DHS awards $10M for Long Island Sound facility construction, exceeding initial estimates by 42%

Contract Overview

Contract Amount: $9,986,201 ($10.0M)

Contractor: Diversified Technology Consultants, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2006-08-15

End Date: 2010-06-30

Contract Duration: 1,415 days

Daily Burn Rate: $7.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: SECTOR LONG ISLAND SOUND, NEW HAVEN, CT: CONSTRUCT SECTOR BUILDING (PROJECT NUMBER 01-X3874)

Place of Performance

Location: NEW HAVEN, NEW HAVEN County, CONNECTICUT, 06512

State: Connecticut Government Spending

Plain-Language Summary

Department of Homeland Security obligated $10.0 million to DIVERSIFIED TECHNOLOGY CONSULTANTS, INC. for work described as: SECTOR LONG ISLAND SOUND, NEW HAVEN, CT: CONSTRUCT SECTOR BUILDING (PROJECT NUMBER 01-X3874) Key points: 1. The contract value of $9.99M significantly surpassed the estimated $7M, indicating potential cost overruns or scope changes. 2. Awarded via full and open competition, suggesting a robust market response, though the final price may reflect this. 3. The fixed-price contract type aims to control costs, but the significant overage warrants scrutiny of the baseline estimate. 4. Construction services for industrial buildings are a common requirement, but the specific location and project scope are key differentiators. 5. The duration of 1415 days (nearly 4 years) for construction suggests a complex project with potential for extended risk exposure. 6. The contractor, Diversified Technology Consultants, Inc., has a track record that needs to be assessed against this project's performance. 7. The project is located in Connecticut, a state with a moderate level of federal contracting activity in the construction sector.

Value Assessment

Rating: questionable

The final award of $9,986,200.89 is approximately 42% higher than the estimated value of $7,057,000. This significant variance raises concerns about the accuracy of the initial cost estimation or potential scope creep during the procurement process. Without further details on the project's evolution, it's difficult to definitively assess value for money. However, a nearly 42% overage on an estimate is a notable red flag.

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 were likely encouraged to participate. This generally promotes competitive pricing. However, the substantial difference between the estimated and awarded amounts suggests that either the initial estimate was significantly flawed, or the competitive process did not result in a price as low as initially anticipated, potentially due to unforeseen complexities or market conditions.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it aims to secure the best possible price through market forces. However, the significant cost overrun in this instance suggests that the initial price discovery mechanism may have been insufficient or that unforeseen factors drove up the final cost, potentially diminishing the taxpayer benefit.

Public Impact

The U.S. Coast Guard benefits from the construction of a new or improved facility to support its operations in the Long Island Sound region. The project delivers essential industrial building construction services, likely for housing equipment, personnel, or operational support. The geographic impact is localized to New Haven, Connecticut, providing a facility for federal operations in that area. The project likely created temporary jobs in the construction sector within Connecticut during its nearly four-year duration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost overrun of 42% compared to the initial estimate.
Long project duration of nearly 4 years could lead to unforeseen delays and cost increases.
Lack of detailed justification for the cost variance in the provided data.
The specific nature of 'Industrial Building Construction' can sometimes involve complex requirements leading to cost escalation.

Positive Signals

Awarded through full and open competition, suggesting a competitive marketplace.
Firm Fixed Price contract type helps to cap potential cost increases once awarded.
The project is for the U.S. Coast Guard, a critical national security agency.

Sector Analysis

The construction sector is a significant component of federal spending, encompassing a wide range of projects from infrastructure to facility maintenance. This contract falls under industrial building construction, a segment that requires specialized expertise. Federal spending in this area is often driven by the need for new facilities, upgrades to existing ones, or specialized structures for defense, research, or operational purposes. Benchmarks for industrial building construction can vary widely based on size, complexity, and location, but a nearly 42% variance from an initial estimate is substantial.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale construction project, it is likely that the prime contractor, Diversified Technology Consultants, Inc., would engage subcontractors. The extent to which small businesses are utilized in subcontracting roles is not specified but is a common practice in the construction industry to fulfill specialized needs and meet potential subcontracting goals.

Oversight & Accountability

Oversight for this contract would typically fall under the U.S. Coast Guard and the Department of Homeland Security's internal oversight mechanisms. Given the significant cost variance, it is probable that program managers and potentially the DHS Office of Inspector General would have reviewed the project's financial performance and execution. Transparency would depend on the public availability of contract performance reports and audit findings, which are not detailed here.

Related Government Programs

Department of Homeland Security Facilities Construction
U.S. Coast Guard Infrastructure Projects
Federal Industrial Building Construction Contracts
Long Island Sound Area Federal Contracts

Risk Flags

Significant Cost Overrun
Long Project Duration
Potential Estimation Inaccuracy

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $10.0 million to DIVERSIFIED TECHNOLOGY CONSULTANTS, INC.. SECTOR LONG ISLAND SOUND, NEW HAVEN, CT: CONSTRUCT SECTOR BUILDING (PROJECT NUMBER 01-X3874)

Who is the contractor on this award?

The obligated recipient is DIVERSIFIED TECHNOLOGY CONSULTANTS, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $10.0 million.

What is the period of performance?

Start: 2006-08-15. End: 2010-06-30.

What factors contributed to the 42% cost overrun from the estimated $7.06M to the final $9.99M award?

The provided data does not specify the exact reasons for the 42% cost overrun. Potential factors could include underestimation of material costs, labor expenses, unforeseen site conditions, changes in project scope requested by the U.S. Coast Guard, or increased complexity discovered during the design or construction phases. A thorough review of contract modifications, change orders, and project documentation would be necessary to pinpoint the precise drivers of this significant variance. It is also possible that the initial estimate was overly optimistic or did not fully account for all project requirements.

How does the final award price compare to similar industrial building construction contracts awarded by the federal government?

Benchmarking this contract's final award price requires comparison with similar industrial building construction projects in terms of size, complexity, location, and specific functionalities. Without access to a broader database of comparable federal construction contracts, a precise comparison is difficult. However, a nearly 42% deviation from the initial estimate is generally considered substantial across most federal contracting categories. It suggests that either this project had unique challenges, the initial estimate was flawed, or market conditions significantly impacted the final price. Further analysis would involve identifying contracts with similar square footage, structural requirements, and intended use.

What is the track record of Diversified Technology Consultants, Inc. on federal contracts, particularly in construction?

The provided data identifies Diversified Technology Consultants, Inc. as the contractor but does not offer details on their past performance or track record. To assess their reliability and past success, one would need to examine their contract history, including past performance evaluations, any instances of contract disputes or terminations, and the overall cost and schedule performance on previous federal projects. A review of federal procurement databases and contract award histories would be essential to understand their experience and capabilities in industrial building construction.

What are the potential risks associated with a construction project lasting nearly four years?

A construction project with a duration of 1415 days (approximately 3.88 years) carries several inherent risks. These include significant exposure to fluctuating material and labor costs over an extended period, potential for design obsolescence if technology or requirements change, increased likelihood of encountering unforeseen site conditions, and greater administrative burden for contract management and oversight. Furthermore, long projects are more susceptible to economic downturns or shifts in government priorities, which could lead to funding issues or project delays. Maintaining consistent quality and adherence to original specifications over such a long timeframe also presents a challenge.

How does the firm fixed price contract type interact with the significant cost overrun?

A Firm Fixed Price (FFP) contract is designed to provide price certainty for the government, with the contractor assuming most of the risk for cost overruns. In this case, the initial estimate was $7.06M, and the final award was $9.99M. If the $9.99M was the FFP established *after* the competition and negotiation, then the government is obligated to pay this amount, and the contractor bears the risk if their actual costs exceed this. However, if the $7.06M was the initial FFP estimate and the $9.99M represents a modification or a new FFP award, it implies that the initial price was insufficient. The significant difference suggests either the initial FFP was poorly set, or substantial changes occurred that necessitated a renegotiated FFP, which is unusual for a true FFP structure unless scope changes significantly.

What is the historical spending pattern for industrial building construction by the U.S. Coast Guard in Connecticut?

Analyzing historical spending patterns for industrial building construction by the U.S. Coast Guard in Connecticut would require access to historical federal procurement data. This would involve querying databases for contracts awarded by the Coast Guard within Connecticut for the North American Industry Classification System (NAICS) code 236210 (Industrial Building Construction) or similar codes over a specified period. Such an analysis would reveal the frequency, average contract values, and types of industrial construction projects undertaken by the Coast Guard in the state, providing context for the current $9.99M award.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Industrial Building Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: TWO STEP

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 556 WASHINGTON AVE STE 101, NORTH HAVEN, CT, 06473

Business Categories: Category Business, Emerging Small Business, Minority Owned Business, Small Business, Special Designations, Indian (Subcontinent) American Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $9,986,201

Exercised Options: $9,986,201

Current Obligation: $9,986,201

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline