Hensel Phelps Construction Co. awarded $305M for combined FORSCOM/USARC HQ, a large project in North Carolina

Contract Overview

Contract Amount: $304,984,360 ($305.0M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2008-09-20

End Date: 2012-09-30

Contract Duration: 1,471 days

Daily Burn Rate: $207.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: COMBINED FORSCOM/USARC HQ

Place of Performance

Location: FORT BRAGG, CUMBERLAND County, NORTH CAROLINA, 28307

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $305.0 million to HENSEL PHELPS CONSTRUCTION CO for work described as: COMBINED FORSCOM/USARC HQ Key points: 1. The contract value of $305 million represents a significant investment in military infrastructure. 2. Awarded under full and open competition, suggesting a robust bidding process. 3. The firm fixed-price contract type indicates that cost risks are largely borne by the contractor. 4. The project duration of 1471 days highlights the scale and complexity of the construction. 5. The North Carolina location places the facility in a region with established defense presence. 6. The project falls under Commercial and Institutional Building Construction, a broad but essential sector.

Value Assessment

Rating: good

The contract value of $305 million for the combined FORSCOM/USARC HQ is substantial. Benchmarking against similar large-scale government construction projects is challenging without more specific project details. However, the firm fixed-price nature of the contract suggests that the contractor assumed significant cost risk, which can be a positive indicator of value if the project is completed within budget. The award to Hensel Phelps Construction Co., a well-established firm, implies a level of confidence in their ability to deliver.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With 4 bidders participating, the competition level appears healthy for a project of this magnitude. This suggests that the Army sought to leverage market competition to achieve a fair price and select the best-qualified contractor.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through a competitive bidding process and ensuring that the government receives proposals from a wide range of qualified contractors.

Public Impact

The primary beneficiaries are the U.S. Army Forces Command (FORSCOM) and the U.S. Army Reserve Command (USARC), who will gain consolidated headquarters facilities. The project delivers essential infrastructure for military command and control operations. The geographic impact is concentrated in North Carolina, likely supporting the local economy through construction jobs and related services. The construction phase will create numerous jobs for skilled trades and construction professionals.

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.
Delays in construction could impact the operational readiness of FORSCOM and USARC.
The large scale of the project may present logistical challenges during the construction phase.

Positive Signals

Awarded to a reputable contractor with a track record in large-scale construction.
Firm fixed-price contract shifts cost risk to the contractor, potentially leading to better cost control.
Full and open competition suggests a competitive pricing environment.
The project addresses a clear need for consolidated military headquarters.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the construction industry. The Department of Defense is a major client for construction services, with substantial annual spending on facilities and infrastructure. The market for large-scale government construction is competitive, with established players like Hensel Phelps often bidding on major projects. This contract represents a substantial investment in military infrastructure, aligning with broader government spending trends in defense and facilities management.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside. While Hensel Phelps is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors on this project. The extent of small business subcontracting would depend on the prime contractor's subcontracting plan and the availability of qualified small business firms for specific trades or services.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army, likely through contracting officers and project managers. Accountability measures are inherent in the firm fixed-price contract, which penalizes the contractor for cost overruns. Transparency is generally maintained through contract award databases and public reporting, although specific project oversight details are often internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Construction (MILCON)
Department of Defense Facilities
Army Corps of Engineers Projects
General Services Administration (GSA) Construction

Risk Flags

Potential for schedule delays
Risk of unforeseen site conditions
Contractor performance risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $305.0 million to HENSEL PHELPS CONSTRUCTION CO. COMBINED FORSCOM/USARC HQ

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 $305.0 million.

What is the period of performance?

Start: 2008-09-20. End: 2012-09-30.

What is Hensel Phelps Construction Co.'s track record with large federal construction projects?

Hensel Phelps Construction Co. has a long and established history of undertaking large-scale construction projects for both government and private sector clients. They are frequently awarded significant contracts, including military construction, aviation facilities, and healthcare institutions. Their portfolio often includes complex projects requiring extensive project management and logistical coordination. While specific performance metrics for every contract are not publicly detailed, their consistent ability to win and execute large federal contracts suggests a strong track record and capability in managing complex construction endeavors. Their experience likely includes navigating federal procurement regulations, security requirements, and quality assurance standards inherent in government projects.

How does the $305 million contract value compare to similar military headquarters construction projects?

The $305 million contract value for the combined FORSCOM/USARC HQ is substantial and falls within the range of large-scale military construction projects. However, direct comparisons are difficult without detailed project specifications, scope of work, and geographic cost variations. Projects like consolidated command centers, major training facilities, or large barracks complexes can range from tens of millions to hundreds of millions of dollars. The cost is influenced by factors such as building size, complexity of systems (e.g., IT infrastructure, security), site preparation requirements, and prevailing labor and material costs in the region. Given the strategic importance and size implied by 'combined HQ,' $305 million appears to be a significant but not necessarily outlier figure for such a critical defense infrastructure undertaking.

What are the primary risks associated with a project of this scale and type?

The primary risks associated with a large-scale construction project like the FORSCOM/USARC HQ include potential cost overruns (even with a fixed-price contract, scope creep or unforeseen issues can arise), construction delays due to weather, labor shortages, supply chain disruptions, or unforeseen site conditions. Schedule slippage can impact operational readiness for the commands. There's also a risk related to the integration of complex IT and security systems required for a headquarters facility. Ensuring compliance with stringent military construction standards and environmental regulations adds another layer of complexity. Finally, contractor performance and quality control are ongoing risks that require diligent oversight.

How effective is full and open competition in ensuring value for taxpayer money in large construction contracts?

Full and open competition is generally considered the most effective method for ensuring value for taxpayer money in large construction contracts. By allowing all responsible sources to bid, the government maximizes the pool of potential contractors, fostering robust competition that drives down prices and encourages innovation. This process allows the government to solicit proposals based on best value, which can include factors beyond just price, such as technical approach, past performance, and schedule. The presence of multiple bidders increases the likelihood that the government will receive competitive pricing and select a contractor capable of delivering high-quality work at a reasonable cost. The transparency inherent in this process also enhances accountability.

What is the historical spending trend for similar Department of the Army construction projects?

Historical spending trends for Department of the Army construction projects, particularly those involving major facilities like headquarters, have generally shown significant and consistent investment. The Army, like other branches of the military, requires substantial capital for building, maintaining, and modernizing its infrastructure to support readiness and operations. Spending in this category can fluctuate based on strategic priorities, budget allocations, and the lifecycle of existing facilities. Major construction initiatives, such as consolidating commands or building new installations, often represent multi-year investments. While specific figures vary annually, the overall trend indicates a sustained need for significant funding for construction projects to support the Army's global mission.

What are the implications of a firm fixed-price contract for this project?

A firm fixed-price (FFP) contract, like the one awarded for the FORSCOM/USARC HQ, places the primary responsibility for cost control on the contractor. This means that Hensel Phelps Construction Co. is obligated to complete the project for the agreed-upon price, regardless of their actual costs. This contract type is generally favored by the government when the scope of work is well-defined and the risks are understood, as it provides the most cost certainty for the buyer. For taxpayers, an FFP contract offers protection against cost overruns, assuming the initial price was competitive and the contractor is capable. However, if the contractor underestimated costs or encounters significant unforeseen issues, they bear the financial burden, which could potentially lead to quality compromises if not managed carefully.

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: W912HN08R0020

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4437 BROOKFIELD CORP DR, CHANTILLY, VA, 90

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

Financial Breakdown

Contract Ceiling: $305,106,360

Exercised Options: $304,984,360

Current Obligation: $304,984,360

Contract Characteristics

Cost or Pricing Data: NO

Timeline