DoD's $11.7M Industrial Building Construction contract awarded to M. A. Mortenson Company shows fair value
Contract Overview
Contract Amount: $11,698,001 ($11.7M)
Contractor: M. a. Mortenson Company
Awarding Agency: Department of Defense
Start Date: 2006-02-27
End Date: 2008-07-06
Contract Duration: 860 days
Daily Burn Rate: $13.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Construction
Place of Performance
Location: NORFOLK, NORFOLK (CITY) County, VIRGINIA, 23511
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $11.7 million to M. A. MORTENSON COMPANY for work described as: Key points: 1. The contract's final value was within the expected range, indicating reasonable cost management. 2. Competition was robust, suggesting effective price discovery and potential for taxpayer savings. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. Performance occurred over a two-year period, allowing for timely project completion. 5. This contract falls within the broader Defense sector, supporting military infrastructure. 6. The award was made by the Department of the Navy, a major component of the DoD.
Value Assessment
Rating: fair
The final award amount of $11.7 million appears reasonable for industrial building construction of this scale. Benchmarking against similar Department of Defense construction projects of comparable size and complexity would provide a more definitive assessment of value for money. However, the firm fixed-price nature of the contract suggests that the contractor assumed the primary risk for cost overruns, which is generally favorable for the government.
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 offers. The presence of two bidders suggests a moderate level of competition for this specific project. While more bidders could potentially drive prices lower, full and open competition is the preferred method for ensuring a fair and transparent process and maximizing the pool of potential offerors.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and innovative solutions.
Public Impact
The primary beneficiaries are the Department of the Navy and the broader Department of Defense, gaining essential industrial facilities. The contract delivered the construction of an industrial building, crucial for military operations and maintenance. The project's geographic impact is localized to Virginia, where the facility was constructed. The contract likely supported construction jobs and related industries in the region.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if the fixed-price contract did not adequately account for all project contingencies.
- Risk of schedule delays impacting operational readiness if construction faced unforeseen challenges.
Positive Signals
- The firm fixed-price contract structure shifts cost risk to the contractor.
- Awarded under full and open competition, maximizing potential for competitive pricing.
- Contract duration of approximately two years allowed for focused execution.
Sector Analysis
This contract falls within the construction sector, specifically industrial building construction, which is a critical component of infrastructure development for government agencies. The Department of Defense, as a major federal entity, frequently engages in construction projects to maintain and expand its operational facilities. Spending in this area is often driven by modernization efforts, capacity expansion, or replacement of aging infrastructure. Comparable spending benchmarks would typically be derived from other large-scale industrial or military facility construction contracts.
Small Business Impact
There is no indication that this contract included small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a large prime contractor like M. A. Mortenson Company might imply a focus on larger-scale construction capabilities rather than specific small business engagement strategies. Further analysis would be needed to determine if any subcontracting plans were mandated or voluntarily pursued.
Oversight & Accountability
The Department of the Navy, as the awarding agency, would have oversight responsibilities for this contract. Standard procurement regulations and contract management practices would apply. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would typically cover allegations of fraud, waste, or abuse related to the contract.
Related Government Programs
- Military Construction
- Naval Facilities Engineering Command Contracts
- Department of Defense Infrastructure Projects
Risk Flags
- Potential for cost escalation if initial estimates were inaccurate.
- Risk of schedule delays impacting operational readiness.
- Adequacy of competition level for optimal price discovery.
Tags
defense, department-of-defense, department-of-the-navy, construction, industrial-building, firm-fixed-price, full-and-open-competition, virginia, large-contract, infrastructure
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $11.7 million to M. A. MORTENSON COMPANY. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is M. A. MORTENSON COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $11.7 million.
What is the period of performance?
Start: 2006-02-27. End: 2008-07-06.
What was the initial award value compared to the final contract value?
The provided data indicates an award amount ('a') of $11,698,001. The duration of the contract (860 days) and the start/end dates (2006-02-27 to 2008-07-06) suggest this was the primary value. Without explicit modification data, it's assumed the final value closely aligns with the initial award, indicating minimal changes or change orders that significantly altered the contract's total cost. This stability in value is often a positive sign for contract management, especially under a firm fixed-price structure.
How does the number of bidders compare to typical construction contracts of this size?
The contract had two bidders. For large-scale industrial construction projects, especially those awarded by major federal agencies like the Department of the Navy, two bidders represent a moderate level of competition. While more bidders can sometimes lead to lower prices, two bidders still indicate that the opportunity was known and that at least two firms were capable and interested in undertaking the work. The level of competition can be influenced by factors such as project complexity, geographic location, and the specific requirements outlined in the solicitation.
What are the potential risks associated with a firm fixed-price contract for industrial construction?
A firm fixed-price (FFP) contract places the primary responsibility for cost overruns on the contractor. While generally favorable for the government, risks can arise if the initial price estimate was inaccurate due to unforeseen site conditions, material price fluctuations, or scope creep that wasn't properly managed through change orders. For industrial construction, complex engineering requirements or specialized materials could introduce higher risks. However, the FFP structure incentivizes the contractor to manage costs efficiently and complete the project within budget.
What is the significance of this contract being awarded by the Department of the Navy?
The Department of the Navy (DoN) is a major component of the Department of Defense (DoD) responsible for maintaining naval forces and facilities. Awarding this contract signifies the DoN's need for specific industrial building infrastructure to support its operations, which could include maintenance, repair, manufacturing, or logistical functions. Contracts awarded by the DoN are typically subject to rigorous procurement processes and oversight to ensure they meet military requirements and taxpayer value standards.
How does the contract's duration (860 days) impact its assessment?
A duration of 860 days, approximately 2.35 years, is a substantial period for a construction project. This duration suggests a project of significant scope and complexity, requiring extensive planning, execution, and oversight. For a firm fixed-price contract, a longer duration necessitates careful initial pricing to account for potential market changes (e.g., material costs) over the project lifecycle. It also provides a longer window for the contractor to manage resources and potentially achieve efficiencies, but conversely, increases the exposure to risks like schedule delays.
What does the 'Industrial Building Construction' designation imply about the project's purpose?
The 'Industrial Building Construction' designation indicates that the facility constructed was intended for industrial purposes. This could encompass a wide range of activities, such as manufacturing, assembly, maintenance, repair, storage of industrial equipment, or logistical support operations. These types of buildings often require specific structural designs, utility provisions (e.g., heavy power, specialized ventilation), and safety features tailored to industrial processes, distinguishing them from administrative or residential structures.
Industry Classification
NAICS: Construction › Nonresidential Building Construction › Industrial Building Construction
Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: M. a. Mortenson Companies, Inc. (UEI: 130731797)
Address: 700 MEADOW LANE NORTH, MINNEAPOLIS, MN, 90
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N6247201D0077
IDV Type: IDC
Timeline
Start Date: 2006-02-27
Current End Date: 2008-07-06
Potential End Date: 2008-07-06 00:00:00
Last Modified: 2009-09-19
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