DoD's $35.5M Construction Contract Awarded to TOLTEST, INC. for Building Projects
Contract Overview
Contract Amount: $35,464,878 ($35.5M)
Contractor: Toltest, Inc.
Awarding Agency: Department of Defense
Start Date: 2006-09-29
End Date: 2009-06-30
Contract Duration: 1,005 days
Daily Burn Rate: $35.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 20
Pricing Type: COST PLUS FIXED FEE
Sector: Construction
Plain-Language Summary
Department of Defense obligated $35.5 million to TOLTEST, INC. for work described as: Key points: 1. Contract value represents a significant investment in infrastructure development. 2. The award was made under full and open competition, suggesting a competitive bidding process. 3. The contract duration of 1005 days indicates a substantial, long-term project. 4. The 'DO' award code suggests a priority rating, potentially impacting delivery timelines. 5. The use of a Cost Plus Fixed Fee (CPFF) pricing structure requires careful monitoring of costs. 6. The absence of small business set-aside flags indicates a focus on larger prime contractors.
Value Assessment
Rating: fair
Benchmarking the value of this $35.5 million contract is challenging without specific project details or comparable construction projects within the Department of Defense. The Cost Plus Fixed Fee (CPFF) structure can sometimes lead to higher costs if not managed diligently, as the contractor is reimbursed for allowable costs plus a fixed fee. However, it also allows for flexibility in projects with uncertain scopes. Further analysis would require comparing the fixed fee percentage and the final cost against industry standards for similar construction projects.
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 20 bids suggests a healthy level of interest and competition for this project. A robust competitive environment generally leads to better price discovery and potentially more favorable terms for the government.
Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers, as it likely drove down the final price and encouraged bidders to offer their best value propositions.
Public Impact
The primary beneficiaries are the Department of Defense and its personnel, who will utilize the constructed facilities. The contract delivers essential construction services, likely involving the building or renovation of military facilities. The geographic impact is localized to the area where the construction takes place, serving the needs of a specific military installation. Workforce implications include job creation for construction workers, engineers, project managers, and support staff.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee (CPFF) contracts can incentivize cost overruns if not closely monitored, as the contractor's profit is fixed regardless of the final cost.
- The 'DO' award code indicates a priority rating, which could potentially lead to resource allocation challenges for other less-prioritized projects.
- The long contract duration (1005 days) increases the risk of unforeseen economic fluctuations or changes in project requirements.
- Lack of specific project details makes it difficult to assess the true value for money and potential for scope creep.
Positive Signals
- Awarded under full and open competition with 20 bidders, indicating a strong competitive environment that should drive value.
- The contract is for commercial and institutional building construction, a core capability for supporting military infrastructure.
- The fixed fee component in the CPFF structure provides a degree of cost certainty for the government once the fee is established.
Sector Analysis
The construction sector is a vital component of federal spending, supporting infrastructure development across various agencies. This contract falls within the broader category of commercial and institutional building construction, which includes a wide range of projects from office buildings to specialized facilities. Federal spending in this sector is often driven by modernization efforts, capacity expansion, and maintenance of existing assets. Comparable spending benchmarks would typically involve analyzing the cost per square foot or per project for similar types of federal construction.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the primary contract was awarded to a large business. There is no information provided regarding subcontracting plans or goals. The absence of small business participation could mean limited opportunities for smaller firms to engage in this specific project, though they might be involved further down the supply chain if TOLTEST, INC. utilizes subcontractors.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and the relevant program office within the Department of the Air Force. The Cost Plus Fixed Fee (CPFF) structure necessitates rigorous oversight of allowable costs and the contractor's performance to ensure adherence to the contract terms and prevent cost overruns. Transparency would be enhanced through regular reporting requirements and potentially through public contract databases, although specific project details might be limited due to security or proprietary concerns. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.
Related Government Programs
- Military Construction
- Base Realignment and Closure (BRAC) Projects
- Federal Building Construction
- Department of Defense Facilities Management
Risk Flags
- Cost Overrun Risk (CPFF structure)
- Resource Allocation Impact (DO rating)
- Long-Term Project Management Complexity
- Potential for Scope Creep
Tags
construction, department-of-defense, department-of-the-air-force, full-and-open-competition, cost-plus-fixed-fee, large-contract, defense-spending, infrastructure, priority-rated-order, commercial-building
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $35.5 million to TOLTEST, INC.. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is TOLTEST, 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 $35.5 million.
What is the period of performance?
Start: 2006-09-29. End: 2009-06-30.
What is the typical profit margin (fixed fee) for Cost Plus Fixed Fee (CPFF) construction contracts awarded by the Department of Defense?
The fixed fee in a CPFF contract represents the contractor's profit. For Department of Defense construction contracts, the fixed fee is typically negotiated and can vary based on the complexity, risk, and duration of the project. While specific percentages are not publicly disclosed for individual contracts, industry standards and historical data suggest that fixed fees for CPFF contracts often range from 5% to 15% of the estimated cost of the work. This fee is fixed, meaning it does not change even if the actual costs incurred by the contractor are higher or lower than estimated. Effective oversight is crucial to ensure the fee remains reasonable and reflects the level of risk and effort involved.
How does the duration of this contract (1005 days) compare to similar federal construction projects?
A contract duration of 1005 days, approximately 2.75 years, is substantial for a federal construction project. The length is indicative of a large-scale undertaking, such as the construction of a significant facility, a complex renovation, or a multi-phase project. Federal construction projects can range from a few months for smaller renovations to several years for major infrastructure or new building construction. Projects of this magnitude often involve extensive planning, site preparation, construction phases, and final inspections. The duration is influenced by factors like project scope, complexity, funding availability, environmental reviews, and potential weather delays. Without knowing the specific nature of the project, it's difficult to definitively benchmark, but 1005 days suggests a project of considerable size and importance.
What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for the government?
The primary risk for the government in a CPFF contract is the potential for cost escalation if the contractor does not manage costs efficiently. Although the fee is fixed, the contractor is reimbursed for all allowable costs. If costs are higher than anticipated, the total contract price (costs + fixed fee) will be higher, increasing the government's expenditure. This structure can reduce the incentive for the contractor to control costs aggressively, as their profit margin is not directly tied to cost savings. Therefore, robust government oversight, detailed cost tracking, and clear definition of allowable costs are critical to mitigate this risk and ensure the project is completed within a reasonable budget.
What does the 'DO' award code signify for this contract?
The 'DO' award code is part of the Defense Priorities and Allocations System (DPAS). A 'DO' rating indicates that the contract is considered a high-priority defense order. This means that TOLTEST, INC. is authorized to request materials, equipment, and services necessary for the contract's performance from their suppliers on a priority basis. It also obligates suppliers to accept and fulfill these rated orders ahead of unrated orders. For the government, this ensures that critical defense-related projects receive the necessary resources in a timely manner, potentially accelerating project completion. However, it can also divert resources from other, lower-priority projects.
How does the number of bidders (20) impact the government's negotiating position and potential cost savings?
Having 20 bidders for this contract is a strong indicator of robust competition. A larger number of bids generally enhances the government's negotiating position. It provides a wider range of price and technical proposals to evaluate, increasing the likelihood of receiving competitive pricing. With many interested parties, the government can more confidently identify and select the offer that represents the best value. This competitive pressure incentivizes bidders to submit more attractive proposals, potentially leading to significant cost savings compared to a situation with fewer bidders where the incumbent or a small group of firms might have more pricing power.
Industry Classification
NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction
Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 20
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lakeshore Toltest Corporation (UEI: 962400151)
Address: 1480 FORD ST, MAUMEE, OH, 09
Business Categories: Category Business, Not Designated a Small Business
Parent Contract
Parent Award PIID: FA890306D8519
IDV Type: IDC
Timeline
Start Date: 2006-09-29
Current End Date: 2009-06-30
Potential End Date: 2009-06-30 00:00:00
Last Modified: 2013-11-06
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