DoD's $44.3M facility contract awarded to RQ Construction, LLC shows fair value despite limited competition

Contract Overview

Contract Amount: $44,324,286 ($44.3M)

Contractor: RQ Construction, LLC

Awarding Agency: Department of Defense

Start Date: 2018-07-26

End Date: 2021-06-18

Contract Duration: 1,058 days

Daily Burn Rate: $41.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF X002 Q921 SOF LOGSU ONE OPS FACILITY

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $44.3 million to RQ CONSTRUCTION, LLC for work described as: IGF::OT::IGF X002 Q921 SOF LOGSU ONE OPS FACILITY Key points: 1. The contract's value appears reasonable when benchmarked against similar construction projects. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. Performance duration of 1058 days indicates a significant project scope. 5. This contract falls within the broader category of institutional building construction. 6. The award was made by the Department of the Navy, a major DoD component.

Value Assessment

Rating: fair

The contract's total value of approximately $44.3 million for commercial and institutional building construction appears to be within a reasonable range when compared to similar projects of this scale and complexity. While specific per-unit cost data is not provided, the overall price seems to reflect the scope of work. Benchmarking against industry standards for large-scale construction projects suggests that the pricing is not excessively high, but the limited competition may have prevented a more aggressive price point.

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 offers. However, the data indicates that only 5 bids were received, which is a moderate level of competition for a project of this magnitude. While full and open competition is the preferred method, a lower number of bidders can sometimes suggest barriers to entry or a specialized market, potentially limiting the downward pressure on pricing.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple companies to bid, driving down prices. However, with only 5 bidders, the potential for significant cost savings may have been constrained compared to a scenario with a larger pool of competitors.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Department of the Navy, which will receive enhanced operational facilities. The services delivered include the construction of commercial and institutional buildings, likely supporting military operations or personnel. The geographic impact is concentrated in California, where the construction project is located. Workforce implications include job creation in the construction sector within California during the project's duration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (5) may indicate potential for higher pricing than if more competition existed.
The project duration of over 1000 days suggests a complex undertaking with potential for unforeseen challenges.
The specific nature of the facility is not detailed, which could mask specific risks or requirements.

Positive Signals

Awarded under full and open competition, ensuring a broad initial outreach for potential bidders.
Firm Fixed Price contract type provides cost certainty for the government, mitigating risk of cost overruns.
The contractor, RQ CONSTRUCTION, LLC, has experience in commercial and institutional building construction.

Sector Analysis

This contract falls within the construction sector, specifically focusing on commercial and institutional building construction. This sub-sector involves the building of non-residential structures such as offices, educational facilities, healthcare buildings, and government installations. The market for large-scale government construction projects is significant, often characterized by stringent requirements, long project timelines, and substantial contract values. Comparable spending benchmarks in this area would typically involve analyzing the cost per square foot or cost per project for similar military or government facility constructions.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The prime contractor, RQ CONSTRUCTION, LLC, is likely a larger entity, and any subcontracting opportunities would be at their discretion.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and project management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring the contractor to deliver the specified facility within the agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Military Construction
Base Realignment and Closure (BRAC) Projects
Department of Defense Facilities Management
Naval Facilities Engineering Command (NAVFAC) Contracts

Risk Flags

Limited competition
Long project duration
Potential for future sole-source follow-on work

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.3 million to RQ CONSTRUCTION, LLC. IGF::OT::IGF X002 Q921 SOF LOGSU ONE OPS FACILITY

Who is the contractor on this award?

The obligated recipient is RQ CONSTRUCTION, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $44.3 million.

What is the period of performance?

Start: 2018-07-26. End: 2021-06-18.

What is the track record of RQ CONSTRUCTION, LLC on similar government contracts?

RQ CONSTRUCTION, LLC has a history of performing construction services for government entities. While specific details on past performance for the Department of the Navy or similar large-scale institutional projects are not provided in this data snippet, their award on this $44.3 million contract suggests they possess the necessary qualifications and experience. A deeper dive into their contract history, including past performance reviews, on-time delivery rates, and any disputes or claims on previous government projects, would provide a more comprehensive understanding of their reliability and capability. Analyzing their portfolio of completed projects would reveal their expertise in handling complex construction requirements typical of federal installations.

How does the awarded price compare to the estimated cost or budget for this facility?

The provided data does not include the government's estimated cost or budget for this facility construction. Therefore, a direct comparison to assess if the awarded price of $44.3 million represents a cost savings or an overage against the initial estimate is not possible. In a typical procurement process, the awarded price is compared against the government's independent government cost estimate (IGCE) to determine the reasonableness of the offer. Without the IGCE or a similar budget figure, it's difficult to definitively state whether this contract represents exceptional value from a budgetary perspective, beyond general market benchmarking.

What are the key performance indicators (KPIs) for this contract, and how is performance being measured?

Specific Key Performance Indicators (KPIs) for this contract are not detailed in the provided data. However, for a construction contract of this nature, typical KPIs would likely include adherence to the project schedule (milestones and final completion date), quality of workmanship and materials used, compliance with safety regulations, and adherence to the firm-fixed-price budget. Performance measurement would involve regular site inspections, progress reports from the contractor, and reviews by the contracting officer's representative (COR) or a designated project manager to ensure the facility is being built according to specifications and standards.

What is the potential impact of the limited competition (5 bidders) on the long-term cost of facility maintenance or upgrades?

The limited competition (5 bidders) for the initial construction contract might have indirect long-term implications. If the chosen contractor, RQ CONSTRUCTION, LLC, becomes the de facto expert on the facility due to their intimate knowledge gained during construction, they might be in a favorable position for future sole-source or limited-competition contracts for maintenance, repairs, or upgrades. This could potentially lead to higher costs for these subsequent services if robust competition is not re-established. However, the firm-fixed-price nature of the initial award focuses on construction cost certainty, and future maintenance contracts would be subject to separate procurement processes and competition rules.

Are there any specific risks associated with the 'Commercial and Institutional Building Construction' category for Department of the Navy projects?

The 'Commercial and Institutional Building Construction' category for Department of the Navy projects can carry several risks. These include potential delays due to site-specific environmental considerations, unforeseen subsurface conditions, or the need to integrate new facilities with existing, potentially older, infrastructure. Security requirements for military installations add another layer of complexity. Furthermore, the specialized nature of some naval facilities might require unique construction techniques or materials, increasing the risk of cost overruns or schedule slippage if not meticulously managed. The firm-fixed-price nature of this contract helps mitigate financial risk for the government, but schedule and quality risks remain.

How does the contract duration (1058 days) compare to industry standards for similar-sized government construction projects?

A contract duration of 1058 days, approximately 35 months or nearly three years, is substantial and suggests a large-scale, complex construction project. For major government facilities, especially those with significant square footage, specialized requirements (e.g., laboratories, secure areas), or located in challenging environments, such durations are not uncommon. Industry standards vary widely based on project scope, complexity, and location. However, a duration exceeding two years typically indicates a project involving extensive site work, multiple building phases, or significant logistical challenges. Benchmarking against similar military construction projects of comparable value and type would provide a more precise comparison.

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: N6247316R3201

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3194 LIONSHEAD AVE, CARLSBAD, CA, 92010

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

Financial Breakdown

Contract Ceiling: $44,324,286

Exercised Options: $44,324,286

Current Obligation: $44,324,286

Subaward Activity

Number of Subawards: 52

Total Subaward Amount: $34,162,005

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6247317D0820

IDV Type: IDC

Timeline