Department of Defense awards $31.5M for Peterson AFB construction, exceeding initial estimates by $5.9M

Contract Overview

Contract Amount: $31,466,037 ($31.5M)

Contractor: Structsure Projects Inc

Awarding Agency: Department of Defense

Start Date: 2018-09-19

End Date: 2022-02-03

Contract Duration: 1,233 days

Daily Burn Rate: $25.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF DESIGN BUILD INITIAL OUTFITTING PROJECT FOR PETERSON AFB, COLORADO SPRINGS, CO

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80914

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $31.5 million to STRUCTSURE PROJECTS INC for work described as: IGF::OT::IGF DESIGN BUILD INITIAL OUTFITTING PROJECT FOR PETERSON AFB, COLORADO SPRINGS, CO Key points: 1. The contract's final value significantly surpassed initial projections, indicating potential cost overruns or scope changes. 2. A single award for a large-scale construction project suggests a concentrated market for such specialized services. 3. The duration of the contract (over 3 years) points to a complex project with potential for unforeseen challenges. 4. Fixed-price contracts can shift risk to the contractor, but require careful initial pricing to avoid overpayment. 5. The project's location in Colorado Springs may indicate specific regional construction market dynamics. 6. The absence of small business set-asides suggests the project's scale or specialized nature may not have been conducive to smaller contractors.

Value Assessment

Rating: fair

The final award of $31.5 million is approximately 23% higher than the initial estimated value of $25.5 million. This significant increase warrants scrutiny to understand the drivers behind the cost escalation. Without comparable project data for similar design-build initial outfitting projects at Air Force bases, it is difficult to definitively benchmark the value. However, a nearly 25% increase over initial estimates suggests potential issues with initial cost estimation, scope creep, or unforeseen site conditions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. With 4 bids received, the competition level appears moderate for a project of this magnitude. While full and open competition is generally favorable for price discovery, the significant cost increase suggests that either the initial estimates were too low, or the winning bid, despite competition, was substantially higher than anticipated.

Taxpayer Impact: Taxpayers benefit from the process of full and open competition, which aims to secure the best possible price. However, the substantial increase from the initial estimate raises concerns about whether the most cost-effective solution was ultimately achieved.

Public Impact

The primary beneficiaries are the Department of Defense and the personnel stationed at Peterson Air Force Base, Colorado Springs, CO, who will receive updated and outfitted facilities. The project delivers essential construction and outfitting services, likely encompassing building construction, interior finishing, and potentially systems integration. The geographic impact is localized to Peterson AFB in Colorado Springs, Colorado, supporting military infrastructure in that region. The project likely involves a significant construction workforce, including skilled trades, project managers, and support staff, contributing to local employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost increase from initial estimate to final award.
Long contract duration may indicate complexity and potential for delays or further cost adjustments.
Lack of small business participation could limit broader economic impact and competition.

Positive Signals

Awarded under full and open competition, suggesting a structured procurement process.
Firm Fixed Price contract type shifts cost risk to the contractor.
Multiple bids received indicate some level of market interest and potential for competitive pricing.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a broad category encompassing the building of non-residential structures. The federal government is a significant consumer of construction services, particularly for infrastructure, military bases, and government facilities. Comparable spending benchmarks would typically involve analyzing other large-scale military construction projects, such as barracks, training facilities, or administrative buildings, often awarded through similar competitive processes. The market for design-build services for federal installations is specialized, requiring contractors with experience in government regulations, security clearances, and specific construction standards.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). The scale and complexity of a design-build initial outfitting project for a military base often favor larger, established construction firms with the capacity to handle extensive project management, bonding, and specialized expertise. While there's no direct subcontracting data provided, large prime contracts like this often include subcontracting opportunities, though the absence of a small business set-aside means there's no mandated requirement for small business participation.

Oversight & Accountability

The contract was awarded by the Department of the Army, a component of the Department of Defense. Oversight would typically involve program managers within the Army Corps of Engineers or the relevant Air Force installation command. Accountability measures are inherent in the firm-fixed-price contract type, which incentivizes the contractor to manage costs. Transparency is generally facilitated through federal procurement databases like FPDS-NG, where contract awards are recorded. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Construction Projects
Base Realignment and Closure (BRAC) Projects
Federal Building Construction
Design-Build Contracts
Installation Support Contracts

Risk Flags

Cost Overrun Potential
Long Project Duration Risks
Limited Small Business Participation
Complexity of Design-Build Projects

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.5 million to STRUCTSURE PROJECTS INC. IGF::OT::IGF DESIGN BUILD INITIAL OUTFITTING PROJECT FOR PETERSON AFB, COLORADO SPRINGS, CO

Who is the contractor on this award?

The obligated recipient is STRUCTSURE PROJECTS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.5 million.

What is the period of performance?

Start: 2018-09-19. End: 2022-02-03.

What factors contributed to the final award price exceeding the initial estimate by nearly $6 million?

The significant increase from the initial estimate ($25.5M) to the final award ($31.5M) suggests several potential contributing factors. These could include unforeseen site conditions discovered during the design or pre-construction phase, changes in material costs or labor rates between the estimation and bidding periods, or an expansion of the project's scope beyond what was initially envisioned. It's also possible that the initial estimate was overly conservative or did not fully account for the complexities inherent in a design-build initial outfitting project for a military installation. Further analysis of contract modifications, change orders, and detailed project documentation would be necessary to pinpoint the exact reasons for this substantial cost escalation.

How does the number of bids (4) compare to similar large-scale military construction projects?

Receiving four bids for a contract valued at over $31 million for a design-build initial outfitting project at a military installation suggests a moderately competitive market. For projects of this scale and specialization, the number of qualified bidders can vary. While more bids generally indicate broader competition, four bids can still be sufficient to achieve competitive pricing if the bidders are strong and the government's requirements are clearly defined. However, in some highly specialized sectors or regions, fewer bidders might be expected. Benchmarking against similar projects within the Department of Defense or other federal agencies would provide a clearer picture of whether four bids represent robust or limited competition in this specific construction niche.

What is the typical risk profile for a Firm Fixed Price (FFP) contract of this nature?

A Firm Fixed Price (FFP) contract, like the one awarded here, generally places the majority of the cost risk on the contractor. This means the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This contract type is often preferred by the government as it provides cost certainty. However, for the contractor, the risk is higher, especially in complex projects with potential for unforeseen issues (like those potentially encountered here, given the cost increase). To mitigate their risk, contractors often build in contingency into their FFP bids, which can lead to higher initial prices. The government's risk in an FFP contract primarily lies in ensuring the contractor has accurately estimated all costs and risks, and that the fixed price represents fair value.

What are the implications of the contract's long duration (1233 days) for project management and cost control?

A contract duration of 1233 days (approximately 3.4 years) for a design-build initial outfitting project indicates a substantial and complex undertaking. Such a long duration increases the potential for various risks, including fluctuations in material prices, labor availability, and evolving regulatory requirements over the project lifecycle. Effective project management is critical to maintaining control over costs and schedule. This necessitates robust oversight, regular progress monitoring, proactive risk management, and clear communication channels between the government and the contractor. The extended timeline also means that the initial cost estimates are more susceptible to becoming outdated, potentially leading to change orders or claims if not managed diligently.

How does the absence of small business participation impact the broader economic goals of federal contracting?

The absence of a small business set-aside for this contract means that there was no specific requirement for the prime contractor to be a small business, nor were there mandated goals for small business subcontracting. Federal contracting aims to ensure that small businesses receive a fair share of government contracts, fostering economic growth and competition. While large projects may not always be suitable for direct small business awards, the lack of set-asides or explicit subcontracting goals can limit opportunities for smaller firms to participate in significant federal projects. This can concentrate large contracts among fewer, larger companies and potentially reduce the pipeline of experienced small businesses capable of undertaking future federal work.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: W9127S16R6000

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 903 E 104TH ST # 140, KANSAS CITY, MO, 64131

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

Financial Breakdown

Contract Ceiling: $31,466,037

Exercised Options: $31,466,037

Current Obligation: $31,466,037

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W9127S17D6004

IDV Type: IDC

Timeline