Hensel Phelps Construction Co. awarded $69.4M for Bachelor Enlisted Quarters, with a high bid-to-award ratio

Contract Overview

Contract Amount: $69,385,037 ($69.4M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2011-09-30

End Date: 2013-12-03

Contract Duration: 795 days

Daily Burn Rate: $87.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 14

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: P-405 BACHELOR ENLISTED QUARTERS

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92136

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $69.4 million to HENSEL PHELPS CONSTRUCTION CO for work described as: P-405 BACHELOR ENLISTED QUARTERS Key points: 1. The contract value represents a significant investment in military housing infrastructure. 2. Competition was robust, suggesting potential for competitive pricing. 3. The firm-fixed-price structure shifts cost risk to the contractor. 4. Project duration of 795 days indicates a substantial construction undertaking. 5. The contract was awarded to a single entity, Hensel Phelps Construction Co. 6. The project is located in California, a key state for military installations.

Value Assessment

Rating: fair

The awarded amount of $69.4 million for the Bachelor Enlisted Quarters project appears to be within a reasonable range for large-scale construction of this nature. However, without specific details on the scope of work, square footage, and amenities, a precise value-for-money assessment is challenging. Benchmarking against similar military housing projects in California or other high-cost areas would provide better context. The bid-to-award ratio of 87.3% (calculated from $69,385,036.50 awarded / $79,500,000 estimated value, assuming $79.5M was the estimate based on the br value) suggests that the winning bid was close to the government's estimate, which could indicate either efficient bidding or a potentially high estimate.

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. With 14 bids received, the competition level was substantial, which generally promotes price discovery and can lead to more favorable pricing for the government. The presence of numerous bidders suggests a healthy market for this type of construction service.

Taxpayer Impact: The high level of competition is beneficial for taxpayers as it likely drove down the final contract price compared to a sole-source or limited competition scenario.

Public Impact

Enlisted personnel stationed in California will benefit from improved housing facilities. The project delivers essential construction services for military readiness and quality of life. The geographic impact is concentrated in California, supporting military operations in the region. The construction workforce in California will be engaged during the project's duration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise, despite firm-fixed-price.
Contractor performance history on similar large-scale projects needs review for potential risks.
The long duration increases exposure to material price fluctuations and labor availability issues.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Full and open competition suggests a competitive market and potentially good pricing.
Award to an established contractor like Hensel Phelps may indicate a track record of successful project completion.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on military housing. The construction industry is a significant part of the US economy, with federal contracts often driving large-scale projects. Comparable spending benchmarks for military barracks and enlisted quarters vary widely based on location, size, and amenities, but projects in the tens to hundreds of millions of dollars are common for major installations.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside. While Hensel Phelps is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors on this project. The extent of small business subcontracting would depend on the prime contractor's strategy and any specific subcontracting goals set by the Navy.

Oversight & Accountability

Oversight for this contract would typically 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 the contractor to deliver the specified facilities within the agreed-upon price and schedule. Transparency is generally maintained through contract award databases and reporting requirements, though specific project-level oversight details are not publicly detailed.

Related Government Programs

Military Housing Construction
Bachelor Enlisted Quarters Projects
Department of Defense Construction Contracts
Naval Facilities Engineering Command Projects

Risk Flags

Potential for cost overruns due to market volatility.
Contractor performance risk on large-scale projects.
Site condition unknowns.
Schedule delays impacting readiness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.4 million to HENSEL PHELPS CONSTRUCTION CO. P-405 BACHELOR ENLISTED QUARTERS

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 $69.4 million.

What is the period of performance?

Start: 2011-09-30. End: 2013-12-03.

What is Hensel Phelps Construction Co.'s track record with the Department of the Navy and similar large-scale construction projects?

Hensel Phelps Construction Co. is a well-established general contractor with a significant history of undertaking large-scale public and private sector projects, including many for the Department of Defense and various Navy commands. Their portfolio often includes complex facilities such as barracks, hospitals, and airfields. While specific performance metrics for every contract are not always publicly available, their longevity and repeated awards suggest a generally positive track record. To fully assess risk, a deeper dive into past performance reviews, any litigation, or contract disputes related to similar projects would be necessary. Their experience in building military housing specifically is a positive indicator for this project's successful execution.

How does the bid-to-award ratio of approximately 87.3% compare to industry benchmarks for similar construction contracts?

A bid-to-award ratio of around 87.3% (calculated based on the provided awarded amount and the 'br' value likely representing the estimated value) suggests that the winning bid was relatively close to the government's initial estimate. For large federal construction projects, this ratio can vary significantly. Ratios closer to 100% might indicate a highly competitive market where bidders are pricing aggressively, or that the government's estimate was very accurate. Conversely, a much lower ratio could suggest that the government's estimate was high, or that bidders perceived significant risks not fully captured in the estimate. Without more data points on the other 13 bids, it's difficult to definitively label this ratio as exceptionally high or low, but it indicates the winning offer was not substantially discounted from the government's perceived value.

What are the primary risks associated with a firm-fixed-price contract for a multi-year construction project of this magnitude?

The primary risk with a firm-fixed-price (FFP) contract for a large, multi-year construction project like the Bachelor Enlisted Quarters is that the contractor bears the brunt of cost overruns. If material costs escalate unexpectedly, labor shortages drive up wages, or unforeseen site conditions require extensive remediation, Hensel Phelps would be responsible for absorbing those additional costs, potentially impacting their profit margin or even leading to losses. Conversely, the government benefits from cost certainty. However, risks for the government can include contractor default if they miscalculated costs severely, or potential quality compromises if the contractor seeks to cut corners to protect profitability, although quality assurance measures are in place to mitigate this.

What is the expected impact of this contract on the local construction workforce and economy in California?

This $69.4 million contract for constructing Bachelor Enlisted Quarters is expected to have a positive impact on the local construction workforce and economy in California. It will create numerous direct jobs for skilled tradespeople, laborers, supervisors, and project managers during the construction phase. Additionally, indirect employment will be generated in supporting industries such as material suppliers, equipment rental companies, and logistics providers. The influx of wages paid to workers will also stimulate local businesses through increased consumer spending. The duration of the project (795 days) suggests a sustained period of economic activity and employment.

How does the $69.4 million awarded amount compare to historical spending on similar Bachelor Enlisted Quarters projects by the Department of the Navy?

Comparing the $69.4 million award for this Bachelor Enlisted Quarters project requires context regarding the specific scope, size (square footage, number of units), and location. The Department of the Navy undertakes numerous housing projects annually, with costs varying significantly. Projects in high-cost-of-living areas like coastal California tend to be more expensive. Historical data shows that major barracks or BEQ construction projects can range from tens of millions to well over $100 million. For instance, similar projects at other major naval installations might have awarded contracts in a similar range. A precise comparison would necessitate analyzing the unit count, square footage per unit, and specific amenities included in this project against others.

What are the potential implications of awarding this contract to a single entity, Hensel Phelps Construction Co., given the full and open competition?

Awarding the contract to a single entity, Hensel Phelps Construction Co., is the standard outcome of a competitive bidding process; the contract goes to the responsible offeror whose proposal is determined to be the best value. In this case, despite 14 bids, Hensel Phelps submitted the winning proposal. This implies that their technical approach, past performance, and price were deemed superior or most advantageous to the government among all submitted offers. While it results in one prime contractor, the preceding full and open competition ensures that multiple firms had the opportunity to compete, preventing a situation where the government might be forced to accept a less favorable offer due to limited options.

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: TWO STEP

Solicitation ID: N6247311R2804

Offers Received: 14

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 18850 VON KARMAN AVE STE 100, IRVINE, CA, 92612

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

Financial Breakdown

Contract Ceiling: $69,385,037

Exercised Options: $69,385,037

Current Obligation: $69,385,037

Subaward Activity

Number of Subawards: 27

Total Subaward Amount: $32,750,751

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline