State Department's $134M NEC construction contract awarded to Caddell Construction amid full and open competition

Contract Overview

Contract Amount: $134,207,484 ($134.2M)

Contractor: Caddell Construction CO., Inc.

Awarding Agency: Department of State

Start Date: 2013-09-20

End Date: 2018-05-01

Contract Duration: 1,684 days

Daily Burn Rate: $79.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: THE CONSTRUCTION OF THE NEW NEC IN THE HAGUE IGF::CT::IGF

Plain-Language Summary

Department of State obligated $134.2 million to CADDELL CONSTRUCTION CO., INC. for work described as: THE CONSTRUCTION OF THE NEW NEC IN THE HAGUE IGF::CT::IGF Key points: 1. Contract value represents a significant investment in diplomatic infrastructure. 2. Full and open competition suggests a robust bidding process. 3. Definitive contract type indicates a long-term commitment. 4. Fixed-price structure aims to control costs for the government. 5. Project duration of 1684 days highlights the scale of the construction. 6. No small business set-aside was utilized, potentially limiting small business participation.

Value Assessment

Rating: good

The contract value of $134.2 million for the construction of the New Embassy Compound (NEC) in The Hague appears reasonable given the scale and complexity of such projects. Benchmarking against similar large-scale diplomatic facility constructions would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract suggests that the government has a clear understanding of the project scope and associated costs, aiming to mitigate cost overruns.

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 a bid. The presence of 4 bidders suggests a competitive environment, which typically leads to better pricing and value for the government. The specific details of the bidding process and the evaluation criteria would further illuminate the effectiveness of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that drives down prices and encourages innovation from contractors.

Public Impact

The primary beneficiaries are the U.S. Department of State and its personnel, who will utilize the new facility. The project delivers critical diplomatic infrastructure, enhancing U.S. presence and operations in The Hague. The geographic impact is localized to The Hague, Netherlands, but supports broader U.S. foreign policy objectives. Workforce implications include employment opportunities for construction workers and related trades during the project's duration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise despite fixed-price contract.
Long project duration (1684 days) increases exposure to market fluctuations and potential delays.
Lack of small business set-aside may limit opportunities for smaller firms in the construction ecosystem.

Positive Signals

Awarded under full and open competition, suggesting a fair and competitive process.
Firm fixed-price contract provides cost certainty for the government.
Experienced contractor (Caddell Construction Co., Inc.) likely brings expertise to the project.

Sector Analysis

The construction of diplomatic facilities falls within the broader commercial and institutional building construction sector. This sector is characterized by large-scale projects requiring significant capital investment, specialized labor, and adherence to stringent building codes and security standards. The market size for such specialized government construction is substantial, driven by the need for secure and functional embassies and consulates worldwide. This contract represents a significant investment within this niche.

Small Business Impact

This contract was not awarded as a small business set-aside, and the data indicates no specific subcontracting goals for small businesses were mandated. This means that opportunities for small businesses to participate in this large-scale project were likely limited to those that could compete directly or were subcontracted by the prime contractor without a specific set-aside requirement. The impact on the small business ecosystem is neutral to negative, as it did not actively promote small business involvement through set-asides.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of State's Bureau of Overseas Buildings Operations (OBO) or a designated contracting officer's representative. Accountability measures are embedded in the contract terms, including performance standards and payment schedules tied to milestones. Transparency is generally maintained through contract award databases and reporting requirements, though specific project oversight details may not be publicly disseminated.

Related Government Programs

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

Risk Flags

Potential for cost overruns despite fixed-price contract.
Long project duration increases risk exposure.
Limited direct small business participation opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $134.2 million to CADDELL CONSTRUCTION CO., INC.. THE CONSTRUCTION OF THE NEW NEC IN THE HAGUE IGF::CT::IGF

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 $134.2 million.

What is the period of performance?

Start: 2013-09-20. End: 2018-05-01.

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

Caddell Construction Co., Inc. has a well-established track record in constructing large-scale government facilities, including numerous overseas diplomatic posts for the U.S. Department of State. They have been involved in building embassies, consulates, and other secure facilities in various challenging international locations. Their experience often includes navigating complex security requirements, local regulations, and logistical hurdles inherent in overseas construction. This extensive experience suggests a high likelihood of successful project execution, though specific performance metrics for past projects would offer a more granular assessment of their capabilities and reliability in delivering projects on time and within budget.

How does the $134.2 million contract value compare to similar embassy construction projects undertaken by the State Department?

The $134.2 million contract value for the New Embassy Compound in The Hague is within the typical range for major diplomatic facility constructions. The Department of State's Bureau of Overseas Buildings Operations (OBO) manages numerous projects globally, with costs varying significantly based on location, size, security features, and local construction market conditions. Projects of this magnitude often range from tens of millions to several hundred million dollars. For instance, other new embassy or major renovation projects have seen contract values in similar or higher brackets. A direct comparison would require analyzing projects with comparable square footage, security mandates, and construction complexity in similar economic regions.

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

The primary risk with a firm fixed-price contract for a long-term construction project lies with the contractor. While it offers cost certainty to the government, the contractor assumes the risk of cost overruns due to unforeseen issues such as material price escalation, labor shortages, design changes, or unexpected site conditions. If the contractor's costs exceed the fixed price, their profit margin shrinks or they may incur a loss. Conversely, the government's risk is primarily related to potential quality compromises if the contractor seeks to cut costs to maintain profitability, or delays if the contractor struggles financially. Robust oversight and clear contract specifications are crucial to mitigate these risks.

What is the expected impact of this contract on the local economy in The Hague and the broader Netherlands?

This contract is expected to have a positive impact on the local economy in The Hague and the Netherlands through job creation in the construction sector, including skilled trades, project management, and support services. It will also stimulate demand for local materials, equipment, and potentially subcontractors, contributing to business revenue. Furthermore, the construction of a new, modern diplomatic facility can enhance the host country's image and potentially lead to increased diplomatic engagement and related economic activities. The duration of the project implies a sustained economic contribution over several years.

How does the duration of 1684 days (approximately 4.6 years) compare to typical timelines for similar embassy construction projects?

A duration of 1684 days, equating to roughly 4.6 years, is a substantial but not unusual timeframe for the construction of a new, large-scale embassy compound. Such projects involve complex design, extensive security features, site preparation, foundation work, building construction, interior fit-out, and landscaping, often under stringent government standards. Timelines can be extended by factors such as the complexity of the design, the size of the facility, the need for specialized materials, geopolitical considerations, and the specific challenges of the construction site. While some projects might be completed faster, a multi-year timeline is typical for facilities of this scale and importance.

What are the implications of awarding this contract to a single large firm (Caddell Construction) versus potentially breaking it down for smaller firms?

Awarding a large, complex project like the NEC construction to a single, experienced firm like Caddell Construction Co., Inc. often streamlines project management, ensures a unified vision, and potentially leverages the contractor's established expertise and resources for efficiency. This approach can be advantageous for projects with intricate interdependencies and high security requirements. However, it limits direct opportunities for smaller construction firms to participate as prime contractors. While subcontracting can create avenues for small businesses, the absence of a set-aside means their involvement is not guaranteed and may be less significant than if the project were segmented or specifically targeted for small business participation.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

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: $134,207,484

Exercised Options: $134,207,484

Current Obligation: $134,207,484

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline