Hensel Phelps Construction awarded $633.6M for Eglin AFB Advanced Munitions Technology Complex, a firm-fixed-price definitive contract

Contract Overview

Contract Amount: $63,357,131 ($63.4M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2019-03-15

End Date: 2024-02-19

Contract Duration: 1,802 days

Daily Burn Rate: $35.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ADVANCED MUNITIONS TECHNOLOGY COMPLEX, EGLIN AFB, FL, BASE BID AND BID OPTION 25

Place of Performance

Location: EGLIN AFB, OKALOOSA County, FLORIDA, 32542

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $63.4 million to HENSEL PHELPS CONSTRUCTION CO for work described as: ADVANCED MUNITIONS TECHNOLOGY COMPLEX, EGLIN AFB, FL, BASE BID AND BID OPTION 25 Key points: 1. The contract's firm-fixed-price structure aims to control costs, but the large dollar value warrants close monitoring for potential overruns. 2. Full and open competition suggests a potentially competitive bidding process, which should theoretically lead to better pricing. 3. The contract duration of 1802 days indicates a significant, long-term project with associated risks in schedule and scope management. 4. The project's focus on an Advanced Munitions Technology Complex highlights its strategic importance within defense infrastructure. 5. The absence of small business set-asides or reported subcontracting suggests limited direct impact on the small business ecosystem for this specific award.

Value Assessment

Rating: good

The contract value of $633.6 million for a large-scale construction project is substantial. Benchmarking against similar large military construction projects would be necessary for a precise value-for-money assessment. However, the firm-fixed-price nature of the contract provides cost certainty for the government, assuming the scope is well-defined and managed effectively. The number of bidders (4) in a full and open competition is a reasonable indicator of market interest.

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. Four bids were received, suggesting a moderate level of competition for this significant construction project. While four bidders is not an exceptionally high number for a project of this magnitude, it does provide a basis for price comparison and negotiation.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation. The presence of multiple bidders suggests that the government likely received competitive pricing, maximizing the value of taxpayer dollars.

Public Impact

The primary beneficiaries are the Department of Defense and the U.S. Air Force, who will gain enhanced capabilities at the Advanced Munitions Technology Complex. The project will deliver new or improved infrastructure for the research, development, testing, and production of advanced munitions. The geographic impact is concentrated at Eglin Air Force Base in Florida, supporting regional economic activity through construction jobs and related services. The construction workforce will see significant employment opportunities, though specific details on local vs. non-local hiring are not provided.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in a long-duration construction project, impacting final costs and schedule.
Reliance on a single prime contractor for a project of this scale introduces risk if performance issues arise.
The strategic nature of the facility could lead to evolving requirements, necessitating contract modifications.
Ensuring adherence to stringent security and environmental regulations for a munitions facility.

Positive Signals

Firm-fixed-price contract provides cost certainty and limits the government's exposure to cost overruns.
Full and open competition suggests a robust bidding process, likely resulting in competitive pricing.
The contractor, Hensel Phelps Construction Co., is a well-established entity in large-scale construction, implying experience and capability.
The project's clear objective (Advanced Munitions Technology Complex) indicates a defined need and purpose.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically for defense infrastructure. The market for large-scale military construction is characterized by significant project values, stringent requirements, and often competitive bidding processes. Comparable spending benchmarks would typically involve other major military base construction or renovation projects, which can range from tens to hundreds of millions of dollars depending on scope and complexity.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Consequently, there are no direct subcontracting opportunities mandated for small businesses through a set-aside program for this specific award. The prime contractor, Hensel Phelps, may still engage small businesses as subcontractors, but this is not a requirement of the contract itself. The impact on the small business ecosystem is therefore indirect, relying on the prime contractor's procurement practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the relevant contracting command at Eglin Air Force Base. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified facilities within the agreed price. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Construction (MILCON)
Advanced Weapons Systems Development
Base Infrastructure Modernization
Department of Defense Facilities Management

Risk Flags

Long-duration contract increases exposure to market volatility and potential scope changes.
High contract value necessitates rigorous oversight to ensure cost control and performance.
Specialized nature of munitions facility may involve unique safety and environmental risks.
Dependence on a single prime contractor for a critical infrastructure project.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.4 million to HENSEL PHELPS CONSTRUCTION CO. ADVANCED MUNITIONS TECHNOLOGY COMPLEX, EGLIN AFB, FL, BASE BID AND BID OPTION 25

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 $63.4 million.

What is the period of performance?

Start: 2019-03-15. End: 2024-02-19.

What is the track record of Hensel Phelps Construction Co. on similar large-scale federal construction projects?

Hensel Phelps Construction Co. has a significant track record in large-scale federal construction, including numerous projects for the Department of Defense and other government agencies. They have experience with complex facilities, military installations, and infrastructure development. While specific project details and performance metrics for all past contracts are not publicly detailed in this summary, their status as a major construction firm suggests a history of successfully managing large, complex projects. A deeper dive into their contract history, including past performance evaluations and any reported disputes or challenges, would provide a more comprehensive understanding of their reliability for this specific award.

How does the $633.6 million award compare to typical costs for constructing advanced technology complexes at military bases?

The $633.6 million award for the Advanced Munitions Technology Complex at Eglin AFB is a substantial investment, placing it at the high end for single construction projects. The cost is influenced by factors such as the specialized nature of munitions facilities (requiring advanced safety, security, and environmental controls), the scale of the complex, and the specific technological capabilities being housed. Benchmarking against other large military construction (MILCON) projects, particularly those involving research, development, or specialized manufacturing capabilities, would provide context. Projects of this magnitude often exceed $100 million, with highly specialized facilities potentially reaching several hundred million dollars, making this award significant but not unprecedented within the defense construction landscape.

What are the primary risks associated with a firm-fixed-price contract for a project of this duration and complexity?

While firm-fixed-price (FFP) contracts offer cost certainty, risks can emerge, especially for long-duration, complex projects like the Eglin AFB munitions complex. The primary risk is that the contractor may underestimate costs or encounter unforeseen issues (e.g., subsurface conditions, material price volatility, labor shortages) that could lead to financial strain or pressure to cut corners if the FFP price is too low. Conversely, if the price was set too high due to overly conservative contractor estimates or insufficient competition, taxpayers may overpay. Effective government oversight is crucial to ensure the contractor maintains quality and adheres to the scope, preventing scope creep or the use of substandard materials to protect their profit margin.

What is the expected impact of this contract on the operational capabilities of the U.S. Air Force at Eglin AFB?

This contract is expected to significantly enhance the operational capabilities of the U.S. Air Force at Eglin AFB by providing a state-of-the-art facility for advanced munitions. The new complex will likely support the research, development, testing, and potentially manufacturing or sustainment of next-generation munitions, which are critical for maintaining technological superiority. Improved facilities can lead to more efficient processes, enhanced safety protocols, and the ability to handle more sophisticated and powerful weaponry. This investment underscores the strategic importance of Eglin AFB as a hub for munitions innovation and readiness.

How has federal spending on defense construction projects like this evolved over the past five years?

Federal spending on defense construction projects, often categorized under Military Construction (MILCON), has generally remained robust, reflecting ongoing modernization needs and global security priorities. While specific annual figures fluctuate based on budget allocations and project pipelines, there has been a consistent demand for upgrading aging infrastructure, building new specialized facilities (like technology complexes), and enhancing force projection capabilities. Factors such as geopolitical tensions, technological advancements in defense, and evolving strategic threats influence the level and focus of defense construction spending. This contract aligns with the broader trend of investing in advanced capabilities and infrastructure to support national defense objectives.

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: W9127817R0029

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Hensel Phelps - Shimizu JV

Address: 6557 HAZELTINE NATIONAL DR STE 1, ORLANDO, FL, 32822

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

Financial Breakdown

Contract Ceiling: $102,571,368

Exercised Options: $63,357,131

Current Obligation: $63,357,131

Actual Outlays: $121,084

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline