Department of the Army awards $20.9M contract for commercial building construction, with a 5-year duration

Contract Overview

Contract Amount: $20,917,583 ($20.9M)

Contractor: Energy Systems Group LLC

Awarding Agency: Department of Defense

Start Date: 2006-06-03

End Date: 2020-06-30

Contract Duration: 5,141 days

Daily Burn Rate: $4.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: 200608!601430!2100!W912DY!USA ENGINEER DIV HUNTSVILLE !DACA8797D0073 !A!N! !N!0001 !02 !20060603!20060930!127762412!009140559!001382555!N!CHEVRON U S A INC !345 CALIFORNIA ST, 18TH FL!SAN FRANCISCO !CA!94104!84000!099!26!WARREN !MACOMB !MICHIGAN !+000000146731!N!N!000000000000!H935!OTHER QUALITY CNTL SVCS/SERVICE & TRADE EQUIPMENT !S1 !SERVICES !000 !NOT DISCERNABLE !561210!E! !5!B!M!D!A! !99990909!B! ! !N!Z!A!U!J!2!002!A! !Z!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: ALGONAC, SAINT CLAIR County, MICHIGAN, 48001

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $20.9 million to ENERGY SYSTEMS GROUP LLC for work described as: 200608!601430!2100!W912DY!USA ENGINEER DIV HUNTSVILLE !DACA8797D0073 !A!N! !N!0001 !02 !20060603!20060930!127762412!009140559!001382555!N!CHEVRON U S A INC !345 CALIFORNIA ST, 18TH FL!SAN FRANCISCO !CA!94104!84000!099!26!WARREN !MACO… Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract's value of $20.9M falls within a moderate spending range for construction projects. 3. The project is located in Michigan, potentially impacting the local construction workforce and economy. 4. The North American Industry Classification System (NAICS) code 236220 indicates a focus on commercial and institutional building construction. 5. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 6. The duration of over 5 years suggests a significant and potentially complex construction project.

Value Assessment

Rating: good

The contract value of $20.9 million for commercial and institutional building construction appears reasonable given the project's duration of over 5 years. Without specific details on the scope of work, it's challenging to benchmark against identical contracts. However, the firm fixed-price nature suggests that the contractor has assumed the risk for cost overruns, which can be a positive indicator for the government if the project is well-defined. The number of bids received (2) is on the lower side for full and open competition, which might warrant a closer look at pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. However, with only two bids received, the level of competition might be considered moderate rather than robust. A higher number of bidders typically leads to more competitive pricing and a wider range of innovative solutions. The limited number of bidders could suggest specific market conditions, high barriers to entry for this type of project, or potentially a lack of widespread interest from qualified contractors.

Taxpayer Impact: While full and open competition is generally beneficial for taxpayers, the limited number of bidders (two) may have resulted in less aggressive pricing than if more companies had competed. This could mean taxpayers did not achieve the absolute lowest possible price.

Public Impact

The primary beneficiaries are likely the entities that will utilize the constructed commercial or institutional buildings. The contract delivers construction services for commercial and institutional buildings. The geographic impact is concentrated in Michigan, where the construction activities will take place. The project will likely have implications for the local construction workforce in Michigan, potentially creating jobs and economic activity.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (2) in a full and open competition could indicate potential market concentration or high barriers to entry.
The firm fixed-price contract type places cost overrun risk on the contractor, which could lead to quality compromises if not managed closely.
The specific nature of 'OTHER QUALITY CNTL SVCS/SERVICE & TRADE EQUIPMENT' is not detailed, making it difficult to assess the full scope and associated risks.

Positive Signals

Awarded under full and open competition, which is a standard and generally preferred method for government contracting.
The firm fixed-price contract type provides cost certainty for the government.
The contract has a defined start and end date, indicating a structured project timeline.

Sector Analysis

The construction sector is a significant part of the US economy, encompassing a wide range of activities from residential building to large-scale infrastructure projects. Commercial and institutional building construction, as indicated by NAICS code 236220, includes the erection of non-residential buildings such as office buildings, warehouses, and public facilities. Federal spending in this sector supports economic growth and provides essential facilities for government operations. Comparable spending benchmarks would depend heavily on the specific type, size, and location of the buildings being constructed.

Small Business Impact

There is no indication from the provided data that this contract included a small business set-aside. The contract was awarded to CHEVRON U S A INC, which is a large corporation, and the prime contractor is listed as ENERGY SYSTEMS GROUP LLC. Further investigation would be needed to determine if any subcontracting opportunities exist for small businesses within this project. Without specific subcontracting plans or goals, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant agency within the Department of the Army. The firm fixed-price nature of the contract implies that the government's primary oversight concern would be ensuring the contractor adheres to the contract's scope, schedule, and quality requirements. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance.

Related Government Programs

Military Construction
Facilities Maintenance and Repair
Architectural and Engineering Services
General Services Administration (GSA) Contracts

Risk Flags

Limited competition (2 bidders) for a full and open contract.
Ambiguity in the specific services covered by 'OTHER QUALITY CNTL SVCS/SERVICE & TRADE EQUIPMENT'.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.9 million to ENERGY SYSTEMS GROUP LLC. 200608!601430!2100!W912DY!USA ENGINEER DIV HUNTSVILLE !DACA8797D0073 !A!N! !N!0001 !02 !20060603!20060930!127762412!009140559!001382555!N!CHEVRON U S A INC !345 CALIFORNIA ST, 18TH FL!SAN FRANCISCO !CA!94104!84000!099!26!WARREN !MACOMB !MICHIGAN !+000000146731!N!N!000000000000!H935!OTHER QUALITY CNTL SVCS/SERVICE & TRADE EQUIPMENT !S1 !SERVICES !000 !NOT DISCERNABLE !561210!E! !5!B!M!D!A! !999

Who is the contractor on this award?

The obligated recipient is ENERGY SYSTEMS GROUP LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $20.9 million.

What is the period of performance?

Start: 2006-06-03. End: 2020-06-30.

What is the specific scope of work for this "OTHER QUALITY CNTL SVCS/SERVICE & TRADE EQUIPMENT" contract?

The provided data lists the Product Service Code (PSC) as H935, which corresponds to 'OTHER QUALITY CONTROL SERVICES'. However, the description also includes 'SERVICE & TRADE EQUIPMENT'. This suggests the contract may involve quality assurance services related to construction or equipment, or potentially the provision and servicing of trade equipment used in construction. Without more detailed contract documentation, the precise deliverables and services are not fully discernible. This ambiguity makes it difficult to assess the value for money or compare it accurately to other contracts. Further clarification from the awarding agency would be necessary to understand the full scope and ensure appropriate oversight.

How does the pricing of this contract compare to similar construction projects awarded by the Department of the Army?

Benchmarking the pricing of this $20.9 million contract requires detailed comparison with similar projects. Key factors for comparison include the type of construction (commercial/institutional), geographic location (Michigan), project duration (over 5 years), and specific scope of work. Given the limited information on the 'OTHER QUALITY CNTL SVCS/SERVICE & TRADE EQUIPMENT' aspect, a direct price-per-square-foot or price-per-unit-of-service comparison is challenging. However, the firm fixed-price nature suggests the government sought cost certainty. The fact that only two bids were received in a full and open competition might indicate that the pricing, while competitive between the two, may not reflect the lowest possible market price achievable with broader competition.

What are the potential risks associated with a firm fixed-price contract of this duration?

Firm fixed-price (FFP) contracts are designed to provide cost certainty to the government by shifting cost overrun risks to the contractor. For a contract of this duration (over 5 years) and value ($20.9M), potential risks include the contractor cutting corners on quality to maintain profitability if costs escalate unexpectedly, or the contractor becoming inflexible to necessary changes in scope due to the fixed-price nature. The government must ensure robust quality assurance and oversight mechanisms are in place to mitigate these risks. Additionally, if the initial cost estimate was inaccurate, the government might end up paying a premium if the contractor's actual costs are significantly lower than anticipated.

What is the track record of ENERGY SYSTEMS GROUP LLC as a federal contractor?

Information regarding the specific track record of ENERGY SYSTEMS GROUP LLC as a federal contractor is not detailed in the provided data snippet. To assess their performance, one would need to consult federal procurement databases (like FPDS or SAM.gov) to review their past contract awards, performance ratings, and any history of disputes or terminations. A thorough review would examine their experience with similar types of construction projects, their on-time and on-budget performance, and their compliance history. Without this external data, it's impossible to evaluate their reliability and past performance effectively for this specific contract.

How has federal spending on commercial and institutional building construction evolved over the past decade?

Federal spending on commercial and institutional building construction has fluctuated over the past decade, influenced by factors such as economic conditions, national security priorities, and infrastructure investment initiatives. While this specific contract represents a single data point, broader trends can be observed through aggregated federal spending data. Periods of increased infrastructure spending or specific agency needs (e.g., military base construction, upgrades to federal buildings) tend to drive up outlays in this category. Conversely, budget constraints or shifts in priorities can lead to decreased spending. Analyzing historical data from sources like the Congressional Budget Office or federal procurement databases would provide a clearer picture of these evolving spending patterns.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › OTHER QUALITY, TEST, INSPECT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Centerpoint Energy, Inc.

Address: 4655 ROSEBUD LN, NEWBURGH, IN, 47630

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $20,917,583

Exercised Options: $20,917,583

Current Obligation: $20,917,583

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: DACA8797D0073

IDV Type: IDC

Timeline