State Department awards $156M construction contract for Moscow Chancery Compound rehabilitation

Contract Overview

Contract Amount: $155,819,295 ($155.8M)

Contractor: Desbuild Incorporated

Awarding Agency: Department of State

Start Date: 2018-09-30

End Date: 2026-09-30

Contract Duration: 2,922 days

Daily Burn Rate: $53.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: MOSCOW CHANCERY COMPOUND REHAB PROJECT

Plain-Language Summary

Department of State obligated $155.8 million to DESBUILD INCORPORATED for work described as: MOSCOW CHANCERY COMPOUND REHAB PROJECT Key points: 1. The contract's value of $155.8 million represents a significant investment in diplomatic infrastructure. 2. Competition dynamics for this large-scale construction project are crucial for ensuring taxpayer value. 3. Performance risks are inherent in long-duration construction projects, especially in international settings. 4. The project's scope involves substantial rehabilitation, indicating a need for specialized construction expertise. 5. This contract falls within the broader sector of commercial and institutional building construction.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the scope of work and comparable international construction projects. The firm-fixed-price structure aims to control costs, but the total value suggests a complex undertaking. Further analysis would require comparing unit costs for specific construction elements against industry standards and similar government projects abroad. The duration of the contract also implies potential for cost escalation if not managed meticulously.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This approach is generally favorable for price discovery and achieving competitive pricing. The presence of two bids suggests a moderate level of competition for this substantial project. A higher number of bids would typically lead to more aggressive pricing from contractors.

Taxpayer Impact: Full and open competition is the most advantageous for taxpayers as it maximizes the potential for cost savings through a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Department of State and its personnel, who will gain a rehabilitated and secure diplomatic facility. The services delivered include comprehensive construction and rehabilitation of the Moscow Chancery Compound. The geographic impact is localized to the U.S. Embassy in Moscow, Russia. Workforce implications include employment opportunities for construction workers, engineers, project managers, and support staff, both locally and potentially from the U.S.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long project duration increases risk of unforeseen issues and cost overruns.
International construction projects can face unique logistical and geopolitical challenges.
The firm-fixed-price contract, while controlling costs, may limit flexibility for design changes.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
The firm-fixed-price contract provides cost certainty for the government.
The project addresses critical infrastructure needs for diplomatic operations.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a broad category encompassing the building of non-residential structures. The market for large-scale international construction projects is specialized, often dominated by a few large firms with experience in complex, high-security environments. Comparable spending benchmarks would involve looking at other major embassy construction or renovation projects undertaken by the U.S. government or other nations globally.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the scale and specialized nature of rehabilitating a chancery compound, it is likely that larger, experienced construction firms were the primary bidders. Subcontracting opportunities may exist for specialized trades, potentially benefiting small businesses if the prime contractor actively seeks them out.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's Bureau of Overseas Buildings Operations (OBO), which manages the construction and maintenance of U.S. diplomatic facilities worldwide. Accountability measures would include regular progress reports, site inspections, and adherence to contract specifications. Transparency is facilitated through contract award announcements and public reporting mechanisms, though detailed project specifics may be limited due to security considerations.

Related Government Programs

Embassy Construction and Maintenance
Diplomatic Facility Rehabilitation
International Construction Projects
Federal Building and Construction Contracts

Risk Flags

Long project duration increases risk exposure.
International project complexities (logistics, geopolitical factors).
Potential for unforeseen site conditions in rehabilitation projects.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $155.8 million to DESBUILD INCORPORATED. MOSCOW CHANCERY COMPOUND REHAB PROJECT

Who is the contractor on this award?

The obligated recipient is DESBUILD INCORPORATED.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $155.8 million.

What is the period of performance?

Start: 2018-09-30. End: 2026-09-30.

What is the specific scope of work for the Moscow Chancery Compound rehabilitation project?

The provided data indicates the contract is for the 'MOSCOW CHANCERY COMPOUND REHAB PROJECT' with a value of $155,819,294.50, awarded to DESBUILD INCORPORATED by the Department of State. The North American Industry Classification System (NAICS) code 236220 points to Commercial and Institutional Building Construction. While the exact scope is not detailed, 'rehabilitation' implies significant renovation, repair, and modernization of existing structures within the compound. This could encompass structural repairs, HVAC system upgrades, electrical and plumbing modernization, security enhancements, interior renovations, and potentially exterior envelope improvements to ensure the facility meets modern operational, safety, and security standards for diplomatic missions.

How does the awarded amount compare to similar international construction projects for diplomatic facilities?

Comparing the $155.8 million award for the Moscow Chancery Compound rehabilitation requires context on the size, scope, and location of similar projects. Large-scale renovations or new constructions of U.S. embassies or consulates can range widely, from tens of millions to hundreds of millions of dollars. Factors influencing cost include the size of the facility, the extent of renovation versus new construction, security requirements, local labor and material costs, and geopolitical considerations. Without specific project details and comparable benchmarks from the Department of State's Bureau of Overseas Buildings Operations (OBO) portfolio, a precise value comparison is difficult. However, the amount suggests a substantial undertaking, consistent with major rehabilitation efforts for significant diplomatic posts.

What are the primary risks associated with a long-duration construction project like this, and how are they mitigated?

The primary risks for a project spanning nearly eight years (September 2018 to September 2026) include scope creep, material cost escalation, labor shortages, unforeseen site conditions, and potential geopolitical disruptions affecting operations or material supply chains. Mitigation strategies typically involve robust project management, detailed initial planning, contingency budgeting, phased construction schedules, strong contract clauses addressing change orders and price adjustments (though this is a firm-fixed-price contract, limiting some flexibility), and proactive risk assessment and management by the contracting agency (Department of State) and the contractor (DESBUILD INCORPORATED). Regular site inspections and progress reviews are also critical.

What is the significance of the contract being a 'Definitive Contract' with a 'Firm Fixed Price' type?

A 'Definitive Contract' is a standard contract type used when the exact quantity of supplies or services is not known or can be estimated. In this case, it likely refers to the overall project scope. The 'Firm Fixed Price' (FFP) type is significant because it places the maximum risk and responsibility on the contractor for controlling costs and performing the work within the agreed-upon price. This provides the government with the greatest cost certainty, as the price is not subject to adjustment based on the contractor's cost experience. However, it also means the contractor must accurately estimate all costs upfront, and any cost overruns are borne by DESBUILD INCORPORATED, potentially impacting their profit margin or leading to quality compromises if not managed well.

How does the NAICS code 236220 (Commercial and Institutional Building Construction) inform our understanding of this contract?

The NAICS code 236220 signifies that the primary activity under this contract is the construction of commercial and institutional buildings. This category includes a wide range of structures such as office buildings, warehouses, factories, government buildings, and other non-residential facilities. For the Moscow Chancery Compound rehabilitation, this code indicates the project involves the physical construction, alteration, or repair of such buildings. It helps categorize the contract within the broader construction industry, allowing for comparisons with other similar projects and providing context on the types of firms and expertise typically involved in this sector.

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: 19AQMM18R0174

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4744 BALTIMORE AVE, HYATTSVILLE, MD, 20781

Business Categories: Category Business, DoT Certified Disadvantaged Business Enterprise, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $155,837,222

Exercised Options: $155,837,222

Current Obligation: $155,819,295

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline