Korte Construction awarded $68M for aircraft maintenance hangar construction in Florida

Contract Overview

Contract Amount: $68,053,984 ($68.1M)

Contractor: Korte Construction Company

Awarding Agency: Department of Defense

Start Date: 2021-05-13

End Date: 2023-12-29

Contract Duration: 960 days

Daily Burn Rate: $70.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: AIRCRAFT MAINTENANCE HANGAR

Place of Performance

Location: KEY WEST, MONROE County, FLORIDA, 33040

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $68.1 million to KORTE CONSTRUCTION COMPANY for work described as: AIRCRAFT MAINTENANCE HANGAR Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 3. The duration of 960 days indicates a significant, long-term construction project. 4. The award was made by the Department of the Navy, a major defense spender. 5. The project is located in Florida, a state with substantial military infrastructure.

Value Assessment

Rating: good

The contract value of $68,053,984 for an aircraft maintenance hangar appears reasonable given the scope and duration. Benchmarking against similar large-scale construction projects for military facilities suggests that this price falls within expected ranges. The firm fixed-price nature of the contract also implies that the contractor has thoroughly assessed costs and risks, contributing to a predictable final price for the government.

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. The presence of 5 bidders suggests a healthy level of competition for this significant construction project. This broad competition is generally favorable for price discovery and ensures the government receives proposals from a diverse range of qualified contractors.

Taxpayer Impact: The robust competition for this hangar construction likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario.

Public Impact

The primary beneficiaries are the U.S. Navy personnel and operations requiring enhanced aircraft maintenance facilities. The contract delivers a critical infrastructure asset: a new aircraft maintenance hangar. The geographic impact is concentrated in Florida, supporting naval aviation readiness in the region. The project will likely create numerous jobs in the construction sector, including skilled trades and project management, within Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for construction delays impacting operational readiness.
Risk of cost overruns if unforeseen site conditions arise, despite fixed-price contract.
Ensuring compliance with stringent military construction standards and specifications.

Positive Signals

Firm fixed-price contract mitigates budget uncertainty for the government.
Full and open competition suggests a competitive pricing environment.
Award to an experienced construction company with a track record in large projects.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on specialized facilities for defense. The market for large-scale military construction is characterized by significant capital investment, stringent regulatory requirements, and a limited number of highly qualified contractors. This project represents a substantial investment in defense infrastructure, aligning with broader government spending trends in maintaining and upgrading military facilities.

Small Business Impact

The data indicates that 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 construction firm. Further analysis would be needed to determine if Korte Construction Company has plans to utilize small business subcontractors to fulfill portions of the work, which could still provide opportunities within the small business ecosystem.

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 facility within the agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements, though specific project oversight details may not be publicly available.

Related Government Programs

Military Construction, Navy
Aircraft Maintenance Facilities
Naval Air Stations
Defense Infrastructure Projects

Risk Flags

Potential for scope creep impacting budget and schedule.
Contractor performance risk on a multi-year project.
Ensuring compliance with environmental regulations during construction.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.1 million to KORTE CONSTRUCTION COMPANY. AIRCRAFT MAINTENANCE HANGAR

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 $68.1 million.

What is the period of performance?

Start: 2021-05-13. End: 2023-12-29.

What is the track record of Korte Construction Company on similar large-scale government construction projects?

Korte Construction Company has a significant history of undertaking large-scale construction projects, including those for government and military clients. Reviewing their past performance on similar projects, such as aircraft hangars, barracks, or other specialized military facilities, would provide insight into their ability to manage complex projects, adhere to budgets, and meet delivery schedules. Data from contract databases often includes past performance evaluations, which can highlight their reliability and quality of work. A review of their portfolio suggests experience with projects of comparable size and complexity, indicating a potentially strong track record for this award.

How does the awarded price compare to similar aircraft maintenance hangar construction projects?

Benchmarking the $68 million award against similar aircraft maintenance hangar projects requires detailed comparison of scope, size, location, and specific requirements. Factors such as square footage, specialized equipment integration, environmental controls, and site preparation costs can vary significantly. However, preliminary comparisons with publicly available data for large military construction projects suggest that this price is within a reasonable range for a facility of this nature. The firm fixed-price contract type also implies that the contractor has factored in potential risks, which can influence the overall price.

What are the primary risks associated with this firm fixed-price contract for the government?

While firm fixed-price contracts generally shift cost risk to the contractor, the government still faces potential risks. These include the risk that the contractor may cut corners on quality or materials to maintain profitability, potentially leading to long-term maintenance issues. There's also the risk of contractor default or bankruptcy, though less common on large, reputable firms. Furthermore, if the scope of work significantly changes due to unforeseen circumstances or evolving military requirements, change orders could lead to cost increases, albeit requiring negotiation and justification.

How effective is the full and open competition process in ensuring value for this type of construction contract?

The full and open competition process is generally considered highly effective in ensuring value for large construction contracts like this one. By allowing all qualified contractors to bid, it fosters a competitive environment that drives down prices and encourages innovation. The presence of five bidders indicates that the market was sufficiently robust to support meaningful competition. This process helps the government secure the best possible price and quality by leveraging the expertise and cost structures of multiple firms, thereby maximizing taxpayer value.

What is the historical spending trend for aircraft maintenance hangar construction by the Department of the Navy?

Historical spending data for aircraft maintenance hangar construction by the Department of the Navy reveals a consistent need for such facilities to support naval aviation operations. Spending in this category fluctuates based on modernization efforts, fleet expansion, and infrastructure replacement cycles. Analyzing past awards for similar projects can provide context for the current $68 million contract, indicating whether this award is typical, higher, or lower than average for comparable projects over time. This helps in assessing whether current spending aligns with historical patterns or represents a significant shift.

What are the implications of the 960-day duration on project management and oversight?

A 960-day duration (approximately 2.6 years) for this construction project signifies a substantial undertaking requiring robust project management and sustained oversight. This extended timeline necessitates careful planning for resource allocation, phased construction, and potential environmental factors. For the government, it means maintaining consistent oversight through contract specialists, engineers, and quality assurance representatives over an extended period to ensure adherence to schedule, budget, and specifications. It also implies a long-term commitment to the project's success and the eventual operational benefits.

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: N6945019R0904

Offers Received: 5

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: $68,053,984

Exercised Options: $68,053,984

Current Obligation: $68,053,984

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $9,735,057

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline