DOD awards $26.6M contract to Sundt Construction for Arizona housing, highlighting firm fixed-price structure

Contract Overview

Contract Amount: $26,658,574 ($26.7M)

Contractor: Sundt Construction, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-06-26

End Date: 2008-12-31

Contract Duration: 919 days

Daily Burn Rate: $29.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Place of Performance

Location: FORT HUACHUCA, COCHISE County, ARIZONA, 85613

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to SUNDT CONSTRUCTION, INC. for work described as: Key points: 1. Contract awarded under full and open competition, suggesting a competitive bidding process. 2. The firm fixed-price contract type indicates that the contractor assumes the risk for cost overruns. 3. The contract duration of 919 days suggests a significant, multi-year construction project. 4. The award to Sundt Construction, Inc. places it within the large business category for this contract. 5. The North American Industry Classification System (NAICS) code 236115 points to new single-family housing construction. 6. The contract was awarded by the Department of the Army, a major component of the Department of Defense.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the scope of work and the number of housing units. However, the $26.6 million award for new single-family housing construction over approximately two and a half years suggests a substantial investment. The firm fixed-price nature of the contract implies that the contractor is responsible for managing costs within the agreed-upon price, which can be a positive indicator of value if the contractor is efficient. Further analysis would require comparing the cost per unit or cost per square foot to similar military housing projects in Arizona or comparable regions.

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 a bid. The presence of two bids suggests a moderate level of competition for this project. While two bidders are better than one, a higher number of bids typically leads to more robust price discovery and potentially lower prices for the government. The specific details of the bidding process, such as the evaluation criteria and the range of bids submitted, would provide further insight into the effectiveness of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and encourage innovation. However, with only two bids, the potential for cost savings might be less than in a scenario with numerous competing firms.

Public Impact

Military personnel and their families stationed in Arizona are the primary beneficiaries, receiving new housing. The contract supports the construction of new single-family homes, directly addressing housing needs. The geographic impact is localized to Arizona, where the construction project will take place. The construction activities will likely create or sustain jobs in the construction sector within Arizona. The Department of Defense's housing infrastructure is enhanced, potentially improving service member quality of life.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the fixed price does not adequately account for unforeseen construction challenges.
Risk of delays if the contractor faces labor shortages or material supply chain issues.
Quality control concerns inherent in large-scale construction projects require diligent oversight.
Dependence on a single contractor for the duration of the project could limit flexibility.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor, potentially leading to better budget certainty.
Award under full and open competition suggests a fair and transparent procurement process.
The contractor, Sundt Construction, Inc., likely has a track record in large-scale construction projects.
The project addresses a critical need for military family housing, contributing to force readiness.

Sector Analysis

The construction industry, particularly new single-family housing, is a significant sector within the U.S. economy. Federal spending in this area often supports military infrastructure, housing for federal employees, or disaster relief efforts. The NAICS code 236115 specifically targets builders of new single-family homes. Comparable spending benchmarks would involve analyzing the cost per square foot or cost per unit for similar housing projects, both government and private, in the same geographic region. The Department of Defense is a major consumer of construction services for its global infrastructure needs.

Small Business Impact

This contract was awarded to Sundt Construction, Inc., which is likely a large business. There is no indication of a small business set-aside for this particular contract, nor is there information provided regarding subcontracting plans. Therefore, the direct impact on the small business ecosystem from this specific award appears minimal, although large prime contractors often engage small businesses for specialized services in their supply chains.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and project management offices. Accountability measures are typically embedded in the contract terms, including performance standards, delivery schedules, and quality requirements. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance or closeout.

Related Government Programs

Military Construction (MILCON)
Family Housing Construction
Department of Defense Procurement
Federal Construction Contracts
Army Corps of Engineers Projects

Risk Flags

Potential for cost overruns due to fixed-price nature and long duration.
Risk of quality compromises if contractor faces financial pressure.
Limited competition (2 bidders) may reduce price discovery benefits.
Dependence on contractor performance over an extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to SUNDT CONSTRUCTION, INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is SUNDT 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 $26.7 million.

What is the period of performance?

Start: 2006-06-26. End: 2008-12-31.

What is Sundt Construction, Inc.'s track record with the Department of Defense and similar housing projects?

Sundt Construction, Inc. has a significant history of working with the Department of Defense and other federal agencies on large-scale construction projects, including military housing and infrastructure. Their portfolio often includes complex projects requiring adherence to strict government specifications and timelines. While specific details for this $26.6 million contract are not provided, their general experience suggests a capacity to handle such endeavors. A deeper dive into their past performance ratings, any past disputes or claims, and the scale of previously completed military housing projects would offer a more precise assessment of their suitability and reliability for this particular award.

How does the $26.6 million contract value compare to the average cost of similar single-family housing construction projects in Arizona?

Comparing the $26.6 million contract value to average construction costs requires detailed data on the number of units, size, and specifications. However, as a general benchmark, the U.S. Census Bureau and the National Association of Home Builders (NAHB) provide data on average construction costs. For new single-family homes, costs can range widely, but a $26.6 million project could encompass dozens of units depending on their size and amenities. If this contract is for, for example, 50 homes, that would average $532,000 per home. This figure needs to be contextualized against military housing standards, which may include additional requirements beyond typical civilian construction, potentially justifying a higher per-unit cost. A precise comparison would necessitate knowing the exact scope and unit count.

What are the primary risk indicators associated with this firm fixed-price contract for new housing construction?

The primary risk indicator for a firm fixed-price contract in construction is the potential for the contractor to cut corners on quality or materials to maintain profitability if costs exceed initial estimates. For new housing construction, risks also include unforeseen site conditions (e.g., soil issues, underground utilities), weather delays impacting schedules, and fluctuations in material prices or labor availability, all of which could strain the contractor's ability to deliver within the fixed price. The government's risk is primarily related to ensuring the final product meets all specifications and quality standards despite the contractor's cost pressures. Diligent government oversight and quality assurance are crucial to mitigate these risks.

How effective is the 'full and open competition' strategy likely to be given only two bids were received?

The effectiveness of 'full and open competition' when only two bids are received is debatable. While it adheres to the principle of allowing all responsible sources to compete, a low number of bidders can suggest several possibilities: the market may genuinely have few qualified contractors for this specific type of project, the solicitation requirements might have been overly restrictive or complex, or the anticipated profit margins may not have been attractive enough to draw more interest. In such scenarios, the government may not achieve the full benefits of robust competition, such as the lowest possible price or the widest range of innovative solutions. The government should analyze the reasons for low bidder participation to improve future solicitations.

What are the historical spending patterns for new single-family housing construction by the Department of the Army in Arizona?

Analyzing historical spending patterns for new single-family housing construction by the Department of the Army in Arizona would require accessing detailed procurement data over several fiscal years. This would involve filtering federal contract databases for awards made by the Army within Arizona, specifically for NAICS code 236115 or similar housing construction codes. Such an analysis could reveal trends in contract values, the number of awards, the types of contractors utilized (large vs. small business), and the average duration and price of these projects. Understanding these patterns can help contextualize the current $26.6 million award, indicating whether it is typical, unusually large, or small compared to past investments in military housing in the region.

What are the implications of the contract duration (919 days) on project management and potential cost escalation?

A contract duration of 919 days (approximately 2.5 years) for new single-family housing construction signifies a substantial and complex project. For project management, this extended timeline necessitates robust planning, scheduling, and coordination of various construction phases, subcontractors, and material deliveries. It also increases the potential for encountering unforeseen challenges over time, such as changes in building codes, environmental regulations, or economic conditions. For a firm fixed-price contract, a longer duration inherently carries a higher risk of cost escalation for the contractor, as the potential for market fluctuations in labor and material costs over 2.5 years is greater. This underscores the importance of the contractor's initial cost estimation accuracy and risk management strategies.

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

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Sundt Companies Inc (UEI: 073354982)

Address: 1501 W FOUNTAIN PKWY STE 6, TEMPE, AZ, 04

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline