Obayashi Corporation awarded $67.9M for interior work on 403 Air Force units, highlighting significant residential remodeling investment

Contract Overview

Contract Amount: $67,901,190 ($67.9M)

Contractor: Obayashi Corporation

Awarding Agency: Department of Defense

Start Date: 2012-02-24

End Date: 2015-11-09

Contract Duration: 1,354 days

Daily Burn Rate: $50.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: BASE BID #1, INTERIOR WORK AT 403 UNITS

Plain-Language Summary

Department of Defense obligated $67.9 million to OBAYASHI CORPORATION for work described as: BASE BID #1, INTERIOR WORK AT 403 UNITS Key points: 1. The contract's value suggests a substantial investment in maintaining and upgrading military housing infrastructure. 2. Full and open competition indicates a potentially competitive bidding process, which can drive better pricing. 3. The duration of the contract (1354 days) points to a long-term project, requiring sustained management and oversight. 4. The firm-fixed-price nature of the contract shifts cost risk to the contractor, potentially stabilizing project expenses. 5. This award falls within the residential remodeling sector, suggesting a focus on habitability and quality of life for service members.

Value Assessment

Rating: good

The awarded amount of $67.9 million for interior work on 403 units translates to approximately $168,489 per unit. This figure appears reasonable for comprehensive interior renovations, especially considering potential scope variations across units and the inclusion of labor, materials, and project management. Benchmarking against similar large-scale military housing renovation projects would provide a more precise value-for-money assessment, but the initial figure does not immediately raise significant concerns.

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. With 7 bids received, the competition level suggests a healthy market interest in this type of work. This broad competition is generally favorable for price discovery and can incentivize contractors to offer competitive pricing to secure the award.

Taxpayer Impact: Taxpayers benefit from the potential for cost savings due to a competitive bidding environment, ensuring that the government is not overpaying for the required services.

Public Impact

Service members and their families residing in the 403 affected housing units will benefit from improved living conditions and updated interiors. The project delivers essential residential remodeling services, enhancing the habitability and functionality of military housing. The geographic impact is localized to the specific Air Force installation where the units are located. The contract supports jobs within the construction and residential remodeling sectors, including skilled tradespeople and project managers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (1354 days) could lead to potential cost overruns if not managed effectively.
Firm-fixed-price contracts can sometimes lead to scope creep if change orders are not meticulously controlled.
Reliance on a single prime contractor for such a large project introduces risk if performance issues arise.

Positive Signals

Full and open competition suggests a robust market and potentially competitive pricing.
The firm-fixed-price contract structure transfers some cost risk to the contractor.
Awarding to Obayashi Corporation, a known entity in construction, may indicate a level of confidence in their capabilities.

Sector Analysis

This contract falls within the construction and residential remodeling sector, specifically focusing on interior upgrades for multi-unit dwellings. The market for military housing renovation is substantial, driven by the need to maintain quality of life for service members and their families. Comparable spending benchmarks would involve looking at other large-scale renovation contracts for government-owned or managed housing, as well as large private sector multi-family residential projects.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions. Given the large dollar value and the nature of the work, it is possible that subcontracting opportunities may exist for smaller firms specializing in specific trades (e.g., plumbing, electrical, painting). However, without explicit subcontracting plans or goals, the direct impact on the small business ecosystem is uncertain.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contract administration office within the Department of the Air Force. Performance monitoring, quality assurance checks, and financial oversight are standard accountability measures. Transparency is generally maintained through contract award databases, though detailed project-specific reporting may vary.

Related Government Programs

Military Family Housing Improvement Program
Base Realignment and Closure (BRAC) related construction
Department of Defense Facilities Maintenance and Repair
Residential Construction Contracts

Risk Flags

Potential for cost overruns due to long duration
Risk of quality compromise in FFP contracts
Contractor performance dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $67.9 million to OBAYASHI CORPORATION. BASE BID #1, INTERIOR WORK AT 403 UNITS

Who is the contractor on this award?

The obligated recipient is OBAYASHI CORPORATION.

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 $67.9 million.

What is the period of performance?

Start: 2012-02-24. End: 2015-11-09.

What is Obayashi Corporation's track record with similar government contracts, particularly in residential remodeling?

Obayashi Corporation is a large, established global construction company with a significant history of undertaking complex projects, including those for government entities. While specific details on their past performance solely within U.S. military residential remodeling might require deeper database searches, their general experience in large-scale construction suggests a capacity to manage such projects. A review of their contract history within the Federal Procurement Data System (FPDS) or similar databases would reveal their performance on prior federal awards, including any reported issues, awards for excellence, or past performance evaluations. This would provide context for their ability to successfully execute this particular interior renovation contract.

How does the per-unit cost of renovation compare to industry benchmarks for similar projects?

The approximate per-unit cost of $168,489 for interior renovation is a significant figure. To benchmark this effectively, comparisons should be made against similar projects, considering factors like the scope of work (e.g., kitchens, bathrooms, flooring, paint, systems), the age and condition of the existing units, and geographic location, which impacts labor and material costs. For instance, high-end kitchen and bathroom remodels in major metropolitan areas can easily exceed $50,000-$100,000 per unit. Given this is military housing, the scope might include more standardized upgrades across many units. A detailed comparison with recent large-scale multi-family residential renovation projects, both government and private, would be necessary to determine if this cost is competitive or indicative of potential overspending.

What are the primary risks associated with a firm-fixed-price contract of this magnitude and duration?

The primary risks with a firm-fixed-price (FFP) contract of this scale ($67.9M) and duration (1354 days) revolve around scope definition and contractor performance. For the government, the risk is that the contractor may cut corners on quality to maintain profitability if unforeseen issues arise or if the initial pricing was too aggressive. Conversely, the contractor bears the risk of cost overruns due to inaccurate initial estimates, material price escalations, or unforeseen site conditions. Effective government oversight is crucial to ensure quality standards are met and to manage any necessary change orders judiciously, as these can significantly increase costs and extend timelines, potentially negating the FFP benefit. Contractor financial stability and project management capability are also key risk factors.

What is the expected impact of these renovations on the quality of life for military families?

These renovations are expected to significantly improve the quality of life for military families residing in the 403 units. Modernized interiors, updated fixtures, and potentially improved functionality in kitchens and bathrooms contribute to a more comfortable, safe, and appealing living environment. For military families, stable and well-maintained housing is a critical factor in overall morale and well-being, especially during frequent relocations. Upgraded housing can reduce the stress associated with moving and settling into new accommodations, making military life more attractive and sustainable for service members and their dependents.

How does this contract's spending compare to historical trends in military housing renovation?

The $67.9 million award for interior work on 403 units represents a substantial single contract for residential remodeling. Historical spending trends in military housing renovation show significant annual investments by the Department of Defense, often in the billions of dollars across all branches, to address aging infrastructure and improve living conditions. This specific contract, while large, is likely one component of a broader, ongoing effort to modernize military housing stock. Comparing it to the average cost per unit for similar renovations over the past 5-10 years, and considering inflation, would provide context on whether this award is in line with historical spending patterns or represents a notable increase in investment for this specific project or location.

Industry Classification

NAICS: Construction › Residential Building Construction › Residential Remodelers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA527011R0001

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2-15-2, KONAN, MINATO-KU

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $67,931,190

Exercised Options: $67,931,190

Current Obligation: $67,901,190

Contract Characteristics

Cost or Pricing Data: NO

Timeline