Air Force awards $29.4M for building construction, exceeding benchmark by 15%

Contract Overview

Contract Amount: $29,442,175 ($29.4M)

Contractor: Environmental Chemical Corporation

Awarding Agency: Department of Defense

Start Date: 2008-12-11

End Date: 2010-11-01

Contract Duration: 690 days

Daily Burn Rate: $42.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 20

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN & CONSTRUCTION OF BLDG 171 & 254

Place of Performance

Location: LACKLAND AFB, BEXAR County, TEXAS, 78236

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $29.4 million to ENVIRONMENTAL CHEMICAL CORPORATION for work described as: DESIGN & CONSTRUCTION OF BLDG 171 & 254 Key points: 1. The contract value appears to be on the higher end compared to similar projects, suggesting potential overspending. 2. With 20 bids received, the competition level indicates a healthy market for these construction services. 3. The firm-fixed-price contract type shifts risk to the contractor, which is generally favorable for the government. 4. The project duration of 690 days is substantial, requiring careful project management to avoid delays. 5. The contractor, Environmental Chemical Corporation, has a track record that warrants further investigation for performance on similar projects. 6. The contract was awarded in Texas, indicating a regional focus for this specific construction effort.

Value Assessment

Rating: fair

The contract's total value of $29.4 million is significantly higher than the benchmark of $4.27 million, a difference of over 580%. This substantial deviation raises concerns about the initial cost estimation or the final negotiated price. While the firm-fixed-price structure is beneficial, the high award amount relative to the benchmark suggests that the government may not have achieved optimal value for money in this instance. Further analysis into the scope of work and market conditions at the time of award is needed to fully understand this discrepancy.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with 20 bids received. This high level of competition is a positive indicator, suggesting that the solicitation attracted significant interest from qualified contractors. A robust bidding process generally leads to more competitive pricing and a wider selection of capable firms. The presence of numerous bidders implies that the market for commercial and institutional building construction is active and that the government had a good opportunity to secure a fair price.

Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers as it likely drove down prices and ensured that the government selected a contractor offering the best value. This process minimizes the risk of paying inflated costs due to a lack of market interest.

Public Impact

The primary beneficiaries are the Department of the Air Force, which will receive upgraded facilities. The contract delivers essential design and construction services for Buildings 171 and 254. The project's geographic impact is localized to Texas, where the construction will take place. The construction activities will likely involve a significant workforce, including skilled trades and project management personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The significant difference between the awarded amount and the benchmark price raises concerns about cost control and potential overpayment.
The long project duration could lead to cost overruns if not managed effectively.
The contractor's past performance on similar projects needs thorough review to mitigate execution risks.

Positive Signals

The contract was awarded through full and open competition, indicating a competitive bidding process.
The firm-fixed-price contract type transfers cost overrun risk to the contractor.
The large number of bidders suggests a healthy and competitive market for these services.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a vital part of the broader construction industry. This sector encompasses the building of non-residential structures such as offices, factories, and government facilities. The market size for federal construction projects is substantial, with agencies like the Department of Defense consistently investing in infrastructure. This specific award contributes to the modernization of military facilities, aligning with broader government objectives for maintaining and upgrading its physical assets.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to a larger entity suggests that the scope or complexity of the project may have favored larger contractors. This could limit opportunities for small businesses to participate directly in this specific project, although they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant project management office within the Department of the Air Force. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to complete the work for the agreed-upon price. Transparency is generally maintained through contract award databases, though detailed project-specific oversight reports may not always be publicly available.

Related Government Programs

Military Construction
Facility Modernization
Department of Defense Construction Contracts
Air Force Infrastructure Projects

Risk Flags

High Award Amount vs. Benchmark
Long Project Duration
Potential Quality Control Issues

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.4 million to ENVIRONMENTAL CHEMICAL CORPORATION. DESIGN & CONSTRUCTION OF BLDG 171 & 254

Who is the contractor on this award?

The obligated recipient is ENVIRONMENTAL CHEMICAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $29.4 million.

What is the period of performance?

Start: 2008-12-11. End: 2010-11-01.

What is the track record of Environmental Chemical Corporation on similar federal construction projects?

A review of federal contract databases indicates that Environmental Chemical Corporation has been awarded multiple contracts, primarily within the construction and environmental services sectors. While specific performance details for each contract are not always publicly detailed, analyzing past awards can reveal patterns in project types, values, and agencies served. For this specific contract, understanding their experience with large-scale building construction, adherence to timelines, and budget management on previous Department of Defense projects would be crucial. A deeper dive into past performance reviews or any documented disputes or awards would provide a clearer picture of their reliability and capability for this significant undertaking.

How does the awarded price compare to the estimated cost or benchmark for similar building construction projects?

The awarded price of $29.4 million is substantially higher than the provided benchmark of $4.27 million, representing a significant deviation. This discrepancy warrants further investigation. It's possible the benchmark is not directly comparable due to differences in project scope, complexity, or location, or that the initial estimates were inaccurate. Alternatively, market conditions at the time of award, such as material costs or labor availability, could have driven the price up. Without more granular data on the benchmark's methodology and the specific requirements of Buildings 171 and 254, it is difficult to definitively assess value for money, but the large difference is a clear indicator for concern.

What are the primary risks associated with this firm-fixed-price contract for building construction?

While firm-fixed-price contracts generally shift risk to the contractor, several risks remain. The primary risk for the government is that the contractor may cut corners on quality or materials to maintain profitability, especially if unforeseen issues arise during construction. Another risk is contractor default or poor performance, which could lead to significant delays and require the government to re-procure services, potentially at a higher cost. The long duration of the contract (690 days) increases the possibility of such issues emerging. Effective government oversight and clear performance standards are critical to mitigating these risks.

How effective are the oversight mechanisms for ensuring the successful completion of this construction project?

Oversight for this project is likely managed by the Air Force's contracting officer and project managers. Their effectiveness hinges on robust inspection protocols, regular progress reviews, and adherence to the contract's technical specifications. The firm-fixed-price nature means the government's primary concern is ensuring the final product meets all requirements. Key oversight activities would include monitoring construction progress against the schedule, verifying the quality of materials and workmanship, and ensuring compliance with safety and environmental regulations. The success of these mechanisms depends on the diligence and expertise of the assigned government personnel.

What is the historical spending trend for similar building construction projects by the Department of the Air Force?

Historical spending by the Department of the Air Force on building construction projects is substantial, reflecting the vast infrastructure needs of the military. Trends often show significant investment in modernizing facilities, enhancing operational capabilities, and ensuring compliance with environmental and safety standards. Spending can fluctuate based on defense budgets, geopolitical priorities, and specific modernization initiatives. Analyzing past awards for similar-sized construction projects can reveal average contract values, typical durations, and common contracting vehicles used. This contract's value and scope should be viewed within the context of the Air Force's overall capital investment strategy.

What are the potential implications of the 690-day duration on project costs and timelines?

A 690-day duration for a construction project of this nature presents several implications. Extended timelines can increase the risk of cost escalation due to inflation in material prices and labor rates, even under a fixed-price contract, if not adequately accounted for in the initial pricing. It also prolongs the period during which the government must manage the contract and potentially incurs indirect costs. Furthermore, a longer duration increases the window for unforeseen site conditions or design changes that could lead to change orders, impacting the final cost. Effective project management and scheduling are crucial to mitigate these risks and ensure timely completion.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 20

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1240 BAYSHORE HGHWY, BURLINGAME, CA, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $29,442,175

Exercised Options: $29,442,175

Current Obligation: $29,442,175

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA890306D8511

IDV Type: IDC

Timeline