State Department awards $194M design-build contract for Casablanca consulate, exceeding initial estimates

Contract Overview

Contract Amount: $194,434,743 ($194.4M)

Contractor: BL Harbert International LLC

Awarding Agency: Department of State

Start Date: 2019-09-26

End Date: 2025-06-25

Contract Duration: 2,099 days

Daily Burn Rate: $92.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN-BUILD CONSTRUCTION OF CASABLANCA NEW CONSULATE COMPOUND PROJECT IN CASABLANCA, MOROCCO.

Plain-Language Summary

Department of State obligated $194.4 million to BL HARBERT INTERNATIONAL LLC for work described as: DESIGN-BUILD CONSTRUCTION OF CASABLANCA NEW CONSULATE COMPOUND PROJECT IN CASABLANCA, MOROCCO. Key points: 1. The contract value of $194.4 million significantly surpassed the estimated value of $92.6 million, indicating potential cost overruns or scope expansion. 2. Awarded as a definitive contract with a firm fixed price, this structure aims to cap costs but requires careful monitoring of change orders. 3. The project involves design-build construction for a new consulate compound, a complex undertaking with inherent risks in international settings. 4. With a duration of 2099 days (approximately 5.75 years), the project spans a considerable timeline, increasing exposure to market fluctuations and unforeseen challenges. 5. The contract was awarded through full and open competition, suggesting a robust bidding process, though the final price warrants scrutiny. 6. BL Harbert International LLC, the contractor, has experience in large-scale construction projects, but performance on this specific contract needs to be evaluated. 7. The project's geographic location in Casablanca, Morocco, introduces geopolitical and logistical complexities that could impact cost and schedule.

Value Assessment

Rating: questionable

The final award price of $194.4 million is nearly double the initial estimated value of $92.6 million. While construction projects can experience cost increases due to design changes or market conditions, this magnitude of difference raises concerns about initial budgeting accuracy or significant scope creep. Benchmarking against similar large-scale international construction projects for diplomatic facilities would be necessary to fully assess value for money, but the substantial deviation from the estimate suggests a potential for reduced value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. The presence of 3 bidders suggests a competitive environment. However, the significant difference between the estimated cost and the final award price, despite competition, may suggest that the initial estimate was not reflective of the true market cost or that the competitive bids were all substantially higher than anticipated.

Taxpayer Impact: While competition is generally beneficial for taxpayers by driving down prices, the substantial increase from the initial estimate to the final award price means taxpayers are paying significantly more than initially projected, even with a competitive process.

Public Impact

The primary beneficiaries are the U.S. Department of State and its personnel who will utilize the new consulate facilities in Casablanca. The project delivers critical infrastructure for diplomatic operations and public services in Morocco. The geographic impact is concentrated in Casablanca, Morocco, enhancing U.S. diplomatic presence in the region. The project will likely create numerous jobs in construction and related trades, both locally in Morocco and potentially for U.S. firms and workers involved in the project.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost increase from estimate to award price suggests potential issues with initial budgeting or scope management.
Long project duration increases risk of cost escalation and unforeseen challenges.
International project location introduces geopolitical and logistical risks.
Firm fixed price contract requires careful oversight to manage potential change orders and scope creep.

Positive Signals

Awarded through full and open competition, indicating a potentially robust bidding process.
Firm fixed price contract provides cost certainty if managed effectively.
Contractor has experience in large-scale construction.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically for government facilities abroad. The global market for such construction is substantial, driven by diplomatic needs, economic development, and security requirements. Comparable spending benchmarks would involve analyzing other U.S. embassy and consulate construction projects, particularly those in similar geopolitical regions or with similar design-build complexities. The scale of this project is significant within the niche of constructing secure, functional diplomatic compounds.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false) and there is no information on subcontracting plans (st, sn are empty). This suggests that the primary contract was awarded to a large business, BL Harbert International LLC. The implications for small businesses would depend on whether the prime contractor intends to subcontract portions of the work to them. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large federal construction projects often create opportunities for specialized small business subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's Bureau of Overseas Buildings Operations (OBO), which manages the design and construction of U.S. diplomatic facilities worldwide. Accountability measures are typically embedded in the contract terms, including performance milestones, quality control requirements, and penalties for delays or deficiencies. Transparency is facilitated through contract awards databases like FPDS. Inspector General jurisdiction would likely extend to investigating fraud, waste, or abuse related to the contract, particularly concerning the significant cost increase.

Related Government Programs

U.S. Embassy Construction Projects
Department of State Facilities Management
Overseas Building Operations (OBO)
Design-Build Contracts
International Construction Projects

Risk Flags

Significant Cost Growth
Potential for Scope Creep
Long Project Duration Risk
International Location Complexities
Inaccurate Initial Estimate

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $194.4 million to BL HARBERT INTERNATIONAL LLC. DESIGN-BUILD CONSTRUCTION OF CASABLANCA NEW CONSULATE COMPOUND PROJECT IN CASABLANCA, MOROCCO.

Who is the contractor on this award?

The obligated recipient is BL HARBERT INTERNATIONAL LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $194.4 million.

What is the period of performance?

Start: 2019-09-26. End: 2025-06-25.

What specific factors contributed to the final award price being nearly double the initial estimate?

The significant discrepancy between the initial estimate ($92.6 million) and the final award price ($194.4 million) for the Casablanca consulate project warrants detailed investigation. Potential contributing factors could include: 1) Inaccurate initial cost estimation due to insufficient site analysis, unforeseen market conditions (e.g., material cost inflation, labor shortages), or a lack of detailed design information at the time of estimation. 2) Scope creep, where the project requirements expanded beyond the initial conception, necessitating additional resources and funding. 3) Competitive bidding dynamics, where the actual cost of executing the project, as determined by the bidders, was substantially higher than the government's initial projection. 4) Unforeseen complexities related to the international location, such as logistical challenges, import/export regulations, security requirements, or local labor costs. A thorough review of the procurement documentation, including the basis of estimate, pre-bid discussions, and the final proposals, would be necessary to pinpoint the exact reasons for this substantial cost increase.

How does the performance history of BL Harbert International LLC compare to similar large-scale international construction projects?

BL Harbert International LLC has a track record of undertaking large-scale construction projects, including significant international endeavors. To assess their performance specifically for this contract, a review of their past performance evaluations, any documented disputes or claims on previous government contracts, and their success in meeting cost and schedule targets on similar projects would be crucial. Benchmarking their historical performance against industry standards for complex diplomatic facility construction is essential. While their experience is a positive signal, the scale and complexity of the Casablanca consulate, coupled with the significant cost variance noted, necessitate a close examination of their past project execution, particularly regarding cost control and adherence to timelines in challenging international environments. Data on past performance, if available through sources like the Contractor Performance Assessment Reporting System (CPARS), would provide valuable insights.

What are the primary risks associated with a project of this scale and duration in Morocco?

This project faces several primary risks inherent to its scale, duration, and location. Geopolitical instability or changes in U.S.-Morocco relations could impact project continuity or security. Logistical challenges in importing materials and equipment, coupled with potential customs delays, can affect the schedule and cost. Local labor availability, skill levels, and labor relations present another risk factor. Currency fluctuations between the U.S. dollar and the Moroccan dirham could impact costs if not adequately hedged. Security risks associated with operating in a foreign country, including site security and personnel safety, require robust mitigation strategies. Furthermore, navigating local building codes, environmental regulations, and permitting processes can introduce complexities and delays. The long duration (nearly six years) amplifies the risk of encountering unforeseen economic shifts, political changes, or environmental factors that could impact project outcomes.

How does the firm fixed price (FFP) contract type mitigate or exacerbate risks for this project?

A Firm Fixed Price (FFP) contract is intended to provide cost certainty to the government by establishing a ceiling price that the contractor must adhere to, regardless of their actual costs. This mitigates the risk of cost overruns for the government, placing the financial risk on the contractor. However, for a project with significant uncertainties, such as complex international construction with a large cost variance from estimate, an FFP contract can exacerbate risks if not managed meticulously. Contractors may build in substantial contingencies into their FFP bids to account for perceived risks, potentially leading to a higher initial price. Conversely, if unforeseen issues arise that are not covered by the contract's scope or force majeure clauses, significant disputes and change orders can occur, potentially negating the cost certainty benefit. Effective oversight is crucial to ensure the contractor is managing risks appropriately and that change orders are justified and priced fairly.

What are the implications of awarding a contract of this magnitude through full and open competition, yet seeing such a large deviation from the initial estimate?

Awarding a contract of this magnitude ($194.4 million) through full and open competition, while simultaneously observing a nearly 100% increase from the initial estimate ($92.6 million), presents a complex picture. On one hand, full and open competition suggests that the government sought the widest possible pool of bidders, theoretically leading to the best possible price. The fact that all competitive bids resulted in prices significantly higher than the estimate could indicate that the government's initial estimate was fundamentally flawed or underestimated the true market cost of such a project. It might also suggest that the market conditions at the time of bidding were such that contractors perceived high risks or costs associated with the project, leading them to bid higher. This scenario raises questions about the government's cost estimation capabilities and the thoroughness of its market research prior to soliciting bids. While competition was present, the outcome suggests that the government may not have achieved the most cost-effective solution relative to its initial expectations.

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: 19AQMM19R0072

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 820 SHADES CREEK PKWY STE 3000, BIRMINGHAM, AL, 35209

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $194,434,743

Exercised Options: $194,434,743

Current Obligation: $194,434,743

Subaward Activity

Number of Subawards: 89

Total Subaward Amount: $13,670,756

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline