Navy awards $170.9M construction contract for Guam facilities, highlighting significant investment in Pacific infrastructure

Contract Overview

Contract Amount: $170,940,342 ($170.9M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2023-03-31

End Date: 2026-05-26

Contract Duration: 1,152 days

Daily Burn Rate: $148.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: WON 1735860 P-927, RADIO BARRIGADA, GU

Place of Performance

Location: BARRIGADA, GUAM County, GUAM, 96913

Plain-Language Summary

Department of Defense obligated $170.9 million to HENSEL PHELPS CONSTRUCTION CO for work described as: WON 1735860 P-927, RADIO BARRIGADA, GU Key points: 1. Contract value represents a substantial commitment to infrastructure development in a key strategic location. 2. The project's scope suggests a focus on enhancing operational capabilities and readiness in the Indo-Pacific. 3. Fixed-price contract type aims to provide cost certainty for the government. 4. The duration of the contract indicates a long-term need for these facilities. 5. Competition level will be a key factor in assessing overall value for money.

Value Assessment

Rating: good

The contract value of $170.9 million for commercial and institutional building construction in Guam appears to be within a reasonable range for large-scale infrastructure projects in high-cost areas. Benchmarking against similar Department of Defense construction projects in remote or high-cost locations would provide a more precise assessment of value. The firm fixed-price structure suggests an effort to control costs, but the final value will depend on the execution and any potential change orders.

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 had the opportunity to submit proposals. This approach is generally expected to foster competitive pricing and encourage a wider range of solutions. The presence of 3 bidders suggests a moderate level of competition for this significant project.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to more competitive pricing and a greater likelihood of obtaining the best value for the government's investment.

Public Impact

The primary beneficiaries are the U.S. Navy and its personnel stationed in Guam, who will gain access to improved facilities. The contract will deliver essential construction services for commercial and institutional buildings. The geographic impact is concentrated in Guam, supporting U.S. military presence and infrastructure in the Pacific. The project is expected to create employment opportunities for skilled construction labor in Guam and potentially surrounding regions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions or material price escalations occur, despite the fixed-price nature.
Logistical challenges associated with construction in Guam could impact project timelines and costs.
Ensuring adequate local workforce availability and managing potential labor disputes.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Firm fixed-price contract type provides cost certainty for the government.
Significant investment in a strategic location demonstrates commitment to long-term operational readiness.

Sector Analysis

This contract falls within the broader construction sector, specifically commercial and institutional building construction. The Department of Defense is a major client for construction services, particularly in support of its global infrastructure needs. Spending in this category is often driven by modernization efforts, base improvements, and strategic positioning, such as the significant military buildup in Guam. Comparable benchmarks would involve other large-scale DoD construction projects, especially those in overseas or high-cost territories.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside (ss: false, sb: false). While this contract was competed fully and openly, there may be opportunities for small businesses to participate as subcontractors to the prime contractor, Hensel Phelps Construction Co. The extent of small business subcontracting will be a key factor in assessing the broader economic impact on the small business ecosystem in Guam and beyond.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and engineering divisions. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified facilities within the agreed budget. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Military Construction
Naval Facilities Engineering Command Contracts
Guam Infrastructure Development Projects
Pacific Region Defense Spending

Risk Flags

Potential for cost overruns due to Guam's high cost of living and logistics.
Risk of project delays due to weather or unforeseen site conditions.
Ensuring adequate skilled labor availability for the project duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $170.9 million to HENSEL PHELPS CONSTRUCTION CO. WON 1735860 P-927, RADIO BARRIGADA, GU

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS CONSTRUCTION CO.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $170.9 million.

What is the period of performance?

Start: 2023-03-31. End: 2026-05-26.

What is the historical spending pattern for commercial and institutional building construction by the Department of the Navy in Guam over the past five years?

Analyzing historical spending by the Department of the Navy for commercial and institutional building construction in Guam over the past five years would reveal trends in infrastructure investment. This data could indicate whether this $170.9 million award represents a significant increase, a continuation of a steady investment, or a decrease compared to previous periods. Understanding these patterns helps contextualize the current award's scale and importance, and whether it aligns with broader strategic objectives for the region. It also provides a baseline for assessing future spending and identifying potential shifts in priorities or budget allocations for construction projects in Guam.

How does the per-square-foot construction cost of this contract compare to similar DoD projects in the Pacific region?

To assess the value for money, a comparison of the per-square-foot construction cost for this $170.9 million contract against similar Department of Defense projects in the Pacific region is crucial. Guam is known for its higher construction costs due to logistical challenges, import duties, and limited local resources. Benchmarking against projects in Hawaii, Japan, or other Pacific territories would help determine if the pricing is competitive or if it reflects the unique cost environment of Guam. A significantly higher per-square-foot cost might warrant further investigation into the specific project requirements, site conditions, or market dynamics that contribute to the overall price.

What are the specific types of commercial and institutional buildings being constructed under this contract, and what is their intended use?

The contract specifies 'Commercial and Institutional Building Construction' but lacks granular detail on the exact types of facilities. Understanding the specific buildings (e.g., barracks, administrative offices, training facilities, maintenance depots, community centers) and their intended use is vital for assessing the strategic importance and operational impact of this $170.9 million award. This information would clarify how the investment directly supports the Navy's mission in Guam, whether it's for personnel support, operational readiness, or administrative functions. Without this detail, it's challenging to fully evaluate the necessity and effectiveness of the expenditure in meeting the Navy's long-term strategic goals in the Indo-Pacific.

What is the track record of Hensel Phelps Construction Co. on similar large-scale government construction projects, particularly those in overseas or high-cost locations?

Hensel Phelps Construction Co. has a significant track record in large-scale government and commercial construction. Evaluating their performance on similar projects, especially those undertaken for the Department of Defense or in challenging logistical environments like Guam, is essential. Key performance indicators to examine include on-time and on-budget delivery, quality of work, safety records, and their experience with firm fixed-price contracts. A history of successful project execution in comparable settings would increase confidence in their ability to deliver this $170.9 million contract effectively, while any past issues might signal potential risks that require closer monitoring.

What are the potential risks associated with the 1152-day duration of this contract, and what mitigation strategies are in place?

The 1152-day duration (approximately 3.15 years) for this $170.9 million construction contract presents several potential risks. These include the possibility of escalating material costs over time, potential labor shortages or disputes, unforeseen geological or environmental conditions specific to Guam, and the risk of design changes or scope creep. Mitigation strategies typically involve robust contract clauses addressing price escalation (though less common in firm fixed-price), detailed site investigations prior to award, strong project management and communication protocols, and contingency planning for logistical challenges. The firm fixed-price nature aims to cap the government's exposure, but effective risk management by the contractor is paramount to ensure successful completion.

How does the competition level (3 bidders) for this contract compare to the average number of bidders for similar DoD construction projects of this magnitude?

Having 3 bidders for a $170.9 million Department of Defense construction contract suggests a moderate level of competition. While more bidders generally lead to better price discovery, the number can vary significantly based on project complexity, geographic location, and the specialized nature of the work. For large-scale, complex construction projects, especially in remote locations like Guam, 3 bidders might be considered adequate if they are all highly qualified firms capable of undertaking such a significant undertaking. A lower number could indicate barriers to entry or limited market capacity, while a much higher number might suggest intense competition driving down prices. Further analysis would involve comparing this to the average bidder count for similar DoD projects nationwide and within the Pacific region.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N4019222R2030

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 841 BISHOP ST STE 2001, HONOLULU, HI, 96813

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $171,993,342

Exercised Options: $171,940,342

Current Obligation: $170,940,342

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6274219D1332

IDV Type: IDC

Timeline