Navy awards $77.9M for Portsmouth Naval Shipyard dry dock construction, with 3 bids received

Contract Overview

Contract Amount: $77,871,401 ($77.9M)

Contractor: Methuen Construction CO Inc

Awarding Agency: Department of Defense

Start Date: 2021-08-30

End Date: 2025-05-15

Contract Duration: 1,354 days

Daily Burn Rate: $57.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN-BID-BUILD DRY DOCK 2 COMPLEX, PORTSMOUTH NAVAL SHIPYARD, KITTERY, ME

Place of Performance

Location: PORTSMOUTH, ROCKINGHAM County, NEW HAMPSHIRE, 03804

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $77.9 million to METHUEN CONSTRUCTION CO INC for work described as: DESIGN-BID-BUILD DRY DOCK 2 COMPLEX, PORTSMOUTH NAVAL SHIPYARD, KITTERY, ME Key points: 1. Contract value appears reasonable given the scope of a major shipyard infrastructure project. 2. Competition was robust with three bids, suggesting a healthy market for this type of construction. 3. Fixed-price contract type mitigates cost overrun risk for the government. 4. Project duration of over three years indicates a significant and complex undertaking. 5. Location in Kittery, ME, suggests a focus on regional economic impact and specialized labor. 6. The contract is for commercial and institutional building construction, a broad category.

Value Assessment

Rating: good

The $77.9 million award for a dry dock construction project at Portsmouth Naval Shipyard seems within a reasonable range for complex maritime infrastructure. Benchmarking against similar large-scale shipyard facility upgrades or new constructions would provide a more precise value-for-money assessment. However, the firm fixed-price nature of the contract suggests the government has secured a defined cost, which is a positive indicator for budget predictability. The number of bidders also implies a competitive environment that likely contributed to a fair price.

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. Three bids were received, which suggests a moderate level of competition for this specialized construction project. While three bidders are better than one or two, a higher number could potentially drive prices down further. The agency's decision to use full and open competition is generally a positive sign for achieving competitive pricing.

Taxpayer Impact: The full and open competition with three bidders likely resulted in a more competitive price for taxpayers than a sole-source or limited competition award. This approach maximizes the opportunity to obtain the best value for the government's investment.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring critical maintenance and repair capabilities for vessels. The project will deliver a new or upgraded dry dock facility essential for shipbuilding and repair operations. Geographic impact is concentrated in Kittery, Maine, and surrounding areas, potentially boosting the local economy through job creation and subcontractor opportunities. Workforce implications include demand for skilled construction labor, engineers, and project managers in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for schedule delays given the complexity of large-scale construction projects.
Ensuring adequate oversight to maintain quality standards throughout the multi-year construction period.
Managing potential environmental impacts associated with shipyard construction activities.

Positive Signals

Firm fixed-price contract structure limits financial risk for the government.
Award to an established construction company suggests a degree of contractor capability.
Full and open competition process generally leads to better pricing outcomes.

Sector Analysis

This contract falls within the broader construction sector, specifically commercial and institutional building construction, with a focus on heavy civil and maritime infrastructure. The market for large-scale shipyard construction and renovation is specialized, often dominated by a smaller number of experienced firms capable of handling the technical requirements and security protocols of naval facilities. Comparable spending benchmarks would typically involve other major naval shipyard upgrades or similar large port infrastructure projects.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside (ss: false, sb: false). This suggests the primary contract was awarded to a larger entity. However, the prime contractor, Methuen Construction Co. Inc., may utilize small businesses as subcontractors to fulfill portions of the work. Further analysis would be needed to determine the extent of small business subcontracting and its impact on the local small business ecosystem.

Oversight & Accountability

Oversight for this project will likely be managed by the Department of the Navy's contracting and engineering divisions, with potential involvement from the Naval Facilities Engineering Command. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver the specified dry dock within the agreed-upon cost. Transparency is facilitated through the Federal Procurement Data System (FPDS), where contract awards are publicly reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Shipyard Infrastructure Modernization Programs
Military Construction Projects
Port and Harbor Development Projects
Heavy Civil Construction Contracts

Risk Flags

Potential for cost overruns despite fixed-price contract if scope changes significantly.
Risk of project delays due to complexity and potential unforeseen site conditions.
Dependence on specialized labor and materials, which could face supply chain disruptions.
Ensuring compliance with stringent environmental and safety regulations in a naval shipyard setting.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.9 million to METHUEN CONSTRUCTION CO INC. DESIGN-BID-BUILD DRY DOCK 2 COMPLEX, PORTSMOUTH NAVAL SHIPYARD, KITTERY, ME

Who is the contractor on this award?

The obligated recipient is METHUEN CONSTRUCTION CO INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $77.9 million.

What is the period of performance?

Start: 2021-08-30. End: 2025-05-15.

What is the track record of Methuen Construction Co. Inc. with federal contracts, particularly with the Department of Defense?

Methuen Construction Co. Inc. has a history of federal contracting, primarily with the Department of Defense. Reviewing their past performance on similar large-scale construction projects, especially those involving maritime or industrial facilities, is crucial. Data from the Federal Procurement Data System (FPDS) can reveal the number and value of previous contracts awarded to Methuen Construction, as well as their performance ratings. A consistent record of successful project completion, adherence to schedules, and quality standards would indicate a lower risk profile for this current dry dock project. Conversely, a history of significant cost overruns, delays, or performance issues on comparable projects would raise concerns about their capacity to execute this complex undertaking effectively.

How does the awarded price compare to similar dry dock construction projects at other naval facilities?

To assess the value for money, the $77.9 million award should be benchmarked against similar dry dock construction or major renovation projects at other naval shipyards or comparable maritime facilities. Factors influencing cost include project scope (size, depth, capabilities), complexity of the site, labor costs in the region, and the specific technological requirements of the dry dock. A detailed comparison would involve analyzing contract data for projects with similar specifications completed within the last few years. If this project's cost per square foot or per unit of capacity is significantly higher than comparable projects, it could indicate potential overpricing or scope creep. Conversely, if it aligns with or is lower than benchmarks, it suggests a competitive and fair price was achieved.

What are the primary risks associated with the 'Commercial and Institutional Building Construction' category for this specific project?

While 'Commercial and Institutional Building Construction' is a broad category, applying it to a naval dry dock project highlights specific risks. These include the inherent complexities of maritime construction, such as working in dynamic water environments, managing deep excavations, and integrating specialized heavy-duty equipment. Risks also extend to potential environmental challenges, compliance with stringent naval operational requirements, and the need for highly specialized engineering and construction expertise. Furthermore, the long duration of the project (over three years) increases exposure to risks like material price fluctuations (though mitigated by fixed-price), labor availability issues, and unforeseen site conditions. Ensuring the contractor has robust risk mitigation plans for these specific maritime construction challenges is paramount.

What is the historical spending pattern for dry dock construction and maintenance at Portsmouth Naval Shipyard?

Analyzing historical spending patterns for dry dock construction and maintenance at Portsmouth Naval Shipyard provides context for the current $77.9 million award. This involves examining past contracts for similar projects, noting their values, durations, and whether they were for new construction or upgrades. Understanding the frequency and cost of past investments can reveal trends in infrastructure needs and budget allocations. For instance, if there hasn't been significant investment in dry dock facilities for many years, this current award might represent a necessary catch-up expenditure. Conversely, if multiple large projects have been awarded recently, it could indicate a sustained modernization effort or potential concerns about the longevity of existing facilities. This historical data helps assess if the current spending is an anomaly or part of a consistent investment strategy.

How does the firm fixed-price contract type impact the government's exposure to cost increases during the project?

The firm fixed-price (FFP) contract type significantly limits the government's exposure to cost increases. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This shifts the risk of cost overruns from the government to the contractor. If Methuen Construction encounters unexpected expenses or inefficiencies, they absorb those additional costs. This contract structure incentivizes the contractor to manage their resources efficiently and control costs to maximize their profit margin. While FFP contracts are generally favorable for the government in terms of cost certainty, they often result in a higher initial price compared to cost-reimbursement contracts, as the contractor factors in a risk premium. For a project like dry dock construction with inherent uncertainties, FFP provides valuable budget predictability.

What are the implications of awarding this contract to Methuen Construction Co. Inc. for the regional construction market?

Awarding a contract of this magnitude ($77.9 million) to Methuen Construction Co. Inc. has significant implications for the regional construction market, particularly in New Hampshire and surrounding areas. It signifies a substantial injection of economic activity, potentially creating numerous jobs for skilled tradespeople, engineers, project managers, and support staff. Methuen Construction will likely engage local suppliers for materials and equipment, further stimulating the regional economy. Furthermore, the successful execution of such a high-profile project can enhance the reputation and capacity of the prime contractor and any local subcontractors involved, potentially positioning them for future large-scale federal or private sector projects. This contract could also influence wage rates and demand for specific construction skills in the region during the project's duration.

Industry Classification

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

Product/Service Code: INSTALLATION OF EQUIPMENT › INSTALLATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N4008521R1225

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 144 MAIN ST, PLAISTOW, NH, 03865

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: $93,336,533

Exercised Options: $77,871,401

Current Obligation: $77,871,401

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline