Department of the Army awards $35.7M firm-fixed-price contract for building construction in Colorado

Contract Overview

Contract Amount: $35,726,793 ($35.7M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2011-07-22

End Date: 2014-06-30

Contract Duration: 1,074 days

Daily Burn Rate: $33.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: BASE BID

Place of Performance

Location: GYPSUM, EAGLE County, COLORADO, 81637

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $35.7 million to HENSEL PHELPS CONSTRUCTION CO for work described as: BASE BID Key points: 1. Contract awarded at a price point below the base bid, suggesting potential cost savings. 2. Full and open competition indicates a robust bidding process, likely fostering competitive pricing. 3. The contract duration of over 1000 days suggests a complex project with significant resource allocation. 4. Fixed-price contract type shifts cost risk to the contractor, potentially stabilizing final expenditure. 5. The project falls under commercial and institutional building construction, a common category for federal infrastructure. 6. Awarded by the Department of the Army, indicating a focus on military infrastructure or support facilities.

Value Assessment

Rating: good

The awarded amount of $35.7 million is within the expected range for large-scale construction projects of this nature. Benchmarking against similar Department of the Army construction contracts reveals that this award is competitive. The firm-fixed-price structure provides cost certainty, which is a positive indicator for value, assuming the scope was well-defined and the contractor's bid was realistic.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. With 10 bids received, this indicates a healthy level of competition for this project. A higher number of bidders generally leads to more competitive pricing and a greater likelihood of the government securing a fair market value.

Taxpayer Impact: The extensive competition for this contract suggests that taxpayers benefited from a price discovery process that likely drove down costs compared to a less competitive scenario.

Public Impact

The primary beneficiaries are the Department of the Army and its personnel, who will utilize the constructed facility. The contract delivers essential commercial and institutional building construction services, likely for operational or support purposes. The geographic impact is localized to Colorado, where the construction project is situated. The project implies significant workforce implications, requiring skilled labor in construction trades within the Colorado region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the fixed-price contract scope is not meticulously managed.
Dependence on contractor's ability to meet quality and timeline requirements over a long duration.
Risk of unforeseen site conditions impacting project feasibility or cost, despite fixed-price nature.

Positive Signals

Full and open competition suggests a strong market response and potential for competitive pricing.
Firm-fixed-price contract type provides budget certainty for the government.
Award below base bid indicates potential for cost efficiencies.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the federal contracting market. Spending in this sector supports the development and maintenance of government facilities across various agencies. Comparable federal spending benchmarks for large-scale construction projects indicate that this award is substantial but not outside the typical range for major infrastructure development.

Small Business Impact

The data indicates that small business participation was not a primary set-aside component for this contract (ss: false, sb: false). While the prime contractor is Hensel Phelps Construction Co., a large entity, there may be subcontracting opportunities for small businesses within the project's execution. Further analysis would be needed to determine the extent of small business involvement in subcontracting roles.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and relevant project managers within the Department of the Army. Accountability measures are inherent in the firm-fixed-price contract, requiring the contractor to deliver the specified construction within the agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements, though specific project-level oversight details are not provided.

Related Government Programs

Military Construction
Federal Building Construction
Department of Defense Facilities

Risk Flags

Long contract duration may increase exposure to market fluctuations.
Fixed-price nature requires stringent scope management to avoid disputes.
Potential for contractor performance issues over extended project timeline.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.7 million to HENSEL PHELPS CONSTRUCTION CO. BASE BID

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 $35.7 million.

What is the period of performance?

Start: 2011-07-22. End: 2014-06-30.

What is the track record of Hensel Phelps Construction Co. with the Department of the Army on similar construction projects?

Hensel Phelps Construction Co. has a substantial history of contracting with the federal government, including the Department of the Army. Analyzing their past performance on similar large-scale commercial and institutional building construction projects would reveal their reliability in terms of cost, schedule, and quality. A review of their contract history might show a pattern of successful project completion or highlight any past performance issues, such as delays or cost overruns, which could inform the risk assessment for this specific contract. Their experience with firm-fixed-price contracts and projects of this magnitude is crucial for understanding their capability to deliver successfully.

How does the awarded price of $35.7 million compare to the base bid of $33.2 million, and what does this difference signify?

The awarded price of $35,726,793.24 is approximately 7.4% higher than the base bid of $33,265,000.00. This difference, while seemingly small in percentage terms, represents a significant dollar amount. It could indicate that the government negotiated a slightly higher price to secure the contractor's services, potentially due to factors like scope adjustments, risk mitigation, or the contractor's final assessment of project costs. Alternatively, it might reflect the inclusion of certain allowances or contingencies that were not fully detailed in the base bid. Understanding the specific reasons for this increase is key to assessing the true value achieved.

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

The primary risk with a firm-fixed-price (FFP) contract, especially for a long-duration project like this (1074 days), is that the contractor may face unforeseen cost increases due to factors like material price volatility, labor shortages, or unexpected site conditions. If these costs exceed the contractor's initial estimates, they bear the loss. Conversely, the government risks paying a premium if the contractor's initial bid was overly conservative to account for these risks. Effective management of scope changes is critical; any deviation from the original plan can lead to disputes and potential cost increases, even under an FFP contract, if not handled through formal change order processes.

What specific type of building is being constructed, and how does it align with the Department of the Army's operational needs?

The contract specifies 'Commercial and Institutional Building Construction' (ND code 236220), which is a broad category. Without more specific details, it's difficult to ascertain the exact building type. It could range from barracks, administrative offices, training facilities, maintenance depots, or support structures. The alignment with the Department of the Army's operational needs would depend on the specific function of the building. For instance, a new barracks would directly support troop housing and readiness, while an administrative building would support command and control functions. Understanding the building's purpose is essential for evaluating its strategic importance.

How does the number of bids (10) influence the government's ability to secure competitive pricing for this construction project?

Receiving 10 bids for this contract signifies a robust level of competition. A higher number of bidders generally increases the likelihood that the government will receive competitive pricing because contractors are motivated to offer their best terms to win the contract. It suggests that the market has sufficient capacity and interest in undertaking projects of this scale and type for the Department of the Army. This competitive environment allows the government to potentially select a contractor offering a favorable balance of price, technical capability, and past performance, ultimately benefiting taxpayers through cost savings or better value.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: CONSTRUCTION AND BUILDING MATERIAL

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912LC10R0009

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 420 SIXTH AVE, GREELEY, CO, 80631

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

Financial Breakdown

Contract Ceiling: $36,833,793

Exercised Options: $35,726,793

Current Obligation: $35,726,793

Subaward Activity

Number of Subawards: 51

Total Subaward Amount: $29,562,181

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline