Commerce awards $70.7M for NIST building modernization, highlighting construction sector activity

Contract Overview

Contract Amount: $70,743,085 ($70.7M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Commerce

Start Date: 2021-05-03

End Date: 2024-12-31

Contract Duration: 1,338 days

Daily Burn Rate: $52.9K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: MODERNIZATION OF BLDG.245 TO #08

Place of Performance

Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20899

State: Maryland Government Spending

Plain-Language Summary

Department of Commerce obligated $70.7 million to HENSEL PHELPS CONSTRUCTION CO for work described as: MODERNIZATION OF BLDG.245 TO #08 Key points: 1. Contract value represents a significant investment in federal infrastructure. 2. Competition dynamics suggest a healthy market for large-scale construction projects. 3. Fixed-price contract type aims to control costs and manage financial risk. 4. Project duration indicates a substantial, multi-year commitment to modernization. 5. Geographic concentration in Maryland points to regional economic impact. 6. The award falls within the broader context of federal building and facility upgrades.

Value Assessment

Rating: good

The contract value of $70.7 million for building modernization appears reasonable for a project of this scope and duration. Benchmarking against similar large-scale commercial and institutional building construction contracts awarded by federal agencies would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an effort to establish cost certainty, which is generally positive for taxpayer value, assuming the initial price was competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This approach typically fosters competitive pricing and encourages contractors to offer their best value. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competitive process was intended and likely achieved.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and ensuring that the government receives competitive bids, leading to more efficient use of public funds.

Public Impact

The National Institute of Standards and Technology (NIST) benefits from modernized facilities, enhancing its research and development capabilities. The project delivers essential construction services, contributing to the upkeep and improvement of federal infrastructure. The geographic impact is concentrated in Gaithersburg, Maryland, potentially creating local jobs and stimulating the regional economy. Workforce implications include employment opportunities for construction workers, engineers, project managers, and related trades in the Maryland area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise, despite fixed-price contract.
Schedule delays could impact NIST's operational continuity.
Quality control during construction is critical to ensure long-term durability and safety.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Full and open competition suggests a competitive bidding process, likely yielding favorable pricing.
Experienced contractor (Hensel Phelps) known for large-scale projects.
Clear project scope for modernization of a specific building.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the U.S. economy. Federal spending on construction, particularly for modernization and upgrades of existing facilities, is a key driver of activity in this sector. Comparable spending benchmarks would involve analyzing other large federal construction awards for similar types of buildings (e.g., research facilities, laboratories) across agencies like GSA, DOD, or DOE.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale construction project, it is unlikely that small businesses would be the primary awardees, though they may participate as subcontractors. Further analysis would be needed to determine the extent of small business subcontracting planned by Hensel Phelps Construction Co.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program officials within the Department of Commerce and NIST. The firm fixed-price nature of the contract provides a degree of financial oversight. Transparency is generally maintained through contract award databases like FPDS. Specific Inspector General jurisdiction would depend on the agency's IG mandate concerning NIST operations and facilities.

Related Government Programs

Federal Building and Facilities Construction
National Institute of Standards and Technology (NIST) Operations
Department of Commerce Infrastructure Projects
Large-Scale Commercial Construction Contracts

Risk Flags

Potential for cost overruns if scope changes significantly.
Risk of schedule delays impacting NIST operations.
Ensuring quality of construction for long-term durability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $70.7 million to HENSEL PHELPS CONSTRUCTION CO. MODERNIZATION OF BLDG.245 TO #08

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS CONSTRUCTION CO.

Which agency awarded this contract?

Awarding agency: Department of Commerce (National Institute of Standards and Technology).

What is the total obligated amount?

The obligated amount is $70.7 million.

What is the period of performance?

Start: 2021-05-03. End: 2024-12-31.

What is the track record of Hensel Phelps Construction Co. on similar federal contracts?

Hensel Phelps Construction Co. is a well-established and reputable general contractor with extensive experience in large-scale federal construction projects. A review of their past performance on similar contracts, particularly those involving institutional or research facilities, would be beneficial. Data from contract databases like FPDS can reveal their award history, past performance ratings, and any significant issues encountered on previous government projects. Their history suggests a capacity to handle complex projects, but a detailed review of specific past projects would confirm their suitability and provide context for the current award's value and execution.

How does the awarded price compare to industry benchmarks for similar building modernization projects?

To benchmark the $70.7 million award, one would compare it against the cost per square foot or per project type for similar federal or large commercial building modernization projects. Factors such as the age and condition of Building 245, the specific scope of modernization (e.g., HVAC, electrical, structural, lab upgrades), and prevailing construction costs in the Gaithersburg, Maryland area are crucial. Industry cost estimating guides and databases from organizations like RSMeans or specialized construction cost consultants could provide benchmarks. Without detailed project specifications and market cost data, a precise comparison is difficult, but the value appears substantial for a significant facility upgrade.

What are the primary risks associated with this modernization project, and how are they being managed?

Key risks include unforeseen site conditions (e.g., hazardous materials, structural issues), potential for schedule delays due to weather or supply chain disruptions, and ensuring minimal disruption to ongoing NIST operations. The firm fixed-price contract helps mitigate financial risk for the government by capping the total cost. Risk management strategies likely involve detailed site investigations prior to construction, robust project scheduling with contingency, clear communication protocols between NIST and the contractor, and potentially performance bonds. The contract's duration (over 3 years) also suggests a phased approach to manage complexity and risk.

How effective is the firm fixed-price contract type in ensuring value for money on this project?

The firm fixed-price (FFP) contract type is generally considered effective for projects with well-defined scopes, like building modernization, as it shifts most of the cost risk to the contractor. This encourages the contractor to manage costs efficiently to maximize profit. For taxpayers, FFP provides budget certainty. However, its effectiveness hinges on the accuracy of the initial scope definition and pricing. If the scope is poorly defined or unforeseen issues arise that require significant changes, change orders could increase the total cost, potentially negating some of the FFP benefits. The success here depends on the thoroughness of NIST's planning and the contractor's execution.

What is the historical spending trend for building modernization at NIST or the Department of Commerce?

Analyzing historical spending data for NIST and the broader Department of Commerce on building maintenance, repair, and modernization would provide context for the $70.7 million award. Trends might reveal whether this is a typical investment level, an increase due to deferred maintenance, or part of a larger strategic initiative. Consistent, significant spending could indicate ongoing facility needs, while sporadic large awards might suggest major capital improvement projects. Understanding these patterns helps assess if the current investment is anomalous or part of a sustained effort to maintain federal infrastructure.

What are the implications of the project's long duration (1338 days) on NIST's operations and budget?

A duration of over three years for building modernization implies a complex, multi-phased project that may involve significant disruption. NIST must plan for potential relocation of personnel or sensitive equipment, temporary shutdowns of certain areas, and manage the integration of new systems with existing infrastructure. Budgetary implications include not only the contract cost but also potential costs for temporary facilities, increased security, and managing the transition. The extended timeline also means that the project's cost is locked in over a longer period, potentially subject to inflation if not fully accounted for in the fixed price.

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

Solicitation Procedures: TWO STEP

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4437 BROOKFIELD CORPORATE DR STE 207, CHANTILLY, VA, 20151

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $70,743,085

Exercised Options: $70,743,085

Current Obligation: $70,743,085

Actual Outlays: $1,236,209

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DOCSB134116CQ0026

IDV Type: IDC

Timeline