State Department awards $5.8M construction contract for Bangkok facility, raising questions on competition

Contract Overview

Contract Amount: $5,834,151 ($5.8M)

Contractor: Cherokee Nation Mechanical LLC

Awarding Agency: Department of State

Start Date: 2023-03-13

End Date: 2026-02-27

Contract Duration: 1,082 days

Daily Burn Rate: $5.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: STAGE 1 REC PROJECT, BANGKOK, THAILAND

Plain-Language Summary

Department of State obligated $5.8 million to CHEROKEE NATION MECHANICAL LLC for work described as: STAGE 1 REC PROJECT, BANGKOK, THAILAND Key points: 1. Contract awarded on a non-competitive basis, limiting potential for cost savings. 2. Construction services are essential for maintaining diplomatic infrastructure abroad. 3. The fixed-price contract type aims to control costs, but initial pricing needs scrutiny. 4. Project duration of nearly three years suggests a complex scope of work. 5. Lack of small business participation noted, with no set-aside provisions. 6. Geographic location in Thailand presents logistical and oversight challenges.

Value Assessment

Rating: fair

The contract value of $5.8 million for a construction project in Bangkok appears within a reasonable range for international projects of this nature, though specific benchmarks are difficult to ascertain without detailed project scope. The firm-fixed-price structure is intended to provide cost certainty. However, the absence of competitive bidding means there's no direct market comparison to ensure optimal value for taxpayer dollars. Further analysis of the contractor's historical performance and pricing on similar projects would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach bypasses the standard competitive process, which typically involves soliciting bids from various qualified contractors. While sole-source awards can be necessary in specific circumstances, they often lead to higher prices and reduced innovation compared to open competition. The lack of bidders means the government did not benefit from price discovery through a competitive marketplace.

Taxpayer Impact: Awarding contracts without competition can result in higher costs for taxpayers, as there is no pressure on the contractor to offer the most competitive price. This limits the government's ability to secure the best possible value for public funds.

Public Impact

The primary beneficiaries are the contractor, Cherokee Nation Mechanical LLC, and potentially the Department of State through the improved facility. The contract will deliver construction and renovation services for a facility in Bangkok, Thailand. The geographic impact is localized to the U.S. Embassy or Consulate in Bangkok. Workforce implications include employment opportunities for construction labor, potentially both local and expatriate, managed by the prime contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price discovery and potential savings.
Lack of transparency in the sole-source justification process.
Potential for cost overruns if initial pricing is not rigorously managed.
Geographic distance may complicate oversight and quality control.
No small business participation or subcontracting opportunities identified.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Contractor has a defined period to complete the project, allowing for planning.
Essential infrastructure improvement for diplomatic operations.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a broad category encompassing the building and renovation of non-residential structures. The global construction market is substantial, with significant government spending allocated to maintaining and upgrading facilities, particularly diplomatic posts abroad. This specific project likely represents a minor component of the overall U.S. government's investment in its overseas infrastructure, which requires specialized contractors capable of operating in foreign environments.

Small Business Impact

There is no indication that this contract included small business set-aside provisions, nor is there information suggesting subcontracting opportunities for small businesses. The award to Cherokee Nation Mechanical LLC, a large business, suggests that small businesses were not specifically targeted for this procurement. This could limit the participation of smaller firms in federal contracting related to this project and its overall ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of State's contracting officers and potentially its Office of Inspector General, depending on the contract value and nature of any issues. Given the overseas location, oversight may involve a combination of on-site representatives and remote monitoring. Transparency is limited due to the sole-source nature of the award, making detailed public scrutiny of the selection and pricing process challenging.

Related Government Programs

Department of State Overseas Buildings Operations
Federal Construction Contracts
International Facilities Management
Government Building Maintenance

Risk Flags

Sole-source award
Overseas project management complexity
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $5.8 million to CHEROKEE NATION MECHANICAL LLC. STAGE 1 REC PROJECT, BANGKOK, THAILAND

Who is the contractor on this award?

The obligated recipient is CHEROKEE NATION MECHANICAL LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $5.8 million.

What is the period of performance?

Start: 2023-03-13. End: 2026-02-27.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which typically implies a sole-source justification was used. Common reasons for sole-source awards include urgent and compelling needs, unique capabilities of a single contractor, or situations where only one responsible source can provide the required services. Without further documentation from the Department of State, the precise justification remains unknown. However, for overseas construction projects, factors like specialized knowledge of local regulations, existing security clearances, or the need to maintain continuity with prior work could be cited. The lack of competition means taxpayers did not benefit from a potentially lower price that could have been achieved through a bidding process.

How does the contract value compare to similar construction projects managed by the State Department abroad?

Benchmarking this $5.8 million contract against similar State Department construction projects abroad is challenging without access to a comprehensive database of overseas construction contracts, including their scope, location, and specific requirements. Projects vary significantly based on size, complexity, security needs, and local market conditions. However, for a facility renovation or construction in a major international city like Bangkok, $5.8 million could represent a moderate-sized project. Larger embassy or consulate new builds or major renovations can easily run into tens or hundreds of millions of dollars. The firm-fixed-price nature suggests an attempt to cap costs, but the absence of competition prevents a direct value-for-money comparison against alternative bids.

What are the potential risks associated with managing a construction project in Thailand from the U.S.?

Managing a construction project in Thailand from the U.S. presents several risks. Logistical challenges include coordinating material procurement, shipping, and managing a workforce across different time zones and cultures. Quality control can be more difficult with remote oversight, potentially leading to deviations from specifications or subpar workmanship. Security risks, while perhaps lower for a construction site than an operational embassy, still need careful management. Furthermore, navigating local labor laws, permitting processes, and potential political or economic instability in the host country adds layers of complexity. The Department of State must have robust oversight mechanisms in place to mitigate these risks effectively.

What is the track record of Cherokee Nation Mechanical LLC on government contracts, particularly overseas construction?

Assessing the track record of Cherokee Nation Mechanical LLC requires accessing historical contract data, performance reviews (e.g., Contractor Performance Assessment Reporting System - CPARS), and any past issues or disputes. Without this specific data, it's difficult to definitively evaluate their past performance. However, as a recipient of federal contracts, they are expected to have demonstrated capability in managing projects of this scale. Their experience with overseas construction, specifically for entities like the Department of State, would be a key indicator of their suitability and ability to handle the unique challenges of international projects. A review of their contract history would reveal their success rate, adherence to schedules and budgets, and overall quality of work.

What are the implications of the nearly three-year duration for this construction project?

A duration of approximately 1082 days (nearly three years) for a $5.8 million construction project suggests a significant scope of work, potentially involving extensive renovation, new construction, or complex integration of systems within an existing facility. Such a long timeline increases the risk of cost escalation due to inflation, changes in material costs, or unforeseen project delays. It also requires sustained project management and oversight from the Department of State over an extended period. While longer durations can sometimes allow for more thorough work and phased implementation, they necessitate careful planning to ensure the project remains on track and within budget, especially given the firm-fixed-price nature which might not easily accommodate extended delays without renegotiation or claims.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2 W. 2ND ST, TULSA, OK, 74103

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $5,861,961

Exercised Options: $5,861,961

Current Obligation: $5,834,151

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline