DoD's $143M Naval Base Construction Contract Awarded to Hensel Phelps Construction Co. for California Project

Contract Overview

Contract Amount: $141,160,861 ($141.2M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2010-06-03

End Date: 2013-02-14

Contract Duration: 987 days

Daily Burn Rate: $143.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: P127, P130, P132, P133, P143, P146, P172, P131, P171, P126

Place of Performance

Location: TWENTYNINE PALMS, SAN BERNARDINO County, CALIFORNIA, 92278

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $141.2 million to HENSEL PHELPS CONSTRUCTION CO for work described as: P127, P130, P132, P133, P143, P146, P172, P131, P171, P126 Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract value of $143 million indicates a significant investment in infrastructure. 3. Fixed-price contract type may offer cost certainty for the government, shifting risk to the contractor. 4. The duration of 987 days points to a substantial construction project timeline. 5. The project is located in California, a state with significant defense infrastructure. 6. The North American Industry Classification System (NAICS) code 237990 suggests heavy civil engineering construction.

Value Assessment

Rating: fair

The contract value of $143 million for heavy civil engineering construction appears substantial. Benchmarking this against similar large-scale defense infrastructure projects is necessary for a definitive value assessment. The firm fixed-price structure suggests an attempt to control costs, but the final value realization depends on the contractor's efficiency and any potential change orders. Without specific cost breakdowns or comparisons to industry standards for similar projects, it's difficult to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The presence of 10 bids suggests a healthy level of interest and competition for this significant construction project. This competitive environment is generally expected to drive down prices and encourage efficient performance from the winning bidder.

Taxpayer Impact: A competitive bidding process for this contract likely resulted in a more favorable price for taxpayers compared to a sole-source award. The multiple bids indicate that taxpayer funds were used efficiently to secure the best possible offer for the required construction services.

Public Impact

The primary beneficiaries are the Department of the Navy and its personnel, who will utilize the improved infrastructure. The contract delivers heavy and civil engineering construction services, likely involving new facilities or upgrades at a naval base. The geographic impact is concentrated in California, supporting naval operations in the region. The project will likely create or sustain jobs in the construction sector within California, including skilled trades and support staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the fixed-price contract does not adequately account for unforeseen construction challenges.
Risk of schedule delays impacting naval operational readiness if construction is not completed on time.
Quality control concerns inherent in large-scale construction projects require diligent oversight.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Firm fixed-price contract type provides cost certainty for the government.
The contractor, Hensel Phelps Construction Co., is a well-established entity in the construction industry.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically NAICS code 237990. This sector is crucial for developing and maintaining large-scale infrastructure, including military bases. The Department of Defense is a major client for construction services, with significant annual spending on facilities and infrastructure upgrades. Comparable spending benchmarks would involve looking at other large military construction projects awarded by the DoD or other federal agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting requirements specifically mandated for small businesses within this award. The primary contractor, Hensel Phelps Construction Co., will manage the subcontracting opportunities, and their internal policies will dictate the extent to which small businesses are engaged. This lack of a set-aside means small businesses will need to compete for subcontracts directly with larger firms.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and their representatives within the Department of the Navy. Accountability measures are embedded in the firm fixed-price contract terms, which incentivize the contractor to complete the work within budget and on schedule. Transparency is generally maintained through contract award databases and reporting requirements, though specific project details and oversight activities may not always be publicly accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Naval Base Construction Projects
Department of Defense Infrastructure Modernization
Heavy and Civil Engineering Construction Contracts
Federal Fixed-Price Construction Awards

Risk Flags

Potential for cost overruns due to fixed-price nature and long duration.
Risk of schedule delays impacting operational readiness.
Need for robust quality assurance to ensure construction standards are met.
Contractor's ability to manage complex logistics and site conditions in California.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $141.2 million to HENSEL PHELPS CONSTRUCTION CO. P127, P130, P132, P133, P143, P146, P172, P131, P171, P126

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 $141.2 million.

What is the period of performance?

Start: 2010-06-03. End: 2013-02-14.

What is the track record of Hensel Phelps Construction Co. on similar federal contracts, particularly with the Department of Defense?

Hensel Phelps Construction Co. has a significant history of performing large-scale construction projects for various federal agencies, including the Department of Defense. Their portfolio often includes complex infrastructure, aviation, and institutional facilities. Analyzing their past performance on similar firm-fixed-price contracts, especially those with durations exceeding 900 days, would reveal their ability to manage scope, budget, and schedule effectively. Past performance reviews and any documented disputes or claims on previous DoD contracts would provide further insight into their reliability and project execution capabilities. While this specific contract is for heavy civil engineering, their broader experience in managing large federal projects suggests a capacity to handle such work, but a detailed review of their DoD-specific project history is crucial for a comprehensive assessment.

How does the awarded value of $143 million compare to industry benchmarks for similar naval base construction projects?

Benchmarking the $143 million award requires detailed analysis of the project's scope, location, and specific construction elements (e.g., earthwork, concrete, utilities, specialized facilities). Without this granular detail, a direct comparison is challenging. However, large-scale military construction projects, especially those involving significant civil engineering components, can range from tens of millions to hundreds of millions of dollars. Factors such as prevailing labor rates in California, material costs, and the complexity of the required infrastructure (e.g., port facilities, runways, specialized buildings) heavily influence the total cost. Comparing the cost per square foot or cost per unit of specific infrastructure elements (if known) against similar projects awarded by the Navy or other branches of the DoD over the past 3-5 years would provide a more accurate assessment of whether this contract represents good value.

What are the primary risks associated with a firm-fixed-price contract for a project of this duration and scale?

The primary risk with a firm-fixed-price (FFP) contract, especially for a long-duration project like this (987 days), is the potential for the contractor to incur significant cost overruns if initial estimates are inaccurate or unforeseen issues arise. While FFP shifts cost risk to the contractor, it can also lead to reduced profit margins for them, potentially impacting their motivation or leading to claims for equitable adjustments if conditions change substantially. For the government, the risk lies in potentially paying a premium upfront to cover the contractor's risk, or facing disputes and delays if the contractor struggles to absorb unexpected costs. Thorough initial scope definition and contingency planning are critical to mitigate these risks for both parties.

What is the expected impact of this contract on naval operational readiness in California?

This contract is expected to positively impact naval operational readiness by providing necessary infrastructure upgrades or new facilities. Improved or expanded facilities can enhance training capabilities, logistical support, berthing, maintenance, and overall operational efficiency for naval forces stationed or operating in California. The specific impact depends on the nature of the construction; for example, upgraded port facilities could improve ship turnaround times, while new barracks could improve quality of life and retention for personnel. Timely completion is crucial; delays could temporarily hinder readiness if existing facilities are strained or if the new infrastructure is critical for planned operations.

How has federal spending on heavy and civil engineering construction for the Department of the Navy trended in recent years?

Federal spending on heavy and civil engineering construction for the Department of the Navy has historically been substantial, driven by the need to maintain and modernize extensive coastal infrastructure, ports, airfields, and training ranges. Trends can fluctuate based on geopolitical priorities, budget allocations, and specific modernization initiatives. In recent years, there has been a continued emphasis on upgrading aging facilities, enhancing cybersecurity resilience of physical infrastructure, and adapting bases to accommodate new platforms and technologies. Analyzing historical spending data for NAICS code 237990 specifically for the Navy would reveal patterns of investment, identifying periods of increased or decreased activity and highlighting key areas of focus, such as shipbuilding support facilities or resilient infrastructure development.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCT NONBUILDING FACILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6247309R1224

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 18850 VON KARMAN AVE STE 100, IRVINE, CA, 47

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

Financial Breakdown

Contract Ceiling: $141,160,861

Exercised Options: $141,160,861

Current Obligation: $141,160,861

Contract Characteristics

Cost or Pricing Data: NO

Timeline