DoD Awards $82M Hangar Construction Contract to Hensel Phelps, Raising Value Concerns
Contract Overview
Contract Amount: $82,086,831 ($82.1M)
Contractor: Hensel Phelps Construction CO
Awarding Agency: Department of Defense
Start Date: 2021-09-21
End Date: 2025-01-31
Contract Duration: 1,228 days
Daily Burn Rate: $66.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 6
Pricing Type: FIRM FIXED PRICE
Sector: Construction
Official Description: FY21 PN76897 AIRCRAFT MAINTENANCE HANGAR, WHEELER ARMY AIRFIELD, OAHU, HAWAII
Place of Performance
Location: FORT SHAFTER, HONOLULU County, HAWAII, 96858
State: Hawaii Government Spending
Plain-Language Summary
Department of Defense obligated $82.1 million to HENSEL PHELPS CONSTRUCTION CO for work described as: FY21 PN76897 AIRCRAFT MAINTENANCE HANGAR, WHEELER ARMY AIRFIELD, OAHU, HAWAII Key points: 1. The $82M contract for an aircraft maintenance hangar at Wheeler Army Airfield is awarded to Hensel Phelps Construction Co. 2. The project falls under Commercial and Institutional Building Construction, a sector with significant federal spending. 3. The firm fixed-price contract awarded on 2021-09-21 with an estimated completion of 2025-01-31. 4. The contract value of $82,068,310 is significantly higher than the benchmark of $66,846,000. 5. No small business participation was noted in the contract award.
Value Assessment
Rating: concerning
The contract award of $82,068,310 significantly exceeds the benchmark of $66,846,000. This substantial difference suggests potential overpricing or scope creep not fully captured by the initial benchmark.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating a broad solicitation process. However, the significant cost overrun compared to the benchmark raises questions about the effectiveness of price discovery during the bidding process.
Taxpayer Impact: Taxpayers may be impacted by the $15.2 million difference between the awarded contract value and the benchmark, potentially funding costs beyond initial estimates.
Public Impact
Military readiness could be impacted if hangar construction is delayed or if costs escalate further. Local economy in Oahu, Hawaii, may benefit from construction jobs and related economic activity. Future construction contracts may be influenced by the pricing and execution of this project.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Significant cost overrun compared to benchmark
- No small business participation noted
- Long duration of contract performance (1228 days)
Positive Signals
- Awarded under full and open competition
- Firm fixed-price contract type can limit cost escalation risk for the government
Sector Analysis
This contract falls within the Commercial and Institutional Building Construction sector. Federal spending in this sector is substantial, often driven by infrastructure and facility needs for various government agencies, including defense.
Small Business Impact
The contract award notice indicates no small business participation. This suggests that the prime contractor, Hensel Phelps, did not subcontract with small businesses for this project, potentially limiting opportunities for smaller firms.
Oversight & Accountability
The Department of the Army awarded this contract. Oversight will be crucial to monitor project progress, manage potential cost overruns, and ensure the facility meets operational requirements within the awarded budget.
Related Government Programs
- Commercial and Institutional Building Construction
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Cost Overrun
- Lack of Small Business Participation
- Long Contract Duration
- Potential for Scope Creep
Tags
commercial-and-institutional-building-co, department-of-defense, hi, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $82.1 million to HENSEL PHELPS CONSTRUCTION CO. FY21 PN76897 AIRCRAFT MAINTENANCE HANGAR, WHEELER ARMY AIRFIELD, OAHU, HAWAII
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 $82.1 million.
What is the period of performance?
Start: 2021-09-21. End: 2025-01-31.
What factors contributed to the contract value exceeding the benchmark by over $15 million?
The significant difference between the awarded contract value and the benchmark could be attributed to various factors. These may include unforeseen site conditions, changes in material costs, updated design requirements, or potentially less competitive bidding than anticipated despite the full and open solicitation. Further investigation into the procurement process and any change orders would be necessary to pinpoint the exact reasons.
What are the potential risks associated with the long contract duration and firm fixed-price structure?
A long contract duration (1228 days) increases the risk of market fluctuations in material and labor costs, which could strain the firm fixed-price agreement if not adequately accounted for. While the FFP structure protects the government from cost overruns, it could incentivize the contractor to cut corners on quality or scope if profit margins are squeezed, necessitating robust oversight.
How will the effectiveness of this contract be measured, given the cost concerns?
Effectiveness will be measured by the timely completion of the aircraft maintenance hangar according to specifications and its operational readiness. Despite the initial cost concerns, successful delivery of a functional facility that meets the Army's needs is paramount. Performance metrics, quality control reports, and post-occupancy evaluations will be key indicators of effectiveness.
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: W9128A21R0004
Offers Received: 6
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 841 BISHOP ST STE 2001, HONOLULU, HI, 96813
Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $82,086,831
Exercised Options: $82,086,831
Current Obligation: $82,086,831
Actual Outlays: $3,194,263
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2021-09-21
Current End Date: 2025-01-31
Potential End Date: 2025-01-31 00:00:00
Last Modified: 2025-07-24
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