Nelson Refrigeration Inc. awarded $20.2M for construction services, with a 1,211-day duration

Contract Overview

Contract Amount: $20,242,714 ($20.2M)

Contractor: Nelson Refrigeration Inc

Awarding Agency: Department of Defense

Start Date: 2022-09-28

End Date: 2026-01-21

Contract Duration: 1,211 days

Daily Burn Rate: $16.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONTRACTOR EQUIPMENT (CF/ CI)

Place of Performance

Location: JBSA LACKLAND, BEXAR County, TEXAS, 78236

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $20.2 million to NELSON REFRIGERATION INC for work described as: CONTRACTOR EQUIPMENT (CF/ CI) Key points: 1. The contract value of $20.2 million for construction services appears reasonable given the 1,211-day duration. 2. Full and open competition suggests a competitive bidding process, potentially leading to better pricing. 3. The firm-fixed-price contract type mitigates cost overrun risks for the government. 4. Performance is situated in Texas, indicating a regional focus for this construction project. 5. The contract falls under commercial and institutional building construction, a common sector for federal procurement.

Value Assessment

Rating: good

The contract value of $20.2 million over 1,211 days averages to approximately $16,716 per day. Benchmarking this against similar large-scale construction projects is challenging without more specific project details. However, the firm-fixed-price nature suggests that the contractor has assumed the risk for cost overruns, which is generally favorable for the government. The number of bids received (2) is on the lower side for full and open competition, which could warrant further investigation into pricing competitiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. However, only two bids were received. While full and open competition is the preferred method, a low number of bidders can sometimes suggest market limitations, contractor capacity issues, or potentially a lack of aggressive pricing due to reduced competition.

Taxpayer Impact: A low number of bidders in a full and open competition may mean that taxpayers did not benefit from the most competitive pricing possible, although the fixed-price nature still provides cost certainty.

Public Impact

The primary beneficiaries are likely the Department of Defense and its personnel, who will benefit from the completed construction. The services delivered involve commercial and institutional building construction, crucial for maintaining and upgrading federal facilities. The geographic impact is concentrated in Texas, supporting local economic activity and employment within the state. Workforce implications include job creation for construction workers, tradespeople, and project management personnel in the Texas region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Low number of bids (2) in a full and open competition could indicate potential issues with market reach or contractor interest, impacting price competitiveness.
The specific nature of the construction is not detailed, making it difficult to assess if the scope aligns perfectly with the awarded value.
Long contract duration (1,211 days) increases the potential for unforeseen challenges or changes in requirements over time.

Positive Signals

Awarded under full and open competition, adhering to best practices for federal procurement.
Firm-fixed-price contract type shifts cost risk to the contractor, providing budget certainty for the government.
The contractor, Nelson Refrigeration Inc., is established, suggesting a degree of reliability for project execution.
The contract is for essential building construction, supporting the operational needs of the Defense Commissary Agency.

Sector Analysis

The construction sector is a significant area of federal spending, encompassing a wide range of projects from infrastructure to facility maintenance. This contract for commercial and institutional building construction fits within this broad category. Federal construction spending is often driven by the need to maintain aging infrastructure, build new facilities, and support military readiness. Comparable spending benchmarks would depend heavily on the specific type and scale of construction, but large projects like this are common across various federal agencies.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the primary focus was on securing the best offer through full and open competition, rather than specifically targeting small business participation. The absence of set-asides means that opportunities for small businesses in this specific contract are limited unless they are prime contractors or choose to subcontract independently.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Commissary Agency (DECA) through contract officers and contracting specialists. Performance monitoring will be crucial given the long duration. Accountability measures are embedded in the firm-fixed-price contract, penalizing the contractor for cost overruns. Transparency is facilitated by the public nature of federal contract awards, though detailed project-specific oversight reports are not always publicly available. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Military Construction Projects
Federal Building Maintenance and Repair
Commercial and Institutional Construction Services

Risk Flags

Low bidder count in full and open competition
Long contract duration increases risk exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.2 million to NELSON REFRIGERATION INC. CONTRACTOR EQUIPMENT (CF/ CI)

Who is the contractor on this award?

The obligated recipient is NELSON REFRIGERATION INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $20.2 million.

What is the period of performance?

Start: 2022-09-28. End: 2026-01-21.

What is the track record of Nelson Refrigeration Inc. with federal contracts, particularly in construction?

Nelson Refrigeration Inc. has been awarded federal contracts, including this significant $20.2 million construction project. A deeper dive into their contract history would reveal the types of projects they have undertaken, their performance ratings on past federal work, and any history of contract disputes or modifications. Understanding their past performance is crucial for assessing their capability to successfully execute this long-term construction project. Federal procurement databases often provide award history, but detailed performance metrics may require access to specific contract performance reports or agency evaluations.

How does the awarded value compare to similar commercial and institutional building construction contracts?

Comparing the $20.2 million award to similar contracts requires detailed information about the scope of work, location, and specific construction type. However, for a project spanning over 1,200 days, this value suggests a substantial undertaking. Federal construction projects can vary widely in cost based on complexity, materials, and security requirements. Without specific benchmarks for comparable projects within the Defense Commissary Agency or similar agencies, it's difficult to definitively state if this represents exceptional value. The firm-fixed-price nature, however, provides a degree of cost control for the government.

What are the primary risks associated with a firm-fixed-price contract for a long-duration construction project?

While firm-fixed-price (FFP) contracts are generally favored for cost certainty, long-duration projects carry inherent risks. For the contractor, unforeseen material cost escalations, labor shortages, or extended delays due to external factors (weather, regulatory changes) can erode profit margins. For the government, the primary risk is that the initial price might not reflect the true final cost if significant scope changes are required, or if the contractor inflates the initial bid to cover potential risks. Effective project management and clear contract terms are essential to mitigate these risks.

What is the significance of the Defense Commissary Agency awarding this contract in Texas?

The award of this construction contract by the Defense Commissary Agency (DECA) in Texas signifies a commitment to upgrading or maintaining facilities that support military personnel and their families in the region. DECA operates commissaries worldwide, providing groceries at a discount. Construction projects like this are vital for ensuring these facilities are modern, efficient, and capable of meeting demand. The location in Texas suggests a specific need for facility improvement or expansion within the state's military community infrastructure.

Given only two bids, what does this imply about the market for this type of construction service?

Receiving only two bids for a full and open competition can suggest several market dynamics. It might indicate that the pool of qualified contractors capable of undertaking a project of this scale and complexity is limited. Alternatively, it could mean that the specific requirements or location were less attractive to a broader range of bidders, or that the estimated cost was perceived as too low by potential competitors. This limited competition could potentially lead to higher prices than if more bids were received, although the firm-fixed-price structure still caps the government's direct cost.

How does the PSC code (or lack thereof) inform the nature of this construction contract?

The provided data indicates 'PSC' is blank. However, the 'ND' (NAICS Description) is 'Commercial and Institutional Building Construction,' which clearly defines the nature of the work. The Product Service Code (PSC) is used by the government to categorize goods and services. A blank PSC might indicate an oversight in data entry or that the system defaults to a broader category when a specific PSC isn't readily assigned or required for this type of award. Regardless, the NAICS code provides sufficient clarity on the construction services being procured.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HDEC0317R0002

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12110 CARY CIR STE 6, LAVISTA, NE, 68128

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

Financial Breakdown

Contract Ceiling: $20,242,714

Exercised Options: $20,242,714

Current Obligation: $20,242,714

Actual Outlays: $1,236,254

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0317D0002

IDV Type: IDC

Timeline