DoD's $288M JOC Construction Project Awarded to Hensel Phelps Construction Co. Shows Strong Competition

Contract Overview

Contract Amount: $288,119,974 ($288.1M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2014-03-27

End Date: 2018-09-10

Contract Duration: 1,628 days

Daily Burn Rate: $177.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: JOC CONSTRUCTION PROJECT

Place of Performance

Location: FORT GEORGE G MEADE, ANNE ARUNDEL County, MARYLAND, 20755

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $288.1 million to HENSEL PHELPS CONSTRUCTION CO for work described as: JOC CONSTRUCTION PROJECT Key points: 1. The contract value of $288 million represents a significant investment in institutional building construction. 2. Awarded under full and open competition, this contract likely benefited from robust price discovery. 3. The firm-fixed-price contract type suggests a clear understanding of project scope and cost allocation. 4. The duration of 1628 days indicates a large-scale, multi-year construction effort. 5. The absence of small business set-asides warrants further investigation into subcontracting opportunities. 6. The contract was awarded by the Department of the Army, a major component of the DoD.

Value Assessment

Rating: good

Benchmarking the value of this $288 million JOC construction project is challenging without specific project details and comparable bids. However, the firm-fixed-price nature suggests that the contractor assumed significant cost risk. The scale of the project implies a substantial undertaking, and the competition level (5 bidders) indicates a healthy market response. Further analysis would require comparing the final cost against initial estimates and industry benchmarks for similar institutional building construction projects.

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 a bid. Five bids were received, indicating a competitive environment for this large-scale construction project. The presence of multiple bidders generally leads to more competitive pricing as contractors vie for the award. This level of competition suggests that the government likely received a fair market price for the services rendered.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers, as it likely drove down the final price and ensured the government received good value for its investment. A competitive bidding process minimizes the risk of overpayment and encourages efficiency from the winning contractor.

Public Impact

The primary beneficiaries are the Department of Defense and the Department of the Army, receiving critical infrastructure improvements. The project delivers essential commercial and institutional building construction services, likely supporting military operations or personnel. The geographic impact is centered in Maryland, where the contract was performed. The contract supports a significant construction workforce, including skilled trades and project management professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of explicit small business set-aside could limit opportunities for smaller firms in the construction ecosystem.
The long contract duration may present challenges in adapting to evolving construction technologies or material costs.

Positive Signals

Awarded under full and open competition, ensuring a broad range of potential contractors could participate.
Firm-fixed-price contract type provides cost certainty for the government.
Multiple bidders (5) indicate a competitive market for this type of construction service.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a vital part of the broader construction industry. This sector encompasses the building of non-residential structures such as offices, schools, hospitals, and government facilities. The market for large-scale government construction projects is often characterized by significant contract values and stringent performance requirements. Comparable spending benchmarks would typically be derived from historical data on similar JOC (Job Order Contracting) or large-scale construction awards within the Department of Defense or other federal agencies.

Small Business Impact

The contract was not awarded as a small business set-aside, and the data indicates no explicit small business participation goals were met. This suggests that opportunities for small businesses may have been limited to subcontracting roles, if any were mandated or pursued by the prime contractor. Further investigation into subcontracting plans and actual performance would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Army. The firm-fixed-price nature of the contract shifts much of the cost risk to the contractor, simplifying some aspects of oversight. Transparency is generally facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Construction Contracts
Army Corps of Engineers Construction Projects
Job Order Contracting (JOC)
Federal Building Construction
Institutional Building Construction

Risk Flags

Potential for cost overruns due to long contract duration and market volatility.
Limited visibility into small business subcontracting opportunities.
Contractor performance risk over a multi-year project.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $288.1 million to HENSEL PHELPS CONSTRUCTION CO. JOC CONSTRUCTION PROJECT

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 $288.1 million.

What is the period of performance?

Start: 2014-03-27. End: 2018-09-10.

What is the historical spending pattern for JOC construction projects by the Department of the Army in Maryland?

Analyzing historical spending for JOC construction projects by the Department of the Army in Maryland requires access to detailed federal procurement data. While this specific contract was awarded in 2014 for $288 million, understanding the broader pattern involves examining trends in contract values, award volumes, and the types of construction services procured over several fiscal years. Factors such as military base expansions, infrastructure upgrades, and specific mission requirements influence these spending patterns. Without a comprehensive dataset filtered for this specific agency, location, and contract type, a precise historical spending analysis is not feasible. However, it is reasonable to infer that the Department of the Army, as a major federal entity, consistently invests significant funds in construction and facilities maintenance across various regions, including Maryland.

How does the number of bidders (5) compare to similar large-scale DoD construction contracts?

The presence of five bidders for this $288 million JOC construction project is a positive indicator of competition. For large-scale Department of Defense (DoD) construction contracts, the number of bidders can vary significantly based on project complexity, geographic location, and market conditions. Generally, a higher number of bidders suggests a more competitive market and potentially better pricing for the government. While five bidders is a healthy number, some highly sought-after or broadly scoped contracts might attract a dozen or more bids, whereas highly specialized or geographically constrained projects might see fewer. Benchmarking against similar firm-fixed-price, full-and-open competition contracts for institutional building construction within the DoD over the same period would provide a more precise comparison. However, five bidders generally signifies adequate market interest and competitive tension.

What are the potential risks associated with a firm-fixed-price contract for a project of this duration (1628 days)?

Firm-fixed-price (FFP) contracts are designed to provide cost certainty for the buyer by shifting most of the cost risk to the contractor. For a project spanning 1628 days (over 4.5 years), the primary risks associated with an FFP contract revolve around potential changes in material costs, labor availability and rates, unforeseen site conditions, and scope creep. If market prices for essential construction materials escalate significantly beyond projections, the contractor could face substantial losses unless the contract includes specific escalation clauses, which are less common in pure FFP agreements. Similarly, unexpected labor shortages or wage increases could impact profitability. The contractor bears the risk of managing these fluctuations. For the government, the risk is that the contractor may cut corners on quality or safety to maintain profitability if unforeseen cost pressures arise, or that the initial price may have been inflated to account for the contractor's perceived risk.

What is the typical profit margin for construction companies on large federal contracts like this one?

Determining the exact profit margin for a specific federal construction contract is challenging as it is proprietary information and depends on numerous factors, including the contractor's efficiency, risk assessment, overhead costs, and market competition. However, for large federal construction projects, profit margins are generally considered to be in the range of 5% to 15% of the contract value. This range accounts for the contractor's investment, labor, materials, equipment, and the inherent risks involved. The firm-fixed-price nature of this contract suggests the contractor has factored in potential cost fluctuations and risks into their bid. The competitive environment, with five bidders, likely pressured contractors to submit bids with reasonable profit margins to secure the award.

How does the National Industry Acquisition (NAICS) code 236220 relate to the services provided under this contract?

The NAICS code 236220, 'Commercial and Institutional Building Construction,' directly corresponds to the services procured under this contract. This code specifically covers establishments primarily engaged in the construction or remodeling of nonresidential buildings, such as commercial, industrial, and institutional structures. This includes activities like new construction, additions, alterations, and repairs. Given that the contract is for a 'JOC CONSTRUCTION PROJECT' awarded to 'HENSEL PHELPS CONSTRUCTION CO' by the 'Department of the Army,' it is highly probable that the project involved the construction or significant renovation of facilities like barracks, administrative buildings, training centers, or other institutional structures necessary for military operations. The NAICS code accurately categorizes the nature of the work performed.

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: W912DR13R0037

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4437 BROOKFIELD CORPORATE DR STE 207, CHANTILLY, VA, 20151

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

Financial Breakdown

Contract Ceiling: $288,407,032

Exercised Options: $288,407,032

Current Obligation: $288,119,974

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline