufacturing or delivery of the specialized transformer, unforeseen challenges during installation and integration into the existing power grid, and potential cost overruns if the contractor's estimates prove inaccurate, despite the fixed-price nature. Mitigation strategies likely include robust contract oversight by the Department of the Army, clear performance milestones, liquidated damages clauses for delays, and thorough pre-award technical evaluations of the contractor's proposed solution and manufacturing plan. The firm fixed-price contract itself shifts significant cost risk to the contractor, incentivizing them to manage their expenses effectively.

What is the expected impact of this transformer replacement on the operational readiness and reliability of the Wolf Creek Powerplant?

The replacement of a generator step-up unit (GSU) transformer is critical for maintaining the operational readiness and reliability of the Wolf Creek Powerplant. The GSU transformer is essential for stepping up the voltage generated by the generator to a level suitable for transmission on the power grid. An aging or failing transformer poses a significant risk of power disruption, potential damage to other generation equipment, and extended outages. Replacing it with a new, reliable unit is expected to significantly enhance the plant's ability to consistently provide power, thereby bolstering the overall energy security and operational readiness of the facilities it serves.

How has federal spending on power generation equipment and infrastructure modernization evolved over the past five years?

Federal spending on power generation equipment and infrastructure modernization has generally seen consistent investment, particularly within the Department of Defense and other agencies responsible for critical infrastructure. While specific figures fluctuate annually based on project needs and budget allocations, there has been a sustained focus on upgrading aging facilities, enhancing energy resilience, and incorporating more efficient technologies. Spending in this category is often driven by the need to replace obsolete equipment, meet evolving energy demands, and ensure the security and reliability of vital government operations. Trends may also reflect broader national priorities related to energy independence and infrastructure resilience.

Industry Classification

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

Product/Service Code: INSTALLATION OF EQUIPMENT › INSTALLATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912P524R0004

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1919 4TH AVE N, BILLINGS, MT, 59101

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

Financial Breakdown

Contract Ceiling: $45,362,220

Exercised Options: $29,876,694

Current Obligation: $29,876,694

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline