DoD spent $13.6M on Iraq police station construction, raising value-for-money questions

Contract Overview

Contract Amount: $13,578,776 ($13.6M)

Contractor: Lakeshore Engineering Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-05-20

End Date: 2009-08-04

Contract Duration: 441 days

Daily Burn Rate: $30.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: COST PLUS FIXED FEE

Sector: Construction

Official Description: MULTIPLE POLICE STATIONS, IRAQ

Plain-Language Summary

Department of Defense obligated $13.6 million to LAKESHORE ENGINEERING SERVICES, INC. for work described as: MULTIPLE POLICE STATIONS, IRAQ Key points: 1. Contract awarded for construction services in a high-risk environment. 2. Limited information available on the specific value-for-money assessment. 3. Competition was full and open, suggesting potential for competitive pricing. 4. Contract duration of 441 days indicates a significant project scope. 5. Awarded as Cost Plus Fixed Fee, which can incentivize cost overruns. 6. No small business set-aside, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: questionable

The contract's value is difficult to assess without detailed cost breakdowns and comparisons to similar construction projects in Iraq during that period. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex projects, carries inherent risks of cost escalation if not managed rigorously. Benchmarking against market rates for construction in a post-conflict zone is challenging due to unique risk premiums and logistical complexities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were initially excluded. The presence of 6 bidders suggests a reasonable level of interest, which typically aids in price discovery. However, the 'exclusion of sources' clause warrants further investigation into why specific companies were not considered.

Taxpayer Impact: A competitive process, even with exclusions, generally benefits taxpayers by driving down prices compared to sole-source awards. The number of bidders provides some assurance that the government received multiple offers, potentially leading to a more favorable price.

Public Impact

Benefits the Department of Defense by providing essential infrastructure for police operations in Iraq. Services delivered include the construction of multiple police stations. Geographic impact is concentrated within Iraq, supporting security and stability efforts. Workforce implications include employment for construction labor and project management personnel, both local and potentially international.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type can lead to higher final costs if not closely monitored.
The 'exclusion of sources' in the competition method requires scrutiny to ensure fairness and optimal pricing.
Construction in a conflict zone presents inherent risks to project timelines and budgets.
Limited public data on performance metrics makes it hard to gauge project success.
The specific need for multiple police stations in Iraq could be further detailed.

Positive Signals

Full and open competition, even with exclusions, suggests an effort to solicit multiple bids.
The award to a single contractor implies a selection based on qualifications and price.
The project addresses a critical infrastructure need for security forces.
The contract duration of over a year indicates a substantial and potentially complex undertaking.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector. The global construction market is vast, with significant government spending allocated to infrastructure projects, particularly in defense and reconstruction efforts. Comparable spending benchmarks would involve analyzing other DoD construction contracts in similar operational environments, considering factors like security, logistics, and material costs.

Small Business Impact

The contract was not set aside for small businesses, and the data does not indicate any subcontracting plans specifically for small businesses. This suggests that larger firms were likely the primary participants and recipients of the contract value. The absence of small business involvement could limit opportunities for smaller, specialized construction companies in this particular project.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and inspection mechanisms. Accountability measures would involve contract performance reviews, financial audits, and potentially Inspector General investigations if issues arise. Transparency is often limited for contracts in operational zones, but reporting requirements would exist within the DoD.

Related Government Programs

DoD Construction Contracts
Reconstruction Projects in Iraq
Security Infrastructure Development
Global Construction Services

Risk Flags

Cost Plus Fixed Fee contract type
Competition excluded sources
Construction in a high-risk environment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.6 million to LAKESHORE ENGINEERING SERVICES, INC.. MULTIPLE POLICE STATIONS, IRAQ

Who is the contractor on this award?

The obligated recipient is LAKESHORE ENGINEERING SERVICES, 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 $13.6 million.

What is the period of performance?

Start: 2008-05-20. End: 2009-08-04.

What was the specific rationale for excluding certain sources from the 'Full and Open Competition'?

The provided data indicates 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This specific solicitation method suggests that while the competition was intended to be open, there were pre-defined reasons for not considering all potential offerors. These exclusions could stem from security clearances, specialized capabilities required for operating in Iraq, past performance issues with certain contractors, or specific government mandates. Without further documentation from the solicitation or award process, the precise reasons remain unclear. However, such exclusions can sometimes limit the breadth of competition and potentially impact the final price achieved, necessitating a thorough review of the justification for these exclusions to ensure taxpayer value.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other options for this type of project in terms of risk and cost?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or when there is significant uncertainty, such as in complex construction projects in challenging environments like Iraq. Under CPFF, the contractor is reimbursed for all allowable costs plus a fixed fee representing profit. This structure incentivizes the contractor to complete the work but can lead to cost overruns if the government does not maintain stringent oversight of allowable costs. Compared to Firm-Fixed-Price (FFP) contracts, CPFF shifts more cost risk to the government. However, FFP might not be suitable if unforeseen issues are highly probable. Other cost-reimbursement types, like Cost Plus Incentive Fee (CPIF), could offer better cost control by linking the fee to performance targets. For this project, the CPFF structure suggests a high degree of anticipated complexity or uncertainty, making robust government cost monitoring crucial.

What were the key performance indicators (KPIs) for this contract, and how was contractor performance measured?

The provided data does not specify the key performance indicators (KPIs) or the detailed methods used for measuring contractor performance for this contract. Typically, for construction projects of this nature, KPIs would include adherence to schedule, quality of workmanship, safety compliance, and budget management. Performance would likely be assessed through regular site inspections, progress reports submitted by the contractor, and potentially third-party quality assurance reviews. The contract type (CPFF) implies that performance would also influence the final fee, although the data does not detail this mechanism. Without specific KPIs and documented performance reviews, it is difficult to definitively assess the contractor's success in meeting project objectives and delivering value.

What is the historical spending trend for similar construction projects by the Department of Defense in Iraq?

Historical spending trends for similar construction projects by the Department of Defense in Iraq are generally characterized by high costs due to the inherent risks, logistical challenges, and security requirements of operating in a post-conflict zone. Projects often involve significant investment in infrastructure for military bases, security forces, and reconstruction efforts. Spending can fluctuate based on geopolitical conditions, troop presence, and the specific phases of stabilization and reconstruction. While specific aggregate data for 'police station construction' in Iraq by the DoD is not readily available in this dataset, broader trends indicate substantial outlays for infrastructure development. Factors such as the use of Cost-Plus contract types, security escorts, and the need for specialized materials and personnel contribute to elevated project costs compared to domestic construction.

Were there any significant cost variances or overruns reported during the execution of this contract?

The provided data summary does not include information on cost variances or overruns for this specific contract. For Cost Plus Fixed Fee (CPFF) contracts, tracking cost variances is critical, as the government is responsible for reimbursing allowable costs. Significant overruns would typically be flagged in contract performance reports, audit findings, or Inspector General reports. Without access to these detailed contract administration documents, it is impossible to determine if this project experienced cost overruns beyond the initial estimated cost. The duration of the contract (441 days) and the CPFF structure suggest that careful monitoring of expenditures would have been necessary to manage costs effectively.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 7310 WOODWARD AVENUE, FIFT, DETROIT, MI, 90

Business Categories: Category Business, Minority Owned Business, Not Designated a Small Business, Subchapter S Corporation, Indian (Subcontinent) American Owned Business

Financial Breakdown

Contract Ceiling: $13,578,776

Exercised Options: $13,578,776

Current Obligation: $13,578,776

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA890306D8505

IDV Type: IDC

Timeline