DoD's $285M Southcom HQ project awarded to Hensel Phelps Construction Co. via full and open competition

Contract Overview

Contract Amount: $284,974,691 ($285.0M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2008-04-04

End Date: 2013-09-30

Contract Duration: 2,005 days

Daily Burn Rate: $142.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN-BUILD TWO PHASE CONSTRUCTION: U.S. SOUTHCOM HEADQUARTERS, MIAMI-DORAL, FLORIDA

Place of Performance

Location: MIAMI, MIAMI-DADE County, FLORIDA, 33101

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $285.0 million to HENSEL PHELPS CONSTRUCTION CO for work described as: DESIGN-BUILD TWO PHASE CONSTRUCTION: U.S. SOUTHCOM HEADQUARTERS, MIAMI-DORAL, FLORIDA Key points: 1. The contract represents a significant investment in military infrastructure for U.S. Southern Command. 2. Full and open competition suggests a potentially competitive bidding process, which can lead to better pricing. 3. The project's duration and fixed-price nature indicate a defined scope and budget, mitigating some cost overrun risks. 4. The award to a single, established contractor like Hensel Phelps suggests a focus on experience and capability for complex projects. 5. The project's success hinges on effective project management and adherence to the design-build specifications. 6. Geographic concentration in Florida may have implications for local construction labor markets and material sourcing.

Value Assessment

Rating: good

Benchmarking this specific design-build construction project is challenging without detailed cost breakdowns and comparable project data. However, the firm-fixed-price contract type, awarded through full and open competition, generally indicates a commitment to achieving value for money by establishing a clear price upfront. The scale of the project suggests it was likely priced competitively among bidders with the capacity to handle such a large undertaking. Further analysis would require comparing the cost per square foot or per functional unit against similar military construction projects of comparable complexity and location.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of three bidders, as indicated by the 'no' field, suggests a reasonable level of competition for this substantial project. While three bidders is not exceptionally high for a project of this magnitude, it still provides a basis for price discovery and allows the government to select the offer that best meets its requirements, likely balancing price and technical factors.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation. It ensures that the government is not limited to a single provider, increasing the likelihood of securing a fair market price.

Public Impact

The primary beneficiaries are the U.S. Southern Command personnel who will operate from a modern, purpose-built headquarters. The project delivers a new headquarters facility, enhancing operational capabilities and readiness for the command. The geographic impact is concentrated in Miami-Doral, Florida, potentially stimulating local economic activity and employment in the construction sector. The construction phase likely created numerous jobs for skilled trades and support staff in the South Florida region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in design-build projects if initial requirements are not precisely defined.
Reliance on a single contractor for a large, multi-year project concentrates risk.
Construction projects are inherently subject to unforeseen site conditions or material price fluctuations, even with fixed-price contracts.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Full and open competition suggests a robust bidding process.
Award to an experienced contractor like Hensel Phelps indicates a focus on proven performance.
Design-build approach can streamline project delivery by integrating design and construction phases.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically for large-scale government facilities. The Department of Defense is a major client in this sector, frequently engaging in design-build projects for infrastructure development worldwide. The market for large military construction projects is typically dominated by a few large, experienced firms capable of managing complex, high-value contracts. Benchmarking would involve comparing the cost per square foot or per occupant against similar military installations or large institutional buildings.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses ('ss': false, 'sb': false). Therefore, there are no direct subcontracting implications specifically related to small business set-asides for this prime contract. However, the prime contractor, Hensel Phelps, may engage small businesses as subcontractors for various aspects of the construction, which would contribute to the small business ecosystem indirectly.

Oversight & Accountability

Oversight for this Department of the Army contract would typically involve contracting officers, project managers, and potentially the U.S. Army Corps of Engineers. The firm-fixed-price nature of the contract provides a degree of accountability by locking in costs. Transparency is generally maintained through contract award databases and public reporting, although detailed project-specific oversight mechanisms are internal to the agency. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Construction (MILCON) Program
Department of Defense Facilities Management
Design-Build Construction Contracts
U.S. Southern Command Operations

Risk Flags

Potential for cost overruns if scope is not tightly controlled.
Risk of construction delays due to unforeseen circumstances.
Quality control during design and construction phases is critical.
Contractor performance risk on a large, multi-year project.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $285.0 million to HENSEL PHELPS CONSTRUCTION CO. DESIGN-BUILD TWO PHASE CONSTRUCTION: U.S. SOUTHCOM HEADQUARTERS, MIAMI-DORAL, FLORIDA

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS CONSTRUCTION CO.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $285.0 million.

What is the period of performance?

Start: 2008-04-04. End: 2013-09-30.

What is Hensel Phelps Construction Co.'s track record with large federal design-build projects?

Hensel Phelps Construction Co. has a substantial track record with large federal design-build projects, including numerous military construction (MILCON) projects. They are a well-established general contractor with extensive experience in complex infrastructure and facilities. Their portfolio often includes projects for various branches of the U.S. military and other federal agencies, demonstrating a capacity to manage large budgets, adhere to stringent government requirements, and deliver projects on time and within scope. Their history suggests a strong understanding of federal procurement processes and construction standards, making them a frequent awardee for high-value government contracts.

How does the awarded price of $284,974,691 compare to similar military headquarters construction projects?

Directly comparing the $284.97 million award for the U.S. Southcom HQ to similar projects is complex without detailed cost breakdowns (e.g., cost per square foot, cost per occupant) and accounting for variations in project scope, location, and construction timelines. However, this figure falls within the typical range for major military facility construction projects. Large headquarters facilities often involve significant architectural design, specialized security features, and extensive technological infrastructure, driving up costs. The firm-fixed-price nature and full and open competition suggest the price was vetted against market rates at the time of award. Further benchmarking would require access to detailed cost data from comparable projects awarded around the same period.

What are the primary risks associated with this design-build construction contract?

The primary risks associated with this design-build contract include potential scope creep if the initial design requirements are not meticulously defined and managed, leading to cost increases or delays despite the fixed-price nature. There's also the risk of unforeseen site conditions or material price volatility, although a fixed-price contract aims to transfer much of this risk to the contractor. Furthermore, reliance on a single contractor for a multi-year, complex project concentrates execution risk. Ensuring quality control throughout both the design and construction phases is critical, as is effective communication between the government and the contractor to address any issues promptly.

How effective is the design-build approach for a project of this scale and type?

The design-build approach is often considered effective for large-scale projects like military headquarters due to its potential for streamlined delivery. By integrating the design and construction phases under a single contract, it can reduce coordination issues, accelerate project schedules, and foster collaboration between designers and builders. This can lead to more innovative solutions and potentially lower overall costs compared to traditional design-bid-build methods. For a project requiring specialized facilities and security, the single point of responsibility inherent in design-build can also enhance accountability and simplify project management for the government.

What are the historical spending patterns for U.S. Southern Command facilities?

Historical spending patterns for U.S. Southern Command (SOUTHCOM) facilities would likely show a pattern of investment in infrastructure to support its mission in the Western Hemisphere. This includes funding for operational facilities, training centers, and administrative buildings. Major construction projects, like the new headquarters, represent significant capital investments that occur periodically rather than annually. Spending would be influenced by strategic priorities, readiness requirements, and the lifecycle of existing facilities. Analyzing past SOUTHCOM construction contracts, including their value, type, and duration, would provide context for the scale and nature of this $285 million award.

What is the significance of the contract award date (2008) in relation to the end date (2013)?

The contract award date of April 4, 2008, and the estimated completion date of September 30, 2013, indicate a project duration of approximately 5.5 years. This timeframe is typical for a large-scale design-build construction project of this magnitude, encompassing detailed design, procurement, construction, and commissioning phases. The extended duration allows for thorough planning and execution while managing the complexities inherent in building a major headquarters facility. The gap between award and completion suggests a significant design and construction effort was required, aligning with the project's substantial budget.

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

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6280 HAZELTINE NATIONAL DR, ORLANDO, FL, 90

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

Financial Breakdown

Contract Ceiling: $284,974,691

Exercised Options: $284,974,691

Current Obligation: $284,974,691

Contract Characteristics

Cost or Pricing Data: NO

Timeline