Army awards $45.5M for HQ building construction, facing potential cost overruns and limited competition

Contract Overview

Contract Amount: $45,538,743 ($45.5M)

Contractor: Messer Construction CO

Awarding Agency: Department of Defense

Start Date: 2021-06-06

End Date: 2025-05-30

Contract Duration: 1,454 days

Daily Burn Rate: $31.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: BASE - CONSTRUCT SOF GROUP HQ BUILDING

Place of Performance

Location: FORT BRAGG, CUMBERLAND County, NORTH CAROLINA, 28310

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $45.5 million to MESSER CONSTRUCTION CO for work described as: BASE - CONSTRUCT SOF GROUP HQ BUILDING Key points: 1. Contract awarded at a significant value for a major construction project. 2. Competition was full and open, but the number of bids suggests moderate interest. 3. Potential for cost overruns exists given the project's duration and complexity. 4. The project is situated in North Carolina, impacting local construction sector. 5. Fixed-price contract type aims to control costs, but scope changes could increase expenses. 6. The contractor has a history of large-scale construction projects.

Value Assessment

Rating: fair

The contract value of $45.5 million for constructing a headquarters building appears within a reasonable range for a project of this scale and complexity. However, without specific benchmarks for similar Department of Defense (DoD) headquarters construction in the region or nationally, a precise value-for-money assessment is challenging. The firm fixed-price structure is generally favorable for cost control, but the extended duration of the contract (over 3 years) increases the risk of unforeseen cost escalations due to market fluctuations or scope creep, which could impact the overall value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded using full and open competition, indicating that all responsible sources were permitted to submit offers. Six bids were received, which suggests a moderate level of competition for this project. While full and open competition is the preferred method for ensuring fair pricing and access to the widest range of capabilities, a lower number of bids than anticipated could indicate specific market conditions, high barriers to entry, or a lack of widespread interest from qualified contractors.

Taxpayer Impact: The full and open competition, despite receiving six bids, aims to secure competitive pricing for taxpayers. However, the moderate number of bidders warrants monitoring to ensure that the final price reflects true market value and not an outcome of limited effective competition.

Public Impact

The primary beneficiaries are the Department of the Army, which will receive a new headquarters facility. The contract delivers essential construction services for a critical military infrastructure project. The geographic impact is concentrated in North Carolina, potentially stimulating the local economy through construction jobs and related services. The project will likely create numerous jobs for skilled tradespeople, construction managers, and support staff in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Extended contract duration (1454 days) increases risk of cost escalation due to market volatility.
Potential for scope creep in large construction projects can lead to budget overruns.
Dependence on a single contractor for a multi-year, high-value project presents execution risk.
Lack of specific performance metrics in the provided data makes it difficult to assess progress.

Positive Signals

Firm fixed-price contract type provides cost certainty if scope remains unchanged.
Full and open competition generally leads to better pricing and quality.
The Army's selection of Messer Construction Co. suggests they met technical and capability requirements.
The project addresses a clear need for updated military infrastructure.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. The market for large-scale government construction projects is often characterized by high barriers to entry, stringent compliance requirements, and substantial bonding needs. Spending in this sector for federal facilities is driven by infrastructure modernization, replacement of aging assets, and expansion of government operations. Comparable spending benchmarks would typically involve analyzing other large federal building projects, considering factors like square footage, complexity, and location.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (sb: false) and does not explicitly mention subcontracting goals for small businesses (st: NC, likely meaning Not Cited or Not Applicable in this context). Therefore, the direct impact on the small business ecosystem through set-asides is minimal. However, the prime contractor, Messer Construction Co., may engage small businesses as subcontractors for specialized services or materials, which would indirectly benefit the small business sector. Further analysis of the subcontracting plan would be needed to fully assess the impact.

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 within the contract terms, including milestones, quality control requirements, and payment schedules tied to progress. Transparency is often facilitated through contract award databases like FPDS-NG, where basic information is publicly available. The Inspector General (IG) for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Military Construction Projects
Department of Defense Facilities
General Services Administration (GSA) Buildings
Federal Building Construction Contracts

Risk Flags

Potential for cost overruns due to extended contract duration.
Moderate number of bidders may indicate limited effective competition.
Lack of specific small business subcontracting goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.5 million to MESSER CONSTRUCTION CO. BASE - CONSTRUCT SOF GROUP HQ BUILDING

Who is the contractor on this award?

The obligated recipient is MESSER 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 $45.5 million.

What is the period of performance?

Start: 2021-06-06. End: 2025-05-30.

What is Messer Construction Co.'s track record with large federal construction projects, particularly for the Department of Defense?

Messer Construction Co. has a significant history of undertaking large-scale construction projects, including those for government and institutional clients. While specific details on their past performance with the Department of Defense (DoD) are not provided in this data snippet, their selection as the prime contractor for a $45.5 million Army headquarters building suggests they possess the necessary experience, financial capacity, and technical expertise. A deeper dive into their contract history, client references, and any past performance evaluations within federal databases would provide a more comprehensive understanding of their reliability and success rate on similar projects. This would include examining any past issues with cost overruns, schedule delays, or quality control on prior DoD contracts.

How does the $45.5 million contract value compare to similar Army headquarters construction projects in terms of cost per square foot or per facility type?

Benchmarking the $45.5 million contract value requires comparing it against similar Army headquarters construction projects. Key metrics for comparison would include cost per square foot, cost per occupant, or cost per functional area. Without data on the size (square footage), intended capacity, and specific functional requirements of this North Carolina headquarters building, a direct comparison is difficult. However, typical costs for large institutional or government buildings can range widely, from a few hundred dollars per square foot to over a thousand, depending on location, complexity, and finishes. To provide a robust comparison, one would need to access databases of recently awarded federal construction contracts, filter for similar project types and agencies, and analyze the cost metrics, adjusting for inflation and regional cost differences.

What are the primary risk indicators associated with this contract, considering its duration and fixed-price nature?

The primary risk indicators for this contract stem from its extended duration (1454 days, approximately 4 years) and its firm fixed-price (FFP) nature. For an FFP contract, the contractor bears the risk of cost overruns. However, over such a long period, market volatility in material prices (e.g., steel, concrete, lumber) and labor costs can become significant. If these costs escalate beyond what was reasonably anticipated during bidding, the contractor might face financial strain, potentially leading to quality compromises or disputes. Conversely, the government risks paying a premium if the contractor's initial cost estimates were overly conservative. Scope creep—uncontrolled changes or additions to the project's requirements—is another major risk, which, if not managed through formal change orders, can erode the intended cost certainty of the FFP structure and lead to budget overruns.

How effective is the 'full and open competition' strategy likely to be in ensuring optimal value for this specific $45.5 million construction project?

The 'full and open competition' strategy is generally the most effective method for achieving optimal value in federal contracting, as it maximizes the pool of potential bidders and encourages competitive pricing. For this $45.5 million Army headquarters construction project, receiving six bids indicates a reasonable level of competition. However, the effectiveness hinges on whether these six bidders represented a truly diverse and capable set of market participants. If the specialized nature of the project or high pre-qualification requirements limited the number of genuinely competitive offers, the value achieved might be less than ideal. Continuous monitoring of the bidding process, bid prices, and the final award price against independent cost estimates is crucial to ascertain if the competition strategy yielded the best possible value for the taxpayer in this instance.

What are the potential implications of the 'NC' status for small business subcontracting on this project?

The 'NC' status, likely indicating 'Not Cited' or 'Not Applicable' for small business subcontracting goals, suggests that specific targets for small business participation may not have been formally established or mandated within this contract award. This could mean that the Army did not impose a small business subcontracting plan requirement on Messer Construction Co. for this particular project. While this doesn't preclude Messer from utilizing small businesses, it reduces the direct contractual leverage to ensure their participation. The implications are that small businesses might not be actively sought out or prioritized for subcontracting opportunities, potentially limiting their access to this significant federal contract's workflow and revenue stream. This contrasts with contracts where robust small business subcontracting plans are required, which actively promote small business inclusion.

Are there any historical spending patterns within the Department of the Army for similar building construction projects that suggest this award is an outlier or consistent?

Analyzing historical spending patterns within the Department of the Army (DoA) for similar building construction projects is essential to contextualize this $45.5 million award. Without access to specific historical data, it's difficult to definitively state whether this contract is an outlier or consistent. However, the DoA regularly undertakes significant construction projects, including barracks, training facilities, administrative buildings, and headquarters. The value of $45.5 million falls within the range of substantial construction contracts. Factors like the project's scope (e.g., size, complexity, specialized requirements like security or technology integration), location (affecting labor and material costs), and the specific year of award (influencing market conditions) would determine its consistency. A review of past DoA construction contracts of similar scale and purpose over the last 5-10 years would reveal trends in pricing, competition levels, and project durations.

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: W912PM21R0001

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 643 W COURT ST, CINCINNATI, OH, 45203

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

Financial Breakdown

Contract Ceiling: $45,551,043

Exercised Options: $45,551,043

Current Obligation: $45,538,743

Actual Outlays: $4,414,911

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline