Pate Construction awarded $35.6M for Test Bed Tunnel A/B Modification, a significant investment in defense infrastructure

Contract Overview

Contract Amount: $35,589,296 ($35.6M)

Contractor: Pate Construction CO., Inc.

Awarding Agency: Department of Defense

Start Date: 2024-08-12

End Date: 2026-12-04

Contract Duration: 844 days

Daily Burn Rate: $42.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: TIME AND MATERIALS

Sector: Construction

Official Description: TEST BED TUNNEL A/B CONSTRUCTION MODIFICATION

Place of Performance

Location: WHITE SANDS MISSILE RANGE, DONA ANA County, NEW MEXICO, 88002

State: New Mexico Government Spending

Plain-Language Summary

Department of Defense obligated $35.6 million to PATE CONSTRUCTION CO., INC. for work described as: TEST BED TUNNEL A/B CONSTRUCTION MODIFICATION Key points: 1. The contract value of $35.6 million represents a substantial commitment to modifying critical defense testing facilities. 2. Competition dynamics for this contract are noted as 'Full and Open Competition After Exclusion of Sources,' suggesting a potentially complex procurement process. 3. The contract type is 'Delivery Order' under a larger agreement, indicating a phased approach to project execution. 4. Performance is scheduled over 844 days, from August 2024 to December 2026, requiring sustained effort and oversight. 5. The project falls under 'Other Heavy and Civil Engineering Construction,' a sector vital for national infrastructure and defense capabilities. 6. The use of 'Time and Materials' pricing could introduce cost variability if not managed closely.

Value Assessment

Rating: fair

Benchmarking the value of this specific modification is challenging without detailed cost breakdowns and comparison to similar tunnel modification projects. The 'Time and Materials' pricing structure introduces inherent risk for cost overruns if not meticulously tracked and controlled. The contract value of $35.6 million appears substantial for a modification, suggesting potentially complex or extensive work required for the Test Bed Tunnel A/B.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be broad, certain sources were excluded, potentially limiting the pool of bidders. The number of bidders is noted as 2, which is a relatively low number for a full and open competition, raising questions about the effectiveness of outreach or the specialized nature of the required services.

Taxpayer Impact: A limited number of bidders, even in a full and open competition, can sometimes lead to less competitive pricing. Taxpayers may not have received the full benefit of a wider bidding process, potentially resulting in a higher overall cost for the modification.

Public Impact

The primary beneficiaries are the Department of Defense and its associated agencies requiring advanced testing facilities. The services delivered involve heavy and civil engineering construction, specifically modifying existing tunnel infrastructure. The geographic impact is localized to New Mexico, where the Test Bed Tunnel A/B is situated. Workforce implications include employment opportunities for skilled construction labor and engineering professionals in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost escalation due to Time and Materials pricing structure.
Limited competition (2 bidders) may indicate suboptimal price discovery.
Exclusion of sources in a 'full and open' competition warrants scrutiny of the justification.

Positive Signals

Awarded to Pate Construction Co., Inc., a known entity in the construction sector.
Modification of critical defense infrastructure ensures continued operational capability.
Project duration is clearly defined, allowing for planning and resource allocation.

Sector Analysis

This contract falls within the Heavy and Civil Engineering Construction sector, a critical component of the broader construction industry. This sector is responsible for large-scale public and private infrastructure projects. The market size for such specialized defense-related construction can be niche, with a limited number of contractors possessing the requisite security clearances and expertise. Comparable spending benchmarks are difficult to ascertain without specific project details, but large-scale modifications to sensitive government facilities typically command significant investment.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary set-aside consideration for this contract. There is no explicit mention of subcontracting goals for small businesses. This suggests that the primary contractor, Pate Construction Co., Inc., will likely handle the majority of the work, with potential for larger, specialized subcontractors rather than a broad distribution to the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Threat Reduction Agency (DTRA) contracting officers and technical representatives. Accountability measures would include adherence to the contract's scope of work, schedule, and quality standards. Transparency is typically facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Infrastructure Modernization Programs
Military Construction Projects
Facility Upgrades and Renovations
Heavy Engineering Services Contracts

Risk Flags

Limited Competition
Time and Materials Pricing
Exclusion of Sources Justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.6 million to PATE CONSTRUCTION CO., INC.. TEST BED TUNNEL A/B CONSTRUCTION MODIFICATION

Who is the contractor on this award?

The obligated recipient is PATE CONSTRUCTION CO., INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Threat Reduction Agency).

What is the total obligated amount?

The obligated amount is $35.6 million.

What is the period of performance?

Start: 2024-08-12. End: 2026-12-04.

What is the track record of Pate Construction Co., Inc. with similar defense infrastructure projects?

Pate Construction Co., Inc. has a history of engaging in construction projects, including those for government entities. To assess their track record specifically for defense infrastructure and tunnel modifications, a deeper dive into their past performance evaluations, contract history with the Department of Defense, and any reported issues or commendations would be necessary. Analyzing their experience with projects of similar scale, complexity, and security requirements would provide crucial context for evaluating their capability to successfully execute the Test Bed Tunnel A/B Modification.

How does the $35.6 million contract value compare to similar tunnel modification projects within the Department of Defense?

Direct comparison of the $35.6 million contract value for the Test Bed Tunnel A/B Modification to similar projects is challenging without access to a comprehensive database of comparable defense infrastructure modifications. Factors such as the specific type of tunnel, its intended use (e.g., testing, storage, transit), the extent of modifications required (structural, environmental, technological), and the geographic location significantly influence project costs. Generally, modifications to specialized defense testing facilities can be more expensive than standard infrastructure due to unique security, environmental, and operational requirements. Further analysis would require identifying projects with analogous scope and complexity.

What are the primary risks associated with the 'Time and Materials' pricing structure for this contract?

The primary risk associated with a 'Time and Materials' (T&M) pricing structure is the potential for cost overruns. Unlike fixed-price contracts, T&M contracts reimburse the contractor for the actual labor hours and material costs incurred, plus a fee. If project scope creeps, inefficiencies arise, or labor/material costs escalate unexpectedly, the total contract cost can exceed initial estimates. Effective risk mitigation requires robust oversight, detailed tracking of hours and expenses, clear definition of work, and strong negotiation of labor rates and material markups by the government.

What does the 'Full and Open Competition After Exclusion of Sources' procurement method imply for cost-effectiveness?

The procurement method 'Full and Open Competition After Exclusion of Sources' suggests a scenario where the solicitation was broadly advertised, but specific sources were intentionally excluded from bidding. While aiming for broad competition, the exclusion of certain entities could limit the number of qualified bidders. If the exclusion was based on valid justifications (e.g., specialized capabilities, security requirements), it might be necessary. However, if it unduly restricts competition, it could lead to less aggressive pricing. The fact that only two bidders participated further emphasizes the need to scrutinize the justification for source exclusion to ensure optimal cost-effectiveness for taxpayers.

What is the historical spending trend for modifications to defense testing facilities like the Test Bed Tunnel A/B?

Analyzing historical spending trends for modifications to defense testing facilities requires access to detailed budget and contract data specific to such infrastructure. Generally, maintaining and upgrading specialized government facilities, particularly those critical for defense research and testing, involves consistent investment. Spending can fluctuate based on the aging of infrastructure, technological advancements requiring facility upgrades, and evolving defense requirements. Without specific data on the Test Bed Tunnel A/B or similar facilities, it's difficult to establish a precise trend, but it's reasonable to assume ongoing capital investment is necessary for these critical assets.

What are the potential implications of awarding a $35.6M contract with only two bidders?

Awarding a significant contract valued at $35.6 million to a pool of only two bidders, even under a 'Full and Open Competition After Exclusion of Sources' framework, raises concerns about the level of competition achieved. A limited number of bidders can reduce price pressure, potentially leading to higher costs than if a wider range of contractors had participated. It may also indicate a highly specialized market or potential barriers to entry for other firms. The government should ensure that the exclusion of sources was fully justified and that the final price reflects fair market value given the limited competition.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering 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

Solicitation ID: HDTRA224R0013

Offers Received: 2

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 87 N MISSION DR, PUEBLO WEST, CO, 81007

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, Hispanic American Owned Business, Minority Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $35,589,296

Exercised Options: $35,589,296

Current Obligation: $35,589,296

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDTRA214D0003

IDV Type: IDC

Timeline