State Department awards $5.2M contract for embassy air handling units in Peru

Contract Overview

Contract Amount: $5,245,516 ($5.2M)

Contractor: Venesco LLC

Awarding Agency: Department of State

Start Date: 2023-12-18

End Date: 2026-12-18

Contract Duration: 1,096 days

Daily Burn Rate: $4.8K/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: AIR HANDLING REPLACEMENT UNITS AT U.S. EMBASSY LIMA PERU.

Plain-Language Summary

Department of State obligated $5.2 million to VENESCO LLC for work described as: AIR HANDLING REPLACEMENT UNITS AT U.S. EMBASSY LIMA PERU. Key points: 1. Contract value appears reasonable for specialized HVAC replacement in an overseas facility. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract duration of three years aligns with the scope of the work. 4. Fixed-price contract type shifts risk to the contractor for cost overruns. 5. The North American Industry Classification System (NAICS) code indicates construction services. 6. This award is a single delivery order under a larger contract vehicle.

Value Assessment

Rating: good

The contract value of approximately $5.2 million for air handling unit replacement at the U.S. Embassy in Lima, Peru, seems within a reasonable range for specialized international construction projects. Benchmarking against similar overseas embassy infrastructure upgrades would provide a more precise value-for-money assessment. The firm fixed-price structure indicates that the contractor bears the primary financial risk, which can be advantageous for the government if costs are managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while the competition was broad, specific sources may have been excluded for defined reasons. The presence of two bidders suggests a moderate level of competition. A higher number of bidders typically leads to more aggressive pricing and better value for the government.

Taxpayer Impact: The use of full and open competition, even with a limited number of bidders, is generally favorable for taxpayers as it encourages competitive pricing and reduces the risk of inflated costs.

Public Impact

The primary beneficiaries are U.S. diplomatic personnel and visitors at the Embassy in Lima, Peru, who will experience improved environmental conditions. The contract delivers essential infrastructure maintenance and upgrades, ensuring the operational integrity of the embassy. The geographic impact is localized to the U.S. Embassy compound in Lima, Peru. The contract supports the construction and maintenance workforce, likely involving skilled tradespeople.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for delays in delivery or installation impacting embassy operations.
Risk of unforeseen site conditions requiring additional costs, despite fixed-price contract.
Ensuring compliance with local Peruvian building codes and regulations.

Positive Signals

Firm fixed-price contract mitigates cost escalation risk for the government.
Contractor's successful completion of similar projects would be a positive indicator.
The use of full and open competition suggests a structured procurement process.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on mechanical systems (HVAC). The market for specialized construction and maintenance services for government facilities, particularly overseas embassies, is competitive but often involves a select group of experienced contractors. Spending in this sector is driven by the need to maintain aging infrastructure and ensure operational continuity for government operations abroad.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses. The contractor, VENESCO LLC, is not explicitly identified as a small business in the provided data. Subcontracting opportunities for small businesses may exist, but they are not detailed in this award notice. The overall impact on the small business ecosystem is likely minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of State's Bureau of Overseas Buildings Operations (OBO) or a designated contracting officer's representative (COR). Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods and services. Transparency is facilitated through contract award databases, though detailed performance monitoring is usually internal.

Related Government Programs

Embassy Infrastructure Modernization Programs
Overseas Facilities Maintenance Contracts
Department of State Capital Security Construction Program

Risk Flags

Potential for schedule delays due to logistical or site-specific issues.
Risk of cost overruns if unforeseen conditions arise, despite fixed-price contract.
Ensuring adequate security protocols are maintained during construction activities.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $5.2 million to VENESCO LLC. AIR HANDLING REPLACEMENT UNITS AT U.S. EMBASSY LIMA PERU.

Who is the contractor on this award?

The obligated recipient is VENESCO LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $5.2 million.

What is the period of performance?

Start: 2023-12-18. End: 2026-12-18.

What is the track record of VENESCO LLC in performing similar overseas construction projects for the U.S. government?

A review of federal procurement databases would be necessary to fully assess VENESCO LLC's track record. Key indicators to examine include the number of past contracts awarded, their values, the types of services rendered (specifically HVAC and embassy construction), and any performance evaluations or past performance questionnaires. A history of successful, on-time, and within-budget completions on similar projects would significantly de-risk this contract. Conversely, a history of disputes, delays, or performance issues would raise concerns about the government's value for money and the reliability of the contractor.

How does the awarded price compare to similar air handling unit replacement projects at other U.S. embassies?

Direct comparison of the $5.2 million award for the Lima embassy requires detailed analysis of project scope, size, complexity, and location. Factors such as the specific tonnage and type of air handling units, the extent of ductwork and electrical integration, and the labor costs in Peru versus other locations significantly influence pricing. Benchmarking against projects of similar scale and technical requirements at other embassies, adjusted for regional economic factors and logistical challenges, would be essential. Without such comparative data, it is difficult to definitively state if this represents excellent or fair value.

What are the primary risks associated with performing construction work at an active U.S. embassy in a foreign country?

Performing construction at an active U.S. embassy involves several unique risks. Security protocols are paramount, requiring strict adherence and potentially impacting work schedules and access. Logistical challenges, including importing materials and equipment, navigating local customs, and managing a diverse workforce, can lead to delays and cost increases. Furthermore, unforeseen site conditions within aging infrastructure, environmental regulations, and the need to minimize disruption to ongoing diplomatic operations add layers of complexity. The firm fixed-price nature of this contract shifts much of the financial risk to the contractor, but the government still faces risks related to schedule delays and operational impact.

What is the expected impact of these new air handling units on the embassy's energy efficiency and operational costs?

The installation of new air handling units is generally expected to improve energy efficiency and reduce operational costs compared to older, less efficient systems. Modern HVAC units are designed with advanced technologies that optimize cooling, heating, and ventilation while consuming less energy. The specific energy savings and cost reductions would depend on the efficiency ratings of the new units, the building's insulation, and how effectively the system is maintained and operated. A detailed energy performance assessment post-installation would quantify these benefits, potentially leading to significant long-term savings for the Department of State.

How has spending on embassy infrastructure maintenance and upgrades trended over the past five years?

Analyzing spending trends on embassy infrastructure maintenance and upgrades over the past five years would reveal patterns in investment priorities and potential backlogs. This data, typically available through the Department of State's budget justifications and procurement reports, would show whether spending has been increasing, decreasing, or remaining stable. An upward trend might indicate a proactive approach to addressing aging facilities, while a stagnant or declining trend could suggest deferred maintenance and a growing need for future investment. Understanding these trends provides context for the current award and its place within the department's overall capital planning.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - GENERAL

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 14801 MURDOCK ST, CHANTILLY, VA, 20151

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

Financial Breakdown

Contract Ceiling: $5,245,516

Exercised Options: $5,245,516

Current Obligation: $5,245,516

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: 19AQMM23D0015

IDV Type: IDC

Timeline