DoD awards $56.7M for Manchester Tank Farm improvements, raising questions on value and competition

Contract Overview

Contract Amount: $56,705,624 ($56.7M)

Contractor: Garco Construction, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-05-25

End Date: 2024-07-12

Contract Duration: 1,144 days

Daily Burn Rate: $49.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCTION OF P856 MANCHESTER TANK FARM IMPROVEMENTS, MANCHESTER, WA

Place of Performance

Location: MANCHESTER, KITSAP County, WASHINGTON, 98353

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $56.7 million to GARCO CONSTRUCTION, INC. for work described as: CONSTRUCTION OF P856 MANCHESTER TANK FARM IMPROVEMENTS, MANCHESTER, WA Key points: 1. Contract awarded to GARCO CONSTRUCTION, INC. for construction services. 2. Project involves improvements to P856 Manchester Tank Farm in Washington. 3. Contract type is Firm Fixed Price, indicating price certainty. 4. Duration of the contract is 1144 days, spanning over three years. 5. The contract was awarded under Full and Open Competition. 6. The North American Industry Classification System (NAICS) code is 237120 for Oil and Gas Pipeline and Related Structures Construction.

Value Assessment

Rating: fair

The contract value of $56.7 million for construction services at the Manchester Tank Farm appears within a reasonable range for a project of this scale and duration. However, without specific benchmarks for similar tank farm improvement projects or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm fixed-price nature of the contract shifts risk to the contractor, which can sometimes lead to higher initial bids but provides budget certainty for the government. Further analysis would require comparing the per-unit costs of specific construction elements to industry standards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under Full and Open Competition, suggesting that all responsible sources were permitted to submit a bid. With 4 bids received, this indicates a moderate level of competition for this project. While four bidders is generally a positive sign, the specific dynamics of the construction market for this type of specialized work would determine if this level of competition was sufficient to drive optimal pricing and innovation. The government's ability to secure the best value is enhanced by a competitive process.

Taxpayer Impact: A full and open competition with multiple bidders generally benefits taxpayers by fostering a more competitive bidding environment, which can lead to lower prices and better terms for the government. This process helps ensure that taxpayer funds are used efficiently.

Public Impact

The primary beneficiaries are the Department of Defense and the Navy, who will receive improved infrastructure for fuel storage and management. The services delivered include construction and related activities for the P856 Manchester Tank Farm. The geographic impact is localized to Manchester, Washington, where the tank farm is located. The project will likely involve a workforce of construction laborers, engineers, and project managers, contributing to local employment in the skilled trades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise, despite the firm fixed-price contract.
Dependence on the contractor's ability to manage complex construction schedules and potential delays.
Ensuring compliance with environmental regulations during construction in a sensitive area.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Full and open competition suggests a robust bidding process.
Award to a single contractor streamlines project management and execution.

Sector Analysis

This contract falls within the construction sector, specifically focusing on infrastructure related to oil and gas storage and pipelines. The market for large-scale government construction projects, particularly those involving specialized infrastructure like tank farms, is often dominated by a few large, experienced firms. Benchmarking this contract's value would involve comparing it to other similar Department of Defense or energy infrastructure construction projects, considering factors like location, scope, and complexity. The total federal spending on construction services is substantial, with significant portions allocated to defense and infrastructure modernization.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, GARCO CONSTRUCTION, INC., is likely a large business. There is no explicit information on subcontracting plans for small businesses within this award notice. The absence of a small business set-aside means that opportunities for small businesses would primarily arise if the prime contractor voluntarily includes them in their subcontracting efforts, which is not guaranteed.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Department of the Navy contracting command. The firm fixed-price nature of the contract implies that the government's primary oversight will focus on ensuring the contractor meets the defined scope, schedule, and quality standards. Transparency is generally provided through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Infrastructure Projects
Naval Facilities Engineering Command Contracts
Fuel Storage Facility Construction
Oil and Gas Pipeline Construction

Risk Flags

Potential for cost escalation if unforeseen site conditions arise.
Risk of project delays impacting operational readiness.
Ensuring compliance with environmental and safety regulations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $56.7 million to GARCO CONSTRUCTION, INC.. CONSTRUCTION OF P856 MANCHESTER TANK FARM IMPROVEMENTS, MANCHESTER, WA

Who is the contractor on this award?

The obligated recipient is GARCO CONSTRUCTION, 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 $56.7 million.

What is the period of performance?

Start: 2021-05-25. End: 2024-07-12.

What is GARCO CONSTRUCTION, INC.'s track record with the Department of Defense and similar construction projects?

GARCO CONSTRUCTION, INC. has a history of performing construction services for the federal government, including projects with the Department of Defense. Analyzing their past performance on similar large-scale infrastructure projects, particularly those involving tank farms or pipeline-related construction, would provide insight into their capabilities, reliability, and adherence to schedule and budget. A review of their contract history, including any past performance evaluations or disputes, is crucial for assessing their suitability for this significant undertaking. Their experience with firm fixed-price contracts and the specific environmental and safety requirements of such projects would also be key factors.

How does the awarded amount of $56.7 million compare to similar tank farm improvement projects undertaken by the DoD or other federal agencies?

Benchmarking the $56.7 million award requires comparing it to similar projects in terms of scope, complexity, location, and duration. Without access to a detailed cost breakdown or specific comparable project data, a precise value assessment is difficult. However, for large-scale infrastructure improvements involving specialized construction like tank farms, this figure appears to be within a plausible range. Factors such as the specific upgrades required (e.g., tank lining, structural reinforcement, safety systems), the size and number of tanks, and the prevailing construction costs in Washington state would influence the total cost. A deeper analysis would involve examining unit costs for key construction elements against industry averages.

What are the primary risks associated with this construction contract, and how are they being mitigated?

Key risks include potential cost overruns due to unforeseen site conditions, construction delays impacting project timelines, and ensuring compliance with stringent environmental and safety regulations. The firm fixed-price contract mitigates financial risk for the government by capping the total cost, but it shifts the risk of cost overruns to the contractor. Mitigation strategies likely involve thorough site investigations prior to award, detailed project planning, robust quality assurance processes, and close monitoring by the contracting officer's representative. The contractor's experience and bonding capacity also play a role in risk mitigation.

What is the expected impact of these tank farm improvements on the Navy's operational capabilities and fuel logistics?

The improvements to the P856 Manchester Tank Farm are expected to enhance the operational readiness and reliability of the Navy's fuel storage and distribution infrastructure. Upgraded facilities can lead to increased storage capacity, improved safety features, reduced environmental risks, and more efficient fuel handling processes. This directly supports the Navy's mission by ensuring a consistent and secure supply of fuel for its operations in the region. Modernized infrastructure also contributes to long-term cost savings through reduced maintenance needs and fewer potential disruptions.

How has federal spending on oil and gas pipeline and related structures construction (NAICS 237120) trended in recent years, and where does this contract fit?

Federal spending on NAICS code 237120, 'Oil and Gas Pipeline and Related Structures Construction,' can fluctuate based on infrastructure needs, energy policy, and defense requirements. In recent years, spending in this category has likely seen activity related to maintaining and upgrading existing critical infrastructure, including military fuel storage facilities like the Manchester Tank Farm. This $56.7 million contract represents a significant, albeit specific, investment within this broader category. Analyzing historical spending data for this NAICS code would reveal trends and help contextualize the size and importance of this particular award within the overall federal investment landscape for such construction.

Industry Classification

NAICS: Construction › Utility System Construction › Oil and Gas Pipeline and Related Structures Construction

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - CONSTRUCTION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N4425521R2000

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4114 E BROADWAY AVE, SPOKANE, WA, 99202

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

Financial Breakdown

Contract Ceiling: $56,705,624

Exercised Options: $56,705,624

Current Obligation: $56,705,624

Actual Outlays: $23,588,778

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline