DoD's $37.9M Korte Construction Contract for 365 ISR Group Facility Faces Scrutiny
Contract Overview
Contract Amount: $37,943,300 ($37.9M)
Contractor: Korte Construction Company
Awarding Agency: Department of Defense
Start Date: 2020-09-29
End Date: 2023-12-28
Contract Duration: 1,185 days
Daily Burn Rate: $32.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Construction
Official Description: 365 ISR GROUP CONSOLIDATED FACILITY
Place of Performance
Location: NELLIS AFB, CLARK County, NEVADA, 89191
State: Nevada Government Spending
Plain-Language Summary
Department of Defense obligated $37.9 million to KORTE CONSTRUCTION COMPANY for work described as: 365 ISR GROUP CONSOLIDATED FACILITY Key points: 1. The contract awarded to Korte Construction Company for a significant facility project raises questions about value and efficiency. 2. Competition was full and open, suggesting a potentially competitive pricing environment. 3. The fixed-price contract type aims to control costs, but the final price warrants review. 4. The project falls within the construction sector, a high-spending area for the government.
Value Assessment
Rating: fair
The contract's total value of $37.9 million for a consolidated facility appears substantial. Benchmarking against similar large-scale construction projects for institutional or commercial buildings is necessary to determine if the pricing is competitive and reflects fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically fosters competitive pricing. However, the final award amount and subsequent modifications should be analyzed to ensure the price discovery process was effective and resulted in the best value.
Taxpayer Impact: Taxpayer funds totaling $37.9 million were allocated. While competition was present, ensuring the final cost represents optimal value is crucial for responsible fiscal management.
Public Impact
Construction projects of this magnitude can impact local economies through job creation and material sourcing. The facility's purpose, supporting the 365 ISR Group, suggests a role in national security operations. Transparency in the bidding and execution phases is vital for public trust in defense spending.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns despite fixed-price contract.
- Need for detailed cost breakdown and justification.
- Ensuring long-term facility maintenance costs are considered.
Positive Signals
- Awarded under full and open competition.
- Fixed-price contract type to manage cost certainty.
- Experienced contractor likely involved.
Sector Analysis
This contract falls under the Commercial and Institutional Building Construction sector. Government spending in construction is significant, encompassing a wide range of projects from military bases to administrative facilities. Benchmarks for similar projects are essential for evaluating cost-effectiveness.
Small Business Impact
The data indicates this contract was not awarded to small businesses (sb: false). Analysis should explore if subcontracting opportunities were provided to small businesses by the prime contractor, Korte Construction Company.
Oversight & Accountability
Oversight is critical to ensure the construction meets specifications, stays within budget (or justifies deviations), and adheres to timelines. Regular progress reports and site inspections by the Department of the Army are expected.
Related Government Programs
- Commercial and Institutional Building Construction
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- High contract value requires thorough justification.
- Potential for cost escalation despite fixed-price.
- Need to verify adherence to construction timelines.
- Lack of small business participation noted.
- Importance of facility's long-term operational costs.
Tags
commercial-and-institutional-building-co, department-of-defense, nv, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $37.9 million to KORTE CONSTRUCTION COMPANY. 365 ISR GROUP CONSOLIDATED FACILITY
Who is the contractor on this award?
The obligated recipient is KORTE CONSTRUCTION COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $37.9 million.
What is the period of performance?
Start: 2020-09-29. End: 2023-12-28.
What specific factors contributed to the final contract value of $37.9 million, and how do these compare to industry standards for similar construction projects?
The final contract value is influenced by numerous factors including labor costs, material prices, project complexity, site conditions, and overhead. A detailed cost breakdown is needed to compare these elements against industry benchmarks for commercial and institutional building construction. This analysis would reveal if the pricing reflects competitive market rates or if there are areas of potential overvaluation.
Given the fixed-price nature of the contract, what mechanisms are in place to mitigate risks associated with unforeseen construction challenges or scope creep?
Fixed-price contracts aim to transfer risk to the contractor. However, mechanisms like contingency allowances, clear scope definition, and robust change order processes are crucial. The contract's specific clauses regarding unforeseen conditions, material escalation, and change management will dictate how effectively risks are mitigated and how potential cost increases are handled without undue burden on the taxpayer.
How effectively did the full and open competition process ensure the best value was achieved for this significant construction project?
Full and open competition theoretically maximizes the pool of potential bidders, driving down prices and improving quality. Evaluating its effectiveness requires examining the number of bids received, the evaluation criteria used, and the final price relative to independent cost estimates. If the process yielded multiple competitive offers and the selected contractor demonstrated superior technical and cost proposals, it suggests effective value realization.
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: W912PL20R0032
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 5700 OAKLAND AVE STE 275, SAINT LOUIS, MO, 63110
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $37,943,300
Exercised Options: $37,943,300
Current Obligation: $37,943,300
Subaward Activity
Number of Subawards: 99
Total Subaward Amount: $88,316,095
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2020-09-29
Current End Date: 2023-12-28
Potential End Date: 2023-12-28 00:00:00
Last Modified: 2024-10-31
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