DoD's $59M contract for 35 housing units awarded to Garco Construction, Inc. in Montana

Contract Overview

Contract Amount: $59,041,546 ($59.0M)

Contractor: Garco Construction, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-08-03

End Date: 2012-05-24

Contract Duration: 2,121 days

Daily Burn Rate: $27.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: 29 6-PLEX BLDGS AND 6 4-PLEX BLDGS

Place of Performance

Location: MALMSTROM AFB, CASCADE County, MONTANA, 59402

State: Montana Government Spending

Plain-Language Summary

Department of Defense obligated $59.0 million to GARCO CONSTRUCTION, INC. for work described as: 29 6-PLEX BLDGS AND 6 4-PLEX BLDGS Key points: 1. The contract awarded to Garco Construction, Inc. represents a significant investment in military family housing infrastructure. 2. The firm-fixed-price contract type suggests that cost overruns are primarily the contractor's responsibility. 3. The duration of the contract (2121 days) indicates a long-term construction project. 4. The project involved the construction of both multi-plex and single-plex residential buildings. 5. The contract was awarded under full and open competition, suggesting a robust bidding process.

Value Assessment

Rating: fair

The total award amount of $59,041,546.49 for 35 housing units equates to approximately $1.69 million per unit. This figure appears high when compared to typical single-family home construction costs, but may be justified by specific military housing requirements, such as security, durability, and amenities, as well as the remote location in Montana. Without detailed specifications and comparable military housing projects in similar geographic areas, a precise value-for-money assessment is challenging.

Cost Per Unit: N/A

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 bidders suggests a moderate level of competition for this project. While more bidders could potentially drive prices lower, three offers generally provide a reasonable basis for price comparison and selection.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which aims to secure the best possible price and quality for the construction of essential military housing.

Public Impact

Military families stationed at the Department of the Army facility in Montana will benefit from new housing. The project delivered 29 six-plex buildings and 6 four-plex buildings, providing a total of 35 residential structures. The geographic impact is concentrated in Montana, addressing specific housing needs for the armed forces in that region. The construction activities likely supported local employment and businesses in the Montana area during the project's duration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen construction challenges arise, despite the firm-fixed-price structure.
Long project duration increases exposure to market fluctuations in material and labor costs.
The per-unit cost appears high, warranting further investigation into project specifics and comparable benchmarks.

Positive Signals

Awarded under full and open competition, suggesting a fair and transparent procurement process.
Firm-fixed-price contract type shifts cost risk to the contractor.
Project addresses a clear need for military family housing infrastructure.

Sector Analysis

This contract falls within the construction sector, specifically new single-family housing construction. The Department of Defense is a major consumer of construction services for military installations, including housing. The market for military housing construction is often characterized by large-scale projects, specific security and durability requirements, and procurement through competitive bidding processes. Benchmarking this contract's cost against other military housing projects of similar scale and complexity would provide further insight into its value.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and there is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is not detailed here. However, large construction projects often involve subcontracting opportunities, which could potentially benefit small businesses in the local Montana economy.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. As a firm-fixed-price contract awarded by the Department of the Army, it would undergo review by contracting officers and potentially the Government Accountability Office (GAO) if disputes arise. Transparency is generally maintained through contract award databases, though detailed project-specific oversight reports are not provided here. Inspector General jurisdiction would apply in cases of fraud or misconduct.

Related Government Programs

Military Family Housing Construction
Department of Defense Construction Contracts
New Residential Construction
Federal Government Procurement

Risk Flags

High per-unit cost requires further justification.
Long contract duration may increase risk of cost escalation or quality issues.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.0 million to GARCO CONSTRUCTION, INC.. 29 6-PLEX BLDGS AND 6 4-PLEX BLDGS

Who is the contractor on this award?

The obligated recipient is GARCO 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 $59.0 million.

What is the period of performance?

Start: 2006-08-03. End: 2012-05-24.

What specific factors contributed to the high per-unit cost of the housing units?

The per-unit cost of approximately $1.69 million for these housing units is notably high. Several factors could contribute to this. Firstly, military housing often incorporates enhanced durability, security features, and specific amenity standards that exceed typical civilian construction. Secondly, the remote location in Montana may lead to increased logistical costs for materials and labor, as well as potentially higher local labor rates. Thirdly, the project involved the construction of multiple buildings (29 six-plexes and 6 four-plexes), which can have different cost efficiencies compared to a single large structure. Finally, the firm-fixed-price nature of the contract, while beneficial for cost control, might have incorporated higher contingency pricing by the contractor to mitigate risks associated with a long-duration project in a potentially challenging environment. A detailed review of the contract's scope of work, specifications, and comparison with similar Department of Defense housing projects in comparable geographic and logistical settings would be necessary for a definitive cost analysis.

How does the competition level of three bidders impact the taxpayer's value for this contract?

A competition level of three bidders for this $59 million contract suggests a moderate degree of market interest. While more bidders could theoretically lead to lower prices due to increased competitive pressure, three offers generally provide a reasonable basis for the government to assess price reasonableness and select the best value proposal. This level of competition indicates that the market is not severely constrained, and multiple firms were capable and willing to bid on this substantial project. It implies that the government likely received competitive pricing, though perhaps not the absolute lowest possible price that might have emerged from a larger pool of bidders. The firm-fixed-price structure further ensures that the primary cost risk is borne by the contractor, protecting taxpayers from unexpected cost escalations.

What are the potential risks associated with a firm-fixed-price contract of this duration?

While a firm-fixed-price (FFP) contract shifts significant cost risk to the contractor, a long duration of 2121 days (nearly 6 years) introduces specific risks. The primary risk is that the contractor may have underestimated material or labor costs at the time of bidding, especially given potential market volatility over such an extended period. This could lead to the contractor seeking to cut corners on quality or scope to maintain profitability, potentially impacting the long-term durability and safety of the housing. Another risk is contractor default or performance issues over the long haul, which, while less common, can be more disruptive on extended projects. The government's recourse, such as termination for default, can be complex and time-consuming. Furthermore, unforeseen site conditions or regulatory changes during the project's lifespan could necessitate contract modifications, potentially impacting the 'fixed' nature of the price if not managed carefully.

What is the historical spending pattern for similar housing construction contracts by the Department of the Army?

Historical spending patterns for similar housing construction contracts by the Department of the Army reveal a consistent and substantial investment in military family housing. The Army regularly procures the construction, renovation, and maintenance of housing units across numerous installations, often through large, multi-year contracts. Spending in this category can fluctuate based on military readiness needs, infrastructure modernization initiatives, and budget allocations. Contracts are typically awarded through full and open competition, though sole-source or limited competition may occur for specialized projects or in remote locations. The average cost per unit can vary significantly based on location, type of housing (e.g., single-family, multi-family), construction standards, and prevailing market conditions. Analyzing past awards provides context for the scale and nature of Garco Construction's contract, highlighting the ongoing need for robust housing infrastructure to support military personnel and their families.

How does the 'New Single-Family Housing Construction (except For-Sale Builders)' NAICS code inform the analysis of this contract?

The North American Industry Classification System (NAICS) code 236115, 'New Single-Family Housing Construction (except For-Sale Builders),' provides crucial context for this contract. It signifies that the work involved the construction of new residential housing units, but specifically excludes projects where the builder intends to sell the homes on the open market. In this case, the Department of the Army is the ultimate recipient and user of the housing, not a buyer in a typical real estate transaction. This distinction is important because government construction projects often have different requirements, specifications, and oversight compared to private sector for-sale developments. These can include stricter building codes, enhanced security measures, specific energy efficiency standards, and longer-term durability expectations, all of which can influence project costs and timelines.

Industry Classification

NAICS: Construction › Residential Building Construction › New Single-Family Housing Construction (except For-Sale Builders)

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: W912DW06R0004

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4114 E BROADWAY AVE, SPOKANE, WA, 05

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

Financial Breakdown

Contract Ceiling: $59,041,546

Exercised Options: $59,041,546

Current Obligation: $59,041,546

Contract Characteristics

Cost or Pricing Data: NO

Timeline