Air Force spent $27.6M on facility expansion, with limited competition impacting price discovery

Contract Overview

Contract Amount: $27,553,135 ($27.6M)

Contractor: Lakeshore Engineering Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-08-23

End Date: 2014-09-16

Contract Duration: 754 days

Daily Burn Rate: $36.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: AFGHAN AF EXPANSION SHINDAND AIR WING PH II, ATCALS AND CENTRAL UTILITIES

Plain-Language Summary

Department of Defense obligated $27.6 million to LAKESHORE ENGINEERING SERVICES, INC. for work described as: AFGHAN AF EXPANSION SHINDAND AIR WING PH II, ATCALS AND CENTRAL UTILITIES Key points: 1. The contract focused on construction services for an air wing expansion, indicating a need for infrastructure development. 2. The procurement method suggests potential limitations in market reach, which could affect overall value. 3. The duration of the contract (754 days) points to a significant project scope. 4. The firm-fixed-price structure aims to transfer cost risk to the contractor. 5. The absence of small business set-asides warrants further investigation into subcontracting opportunities. 6. The project was awarded to a single contractor, raising questions about competitive pricing.

Value Assessment

Rating: fair

The total contract value of approximately $27.6 million for commercial and institutional building construction appears to be within a reasonable range for a project of this scope and duration. However, without specific benchmarks for similar air wing expansion projects or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm-fixed-price contract type suggests that the contractor bears the primary risk for cost overruns, which can be a positive indicator of cost control if the initial pricing was competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while the initial solicitation was broad, certain sources were later excluded, leading to a limited competition scenario. With only one awardee, it is difficult to ascertain the full extent of price discovery. A limited competition environment can sometimes lead to higher prices compared to full and open competition with multiple bidders, as the incentive to offer the lowest possible price is reduced.

Taxpayer Impact: The limited competition for this significant infrastructure project means taxpayers may not have benefited from the most aggressive pricing achievable through a wider bidding process. This could translate to a higher overall cost for the government and, consequently, for taxpayers.

Public Impact

The primary beneficiaries are the Department of the Air Force and its personnel stationed at the Shindand Air Wing, who will gain improved facilities. The services delivered include the expansion of air wing facilities, specifically focusing on ATCALS (Air Traffic Control and Landing Systems) and central utilities. The geographic impact is localized to the Shindand Air Wing, Afghanistan, supporting military operations in the region. Workforce implications include employment opportunities for construction workers and related trades during the project's execution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in suboptimal pricing for taxpayers.
The exclusion of sources in the competition phase warrants scrutiny to ensure fairness and maximum value.
Lack of transparency regarding the reasons for excluding sources could obscure potential risks or inefficiencies.

Positive Signals

The firm-fixed-price contract structure shifts cost overrun risks to the contractor.
The project addresses critical infrastructure needs for air wing operations.
The contract duration of over two years suggests a comprehensive approach to facility development.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically supporting defense infrastructure. The construction market for military facilities is often characterized by specialized requirements and security protocols. While specific benchmarks for air wing expansions are not readily available, large-scale construction projects for government entities typically involve significant investment. This contract represents a substantial expenditure within this niche of the construction industry, aimed at enhancing operational capabilities.

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 awardee was likely a large business. Without specific subcontracting plans or reporting, it is difficult to assess the extent to which small businesses may have participated indirectly. The absence of a small business set-aside could mean missed opportunities for small business growth and participation in the federal contracting ecosystem for this project.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and inspection mechanisms. The firm-fixed-price nature of the contract implies that the government's primary oversight would focus on ensuring the contractor meets the specified deliverables and quality standards within the agreed-upon price. Accountability measures would involve contract close-out procedures and performance reviews. Transparency is often limited in defense contracts, especially those involving overseas operations, but contract award data is generally publicly available.

Related Government Programs

Military Construction
Base Realignment and Closure (BRAC) Projects
Defense Infrastructure Modernization
Air Force Facility Sustainment, Restoration, and Modernization (FSRM)

Risk Flags

Limited Competition
Potential for Overpricing
Lack of Transparency in Source Exclusion

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.6 million to LAKESHORE ENGINEERING SERVICES, INC.. AFGHAN AF EXPANSION SHINDAND AIR WING PH II, ATCALS AND CENTRAL UTILITIES

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 $27.6 million.

What is the period of performance?

Start: 2012-08-23. End: 2014-09-16.

What was the specific reason for excluding certain sources during the 'Full and Open Competition After Exclusion of Sources' process?

The provided data does not specify the exact reasons for excluding sources during the 'Full and Open Competition After Exclusion of Sources' process. This procurement method typically involves an initial broad solicitation, followed by the exclusion of certain potential bidders based on predefined criteria, such as technical capabilities, past performance, or specific security requirements. Without further documentation or agency explanations, it is impossible to determine if these exclusions were justified or if they limited the competitive landscape unnecessarily, potentially impacting the final price and value for the government. Understanding these exclusions is crucial for assessing the fairness and effectiveness of the competition.

How does the $27.6 million contract value compare to similar air wing expansion projects undertaken by the Department of Defense?

A direct comparison of the $27.6 million contract value for the AFGHAN AF EXPANSION SHINDAND AIR WING PH II project to similar air wing expansion projects is challenging without access to a comprehensive database of comparable contracts. Factors such as geographic location (Afghanistan, with associated logistical and security costs), specific facility requirements (ATCALS and central utilities), project duration (754 days), and prevailing market conditions at the time of award (2012-2014) significantly influence costs. However, for large-scale construction projects within the Department of Defense, especially those involving complex infrastructure and potentially higher risk environments, this figure could be considered within a typical range. Further analysis would require benchmarking against projects with similar scope, complexity, and location.

What are the potential risks associated with a firm-fixed-price contract for a construction project of this magnitude and duration?

While a firm-fixed-price (FFP) contract is designed to transfer cost risk to the contractor, significant risks can still arise for projects of this magnitude and duration (754 days). For the government, the primary risk is that the contractor may have inflated the initial price to account for potential unforeseen issues, leading to a higher-than-necessary cost. If the contractor cuts corners on quality to maintain profitability, it could lead to long-term maintenance issues. For the contractor, risks include underestimating costs, encountering unexpected site conditions, or facing material price escalations, which could lead to financial losses if not adequately managed. Effective government oversight is crucial to ensure quality and adherence to specifications despite the FFP structure.

What was the historical spending pattern for facility expansion at the Shindand Air Wing prior to this contract?

The provided data does not contain information on historical spending patterns for facility expansion at the Shindand Air Wing prior to this specific contract (awarded August 2012). To assess historical spending, one would need to access procurement records for the specific location and project type over previous fiscal years. Analyzing past contracts for similar construction or expansion efforts at Shindand would reveal trends in investment, identify recurring needs, and provide context for the $27.6 million expenditure. Without this historical data, it's difficult to determine if this contract represents a significant increase, a continuation of a trend, or a one-time investment.

What is the track record of Lakeshore Engineering Services, Inc. in performing similar large-scale construction contracts for the Department of Defense?

The provided data identifies Lakeshore Engineering Services, Inc. as the contractor for this $27.6 million project. To assess their track record, one would need to examine their past performance on similar large-scale construction contracts, particularly for the Department of Defense. This would involve reviewing contract databases for previous awards, project types, values, and performance reviews. Key indicators would include their experience with military construction, facility expansions, projects in challenging environments, and their history of meeting deadlines and quality standards. A positive track record suggests a lower risk of performance issues, while a history of problems could indicate potential concerns for future projects.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7310 WOODWARD AVENUE, FIFT, DETROIT, MI, 48202

Business Categories: Category Business, Foreign-Owned and U.S.-Incorporated Business, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business

Financial Breakdown

Contract Ceiling: $27,553,135

Exercised Options: $27,553,135

Current Obligation: $27,553,135

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $2,273,430

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA890306D8505

IDV Type: IDC

Timeline