DoD's $53.5M KC-46A hangar contract awarded to Walsh Federal LLC shows fair competition but requires scrutiny on cost efficiency

Contract Overview

Contract Amount: $53,504,031 ($53.5M)

Contractor: Walsh Federal LLC

Awarding Agency: Department of Defense

Start Date: 2019-07-11

End Date: 2024-12-31

Contract Duration: 2,000 days

Daily Burn Rate: $26.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: KC46-A 2-BAY MX HANGAR

Place of Performance

Location: TRENTON, BURLINGTON County, NEW JERSEY, 08641

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $53.5 million to WALSH FEDERAL LLC for work described as: KC46-A 2-BAY MX HANGAR Key points: 1. The contract value of $53.5M for a KC-46A hangar appears within a reasonable range for large-scale construction projects of this nature. 2. Full and open competition was utilized, suggesting a healthy market response and potential for competitive pricing, though specific bid data is limited. 3. The firm-fixed-price contract type shifts risk to the contractor, which can be beneficial for budget predictability. 4. The project's duration of approximately 5.5 years indicates a significant, long-term commitment by the Department of the Army. 5. The contractor, Walsh Federal LLC, has a track record in large federal construction projects, providing some assurance of capability. 6. The absence of small business set-asides or subcontracting goals warrants review to ensure broader economic participation.

Value Assessment

Rating: fair

The contract's total value of $53.5M for a specialized aircraft hangar is substantial. Benchmarking against similar large-scale military construction projects is challenging without more specific project details (e.g., square footage, specific technological requirements). However, the firm-fixed-price nature of the award suggests that the initial pricing was deemed acceptable by the government. Further analysis would require comparing the final cost against the initial bid and any change orders to assess true value for money.

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 solicited and considered. With 3 bids received, the level of competition appears moderate. While this suggests some price discovery, a higher number of bids would typically lead to more robust competition and potentially lower prices for the government. The specific details of the bidding process and the spread between bids are not publicly available, limiting a deeper assessment of price competitiveness.

Taxpayer Impact: The use of full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, driving down costs through market forces. A moderate number of bidders suggests that while competition existed, there may have been opportunities for even greater savings if more firms had participated.

Public Impact

The primary beneficiaries are the U.S. Air Force personnel and operations requiring maintenance and support for the KC-46A Pegasus aircraft. The project delivers critical infrastructure in the form of a specialized hangar, essential for the operational readiness and maintenance of advanced aerial refueling tankers. The geographic impact is localized to McGuire Air Force Base in New Jersey, supporting regional military operations. The construction and subsequent operation of the facility will likely have implications for the local workforce, creating jobs in construction and potentially in long-term facility maintenance and support roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific small business subcontracting goals may limit opportunities for smaller firms in the construction ecosystem.
The long duration of the contract (over 5 years) could introduce risks related to cost escalation if not managed tightly, despite the fixed-price nature.
Limited public data on the specific technical requirements and competitive landscape makes a thorough value-for-money assessment difficult.

Positive Signals

Awarded under full and open competition, indicating a broad market solicitation.
Firm-fixed-price contract type transfers cost overrun risk to the contractor.
The contractor, Walsh Federal LLC, has experience with large federal construction projects.
The project addresses a critical infrastructure need for the KC-46A aircraft fleet.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on specialized military infrastructure. The market for large-scale military construction is often characterized by a limited number of large, experienced contractors capable of handling complex projects. Spending in this sector is driven by defense modernization, base infrastructure upgrades, and operational readiness requirements. Comparable benchmarks would involve other large aircraft hangar constructions or similar specialized military facility projects, which often run into tens of millions of dollars.

Small Business Impact

This contract does not appear to have specific small business set-aside provisions, nor are there explicit mentions of small business subcontracting goals in the provided data. This suggests that opportunities for small businesses may be limited to those that can compete directly for the prime contract or are subcontracted by the prime contractor without a formal requirement. Further investigation into Walsh Federal LLC's subcontracting plans would be necessary to understand the potential impact on the small business ecosystem.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of the Army, falling under the purview of the Department of Defense. Oversight mechanisms would typically involve contract officers, project managers, and potentially the Defense Contract Audit Agency (DCAA) for financial oversight. Transparency is facilitated by contract award databases like FPDS, though detailed performance metrics and oversight reports are not always publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

KC-46A Pegasus Aircraft Program
Military Construction Projects
Air Force Base Infrastructure
Aircraft Maintenance Facilities

Risk Flags

Potential for cost creep despite fixed-price contract if scope changes significantly.
Risk of construction delays impacting operational readiness timelines.
Need for stringent quality control to meet specialized aerospace standards.
Limited visibility into specific bid details impacting full competition assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.5 million to WALSH FEDERAL LLC. KC46-A 2-BAY MX HANGAR

Who is the contractor on this award?

The obligated recipient is WALSH FEDERAL LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $53.5 million.

What is the period of performance?

Start: 2019-07-11. End: 2024-12-31.

What is the track record of Walsh Federal LLC in executing large federal construction contracts, particularly those involving specialized facilities?

Walsh Federal LLC, a subsidiary of The Walsh Group, has a significant history of executing large-scale federal construction projects. Their portfolio includes infrastructure, transportation, and building construction for various government agencies, including the Department of Defense. While specific details on KC-46A related facilities are not immediately apparent, their experience with complex projects suggests a capacity to manage the technical and logistical demands of constructing specialized hangars. A deeper dive into their past performance ratings, any past performance issues, and the scale of previously completed similar projects would provide a more robust assessment of their capability and reliability for this specific contract.

How does the awarded amount of $53.5 million compare to the estimated cost or market rates for similar KC-46A hangars?

Direct comparison of the $53.5 million award to market rates for similar KC-46A hangars is challenging due to the proprietary nature of construction bids and the unique specifications of each project. Factors such as location, specific technological requirements (e.g., specialized equipment, environmental controls), size, and the prevailing economic conditions at the time of bidding significantly influence costs. However, the firm-fixed-price nature of the contract suggests that the government assessed the bids and found them acceptable within their budget expectations. Without access to the number of bids received and the range of those bids, it's difficult to definitively state if this represents optimal value. Generally, large specialized military construction projects of this magnitude can range widely, making this figure plausible but requiring further context for a precise value assessment.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include potential cost overruns (though mitigated by the firm-fixed-price structure), schedule delays due to unforeseen site conditions or supply chain issues, and performance risks related to the quality of construction meeting stringent military specifications. The firm-fixed-price contract shifts the financial risk of cost overruns to the contractor, Walsh Federal LLC. Mitigation for schedule and performance risks would rely on robust project management, regular site inspections, adherence to detailed construction plans and specifications, and clear communication channels between the contractor and the government's contracting officer's representative (COR). The long duration also presents a risk of material price escalation, which the contractor must absorb under the fixed-price terms.

What is the expected effectiveness of this hangar in supporting KC-46A operations?

The effectiveness of this hangar is expected to be high, as it is purpose-built to support the specific maintenance, repair, and operational needs of the KC-46A Pegasus aircraft. These specialized facilities are crucial for ensuring the airworthiness and readiness of the fleet by providing controlled environments, necessary utilities, and access for complex servicing tasks. The construction of this hangar directly addresses a critical infrastructure requirement for the KC-46A program, enabling efficient and effective sustainment operations. Its successful completion and operational readiness will contribute significantly to the overall mission capability of the aircraft.

How has federal spending on similar military construction projects evolved over the past five years?

Federal spending on military construction projects, including aircraft hangars and specialized facilities, has generally remained robust, driven by modernization efforts, aging infrastructure replacement, and evolving operational requirements across the armed forces. While specific figures for KC-46A hangars are not readily available, overall military construction budgets fluctuate based on congressional appropriations, strategic priorities, and global security demands. Trends indicate a continued need for investment in state-of-the-art facilities to support new platforms like the KC-46A and to maintain readiness across various bases. Factors such as the pace of aircraft procurement and base realignment decisions influence the timing and scale of such construction spending.

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: SEALED BID

Solicitation ID: W912DS19R0001

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 929 W ADAMS ST, CHICAGO, IL, 60607

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

Financial Breakdown

Contract Ceiling: $53,504,031

Exercised Options: $53,504,031

Current Obligation: $53,504,031

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline