SUNDT CONSTRUCTION awarded $32M for Arizona site prep, exceeding initial estimates by $3.8M

Contract Overview

Contract Amount: $32,052,763 ($32.1M)

Contractor: Sundt Construction, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-09-24

End Date: 2013-01-01

Contract Duration: 830 days

Daily Burn Rate: $38.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DAGIR

Place of Performance

Location: TEMPE, MARICOPA County, ARIZONA, 85282

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $32.1 million to SUNDT CONSTRUCTION, INC. for work described as: DAGIR Key points: 1. Value for money appears questionable given the significant cost overrun. 2. Competition dynamics were favorable with three bidders, suggesting a competitive process. 3. Risk indicators include cost growth and potential for schedule delays. 4. Performance context shows a large-scale construction project with a multi-year duration. 5. Sector positioning is within heavy civil construction for defense infrastructure.

Value Assessment

Rating: questionable

The contract's final value of $32.05M significantly exceeded the initial award amount of $28.19M, representing a cost growth of approximately 13.8%. While the initial award was competitive, the subsequent increase raises concerns about initial cost estimation accuracy or unforeseen project complexities. Benchmarking against similar large-scale site preparation contracts for military installations would be necessary to fully assess if the final price reflects fair market value given the scope and duration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with three bids received. This indicates a healthy level of market interest and suggests that the initial bidding process likely resulted in competitive pricing. The presence of multiple bidders generally allows for price discovery and can lead to more favorable terms for the government.

Taxpayer Impact: The competitive bidding process for this contract likely ensured that taxpayer funds were used efficiently at the time of award. However, the subsequent cost growth warrants scrutiny to understand if the competitive advantage was eroded by project changes or management issues.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel stationed in Arizona. The contract delivered essential site preparation services for military infrastructure. Geographic impact is concentrated in Arizona, supporting regional defense capabilities. Workforce implications include employment opportunities for construction labor and related trades in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost overrun from initial award to final value.
Potential for schedule slippage given the project's scale and duration.
Lack of detailed cost breakdown makes it difficult to assess specific drivers of the overrun.

Positive Signals

Awarded under full and open competition, indicating market engagement.
Multiple bidders participated, suggesting a competitive initial pricing environment.
Project supports critical defense infrastructure development.

Sector Analysis

This contract falls within the heavy civil construction sector, specifically focusing on site preparation for large-scale infrastructure. The market for such services is substantial, driven by government and private sector development projects. Comparable spending benchmarks would typically involve analyzing the cost per acre or per square foot for similar military base construction or expansion projects, considering factors like terrain and required earthwork.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary contractor, SUNDT CONSTRUCTION, INC., likely handled the majority of the work with its own resources or through larger subcontractors, potentially limiting direct opportunities for small businesses within this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Army's contracting and engineering divisions. Accountability measures would include contract performance reviews, milestone tracking, and financial audits. Transparency is generally maintained through contract award databases, though detailed justifications for cost overruns may not always be publicly accessible.

Related Government Programs

Military Construction
Base Realignment and Closure (BRAC) Projects
Federal Civil Engineering Contracts
Department of Defense Infrastructure Development

Risk Flags

Cost Overrun
Potential Schedule Delays
Large Contract Value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.1 million to SUNDT CONSTRUCTION, INC.. DAGIR

Who is the contractor on this award?

The obligated recipient is SUNDT CONSTRUCTION, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $32.1 million.

What is the period of performance?

Start: 2010-09-24. End: 2013-01-01.

What were the primary reasons for the $3.86 million cost overrun on this site preparation contract?

The provided data indicates a significant cost overrun of approximately $3.86 million (from $28.19M to $32.05M) on this contract awarded to SUNDT CONSTRUCTION, INC. While the exact reasons are not detailed in the summary data, common causes for such overruns in large construction projects include unforeseen site conditions (e.g., unexpected soil issues, buried utilities, environmental remediation needs), changes in project scope or design requested by the government, inflation impacting material and labor costs over the contract's duration, or contractor-related issues such as inefficiencies or disputes. A thorough review of contract modification history, change orders, and project management documentation would be necessary to pinpoint the specific drivers of this cost increase.

How does the final cost of $32.05 million compare to industry benchmarks for similar site preparation projects?

Benchmarking the final cost of $32.05 million requires detailed comparison with similar projects, considering factors like geographic location, specific site conditions, scope of work (e.g., grading, excavation, utility installation), and contract type. Without more granular data on the project's specifics and comparable market rates at the time of completion, a precise benchmark is difficult. However, the 13.8% cost growth over the initial award suggests potential inefficiencies or underestimation. Industry averages for cost growth in large federal construction projects can vary, but significant overruns often signal issues in initial planning, risk assessment, or project execution. Further analysis would involve comparing cost per acre or cost per square foot against similar military or large-scale civil engineering projects in the Southwest region.

What was the track record of SUNDT CONSTRUCTION, INC. with the Department of Defense prior to this award?

SUNDT CONSTRUCTION, INC. has a history of performing work for the Department of Defense and other federal agencies. While this specific contract data doesn't detail their prior performance record, the company is a well-established construction firm with experience in large-scale projects, including military facilities. Assessing their track record would involve reviewing past contract performance evaluations (e.g., CPARS reports), any history of disputes or litigation, and their success rate on similar federal contracts. A positive performance history generally indicates reliability and capability, though even experienced contractors can encounter challenges on complex projects.

What are the potential implications of this contract's cost growth for future Department of the Army construction projects?

The significant cost growth observed in this $32.05 million site preparation contract could have several implications for future Department of the Army construction projects. Firstly, it may prompt a review of the Army's cost estimation processes and risk assessment methodologies to prevent similar underestimations or unforeseen cost escalations. Secondly, it could lead to increased scrutiny of contractor performance and change order justifications. Agencies might also adjust their budgeting strategies to include larger contingency funds for projects with similar complexity or duration. Furthermore, lessons learned from this project's cost overrun could inform the development of more robust contract clauses related to cost control and performance incentives.

How did the competition level (3 bidders) influence the initial pricing and overall value of this contract?

The fact that this contract received three bids under full and open competition suggests a reasonably competitive initial pricing environment. With multiple firms vying for the award, the government likely benefited from competitive proposals, potentially driving down the initial price compared to a sole-source or limited competition scenario. This level of competition generally enhances price discovery and increases the likelihood that the initial award represents fair market value at that point in time. However, the subsequent cost overrun indicates that factors beyond the initial competitive pricing, such as scope changes or unforeseen conditions, ultimately impacted the total value delivered to the government.

Industry Classification

NAICS: Construction › Other Specialty Trade Contractors › Site Preparation Contractors

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCT NONBUILDING FACILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: W9126G08R0205

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Sundt Companies Inc (UEI: 073354982)

Address: 2620 S 55TH ST, TEMPE, AZ, 04

Business Categories: Category Business, Not Designated a Small Business, Subchapter S Corporation

Financial Breakdown

Contract Ceiling: $32,052,763

Exercised Options: $32,052,763

Current Obligation: $32,052,763

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W9126G09D0004

IDV Type: IDC

Timeline