Walsh Construction awarded $47M for Detroit Arsenal tank plant facilities, completed in 2020

Contract Overview

Contract Amount: $46,978,714 ($47.0M)

Contractor: Walsh Construction Company

Awarding Agency: Department of Defense

Start Date: 2009-07-22

End Date: 2020-04-20

Contract Duration: 3,925 days

Daily Burn Rate: $12.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: TAS::21 2041::TAS DESIGN/BUILD LABORATORY FACILITIES, DETROIT ARSENAL TANK PLANT, WARREN, MI

Place of Performance

Location: WARREN, MACOMB County, MICHIGAN, 48092

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $47.0 million to WALSH CONSTRUCTION COMPANY for work described as: TAS::21 2041::TAS DESIGN/BUILD LABORATORY FACILITIES, DETROIT ARSENAL TANK PLANT, WARREN, MI Key points: 1. Contract value of $47M for design and build services suggests a significant project scope. 2. Full and open competition indicates a broad market engagement, potentially leading to competitive pricing. 3. A duration of 3925 days (over 10 years) points to a long-term, complex construction and facility management undertaking. 4. The project's focus on tank plant facilities aligns with strategic defense infrastructure needs. 5. Fixed-price contract type shifts risk to the contractor, potentially impacting final cost if unforeseen issues arise. 6. The absence of small business set-asides suggests the prime contractor is a large entity, with subcontracting opportunities for smaller firms.

Value Assessment

Rating: fair

The contract value of $47 million for design and build laboratory facilities at the Detroit Arsenal Tank Plant appears substantial. Benchmarking this against similar large-scale defense infrastructure projects would be necessary for a precise value-for-money assessment. The fixed-price nature of the contract suggests an attempt to control costs, but the long duration could introduce risks of cost escalation if not managed meticulously. Without specific cost breakdowns or comparisons to industry standards for similar facilities, a definitive judgment on value is challenging.

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. With three bidders participating, the competition level suggests a moderate degree of market interest. While three bidders provide some price discovery, a higher number of bidders typically leads to more robust competition and potentially lower prices for the government. The specific details of the bidding process and the evaluation criteria would further inform the assessment of competition effectiveness.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging a wider range of offers, which can drive down costs and improve service quality. The presence of multiple bidders helps ensure that the government is receiving a fair market price.

Public Impact

The primary beneficiaries are the Department of Defense and the U.S. Army, gaining upgraded or new laboratory facilities essential for defense research and development. The services delivered include design and construction of specialized laboratory facilities, crucial for maintaining and advancing military technology. The geographic impact is concentrated in Warren, Michigan, at the Detroit Arsenal Tank Plant, supporting regional economic activity through construction jobs and related services. Workforce implications include employment for construction workers, engineers, architects, and project managers during the extensive project duration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long project duration (over 10 years) increases the risk of scope creep, material cost fluctuations, and contractor performance degradation.
Fixed-price contract, while aiming for cost control, can lead to disputes or reduced quality if unforeseen construction challenges arise.
Reliance on a single prime contractor for a decade-long project necessitates robust oversight to ensure consistent quality and adherence to specifications.
The specific nature of 'laboratory facilities' implies complex requirements that may be difficult to fully define upfront, increasing risk.
Limited competition (3 bidders) might mean less aggressive pricing than a more crowded field could achieve.

Positive Signals

Awarded under full and open competition, suggesting a broad search for qualified contractors.
Fixed-price contract type provides cost certainty for the government, assuming no significant change orders.
The contractor, Walsh Construction Company, is a large, established firm likely possessing the resources and experience for such a project.
The project's focus on defense infrastructure indicates a critical need being met, contributing to national security objectives.
The long duration allows for phased development and integration of complex systems within the laboratory facilities.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on specialized facilities for defense applications. The U.S. construction market is vast, with significant government spending on infrastructure and specialized facilities. Projects like this, involving design-build capabilities for sensitive government installations, often command higher values due to security, complexity, and specific regulatory requirements. Comparable spending benchmarks would typically look at other large-scale military facility construction or renovation projects.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no indication of specific small business subcontracting goals being a primary driver (ss: false). This suggests that the prime contract was awarded to a large business, Walsh Construction Company. While not a set-aside, large federal construction contracts often include subcontracting requirements, providing opportunities for small businesses to participate in specific trades or services. The extent of small business participation would depend on the subcontracting plan negotiated with the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense. Given the long duration and significant value, regular progress reviews, site inspections, and quality assurance checks are expected. Accountability measures would be tied to the contract terms, including performance milestones and adherence to specifications. Transparency might be facilitated through contract award databases and potentially public reports on project progress, though specific details of laboratory facilities might be sensitive. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise.

Related Government Programs

Military Construction (MILCON)
Department of Defense Facilities Modernization
Research and Development Facilities Construction
Army Corps of Engineers Construction Contracts
Defense Logistics Agency (DLA) Support Contracts

Risk Flags

Long-term project duration risk
Fixed-price contract risk for contractor
Potential for cost escalation via change orders
Sustained oversight requirement
Moderate competition level

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.0 million to WALSH CONSTRUCTION COMPANY. TAS::21 2041::TAS DESIGN/BUILD LABORATORY FACILITIES, DETROIT ARSENAL TANK PLANT, WARREN, MI

Who is the contractor on this award?

The obligated recipient is WALSH 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 $47.0 million.

What is the period of performance?

Start: 2009-07-22. End: 2020-04-20.

What is the track record of Walsh Construction Company with the Department of Defense, particularly on similar large-scale facility projects?

Walsh Construction Company has a significant history of working with the Department of Defense and other federal agencies on large-scale infrastructure and building projects. Their portfolio includes numerous projects involving complex facilities, such as military bases, research laboratories, and industrial plants. While specific details on past performance metrics for projects of this exact nature (design/build laboratory facilities at a tank plant) are not provided in the summary data, their extensive experience suggests a capacity to handle such demanding contracts. A deeper dive into their past performance ratings, any past disputes, or contract modifications on similar DoD projects would offer a more comprehensive view of their reliability and expertise in this domain.

How does the $47 million contract value compare to the cost of similar laboratory facility construction projects for defense purposes?

The $47 million contract value for designing and building laboratory facilities at the Detroit Arsenal Tank Plant is substantial, reflecting the complexity and specialized nature of such projects. To benchmark this value effectively, comparisons should be made with other Department of Defense or similar government agency contracts for constructing or renovating advanced research and testing laboratories, particularly those with defense-related functions. Factors influencing cost include facility size, specialized equipment integration, security requirements, and geographic location. Without access to a database of comparable projects with detailed cost breakdowns, it's difficult to definitively state if $47 million represents excellent, fair, or concerning value. However, large-scale, specialized government facilities often incur higher costs than standard commercial construction due to stringent requirements.

What are the primary risks associated with a fixed-price contract for a project spanning over 10 years?

A fixed-price contract for a project with a duration exceeding 10 years carries inherent risks, primarily for the contractor, but also potentially impacting the government. For the contractor, the main risk is underestimating costs over such a long period. Fluctuations in material prices, labor costs, and unforeseen site conditions can significantly erode profit margins or lead to losses if not adequately accounted for in the initial bid. For the government, the risk lies in potential quality compromises if the contractor faces financial strain, or in disputes arising from change orders needed to address evolving requirements or unforeseen issues. While the fixed price offers budget certainty initially, the long timeframe increases the likelihood of change orders, which can drive up the total cost and complexity of contract management.

What is the significance of the Detroit Arsenal Tank Plant location for defense research and development?

The Detroit Arsenal Tank Plant has historically been a critical hub for U.S. Army ground vehicle research, development, and production. Its continued operation and modernization, including the development of new laboratory facilities, underscore its ongoing importance in advancing military technology, particularly in areas related to armored vehicles, weaponry, and related systems. Upgraded facilities at such a strategic location are essential for maintaining technological superiority, testing new prototypes, and ensuring the readiness of the nation's defense capabilities. The investment in these facilities signals a commitment to the future of ground combat system development.

How does the number of bidders (3) in a full and open competition impact price discovery and potential savings for taxpayers?

Having three bidders in a full and open competition provides a moderate level of price discovery. It indicates that at least three firms were capable and interested in undertaking the project. This is generally better than a sole-source or limited competition scenario, as it introduces some level of market pressure on pricing. However, a higher number of bidders typically leads to more aggressive competition, potentially driving prices lower and offering greater savings to taxpayers. With only three bidders, there's a possibility that the winning bid might not represent the absolute lowest price achievable in a more crowded marketplace. The government's procurement strategy and negotiation tactics also play a role in maximizing value in such situations.

What are the potential implications of the project's long duration (3925 days) on contractor performance and oversight?

A project duration of 3925 days, approximately 10.75 years, presents significant challenges for both contractor performance and government oversight. For the contractor, maintaining consistent quality, motivation, and project focus over such an extended period can be difficult. Key personnel may change, institutional knowledge can be lost, and the initial project team may be long gone by completion. For oversight, it requires sustained effort and resources to monitor progress, ensure adherence to evolving standards, manage contract modifications, and maintain accountability. Robust contract management systems, regular performance evaluations, and proactive risk management are crucial to mitigate the challenges associated with such a lengthy undertaking and ensure successful project delivery.

Industry Classification

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

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCT NONBUILDING FACILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912QR08R0028

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Walsh Group Ltd., the (UEI: 121476675)

Address: 929 W ADAMS ST, CHICAGO, IL, 90

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

Financial Breakdown

Contract Ceiling: $46,978,714

Exercised Options: $46,978,714

Current Obligation: $46,978,714

Contract Characteristics

Cost or Pricing Data: NO

Timeline