State Department awards $39M for embassy construction in Denmark, facing limited competition

Contract Overview

Contract Amount: $39,063,966 ($39.1M)

Contractor: Facilities Development Corporation

Awarding Agency: Department of State

Start Date: 2018-12-28

End Date: 2022-12-16

Contract Duration: 1,449 days

Daily Burn Rate: $27.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCTION SERVICES FOR EMBASSY UPGRADES AND RENOVATIONS IN COPENHAGEN, DENMARK.

Plain-Language Summary

Department of State obligated $39.1 million to FACILITIES DEVELOPMENT CORPORATION for work described as: CONSTRUCTION SERVICES FOR EMBASSY UPGRADES AND RENOVATIONS IN COPENHAGEN, DENMARK. Key points: 1. Contract value appears reasonable given the scope of embassy upgrades and renovations. 2. Limited competition may have impacted price discovery and potentially increased costs. 3. The firm-fixed-price contract type shifts risk to the contractor. 4. Project duration of nearly four years suggests a complex and extensive undertaking. 5. The contractor has experience in facilities development, but specific performance on this contract requires further review. 6. Geographic focus on Copenhagen, Denmark, indicates a specific diplomatic infrastructure investment.

Value Assessment

Rating: fair

The contract value of approximately $39 million for embassy upgrades and renovations in Copenhagen is substantial. Benchmarking against similar international construction projects for diplomatic facilities is challenging due to unique security and logistical requirements. However, the number of bidders (2) suggests a potentially limited market for such specialized work, which could influence pricing. Without more comparable data points, a definitive value-for-money assessment is difficult, but the limited competition raises a flag.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' with only two bidders. This indicates that while the competition was intended to be open, certain sources were excluded, and the final competition was limited. The low number of bidders suggests that the pool of qualified contractors for this specific type of work (embassy construction and renovation with security considerations) may be small, or that other factors limited participation. This limited competition could lead to less aggressive pricing than a more robustly competed contract.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the most competitive pricing achievable. The government might have paid a premium due to the restricted number of offers, limiting the potential for cost savings.

Public Impact

The primary beneficiaries are the U.S. Department of State and its personnel stationed at the embassy in Copenhagen, who will receive upgraded and renovated facilities. The contract delivers essential construction services for maintaining and improving diplomatic infrastructure abroad. The geographic impact is concentrated in Copenhagen, Denmark, supporting U.S. diplomatic presence. Workforce implications include employment for construction workers and related trades in the Copenhagen area, as well as potential involvement of specialized engineering and architectural services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may have resulted in higher costs for taxpayers.
The exclusion of sources in the competition process warrants further investigation into its justification.
The long contract duration (1449 days) increases the risk of cost overruns or scope creep if not managed effectively.

Positive Signals

The firm-fixed-price contract type effectively transfers cost overrun risk to the contractor.
The contractor, Facilities Development Corporation, has a stated focus on facilities development, suggesting relevant experience.
The contract supports critical diplomatic infrastructure, aligning with national security and foreign policy objectives.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on government facilities abroad. The market for constructing and renovating embassies is specialized, requiring adherence to strict security, architectural, and diplomatic standards. Comparable spending benchmarks are difficult to establish due to the unique nature of these projects, but large-scale government construction contracts often involve significant investment. The Department of State regularly procures such services to maintain its global presence.

Small Business Impact

The data indicates that small business participation was not a primary focus, as the contract was not set-aside for small businesses (sb: false) and the contractor is Facilities Development Corporation, which is likely not a small business. There is no information provided on subcontracting plans specifically for small businesses. This suggests that opportunities for small businesses within this large contract may be limited unless proactively sought by the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting officers and program managers. Accountability measures are typically embedded in the contract terms, including performance standards and payment schedules tied to milestones. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance or closeout.

Related Government Programs

Embassy Construction and Renovation Projects
Department of State Facilities Management
International Construction Contracts
Government Building Maintenance

Risk Flags

Limited competition
Potential for cost overruns due to long duration
Justification for source exclusion requires review

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $39.1 million to FACILITIES DEVELOPMENT CORPORATION. CONSTRUCTION SERVICES FOR EMBASSY UPGRADES AND RENOVATIONS IN COPENHAGEN, DENMARK.

Who is the contractor on this award?

The obligated recipient is FACILITIES DEVELOPMENT CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $39.1 million.

What is the period of performance?

Start: 2018-12-28. End: 2022-12-16.

What is the track record of Facilities Development Corporation on similar government contracts?

A comprehensive review of Facilities Development Corporation's track record on similar government contracts would require accessing detailed performance evaluations and past performance questionnaires. While the provided data indicates the company's focus is on facilities development, it does not offer specifics on their success rate, quality of work, or adherence to schedule and budget on prior projects, particularly those involving diplomatic facilities. Further investigation into their contract history with the Department of State and other federal agencies would be necessary to assess their reliability and capability for complex international construction projects. This would involve looking at contract close-out reports, any documented disputes or claims, and client feedback to form a complete picture of their performance history.

How does the cost per square foot for this embassy renovation compare to similar international government construction projects?

Determining a precise cost per square foot comparison is challenging without detailed project specifications, including the total square footage renovated and the specific types of upgrades performed (e.g., structural, MEP, finishes, security enhancements). Embassy projects often include unique security infrastructure and specialized systems that can significantly inflate per-square-foot costs compared to standard commercial construction. Furthermore, construction costs vary widely by geographic location due to labor rates, material availability, and local regulations. Given the limited competition (2 bidders) and the specialized nature of embassy work, the cost per square foot might be higher than average market rates for general commercial construction but could be within a reasonable range for secure diplomatic facilities. A detailed analysis would require access to the full scope of work and architectural plans.

What were the specific reasons for excluding other potential sources in the competition process?

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' The specific reasons for excluding other potential sources are not detailed in the provided data. Typically, such exclusions are justified based on factors like the need for specialized capabilities, proprietary technology, or unique security requirements that only a limited number of firms can meet. The Department of State would have had to document and justify why certain sources were excluded to ensure compliance with federal procurement regulations. Without this documentation, it is difficult to assess whether the exclusion was warranted or if it unduly limited competition, potentially impacting the final price paid by taxpayers.

What are the key performance indicators (KPIs) used to measure the success of this construction contract?

Key performance indicators (KPIs) for a construction contract of this nature typically revolve around adherence to schedule, budget, quality of workmanship, safety compliance, and stakeholder satisfaction. For embassy upgrades, specific KPIs might also include the successful integration of security systems, compliance with diplomatic standards, and minimal disruption to ongoing embassy operations. The Department of State would have established these KPIs in the contract's Performance Work Statement (PWS). Success would be measured by the contractor's ability to meet or exceed these defined metrics throughout the project lifecycle, from initial construction phases to final handover and defect rectification.

Has the Department of State awarded similar contracts to Facilities Development Corporation in the past, and what was the performance outcome?

The provided data does not specify whether the Department of State has awarded similar contracts to Facilities Development Corporation in the past or detail the performance outcomes of any such prior contracts. To assess the contractor's historical performance, one would need to consult the Federal Awardee Performance and Integrity Information System (FAPIIS) or conduct a thorough review of the contractor's past performance evaluations within the Department of State's procurement records. Understanding their history on comparable projects is crucial for evaluating their suitability and reliability for this current contract, especially given the limited competition.

What is the projected impact of this contract on the local Danish construction market?

This contract is likely to have a positive, albeit localized, impact on the Danish construction market, particularly in the Copenhagen area. It will create demand for labor, materials, and potentially local subcontractors, contributing to economic activity. However, as a U.S. federal government contract, procurement processes and standards may differ from local Danish practices. The primary beneficiaries of direct contract awards will be the selected prime contractor and any subcontractors they engage. The overall scale of the project, while significant for the contractor, may represent a moderate addition to the broader Danish construction sector's annual output. The long duration suggests sustained economic activity over several years.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 19AQMM18R0008

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1980 ISAAC NEWTON SQ W, RESTON, VA, 20190

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Service Disabled Veteran Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $39,063,966

Exercised Options: $39,063,966

Current Obligation: $39,063,966

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline