State Department awards $151M design-build contract for Santo Domingo embassy, facing moderate competition

Contract Overview

Contract Amount: $150,934,462 ($150.9M)

Contractor: Caddell Construction CO., Inc.

Awarding Agency: Department of State

Start Date: 2010-09-29

End Date: 2020-12-31

Contract Duration: 3,746 days

Daily Burn Rate: $40.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN/BUILD OF NEW EMBASSY COMPOUND FOR SANTO DOMINGO, DOMINICAN REPUBLIC

Plain-Language Summary

Department of State obligated $150.9 million to CADDELL CONSTRUCTION CO., INC. for work described as: DESIGN/BUILD OF NEW EMBASSY COMPOUND FOR SANTO DOMINGO, DOMINICAN REPUBLIC Key points: 1. Contract awarded to Caddell Construction Co., Inc. for a new embassy compound. 2. The project involves the design and construction of a new facility. 3. The contract type is a definitive contract with a firm fixed price. 4. The duration of the contract is over 3,700 days, indicating a long-term project. 5. The contract was awarded under full and open competition. 6. The North American Industry Classification System (NAICS) code is 236220 for Commercial and Institutional Building Construction.

Value Assessment

Rating: fair

The contract value of $151 million for a new embassy compound appears within a reasonable range for such a large-scale construction project. However, without specific benchmarks for embassy construction costs or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm fixed-price structure suggests that cost overruns are primarily the contractor's responsibility, which can be a positive indicator for cost control. Further analysis would require comparing this cost to similar international construction projects of comparable size and complexity, considering regional labor and material costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple bidders were likely solicited. The presence of 3 bids suggests a moderate level of competition for this significant construction project. While full and open competition is generally preferred for ensuring fair pricing and access for qualified contractors, the specific number of bidders (3) might suggest that the market for such specialized international construction projects is somewhat concentrated, or that the requirements were highly specific.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down prices. The moderate competition level suggests that the government likely received a reasonable price, though a higher number of bids could have potentially led to even greater cost savings.

Public Impact

The primary beneficiaries are the U.S. Department of State and its personnel, who will gain a new, modern, and secure embassy facility. The project delivers essential infrastructure for diplomatic operations in the Dominican Republic. The geographic impact is focused on Santo Domingo, Dominican Republic, enhancing U.S. diplomatic presence. The project will likely create jobs for construction workers and support staff in the local Dominican Republic economy, as well as potentially for U.S. firms involved in design and oversight.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 10 years) increases the risk of scope creep or unforeseen cost escalations, despite the fixed-price nature.
Reliance on a single contractor for both design and build could limit flexibility if design changes are needed.
International construction projects can face unique risks related to local regulations, supply chains, and political stability.

Positive Signals

Firm fixed-price contract provides cost certainty and shifts risk to the contractor.
Full and open competition suggests a robust process for selecting the most qualified and cost-effective bidder.
The project addresses a critical need for secure and functional diplomatic facilities.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the construction industry. The market for constructing large-scale government facilities, especially overseas embassies, is specialized, often involving a limited number of experienced contractors capable of meeting stringent security and logistical requirements. Comparable spending benchmarks would typically be found in large public works projects or major commercial developments, though embassy construction often carries a premium due to security and diplomatic standards.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no specific information on subcontracting plans (st: ''). This suggests that the primary contract was awarded to a large business. While large contracts can sometimes include subcontracting opportunities for small businesses, the absence of explicit set-aside or subcontracting goals in the provided data means the direct impact on the small business ecosystem is likely minimal unless Caddell Construction Co., Inc. voluntarily engages small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's Bureau of Overseas Buildings Operations (OBO), which is responsible for managing the design, construction, and maintenance of U.S. diplomatic facilities worldwide. Accountability measures are typically embedded in the contract terms, including performance milestones and quality control. Transparency is generally maintained through contract award notices and public reporting, though detailed project financials and specific oversight reports may not always be publicly accessible.

Related Government Programs

U.S. Embassy Construction Projects
Department of State Facilities Management
Overseas Diplomatic Infrastructure
Large-Scale Commercial Construction Contracts

Risk Flags

Long contract duration increases risk exposure.
Potential for cost escalation despite fixed-price due to unforeseen international factors.
Limited competition may impact price optimization.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $150.9 million to CADDELL CONSTRUCTION CO., INC.. DESIGN/BUILD OF NEW EMBASSY COMPOUND FOR SANTO DOMINGO, DOMINICAN REPUBLIC

Who is the contractor on this award?

The obligated recipient is CADDELL CONSTRUCTION CO., INC..

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $150.9 million.

What is the period of performance?

Start: 2010-09-29. End: 2020-12-31.

What is Caddell Construction Co., Inc.'s track record with large-scale government construction projects, particularly overseas?

Caddell Construction Co., Inc. has a significant track record in constructing large-scale government facilities, including numerous projects for the Department of Defense and the Department of State, both domestically and internationally. They have experience with complex projects such as military bases, federal courthouses, and embassies. Their portfolio often includes projects with high security requirements and in challenging environments, suggesting they possess the necessary expertise and logistical capabilities for projects like the Santo Domingo embassy. A review of their past performance on similar contracts would be crucial to assess their reliability and quality of work.

How does the $151 million cost compare to similar embassy construction projects undertaken by the State Department?

Benchmarking the $151 million cost requires comparing it to similar embassy construction projects, considering factors like size (square footage), location (regional construction costs), security features, and specific amenities. The State Department's Bureau of Overseas Buildings Operations (OBO) manages numerous such projects, and their average costs can vary widely. For instance, a new embassy in a high-cost Western European capital might be significantly more expensive per square foot than one in a developing nation. Without specific details on the size and complexity of the Santo Domingo compound relative to others, a direct comparison is difficult, but the cost appears substantial, reflecting the complexities of building secure diplomatic facilities abroad.

What are the primary risks associated with a long-duration (over 10 years) firm-fixed-price contract for embassy construction?

The primary risks with a long-duration firm-fixed-price contract for embassy construction include potential contractor insolvency or bankruptcy over the extended period, significant changes in material costs or labor availability that could strain the contractor's ability to deliver at the fixed price, and the risk of contractor default. While the fixed price shifts cost overrun risk to the contractor, a prolonged project increases the likelihood of unforeseen events. The government's risk lies in potential delays, quality compromises if the contractor struggles, or the need to potentially re-procure services if the original contractor fails, which could lead to significant cost and schedule impacts.

How effective are firm-fixed-price contracts in controlling costs for complex, long-term construction projects like this?

Firm-fixed-price (FFP) contracts are generally considered effective for controlling costs when the scope of work is well-defined and risks can be reasonably anticipated. For complex, long-term construction projects like embassy builds, FFP provides cost certainty to the government, as the contractor bears the risk of cost overruns. However, the effectiveness can be diminished if the initial scope is not thoroughly defined, leading to change orders, or if unforeseen conditions arise that necessitate significant contract modifications. The contractor may also build in a larger contingency into their bid to account for the risks of a long-term FFP contract, potentially leading to a higher initial price compared to other contract types.

What is the historical spending pattern for the Department of State's construction and facilities management?

The Department of State consistently allocates substantial funding towards the construction, renovation, and maintenance of its global facilities. Historical spending patterns show significant annual investments, often in the billions of dollars, driven by the need to maintain secure, functional, and modern diplomatic posts worldwide. This includes major capital projects like new embassy compounds, as well as ongoing sustainment, repair, and modernization efforts. Spending levels can fluctuate based on geopolitical priorities, the condition of existing facilities, and the availability of appropriations, with major construction initiatives often requiring multi-year funding commitments.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - GENERAL

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2700 LAGOON PARK DR, MONTGOMERY, AL, 36109

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

Financial Breakdown

Contract Ceiling: $150,934,462

Exercised Options: $150,934,462

Current Obligation: $150,934,462

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline