Navy Gateway Inn & Suites contract awarded to Korte Construction Company for $59.66M over 1582 days

Contract Overview

Contract Amount: $59,662,139 ($59.7M)

Contractor: Korte Construction Company

Awarding Agency: Department of Defense

Start Date: 2019-09-27

End Date: 2024-01-26

Contract Duration: 1,582 days

Daily Burn Rate: $37.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: P-741 NAVY GATEWAY INN&SUITES

Place of Performance

Location: KEY WEST, MONROE County, FLORIDA, 33040

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $59.7 million to KORTE CONSTRUCTION COMPANY for work described as: P-741 NAVY GATEWAY INN&SUITES Key points: 1. Contract value represents a significant investment in lodging infrastructure for naval personnel. 2. The firm-fixed-price structure aims to provide cost certainty for the government. 3. A single award over a long duration suggests a focus on a specific project or long-term relationship. 4. The contract falls within the broad Commercial and Institutional Building Construction sector. 5. Performance is geographically concentrated in Florida, impacting local economies and workforce.

Value Assessment

Rating: fair

The contract value of $59.66 million for building construction over approximately 4.3 years appears substantial. Benchmarking against similar large-scale construction projects for government facilities is necessary to fully assess value. The firm-fixed-price nature provides predictability but may not reflect the most cost-effective approach if market conditions fluctuate significantly. Without detailed cost breakdowns or comparisons to private sector construction of similar scale and quality, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. With 6 bidders, the competition level suggests a reasonable market interest in this type of government construction work. This level of competition is generally favorable for price discovery and potentially achieving competitive pricing for the government.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer funds are used efficiently by driving down costs through market forces.

Public Impact

Naval personnel stationed or visiting Florida will benefit from improved lodging facilities. The contract supports the construction and potentially renovation of lodging infrastructure. Geographic impact is concentrated in Florida, specifically within the St. Johns County area (236220 NAICS code). The construction project will likely create jobs for skilled and unskilled labor in the local Florida workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen construction challenges arise, despite fixed-price contract.
Long contract duration could lead to scope creep or changes in requirements.
Dependence on a single contractor for a large project increases risk if performance issues emerge.

Positive Signals

Firm-fixed-price contract provides budget certainty for the government.
Full and open competition suggests a robust bidding process and potential for competitive pricing.
Award to a single contractor for a defined project can lead to focused execution and efficiency.

Sector Analysis

This contract falls under the Commercial and Institutional Building Construction sector, a significant part of the broader construction industry. The market for government construction projects is substantial, driven by the need for infrastructure, housing, and operational facilities. This specific contract for lodging facilities aligns with the Navy's requirements for supporting its personnel. Comparable spending benchmarks would involve analyzing other large-scale construction contracts for military or government-owned lodging and facilities.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). The prime contractor, Korte Construction Company, is likely a larger entity. There is no explicit information on subcontracting plans for small businesses within this award, which could represent a missed opportunity to engage the small business ecosystem. Further investigation into subcontracting goals and actual performance would be needed to assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and relevant Navy program management officials. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified construction services. Transparency is facilitated through contract award databases, though detailed project progress and cost justifications may not be publicly available. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Military Construction Projects
Government Lodging Facilities
Naval Base Infrastructure
Department of Defense Construction Contracts

Risk Flags

Long contract duration may increase risk of cost escalation or scope creep.
Firm-fixed-price contract shifts cost risk to the contractor, potentially leading to higher initial bids.
Lack of specific small business subcontracting data requires further review.
Geographic concentration in Florida could be a vulnerability if local economic conditions change.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.7 million to KORTE CONSTRUCTION COMPANY. P-741 NAVY GATEWAY INN&SUITES

Who is the contractor on this award?

The obligated recipient is KORTE CONSTRUCTION COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $59.7 million.

What is the period of performance?

Start: 2019-09-27. End: 2024-01-26.

What is the track record of Korte Construction Company with the Department of Defense?

Korte Construction Company has a history of working with the Department of Defense and other government agencies on various construction projects. Analyzing their past performance on similar contracts, including any past performance evaluations, award fees, or disputes, would provide insight into their reliability and capability. Reviewing their portfolio of completed government projects can indicate their experience with the specific requirements and complexities of military construction. Information from sources like SAM.gov or past performance databases can offer a more detailed picture of their track record.

How does the per-square-foot construction cost compare to industry benchmarks for similar lodging facilities?

To assess the value for money, a comparison of the per-square-foot construction cost against industry benchmarks for similar lodging facilities is crucial. This requires obtaining the total square footage of the Navy Gateway Inn & Suites project and dividing the total contract value by this figure. Subsequently, this calculated cost per square foot would be benchmarked against data for recently constructed hotels, extended-stay accommodations, or similar government lodging facilities in comparable geographic regions. Factors such as material costs, labor rates, and specific amenity requirements can influence these benchmarks. A significant deviation from the average could indicate either exceptional value or potential overpricing.

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

Firm-fixed-price (FFP) contracts offer cost certainty but carry inherent risks, especially for long-duration construction projects. For the contractor, the primary risk is underestimating costs, leading to reduced profit margins or even losses if unforeseen issues arise, such as material price escalations, labor shortages, or unexpected site conditions. For the government, the risk is paying a premium upfront to transfer cost risk to the contractor. If the contractor inflates their bid to account for potential risks, the government might end up paying more than necessary. Scope creep, where the government requests changes or additions beyond the original agreement, can also become contentious and costly under an FFP structure if not managed carefully through formal change order processes.

What is the expected impact of this contract on the local Florida economy and workforce?

This $59.66 million construction contract is expected to have a positive impact on the local Florida economy, particularly in the St. Johns County area. The project will likely generate numerous direct and indirect jobs, ranging from skilled trades like electricians, plumbers, and carpenters to general laborers and project management roles. Local businesses supplying materials, equipment, and services to the prime contractor will also benefit. Furthermore, increased economic activity from construction workers spending their wages locally can stimulate demand in sectors such as retail, hospitality, and transportation. The duration of the contract suggests a sustained period of economic stimulus.

How does the number of bidders (6) influence the pricing and quality outcomes for this contract?

A competition involving six bidders generally suggests a healthy market interest and a reasonable level of competition for this type of construction project. With multiple bidders, the government has a greater opportunity to receive competitive pricing, as contractors are incentivized to offer their best terms to win the contract. This increased competition can lead to better price discovery and potentially lower costs for the taxpayer compared to a sole-source or limited-competition scenario. Furthermore, a competitive environment can encourage contractors to propose innovative solutions and maintain higher quality standards to differentiate themselves, ultimately benefiting the government and the end-users of the facility.

What are the potential long-term implications of this contract for Navy lodging infrastructure in Florida?

This contract signifies a significant investment in upgrading or expanding Navy lodging infrastructure in Florida. The successful completion of the Gateway Inn & Suites project could lead to improved quality of accommodation for service members and their families, enhancing morale and readiness. It may also serve as a model or precedent for future lodging construction or renovation projects within the Navy's portfolio. Depending on the scope, it could address capacity issues or modernize outdated facilities, contributing to the overall operational effectiveness and support services provided by the Navy in the region. The long-term implications also include the ongoing maintenance and operational costs associated with the new or renovated facility.

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: N6945019R0903

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5700 OAKLAND AVE STE 275, SAINT LOUIS, MO, 63110

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

Financial Breakdown

Contract Ceiling: $59,662,139

Exercised Options: $59,662,139

Current Obligation: $59,662,139

Subaward Activity

Number of Subawards: 110

Total Subaward Amount: $169,308,968

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline