Navy Gateway Inns & Suites construction contract awarded to Korte Construction Company for over $48.9 million

Contract Overview

Contract Amount: $48,922,971 ($48.9M)

Contractor: Korte Construction Company

Awarding Agency: Department of Defense

Start Date: 2014-09-25

End Date: 2019-12-15

Contract Duration: 1,907 days

Daily Burn Rate: $25.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF CONSTRUCTION SERVICES FOR NAVY GATEWAY INNS&SUITES

Place of Performance

Location: NEWPORT, NEWPORT County, RHODE ISLAND, 02840

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $48.9 million to KORTE CONSTRUCTION COMPANY for work described as: IGF::OT::IGF CONSTRUCTION SERVICES FOR NAVY GATEWAY INNS&SUITES Key points: 1. Contract value represents a significant investment in military lodging infrastructure. 2. Awarded through full and open competition, suggesting a robust bidding process. 3. Fixed-price contract type aims to control costs and manage financial risk. 4. Performance period spanned over five years, indicating a substantial project duration. 5. Geographic focus on Rhode Island highlights specific regional infrastructure development. 6. Contractor has a track record with federal construction projects.

Value Assessment

Rating: good

The contract value of approximately $48.9 million for construction services is substantial. Benchmarking against similar large-scale institutional building projects would be necessary for a precise value-for-money assessment. However, the firm fixed-price nature of the contract suggests an effort to establish a clear cost ceiling, which is a positive indicator for cost control. The duration of the contract (over 1900 days) also implies a complex and extensive scope of work.

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 a bid. The presence of 6 bidders suggests a healthy level of competition for this significant construction project. This competitive environment is generally expected to drive more favorable pricing and better terms for the government.

Taxpayer Impact: A competitive bidding process for this contract likely resulted in a more cost-effective outcome for taxpayers by encouraging multiple firms to offer their best pricing and capabilities.

Public Impact

Service members and their families staying at Navy Gateway Inns & Suites in Rhode Island benefit from improved lodging facilities. The project involved the construction and potentially renovation of institutional buildings, enhancing the quality of on-base accommodations. The geographic impact is concentrated in Rhode Island, supporting local economic activity through construction jobs and material sourcing. The construction activities likely supported a workforce of skilled tradespeople and construction professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise during a long-term construction project.
Risk of delays impacting the availability of updated lodging facilities for service members.
Ensuring compliance with all building codes and environmental regulations throughout the construction process.

Positive Signals

Firm fixed-price contract helps mitigate budget uncertainty.
Awarded through full and open competition, indicating a competitive market.
Contractor has experience with federal construction projects, suggesting familiarity with government requirements.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. Federal spending in this area supports the development and maintenance of government facilities, including military installations. The value of this contract is substantial within the context of a single project, and comparable spending benchmarks would involve looking at other large-scale federal construction awards for similar types of facilities.

Small Business Impact

The contract was not set aside for small businesses, and there is no explicit indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a larger firm, and the direct impact on the small business ecosystem may be limited unless Korte Construction Company actively engaged small businesses as subcontractors.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of the Navy, implying oversight from the Navy's contracting and program management offices. As a firm fixed-price contract, financial oversight would focus on adherence to the agreed-upon price. Transparency would be facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Construction (MILCON)
Base Realignment and Closure (BRAC) projects
Department of Defense Facilities Management
Government Lodging Services

Risk Flags

Long contract duration increases exposure to market volatility.
Fixed-price contracts can lead to disputes if scope or conditions change.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.9 million to KORTE CONSTRUCTION COMPANY. IGF::OT::IGF CONSTRUCTION SERVICES FOR NAVY GATEWAY INNS&SUITES

Who is the contractor on this award?

The obligated recipient is KORTE CONSTRUCTION COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $48.9 million.

What is the period of performance?

Start: 2014-09-25. End: 2019-12-15.

What is the historical spending pattern for Navy Gateway Inns & Suites construction and renovation projects?

Analyzing historical spending for Navy Gateway Inns & Suites (NGIS) construction and renovation requires access to detailed federal procurement data beyond this single contract. Generally, NGIS projects are part of the Department of the Navy's broader infrastructure investment strategy, which fluctuates based on budget allocations, military readiness needs, and modernization priorities. Spending can be influenced by factors such as the age of existing facilities, the need to upgrade to meet modern standards, and the deployment tempo of naval forces. Comparing this $48.9 million contract to other NGIS projects would reveal if it represents a typical investment or an outlier in terms of scale and cost. Trends in military construction budgets, overall defense spending, and specific appropriations for lodging facilities would provide further context on the historical spending landscape for such projects.

How does the cost per square foot of this project compare to industry benchmarks for similar institutional construction?

To compare the cost per square foot, the total square footage of the construction would be needed, which is not provided in the data. Assuming the contract value of $48.9 million covers the entire project, and if the square footage were known, it could be benchmarked. Industry benchmarks for institutional construction vary significantly by region, complexity, and specific building type (e.g., hotel vs. barracks). For large-scale projects, costs can range widely, but a rough estimate might place institutional construction anywhere from $200 to $600+ per square foot. Without the square footage, a precise comparison is impossible. However, the firm fixed-price nature suggests the contractor aimed to lock in costs based on their assessment of the project's scope and the prevailing market rates at the time of bidding.

What is Korte Construction Company's track record with Department of Defense contracts, specifically for lodging facilities?

Korte Construction Company has a significant track record with Department of Defense (DoD) contracts, including projects related to military construction and facilities. While specific details on their past performance solely on lodging facilities like Gateway Inns & Suites are not detailed here, their history with the DoD suggests familiarity with federal procurement processes, security requirements, and construction standards applicable to military installations. A deeper dive into their contract history would reveal the number and value of similar projects, client satisfaction ratings (if available through past performance evaluations), and any history of disputes or performance issues. Their ability to win a large, competitively bid contract like this one implies a demonstrated capability and a positive past performance record with the government.

What are the potential risks associated with a five-year fixed-price construction contract of this magnitude?

A five-year firm fixed-price contract of this magnitude carries several potential risks. For the government, the primary risk is that the fixed price might become uncompetitive if market conditions change significantly (e.g., material costs skyrocket) or if the initial cost estimate was too high. However, the contractor bears the risk of cost overruns if their estimates are inaccurate or if unforeseen site conditions or scope creep occur. For the contractor, managing a project over five years involves risks related to labor availability, material price volatility, and potential delays due to weather, regulatory changes, or unforeseen site issues. Effective project management, contingency planning, and clear communication channels are crucial to mitigate these risks for both parties.

How does the number of bidders (6) influence the government's ability to secure competitive pricing for large construction projects?

A higher number of bidders, such as the six involved in this contract, generally enhances the government's ability to secure competitive pricing. When multiple qualified firms vie for a contract, they are incentivized to offer their most competitive bids to win the work. This competition can drive down prices, improve the quality of proposals, and encourage innovation. Conversely, a low number of bidders might indicate limited market capacity, specialized requirements, or potential barriers to entry, which could lead to higher prices. The presence of six bidders suggests a reasonably competitive market for this type of construction, likely contributing to a more favorable outcome for the government compared to a sole-source or limited-competition scenario.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N4008514R5226

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5700 OAKLAND AVE STE 275, SAINT LOUIS, MO, 63110

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

Financial Breakdown

Contract Ceiling: $48,922,971

Exercised Options: $48,922,971

Current Obligation: $48,922,971

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline