Army Reserve Center Design/Build Contract Awarded to Korte Construction for $26.7M

Contract Overview

Contract Amount: $26,732,702 ($26.7M)

Contractor: Korte Construction Company

Awarding Agency: Department of Defense

Start Date: 2007-09-25

End Date: 2009-10-14

Contract Duration: 750 days

Daily Burn Rate: $35.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN/BUILD ARMY RESERVE CENTER, FORT LEWIS, WASHINGTON

Place of Performance

Location: TACOMA, PIERCE County, WASHINGTON, 98433

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to KORTE CONSTRUCTION COMPANY for work described as: DESIGN/BUILD ARMY RESERVE CENTER, FORT LEWIS, WASHINGTON Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Firm Fixed Price, which transfers risk to the contractor. 3. Project duration of 750 days indicates a significant construction timeline. 4. The contract was awarded by the Department of the Army, a major component of the DoD. 5. The project is located in Washington state, impacting local construction resources. 6. The North American Industry Classification System (NAICS) code 236220 points to commercial and institutional building construction.

Value Assessment

Rating: fair

Benchmarking the value of this $26.7 million contract is challenging without specific cost breakdowns or comparable project data. However, the firm fixed-price nature suggests the government sought to control costs by shifting risk to the contractor. The duration of 750 days for a design/build project of this scale provides some context for the expected resource allocation. Further analysis would require comparing the cost per square foot or per unit of functionality against similar military construction projects.

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. The presence of 2 bids suggests a moderate level of competition for this project. While more than two bidders would typically indicate stronger price discovery, full and open competition is generally favorable for achieving competitive pricing.

Taxpayer Impact: Full and open competition is the preferred method for maximizing taxpayer value by encouraging multiple bids and driving down costs.

Public Impact

The primary beneficiaries are the U.S. Army Reserve, who will gain a new facility. The project delivers a design and build service for a new Army Reserve Center. The geographic impact is localized to Fort Lewis, Washington. The construction workforce in the Washington area will be directly impacted by this project.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if design changes are extensive or unforeseen site conditions arise, despite the fixed-price contract.
Contractor performance risk associated with meeting the 750-day schedule.
Ensuring the final facility meets all operational requirements of the Army Reserve.

Positive Signals

Firm fixed-price contract structure helps to lock in costs and reduce budget uncertainty for the government.
Full and open competition likely resulted in a more competitive bid.
Design/build approach can streamline the construction process by integrating design and construction phases.

Sector Analysis

This contract falls within the construction sector, specifically commercial and institutional building construction. The U.S. federal government is a significant client in this sector, awarding numerous contracts for military facilities, government buildings, and infrastructure projects. The market size for federal construction is substantial, with agencies like the Department of Defense consistently investing in new facilities and upgrades. This project represents a typical investment in maintaining and expanding military operational capacity.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false) and only received 2 bids. This suggests that larger construction firms were likely the primary participants. While there's no explicit information on subcontracting plans, large prime contractors often utilize small businesses for specialized services, which could provide some indirect opportunities. However, the lack of a specific small business set-aside means direct opportunities for small businesses as prime contractors were limited.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and project managers within the Department of the Army. The firm fixed-price nature of the contract places a significant portion of the performance risk on Korte Construction Company. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Construction
Design-Build Contracts
Army Facilities
Federal Building Construction

Risk Flags

Limited Competition (2 Bidders)
Potential for Cost Overruns (Fixed Price Risk)
Schedule Risk (750-day duration)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to KORTE CONSTRUCTION COMPANY. DESIGN/BUILD ARMY RESERVE CENTER, FORT LEWIS, WASHINGTON

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 $26.7 million.

What is the period of performance?

Start: 2007-09-25. End: 2009-10-14.

What is the track record of Korte Construction Company with federal contracts, particularly with the Department of Defense?

Korte Construction Company has a history of working with the federal government, including the Department of Defense. Analyzing their past performance on similar design-build projects, especially those for military branches, would provide insight into their reliability and ability to deliver projects on time and within budget. A review of their contract history, including any past performance evaluations or disputes, would be crucial. For instance, examining the number and value of previous DoD contracts awarded to Korte, and their successful completion rates, would help assess their suitability for this project. Without specific data on their past performance metrics for this contract, it's difficult to definitively assess their track record beyond their general presence in the federal contracting space.

How does the awarded price of $26.7 million compare to similar Army Reserve Center design-build projects?

Comparing the $26.7 million award price for this Army Reserve Center design-build project requires access to a database of similar federal construction contracts. Key metrics for comparison would include the total contract value, the square footage of the facility, and the specific functionalities included (e.g., administrative space, training areas, vehicle maintenance). Factors such as geographic location (which influences labor and material costs), the year of award, and the complexity of the design-build requirements also play a significant role. If comparable projects in similar regions awarded around 2007 (the award year) had a lower cost per square foot or per functional unit, it might suggest this contract was priced at a premium. Conversely, if it aligns with or is below benchmarks, it could indicate good value.

What are the primary risks associated with a firm fixed-price design-build contract for a military facility?

The primary risks associated with a firm fixed-price design-build contract for a military facility, like the Army Reserve Center at Fort Lewis, primarily lie with the contractor. Korte Construction Company assumes the risk of cost overruns due to unforeseen site conditions, design complexities, or escalating material and labor costs. If the actual costs exceed the fixed price, the contractor's profit margin will be reduced or they could incur a loss. For the government, the main risk is that the contractor might cut corners on quality or scope to maintain profitability, potentially leading to a facility that doesn't fully meet long-term operational needs or requires more maintenance. Additionally, if the contractor fails to perform adequately, the government's recourse might be limited and could involve lengthy dispute resolution processes.

What was the historical spending pattern for similar Army Reserve Center construction projects prior to this award?

To assess historical spending patterns for similar Army Reserve Center construction projects prior to this award, one would need to analyze federal procurement data over several preceding years. This would involve identifying contracts for the design and construction of Army Reserve facilities, filtering by agency (Department of the Army), and looking at contract values, durations, and types of construction. Examining trends in average contract size, the frequency of design-build versus traditional design-bid-build approaches, and the prevalence of full and open competition versus set-asides would provide context. Understanding whether spending on such facilities was increasing, decreasing, or stable would help determine if this $26.7 million award was in line with historical investment levels or represented a significant shift.

How effective was the 'full and open competition' process in ensuring competitive pricing for this specific contract?

The effectiveness of 'full and open competition' in ensuring competitive pricing for this contract can be inferred from the number of bids received. With only two bids submitted by Korte Construction Company and one other unnamed bidder, the level of competition was limited. While 'full and open' theoretically allows all eligible contractors to participate, the actual number of bids is a more direct indicator of market interest and competitive pressure. A higher number of bids (e.g., five or more) typically leads to more aggressive pricing as contractors vie for the award. Two bids suggest that the market may have been constrained, perhaps due to specialized requirements, contractor availability, or the project's specific location, potentially resulting in less downward pressure on price than ideal.

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: W912QR06R0088

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 700 SAINT LOUIS UNION STA # 200, SAINT LOUIS, MO, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $26,732,702

Exercised Options: $26,732,702

Current Obligation: $26,732,702

Contract Characteristics

Cost or Pricing Data: NO

Timeline