Hensel Phelps Construction Co. awarded $74.2M contract for Naval Base Coronado, exceeding typical project scale

Contract Overview

Contract Amount: $74,169,907 ($74.2M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2015-07-30

End Date: 2017-09-14

Contract Duration: 777 days

Daily Burn Rate: $95.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 13

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF P730 BEQ AT NBC, SAN DIEGO, CA

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92135

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $74.2 million to HENSEL PHELPS CONSTRUCTION CO for work described as: IGF::OT::IGF P730 BEQ AT NBC, SAN DIEGO, CA Key points: 1. Contract value suggests a significant construction project with substantial resource allocation. 2. Full and open competition indicates a broad market engagement, potentially leading to competitive pricing. 3. Project duration of 777 days points to a complex undertaking requiring extensive planning and execution. 4. The contract's firm-fixed-price nature shifts cost risk to the contractor, a common practice for predictable scope projects. 5. Awarded by the Department of the Navy, this project likely supports critical military infrastructure needs. 6. The project's location in San Diego, California, places it within a region with high construction demand and costs.

Value Assessment

Rating: good

The $74.2 million award for commercial and institutional building construction appears to be a substantial investment. Benchmarking against similar large-scale military construction projects would be necessary for a precise value-for-money assessment. However, the firm-fixed-price contract type suggests that the government has secured a defined cost, which is generally favorable. The number of bidders (13) also implies a degree of market interest that could contribute to a reasonable 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 offers. The participation of 13 bidders suggests a healthy level of competition for this project. A higher number of bidders generally correlates with more competitive pricing and a wider selection of qualified contractors, benefiting the government.

Taxpayer Impact: The broad competition for this contract likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario. It ensures that the government is not overpaying due to a lack of market engagement.

Public Impact

The primary beneficiaries are the U.S. Navy personnel and operations at Naval Base Coronado, San Diego, California, through improved facilities. The contract delivers new or renovated commercial and institutional buildings essential for military readiness and support services. Geographic impact is concentrated in San Diego, California, potentially stimulating the local construction economy and workforce. The project is expected to create or sustain jobs within the construction sector in Southern California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise, despite the firm-fixed-price structure.
Delays in construction could impact operational readiness at the naval base.
Contractor performance issues could lead to disputes and affect project timelines.

Positive Signals

Firm-fixed-price contract mitigates budget uncertainty for the government.
Full and open competition suggests a robust selection process and potential for quality.
The contractor, Hensel Phelps Construction Co., has a significant track record in large-scale construction.

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 such services, often requiring specialized facilities. The market for large-scale government construction is competitive, with established firms like Hensel Phelps often securing significant portions. Benchmarks for similar military construction projects can vary widely based on scope, location, and specific requirements.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the primary award went to a large prime contractor. While large projects can sometimes offer subcontracting opportunities, the absence of specific set-aside information means the direct impact on the small business ecosystem for this particular award is unclear without further investigation into subcontracting plans.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Department of the Navy contracting activity. The firm-fixed-price nature implies that financial oversight will focus on progress payments and adherence to the contract schedule. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Facilities Engineering Command (NAVFAC) Contracts
Military Construction Projects
Department of Defense Facilities Modernization
Large-Scale Commercial Building Projects

Risk Flags

Large contract value
Long project duration
Firm-fixed-price contract risk
Potential for construction delays

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.2 million to HENSEL PHELPS CONSTRUCTION CO. IGF::OT::IGF P730 BEQ AT NBC, SAN DIEGO, CA

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 $74.2 million.

What is the period of performance?

Start: 2015-07-30. End: 2017-09-14.

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 extensive experience in large-scale construction projects, including significant work for government agencies and the Department of Defense. A review of their past performance indicates a history of successfully completing complex projects, often within demanding timelines and budgets. Their portfolio includes numerous military installations, aviation facilities, and institutional buildings. While specific performance metrics for past Navy contracts are not detailed here, their sustained presence and award of substantial contracts suggest a generally positive track record. Further analysis would involve examining past performance evaluations and any documented disputes or contract modifications.

How does the $74.2 million contract value compare to other commercial and institutional building construction contracts awarded by the Department of the Navy?

The $74.2 million award is a significant sum for a single construction contract, placing it in the upper tier of projects within the commercial and institutional building category. While the Department of the Navy undertakes numerous construction projects annually, many smaller contracts exist for repairs, renovations, or specialized facilities. Projects of this magnitude are typically reserved for major new construction, expansions, or significant overhauls of critical infrastructure. Comparing this to the average or median contract value for similar projects would reveal whether this represents a premium, a standard rate, or a potentially advantageous price, considering the scope and complexity inherent in military base construction.

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

For a firm-fixed-price contract of this scale ($74.2 million) and duration (777 days), the primary risks for the contractor include underestimating costs, encountering unforeseen site conditions, material price escalations, and labor shortages. If the contractor's cost projections are inaccurate, they bear the full burden of any overruns, potentially impacting their profitability or even leading to financial distress. Unforeseen conditions (e.g., hazardous materials, unexpected soil issues) can significantly increase costs and complexity. Material and labor costs can fluctuate over the project's lifespan, especially in a dynamic market. The government's risk is primarily related to potential contractor default or substandard performance if the contractor struggles financially or operationally.

What does the 'FULL AND OPEN COMPETITION' designation imply about the potential effectiveness and cost-efficiency of this contract?

The 'FULL AND OPEN COMPETITION' designation is a strong positive indicator for both effectiveness and cost-efficiency. It signifies that the government actively sought proposals from the widest possible range of qualified contractors, preventing market exclusion. This broad competition typically drives down prices as contractors vie for the award, leading to better value for taxpayers. Furthermore, it increases the likelihood of selecting a contractor with the most suitable qualifications and innovative approach for the project, enhancing the probability of successful and effective project completion. The presence of 13 bidders further reinforces the competitive nature of the procurement.

How has federal spending on commercial and institutional building construction, particularly by the Department of the Navy, trended in recent years?

Federal spending on commercial and institutional building construction, especially by major agencies like the Department of Defense (including the Navy), has historically been substantial, driven by the need to maintain and modernize military infrastructure. Trends can fluctuate based on geopolitical factors, defense budgets, and specific modernization initiatives. In recent years, there has been a continued emphasis on upgrading aging facilities, enhancing cybersecurity infrastructure, and adapting bases for evolving operational needs. While specific year-over-year trends require detailed budget analysis, the consistent requirement for construction services suggests a stable, albeit budget-dependent, demand. Factors like economic conditions and material costs also influence the overall spending volume and the value achieved per contract.

What are the potential workforce implications of a $74.2 million construction project in San Diego, California?

A construction project of this magnitude ($74.2 million) in San Diego, California, is likely to have a significant positive impact on the local workforce. It will create numerous direct jobs for skilled tradespeople (carpenters, electricians, plumbers, heavy equipment operators), project managers, engineers, and support staff. Additionally, indirect employment will be generated in related industries such as material supply, equipment rental, transportation, and professional services. The demand for labor could potentially lead to increased wages and employment opportunities within the construction sector in the region. The duration of the project (777 days) suggests sustained employment over an extended period.

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: N6247313R4201

Offers Received: 13

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: $74,169,907

Exercised Options: $74,169,907

Current Obligation: $74,169,907

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline