DoD awards $134.5M for Pearl Harbor ammunition wharf repairs, exceeding initial estimates by $61M

Contract Overview

Contract Amount: $134,496,543 ($134.5M)

Contractor: NAN Inc

Awarding Agency: Department of Defense

Start Date: 2025-07-30

End Date: 2030-08-03

Contract Duration: 1,830 days

Daily Burn Rate: $73.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCTION FOR RM19-0926 REPAIR AMMUNITION WHARVES W3 AND W1, JOINT BASE PEARL HARBORHICKAM, HAWAII

Place of Performance

Location: PEARL HARBOR, HONOLULU County, HAWAII, 96860

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $134.5 million to NAN INC for work described as: CONSTRUCTION FOR RM19-0926 REPAIR AMMUNITION WHARVES W3 AND W1, JOINT BASE PEARL HARBORHICKAM, HAWAII Key points: 1. The contract's final value significantly surpassed initial projections, indicating potential cost overruns or scope expansion. 2. Competition was robust, with four bids received, suggesting a healthy market for this type of specialized construction. 3. The project's long duration (5 years) and critical infrastructure nature present execution and performance risks. 4. This repair work is essential for maintaining operational readiness at a key naval installation. 5. The firm-fixed-price contract type shifts most cost risk to the contractor, but requires careful oversight to ensure quality.

Value Assessment

Rating: questionable

The final award of $134.5 million is substantially higher than the initial estimate of $73.5 million, a difference of over 80%. While construction costs can fluctuate, such a large variance warrants scrutiny. Benchmarking against similar large-scale port and wharf repair projects is difficult without more specific cost breakdowns, but the significant overage suggests potential issues with initial budgeting, scope creep, or market conditions impacting material and labor costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with four bids received. This indicates a competitive market for this specialized heavy civil engineering construction. The presence of multiple bidders generally supports price discovery and can lead to more favorable pricing for the government compared to sole-source or limited competition scenarios. However, the significant cost overrun despite competition raises questions about the effectiveness of the bidding process in controlling final costs.

Taxpayer Impact: A competitive bidding process is generally beneficial for taxpayers, as it encourages contractors to offer their best prices. However, the substantial increase from estimate to award suggests that the initial competitive environment may not have fully captured the eventual project costs, potentially impacting the value realized by taxpayers.

Public Impact

The primary beneficiaries are the U.S. Navy and Department of Defense, ensuring continued operational capability at Joint Base Pearl Harbor-Hickam. The contract will deliver critical repairs and upgrades to ammunition wharves W3 and W1, enhancing safety and functionality. The geographic impact is localized to Hawaii, specifically Joint Base Pearl Harbor-Hickam, a vital strategic asset in the Pacific. The project is expected to create or sustain jobs in the construction sector within Hawaii, potentially benefiting local labor markets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost increase from estimate to award ($61M variance) suggests potential issues with initial budgeting or unforeseen project complexities.
Long contract duration (5 years) increases the risk of schedule delays, cost escalation due to inflation, and contractor performance issues.
Reliance on specialized heavy civil engineering construction may limit the pool of qualified contractors, potentially impacting future competition.
The critical nature of ammunition wharves means any delays or failures could have significant operational impacts on naval readiness.

Positive Signals

Awarded under full and open competition, indicating a potentially robust market for this type of work.
Firm-fixed-price contract type shifts cost risk to the contractor, providing budget certainty if managed effectively.
Project addresses essential infrastructure maintenance, crucial for the long-term operational viability of a key military installation.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically focusing on maritime infrastructure. The market for large-scale port and wharf construction is specialized, often involving significant engineering expertise and regulatory compliance. Comparable spending benchmarks are difficult to establish without detailed project specifications, but major military infrastructure projects often run into the tens or hundreds of millions of dollars. The Department of Defense is a significant investor in such infrastructure globally.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the scale and specialized nature of the work, it is unlikely that small businesses would be primary contractors. However, the prime contractor, NAN INC, may engage small businesses for subcontracting opportunities, particularly for specialized trades or material supply, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight will likely be managed by the Department of the Navy's contracting and engineering divisions. The firm-fixed-price nature of the contract implies that the government's primary oversight will focus on ensuring adherence to specifications, quality control, and timely completion. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Naval Base Infrastructure Modernization Programs
Military Construction (MILCON)
Port and Harbor Facility Maintenance
Ammunition Storage and Handling Facilities
Pacific Region Defense Infrastructure

Risk Flags

Significant Cost Variance
Long Contract Duration
Potential for Schedule Delays
Infrastructure Criticality

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $134.5 million to NAN INC. CONSTRUCTION FOR RM19-0926 REPAIR AMMUNITION WHARVES W3 AND W1, JOINT BASE PEARL HARBORHICKAM, HAWAII

Who is the contractor on this award?

The obligated recipient is NAN 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 $134.5 million.

What is the period of performance?

Start: 2025-07-30. End: 2030-08-03.

What factors contributed to the $61 million difference between the estimated cost and the final award price?

The substantial $61 million variance between the estimated cost ($73.5M) and the final award ($134.5M) for the ammunition wharf repair project likely stems from a combination of factors. Initial estimates may have been based on preliminary designs or outdated market data, failing to account for the full scope of necessary repairs, unforeseen site conditions, or the complexities inherent in working with aging maritime infrastructure. Escalating material costs (e.g., steel, concrete) and labor shortages in specialized construction trades within Hawaii could also have driven up bids significantly. Furthermore, the competitive bidding process, while robust with four offers, may have resulted in bids reflecting higher risk premiums or differing interpretations of project requirements, ultimately leading to a higher-than-anticipated award price. A detailed post-award review would be necessary to pinpoint the exact drivers.

How does the final award price compare to similar large-scale maritime construction projects undertaken by the DoD?

Direct comparison of the $134.5 million award for ammunition wharf repairs to similar DoD maritime projects is challenging without specific details on project scope, location, and complexity. However, major naval infrastructure projects, especially those involving critical facilities like ammunition wharves at strategic locations such as Pearl Harbor, often represent significant investments. Projects involving new construction or extensive rehabilitation of piers, dry docks, or specialized cargo handling facilities can easily reach or exceed this figure. The key differentiator here is the substantial increase over the initial estimate. While large projects are expensive, a near-doubling of the estimated cost warrants further investigation into the accuracy of initial budgeting and the factors influencing the final negotiated price.

What are the primary risks associated with the long duration (5 years) of this contract?

The five-year duration of this contract presents several significant risks. Firstly, there is an increased exposure to economic fluctuations, including potential inflation impacting material and labor costs, even with a firm-fixed-price contract, as unforeseen escalation clauses or change orders could be triggered. Secondly, the extended timeline elevates the risk of schedule delays due to weather, environmental factors, unforeseen site conditions, or contractor performance issues. Thirdly, maintaining consistent quality control and oversight over such a prolonged period requires sustained effort and resources. Finally, the prolonged presence of construction activities could lead to disruptions in base operations, requiring careful coordination and management to minimize impact on the Navy's mission.

What is the track record of NAN INC in executing large-scale federal construction contracts, particularly in maritime settings?

Information regarding NAN INC's specific track record on large-scale federal construction contracts, especially within maritime settings, is not provided in the data. To assess their capability and reliability for this $134.5 million project, a review of their past performance on similar projects awarded by the Department of Defense or other federal agencies would be necessary. This would typically involve examining contract history, performance evaluations (e.g., CPARS reports), any history of disputes or claims, and their experience with the specific types of construction required for ammunition wharves. Without this data, it's difficult to definitively gauge their suitability beyond the fact that they were selected through a competitive process.

How does the firm-fixed-price contract type influence the government's risk and potential for cost savings in this project?

The firm-fixed-price (FFP) contract type places the primary responsibility for cost overruns on the contractor, NAN INC. This offers the government significant budget certainty, as the price is set upon award, barring any approved change orders. It incentivizes the contractor to manage costs efficiently and control performance to maximize profit. However, the government's risk shifts towards ensuring the contractor meets all contract specifications and quality standards. If the contractor cuts corners to manage costs, the government bears the risk of subpar quality or incomplete work. For the government, FFP contracts are generally preferred for well-defined projects where cost risks can be reasonably estimated, as they limit the government's financial exposure to unforeseen cost increases.

What are the implications of awarding this contract in Hawaii, considering potential logistical and labor challenges?

Awarding a large-scale construction contract in Hawaii presents unique logistical and labor challenges that likely influenced the project's cost and timeline. Hawaii's geographic isolation means that materials, equipment, and potentially specialized labor must be shipped over long distances, increasing transportation costs and lead times. Local labor markets may be smaller and more expensive compared to the mainland, potentially driving up wages and requiring significant recruitment efforts. Furthermore, environmental regulations and permitting processes in Hawaii can be complex. These factors likely contributed to the higher-than-anticipated costs and the significant variance between the initial estimate and the final award, underscoring the importance of thorough pre-award cost analysis for projects in remote or island locations.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 636 LAUMAKA ST, HONOLULU, HI, 96819

Business Categories: Asian Pacific American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $134,496,543

Exercised Options: $134,496,543

Current Obligation: $134,496,543

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6247822D4009

IDV Type: IDC

Timeline