State Department awards $236.5M construction contract for DHAHRAN consulate, highlighting full and open competition

Contract Overview

Contract Amount: $236,537,391 ($236.5M)

Contractor: Caddell Construction CO. (DE), LLC

Awarding Agency: Department of State

Start Date: 2017-08-27

End Date: 2019-10-27

Contract Duration: 791 days

Daily Burn Rate: $299.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::CT::IGF - CONSTRUCTION FOR DHAHRAN NEW CONSULATE COMPOUND, DHAHRAN, SAUDI ARABIA

Plain-Language Summary

Department of State obligated $236.5 million to CADDELL CONSTRUCTION CO. (DE), LLC for work described as: IGF::CT::IGF - CONSTRUCTION FOR DHAHRAN NEW CONSULATE COMPOUND, DHAHRAN, SAUDI ARABIA Key points: 1. Contract awarded to Caddell Construction Co. for a significant consulate compound. 2. The contract duration of 791 days suggests a complex and extensive construction project. 3. A firm fixed-price contract type indicates a defined scope and budget, reducing cost overrun risk. 4. The project falls under commercial and institutional building construction, a key sector for diplomatic infrastructure. 5. Awarded by the Department of State, this contract supports U.S. diplomatic presence abroad. 6. The absence of small business set-asides suggests the scale and nature of the work may not have been suitable for smaller firms.

Value Assessment

Rating: good

The contract value of $236.5 million for a new consulate compound in DHAHRAN appears to be within a reasonable range for such a large-scale international construction project. Benchmarking against similar diplomatic facility constructions would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an effort to control costs, but the final expenditure against the awarded amount would be a key indicator of efficiency. Without specific cost breakdowns or comparisons to similar projects, a definitive value assessment is challenging, but the scale and scope imply a substantial investment.

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 offers. The presence of 3 bidders suggests a moderate level of competition for this significant construction project. While more than one bidder is positive, a higher number of competitors typically leads to more aggressive pricing and better 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 is generally favorable for taxpayers as it encourages a wider range of bids, potentially leading to lower prices and better quality services. The fact that there were multiple bidders suggests that taxpayer funds are being used in a competitive environment, which can help ensure a fair market price is achieved.

Public Impact

The primary beneficiaries are the U.S. Department of State and its personnel, who will utilize the new consulate compound. The project delivers essential infrastructure for diplomatic operations and services in DHAHRAN, Saudi Arabia. Geographic impact is concentrated in DHAHRAN, Saudi Arabia, enhancing U.S. diplomatic presence in the region. The construction project will likely create numerous jobs for skilled and unskilled labor in the local and potentially international workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen construction challenges arise, despite the firm fixed-price contract.
Dependence on a single contractor for a critical diplomatic facility introduces risk if performance issues emerge.
Geopolitical risks associated with construction in an international location could impact timelines and costs.

Positive Signals

Firm fixed-price contract provides cost certainty and incentivizes contractor efficiency.
Award to an established contractor like Caddell Construction Co. suggests a level of confidence in their capabilities.
Full and open competition increases the likelihood of selecting the most capable and cost-effective bidder.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a vital part of the construction industry responsible for building non-residential structures. The global market for such construction is substantial, driven by government infrastructure needs, commercial development, and institutional expansion. The Department of State's investment in a new consulate compound is a significant undertaking within this sector, reflecting the importance of diplomatic facilities. Comparable spending benchmarks for international embassy and consulate construction would provide further context on the scale of this investment.

Small Business Impact

The contract was not set aside for small businesses, and the 'sb' field is false, indicating no specific small business subcontracting goals were mandated in the provided data. This is common for large-scale, complex construction projects where specialized expertise and significant bonding capacity are required, often favoring larger, established firms. The absence of set-asides means that opportunities for small businesses would primarily arise through subcontracting, if the prime contractor chooses to engage them.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's Bureau of Overseas Buildings Operations (OBO), which manages the design, construction, and maintenance of U.S. diplomatic facilities worldwide. They employ project managers and quality assurance personnel to monitor progress and ensure compliance with specifications. Transparency is typically maintained through contract award notices and reporting requirements. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of State Diplomatic Facilities Construction
Overseas Building Operations Projects
International Construction Contracts
Commercial and Institutional Building Construction

Risk Flags

Potential for cost escalation due to international location and long duration.
Contractor performance risk in a complex, high-stakes project.
Geopolitical and security risks inherent in Middle Eastern construction.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $236.5 million to CADDELL CONSTRUCTION CO. (DE), LLC. IGF::CT::IGF - CONSTRUCTION FOR DHAHRAN NEW CONSULATE COMPOUND, DHAHRAN, SAUDI ARABIA

Who is the contractor on this award?

The obligated recipient is CADDELL CONSTRUCTION CO. (DE), LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $236.5 million.

What is the period of performance?

Start: 2017-08-27. End: 2019-10-27.

What is Caddell Construction Co.'s track record with the Department of State on similar international construction projects?

Caddell Construction Co. has a significant history of working with the Department of State on overseas construction projects. They have been awarded numerous contracts for embassies, consulates, and other diplomatic facilities globally. Their experience includes projects in various challenging environments, often involving complex security requirements and demanding logistical considerations. This extensive track record suggests a familiarity with the State Department's standards, procedures, and expectations for quality, safety, and timely delivery. Reviewing past performance evaluations and project completion records for Caddell on similar State Department contracts would provide further insight into their reliability and capability for the DHAHRAN consulate project.

How does the $236.5 million contract value compare to similar consulate construction projects undertaken by the U.S. government?

The $236.5 million contract value for the DHAHRAN consulate compound is substantial and aligns with the significant investment typically required for constructing modern diplomatic facilities in international locations. Similar projects, such as new embassy or consulate constructions in other regions, have often ranged from tens of millions to several hundred million dollars, depending on size, complexity, security features, and location-specific challenges. For instance, projects in high-threat environments or those requiring extensive new infrastructure development can push costs higher. Without specific details on the DHAHRAN compound's square footage, security enhancements, and site conditions, a precise comparison is difficult. However, the awarded amount suggests a project of considerable scale and scope, consistent with the needs of a major diplomatic mission.

What are the primary risk indicators associated with this firm fixed-price construction contract?

While a firm fixed-price (FFP) contract is designed to provide cost certainty, several risk indicators remain. The primary risk is the potential for scope creep or unforeseen site conditions that could lead to change orders, even under an FFP agreement, potentially increasing the total cost. Contractor performance risk is also present; if Caddell Construction Co. experiences delays, quality issues, or financial instability, it could jeopardize project completion. Furthermore, the international location introduces geopolitical risks, labor availability issues, and supply chain disruptions that could impact the schedule and cost. The duration of the contract (791 days) also indicates a long-term commitment, increasing the window for potential risks to materialize.

How effective is the 'full and open competition' approach for large-scale diplomatic construction projects in terms of achieving value for taxpayers?

The 'full and open competition' approach is generally considered the most effective method for achieving value for taxpayers on large-scale diplomatic construction projects. By allowing all responsible sources to bid, it maximizes the pool of potential contractors, fostering a competitive environment that drives down prices and encourages innovation. This approach increases the likelihood that the government will receive the best possible combination of price, quality, and performance. While the number of bidders (3 in this case) provides some indication of competition, the true effectiveness also depends on the rigor of the evaluation process and the clarity of the solicitation requirements. A well-executed full and open competition minimizes the risk of overpaying and ensures that taxpayer funds are used efficiently.

What are the historical spending patterns for similar construction projects by the Department of State in the Middle East region?

Historical spending patterns for similar construction projects by the Department of State in the Middle East region often reflect significant investments due to the strategic importance and security requirements of diplomatic facilities in the area. Projects in this region can be more costly than in other parts of the world due to factors such as climate, security protocols, local labor costs, and material sourcing challenges. Contracts for new embassies or major renovations in the Middle East have frequently been awarded in the hundreds of millions of dollars. The $236.5 million for the DHAHRAN consulate appears consistent with this trend, reflecting the substantial resources allocated to maintaining and enhancing U.S. diplomatic infrastructure in this critical region. Analyzing past awards for projects in neighboring countries or similar-sized facilities would provide more granular comparative data.

What are the implications of the contract being a 'definitive contract' for project management and oversight?

A 'definitive contract' is the final, binding agreement that follows a more preliminary contract, such as a letter of intent or basic ordering agreement. In the context of this construction project, it signifies that the terms, scope, price, and schedule have been finalized and agreed upon by both the Department of State and Caddell Construction Co. This provides a clear framework for project management and oversight. The definitive contract serves as the primary document against which performance is measured, change orders are evaluated, and payments are processed. It establishes clear expectations and responsibilities, enabling more robust oversight by the contracting officer and project managers to ensure compliance and successful project delivery.

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

Solicitation ID: SAQMMA16R0126

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Caddell Construction CO., Inc.

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

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $236,537,391

Exercised Options: $236,537,391

Current Obligation: $236,537,391

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline