DHS awarded $73.9M contract for heavy engineering construction, with 19 offers received

Contract Overview

Contract Amount: $73,933,039 ($73.9M)

Contractor: Cerrudo Services, LLC

Awarding Agency: Department of Homeland Security

Start Date: 2015-09-29

End Date: 2021-03-28

Contract Duration: 2,007 days

Daily Burn Rate: $36.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 19

Pricing Type: COST PLUS FIXED FEE

Sector: Construction

Official Description: AWARD CTIMR CONTRACT HSBP1014C00072 WITH A BASE PLUS 4 (1) YR OPTIONS IGF::CT::IGF

Place of Performance

Location: CHULA VISTA, SAN DIEGO County, CALIFORNIA, 91914

State: California Government Spending

Plain-Language Summary

Department of Homeland Security obligated $73.9 million to CERRUDO SERVICES, LLC for work described as: AWARD CTIMR CONTRACT HSBP1014C00072 WITH A BASE PLUS 4 (1) YR OPTIONS IGF::CT::IGF Key points: 1. The contract's value of $73.9 million over its period of performance suggests a significant investment in heavy engineering construction services. 2. With 19 offers received, the competition level indicates a robust market response for this type of federal procurement. 3. The 'Cost Plus Fixed Fee' contract type introduces potential for cost overruns, necessitating close oversight. 4. The contract duration of approximately 2007 days (around 5.5 years) points to a long-term need for these services. 5. The 'Other Heavy and Civil Engineering Construction' NAICS code places this contract within a specific, specialized sector of the construction industry. 6. The award to CERRUDO SERVICES, LLC, highlights a specific contractor's role in fulfilling federal infrastructure needs.

Value Assessment

Rating: fair

Benchmarking the value of this $73.9 million contract is challenging without specific details on the scope of work and deliverables. However, the 'Cost Plus Fixed Fee' (CPFF) contract type, while allowing for flexibility, can sometimes lead to higher overall costs compared to fixed-price contracts if not managed diligently. The relatively high number of offers (19) suggests that the pricing might have been competitive at the time of award, but without a direct comparison to similar projects or market rates for the specific services rendered, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which is a less common competition type. While 19 offers were received, the 'exclusion of sources' aspect suggests that certain potential bidders may have been disqualified or not considered from the outset, potentially limiting the breadth of competition. The high number of offers is positive, but the specific reason for excluding sources needs further investigation to understand its impact on the competitive landscape and potential price discovery.

Taxpayer Impact: The exclusion of sources, even with a high number of bids, could mean that taxpayers did not benefit from the widest possible competitive pricing. Further clarity on the exclusion criteria is needed to ensure maximum value for taxpayer dollars.

Public Impact

This contract likely benefits the Department of Homeland Security by providing essential heavy and civil engineering construction services for its facilities and infrastructure. The services delivered are crucial for maintaining and potentially expanding the operational capabilities of U.S. Customs and Border Protection. The geographic impact is primarily focused on California, where the contract was awarded. The contract supports jobs within the heavy and civil engineering construction sector, contributing to the local and regional economy in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Cost Plus Fixed Fee' contract type can lead to cost overruns if not meticulously managed and monitored.
The 'exclusion of sources' in the competition process raises questions about whether the full spectrum of potential bidders was considered, potentially impacting price competitiveness.
Lack of detailed public information on the specific scope of work makes it difficult to fully assess the value for money.
The contract's duration of over 5 years necessitates ongoing performance monitoring to ensure sustained quality and efficiency.

Positive Signals

The receipt of 19 offers indicates a strong interest from the market and suggests a competitive bidding environment.
The award to CERRUDO SERVICES, LLC, provides a specific contractor to fulfill critical infrastructure needs for DHS.
The contract is awarded to a company operating within the United States, supporting domestic economic activity.
The contract falls under a specific NAICS code (237990), indicating a focus on specialized heavy and civil engineering construction.

Sector Analysis

This contract falls within the Heavy and Civil Engineering Construction sector, which includes establishments primarily engaged in the construction or alteration of infrastructure projects such as highways, streets, bridges, tunnels, and other public works. The market for such services is often characterized by large-scale projects, significant capital investment, and specialized expertise. The award of $73.9 million positions this contract as a substantial project within this sector. Comparable spending benchmarks would typically involve analyzing other large federal or state-level infrastructure projects of similar scope and complexity.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large-value contract in the heavy and civil engineering construction sector, it is unlikely to have significant subcontracting opportunities specifically targeted at small businesses unless explicitly mandated or pursued by the prime contractor. The absence of small business set-aside provisions means that the primary focus of this contract is on larger, established firms capable of undertaking complex infrastructure projects.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security and U.S. Customs and Border Protection. The 'Cost Plus Fixed Fee' nature of the contract necessitates rigorous financial oversight to ensure costs are reasonable and allocable to the contract. Transparency would be enhanced through regular reporting requirements from the contractor and potential audits by the agency or the DHS Office of Inspector General. The specific Inspector General jurisdiction would be that of the Department of Homeland Security.

Related Government Programs

Federal Highway Administration Construction Projects
Army Corps of Engineers Civil Works Projects
General Services Administration Public Buildings Service Construction
Department of Transportation Infrastructure Grants
Department of Defense Military Construction

Risk Flags

Cost Overrun Risk (CPFF Contract Type)
Limited Competition Due to Source Exclusion
Long Contract Duration Risk
Potential for Scope Creep
Difficulty in Benchmarking Value Without Detailed Scope

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $73.9 million to CERRUDO SERVICES, LLC. AWARD CTIMR CONTRACT HSBP1014C00072 WITH A BASE PLUS 4 (1) YR OPTIONS IGF::CT::IGF

Who is the contractor on this award?

The obligated recipient is CERRUDO SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $73.9 million.

What is the period of performance?

Start: 2015-09-29. End: 2021-03-28.

What was the specific scope of work for this $73.9 million heavy engineering construction contract awarded to CERRUDO SERVICES, LLC?

The provided data indicates the contract (HSBP1014C00072) was for 'Other Heavy and Civil Engineering Construction' (NAICS 237990) awarded by U.S. Customs and Border Protection (part of DHS) to CERRUDO SERVICES, LLC. The base value was $73,933,038.57 with options extending the performance period. However, the specific details of the scope of work, such as the type of construction (e.g., border infrastructure, facility upgrades, road construction), the exact locations within California, and the specific deliverables, are not detailed in the provided data. This level of detail is crucial for a comprehensive understanding of the contract's purpose and value.

How does the 'Cost Plus Fixed Fee' (CPFF) contract type typically perform in terms of cost control compared to other federal contract types?

Cost Plus Fixed Fee (CPFF) contracts are used when the scope of work is not precisely defined, or when there is significant uncertainty in the cost of performance. In a CPFF contract, the contractor is reimbursed for all allowable costs plus a fixed fee, which represents profit. While the fixed fee provides some incentive for the contractor to control costs (as it doesn't increase with actual costs), it generally offers less cost control for the government compared to fixed-price contracts. If costs escalate significantly, the government still pays the allowable costs plus the pre-determined fee. Effective oversight, detailed cost accounting, and clear performance metrics are essential to manage CPFF contracts and mitigate the risk of cost overruns.

What are the implications of 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' for federal procurement fairness and cost efficiency?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' (FOUCAES) is a procurement method where the agency intends to conduct full and open competition but excludes specific sources from consideration. This exclusion must be justified by specific criteria outlined in federal acquisition regulations, such as national security concerns or the need to protect proprietary information. While it aims for competition among the remaining eligible sources, the exclusion inherently limits the pool of potential bidders. This can potentially reduce price competition and may lead to higher costs for taxpayers if the excluded sources could have offered better value. The justification for exclusion is critical for ensuring fairness and maximizing competition.

What is the typical market size and contractor landscape for 'Other Heavy and Civil Engineering Construction' (NAICS 237990) in California?

The 'Other Heavy and Civil Engineering Construction' sector (NAICS 237990) encompasses a wide range of infrastructure projects beyond standard building construction. In California, a state with significant infrastructure needs and a large economy, this sector is substantial. It includes numerous large, established engineering and construction firms, as well as specialized subcontractors. The market is competitive, driven by government contracts (federal, state, local) and private sector development. The presence of 19 bidders for this specific DHS contract suggests a healthy level of interest and capability within the California market for such projects, indicating a robust ecosystem of qualified contractors.

How has federal spending in the 'Other Heavy and Civil Engineering Construction' sector trended in recent years, and how does this contract fit?

Federal spending in the 'Other Heavy and Civil Engineering Construction' sector can fluctuate based on infrastructure initiatives, economic conditions, and national priorities. Historically, significant federal investments have been made in areas like transportation, energy, and defense infrastructure. This $73.9 million contract awarded in 2015 for DHS needs fits within the broader pattern of federal agencies procuring construction services for critical facilities and operational support. Without access to historical spending data specifically for NAICS 237990 by DHS or similar agencies, it's difficult to pinpoint its exact position relative to trends. However, large infrastructure projects are a consistent component of federal spending.

What are the potential risks associated with a contract duration of approximately 2007 days (over 5 years) for heavy engineering construction?

A contract duration of over five years for heavy engineering construction presents several potential risks. Firstly, the longer the contract period, the greater the exposure to economic fluctuations, material price volatility, and changes in labor costs, which can impact the 'fixed fee' aspect of a CPFF contract if not properly managed. Secondly, there's a risk of scope creep or evolving requirements over such an extended period, potentially leading to contract modifications and cost increases. Thirdly, maintaining consistent quality and performance over many years requires robust oversight and contractor accountability. Finally, technological advancements in construction methods or materials could render initial plans or approaches suboptimal by the end of the contract term.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HSBP1013R0017

Offers Received: 19

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 74 DIGITAL DR STE 1, NOVATO, CA, 94949

Business Categories: Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Economically Disadvantaged Women Owned Small Business, Hispanic American Owned Business, Limited Liability Corporation, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $82,779,376

Exercised Options: $73,933,039

Current Obligation: $73,933,039

Actual Outlays: $115,893

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline