Army awards $39.8M contract for 363,600 tons of stone to Michels Construction, Inc

Contract Overview

Contract Amount: $39,848,304 ($39.8M)

Contractor: Michels Construction, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-11-04

End Date: 2026-06-14

Contract Duration: 1,318 days

Daily Burn Rate: $30.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: BANK STABILIZATION AND NAVIGATION PROJECT- NAVIGATION CHANNEL STRUCTURES REPAIRS- STONE PLACEMENT OF 363,600 TONS

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64106

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $39.8 million to MICHELS CONSTRUCTION, INC. for work described as: BANK STABILIZATION AND NAVIGATION PROJECT- NAVIGATION CHANNEL STRUCTURES REPAIRS- STONE PLACEMENT OF 363,600 TONS Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The firm-fixed-price contract type indicates that the price is set and not subject to adjustment based on the contractor's costs. 3. The contract duration of 1318 days suggests a long-term project with significant resource commitment. 4. The project involves substantial material procurement (363,600 tons of stone), indicating a large-scale civil engineering undertaking. 5. The award to a single contractor, Michels Construction, Inc., warrants a review of their capacity and past performance. 6. The project's focus on navigation channel structures points to critical infrastructure maintenance and improvement.

Value Assessment

Rating: fair

The contract value of $39.8 million for 363,600 tons of stone equates to approximately $109.60 per ton. Benchmarking this against similar heavy civil construction projects involving large-scale stone placement is crucial. Without specific market data for stone procurement and placement in the Missouri region, a definitive value-for-money assessment is challenging. However, the scale of the project and the fixed-price nature suggest that the government has negotiated a price based on anticipated costs and market conditions.

Cost Per Unit: Approximately $109.60 per ton of stone.

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The presence of 3 bids suggests a moderate level of competition for this project. While three bidders participated, the specific details of the bidding process, such as the range of bids and the evaluation criteria, are not provided. A higher number of bidders typically leads to more competitive pricing.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage efficiency. The fact that three bids were received suggests that the government received multiple offers, potentially leading to a more favorable price than a sole-source award.

Public Impact

The primary beneficiaries are likely the U.S. Army Corps of Engineers and the broader maritime industry that relies on navigable waterways. The project will deliver essential repairs and maintenance to navigation channel structures, ensuring the continued safe passage of vessels. The geographic impact is centered in Missouri, where the navigation channels are located. The project will likely involve a significant workforce in the heavy civil engineering and construction sector, potentially creating or sustaining jobs in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions impact the fixed-price contract.
Dependence on a single contractor for a large volume of critical infrastructure work.
Risk of delays due to material availability or logistical challenges in transporting 363,600 tons of stone.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Awarded through full and open competition, indicating a structured procurement process.
Long contract duration allows for phased execution and potential learning curve efficiencies.

Sector Analysis

This contract falls within the Other Heavy and Civil Engineering Construction sector, a broad category encompassing infrastructure projects like waterways, dams, and bridges. The market for such services is characterized by large, specialized firms capable of undertaking complex, capital-intensive projects. Spending in this sector is often driven by government investment in public infrastructure, national security needs, and economic development initiatives. Comparable spending benchmarks would involve analyzing other large-scale civil engineering contracts awarded by agencies like the Army Corps of Engineers for similar navigation or waterway improvement projects.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, small businesses are unlikely to be direct prime contractors on this award. However, Michels Construction, Inc. may engage small businesses as subcontractors for specialized services or material supply, contributing to the small business ecosystem indirectly. The absence of a small business set-aside suggests the scope or nature of the work was deemed more suitable for larger, established firms.

Oversight & Accountability

Oversight for this contract will likely be managed by the U.S. Army Corps of Engineers, the contracting agency. Accountability measures are embedded in the firm-fixed-price contract, which holds the contractor responsible for delivering the specified work within the agreed-upon price. Transparency is typically facilitated through contract award databases and public reporting mechanisms. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance.

Related Government Programs

Army Corps of Engineers Civil Works Programs
Inland Waterways Navigation Projects
Infrastructure Improvement Contracts
Heavy Civil Engineering Construction Services

Risk Flags

Potential for cost escalation under fixed-price contract
Contractor performance risk on large-scale infrastructure
Logistical challenges for massive material delivery

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.8 million to MICHELS CONSTRUCTION, INC.. BANK STABILIZATION AND NAVIGATION PROJECT- NAVIGATION CHANNEL STRUCTURES REPAIRS- STONE PLACEMENT OF 363,600 TONS

Who is the contractor on this award?

The obligated recipient is MICHELS CONSTRUCTION, 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 $39.8 million.

What is the period of performance?

Start: 2022-11-04. End: 2026-06-14.

What is the track record of Michels Construction, Inc. in performing similar large-scale civil engineering projects, particularly those involving significant stone placement for navigation channels?

Michels Construction, Inc. is a large, established construction firm with a history of undertaking significant civil engineering projects. While specific details on their past performance for navigation channel stone placement are not provided in this data snippet, their extensive experience in heavy civil construction suggests they possess the capabilities required for this project. A deeper dive into their contract history, client reviews, and any past performance evaluations would be necessary to fully assess their track record. This would include examining projects of similar scale, complexity, and duration to gauge their reliability and expertise in delivering on time and within budget for critical infrastructure work.

How does the per-ton cost of stone placement ($109.60) compare to industry benchmarks for similar projects in the Midwest region?

The per-ton cost of approximately $109.60 for stone placement is a key metric for value assessment. To benchmark this effectively, one would need to consult industry cost databases, recent bid results for comparable Army Corps of Engineers projects, and market surveys for aggregate materials and heavy equipment in Missouri and surrounding states. Factors influencing this cost include the type and quality of stone required, transportation distances, site accessibility, labor rates, and the specific engineering requirements for the navigation channel structures. Without access to these specific benchmarks, it is difficult to definitively state whether this price represents excellent, fair, or concerning value for money. However, the full and open competition suggests the government sought competitive pricing.

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

The primary risk with a firm-fixed-price (FFP) contract, especially for a long-duration project like this (1318 days), is that the contractor bears the brunt of any cost overruns. If Michels Construction, Inc. encounters unforeseen site conditions, material price escalations beyond what was reasonably anticipated, or labor issues, their profit margin could be significantly eroded, or they could incur a loss. Conversely, if they manage costs exceptionally well, they could realize higher-than-expected profits. For the government, the risk is that the contractor might cut corners on quality to protect their profit if costs escalate unexpectedly, or that the initial price negotiated might have been too high if the contractor's actual costs are significantly lower. Robust government oversight and clear contract specifications are crucial to mitigate these risks.

What is the expected impact of this contract on the local workforce and economy in Missouri?

This $39.8 million contract is expected to have a positive impact on the local workforce and economy in Missouri. The project requires substantial labor for heavy civil engineering, including equipment operators, laborers, engineers, and project managers. Michels Construction, Inc. will likely hire locally or bring in skilled personnel, creating jobs and stimulating economic activity through wages and local procurement of goods and services. The project's duration suggests sustained employment opportunities over several years. Furthermore, the successful completion of navigation channel repairs will support the efficiency and safety of commercial shipping, benefiting industries reliant on river transportation within Missouri and beyond.

Given the 'full and open competition' and three bids received, what does this suggest about the availability of qualified contractors for this type of specialized heavy civil engineering work?

The fact that the contract was awarded under 'full and open competition' and attracted three bids suggests a healthy, albeit potentially specialized, market for this type of heavy civil engineering work. It indicates that multiple firms possess the technical expertise, financial capacity, and bonding capabilities to undertake large-scale navigation structure repairs. While three bidders might not seem like a large number for some commodity procurements, for highly specialized infrastructure projects, it often represents a competitive field. This level of competition generally provides the government with a reasonable basis for price negotiation and increases the likelihood of selecting a capable contractor at a fair price. It implies that the barriers to entry (e.g., required experience, equipment, certifications) are significant enough to limit the pool of potential bidders to established players.

How does the quantity of stone (363,600 tons) relate to the overall scope and potential environmental considerations of the project?

The quantity of 363,600 tons of stone signifies a substantial volume, indicating that this project involves significant structural reinforcement or repair of navigation channel structures. This scale suggests the project aims to address considerable erosion, provide robust bank stabilization, or construct substantial new features within the waterway. Environmentally, the sourcing and placement of such a large quantity of stone require careful management. Considerations would include the environmental impact of quarrying the stone, transportation logistics (potential emissions, noise), and the precise placement methods to ensure the stone effectively serves its purpose without negatively impacting aquatic habitats or water flow dynamics. The Army Corps of Engineers typically mandates environmental compliance and mitigation measures for such projects.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: W912DQ22B1030

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 817 MAIN ST, BROWNSVILLE, WI, 53006

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: $39,848,304

Exercised Options: $39,848,304

Current Obligation: $39,848,304

Actual Outlays: $15,172,898

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline