GSA awards $343.6M design-build contract for San Luis Port of Entry modernization

Contract Overview

Contract Amount: $343,558,497 ($343.6M)

Contractor: Hensel Phelps Construction CO.

Awarding Agency: General Services Administration

Start Date: 2022-09-21

End Date: 2028-12-01

Contract Duration: 2,263 days

Daily Burn Rate: $151.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN-BUILD SERVICES FOR THE EXPANSION & MODERNIZATION PROJECT AT THE SAN LUIS I LAND PORT OF ENTRY IN SAN LUIS, AZ

Place of Performance

Location: SAN LUIS, YUMA County, ARIZONA, 85349

State: Arizona Government Spending

Plain-Language Summary

General Services Administration obligated $343.6 million to HENSEL PHELPS CONSTRUCTION CO. for work described as: DESIGN-BUILD SERVICES FOR THE EXPANSION & MODERNIZATION PROJECT AT THE SAN LUIS I LAND PORT OF ENTRY IN SAN LUIS, AZ Key points: 1. Contract awarded to Hensel Phelps Construction Co. for a significant infrastructure project. 2. Project scope includes expansion and modernization of a key border facility. 3. The contract is a firm-fixed-price definitive contract, indicating price certainty. 4. Duration of the contract is over 6 years, suggesting a long-term commitment. 5. The project is located in San Luis, Arizona, impacting regional infrastructure. 6. This contract represents a substantial investment in border security and trade facilitation.

Value Assessment

Rating: good

The contract value of $343.6 million for a design-build modernization of a land port of entry appears reasonable given the scale and complexity of such projects. Benchmarking against similar large-scale federal construction projects, particularly those involving border infrastructure, suggests this pricing is within expected ranges. The firm-fixed-price structure provides cost certainty for the government, which is a positive indicator of value, assuming the initial bid was competitive.

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 solicited and considered. This competitive process is crucial for ensuring that the government receives the best possible price and value for its investment. The number of bidders, while not explicitly stated, is implied to be sufficient to drive competitive pricing.

Taxpayer Impact: Full and open competition generally leads to more favorable pricing for taxpayers by fostering a competitive environment among qualified contractors.

Public Impact

Benefits federal agencies responsible for border management and trade. Enhances operational capacity and efficiency at the San Luis I Land Port of Entry. Supports economic activity and trade flow between the US and Mexico. Likely to create construction jobs in the San Luis, Arizona region. Modernized facilities will improve processing times for goods and travelers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in large-scale, multi-year construction projects.
Delays in construction timelines can impact operational readiness.
Ensuring compliance with environmental and security regulations throughout the project.

Positive Signals

Firm-fixed-price contract provides cost predictability.
Awarded through full and open competition, suggesting competitive pricing.
Experienced contractor (Hensel Phelps) likely brings strong project management capabilities.
Modernization aims to improve long-term efficiency and reduce future operational costs.

Sector Analysis

This contract falls within the construction sector, specifically focusing on institutional and commercial building construction. The General Services Administration (GSA) is responsible for managing federal government buildings and facilities. Projects like the San Luis Port of Entry modernization are critical for national infrastructure, impacting trade, security, and transportation. Comparable spending benchmarks for large federal construction projects, especially those involving border facilities, often run into hundreds of millions of dollars due to the specialized requirements and scale.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside (ss: false, sb: false). While this contract was awarded through full and open competition, it is important to assess if subcontracting opportunities will be made available to small businesses. The prime contractor, Hensel Phelps, will likely need to outline its subcontracting plan to ensure small businesses can participate in delivering specialized services or materials for this large project, contributing to the broader small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily be managed by the General Services Administration (GSA), likely through its Public Buildings Service. The firm-fixed-price nature of the contract provides a degree of financial oversight. Accountability measures will be embedded in the contract's performance requirements and delivery schedules. Transparency is expected through GSA's public contract award databases and reporting. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Border Infrastructure Projects
GSA Public Buildings Service Construction Contracts
Land Port of Entry Modernization Programs
Design-Build Construction Contracts

Risk Flags

Potential for schedule delays
Risk of cost escalation beyond initial bid
Complex integration of security and technology systems
Ensuring compliance with environmental and regulatory standards

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $343.6 million to HENSEL PHELPS CONSTRUCTION CO.. DESIGN-BUILD SERVICES FOR THE EXPANSION & MODERNIZATION PROJECT AT THE SAN LUIS I LAND PORT OF ENTRY IN SAN LUIS, AZ

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS CONSTRUCTION CO..

Which agency awarded this contract?

Awarding agency: General Services Administration (Public Buildings Service).

What is the total obligated amount?

The obligated amount is $343.6 million.

What is the period of performance?

Start: 2022-09-21. End: 2028-12-01.

What is the track record of Hensel Phelps Construction Co. on similar federal infrastructure projects?

Hensel Phelps Construction Co. has a substantial track record with federal infrastructure projects, including significant work for agencies like the GSA and Department of Defense. They have experience with large-scale design-build projects, which are complex and require robust project management. Reviewing their past performance on similar projects, such as airport terminals, courthouses, or other critical government facilities, would provide insight into their ability to deliver on time and within budget. Specific data on past project cost performance, schedule adherence, and client satisfaction for federal contracts would be valuable for a comprehensive assessment. Their history suggests they are a capable contractor for this type of work, but a detailed review of relevant past performance is always recommended.

How does the awarded price compare to similar land port of entry modernization projects?

The awarded price of $343.6 million for the San Luis I Land Port of Entry modernization is substantial, reflecting the scale and complexity of expanding and upgrading critical border infrastructure. Benchmarking this against other recent land port of entry projects managed by GSA or CBP reveals that large-scale modernizations often fall within the hundreds of millions of dollars range. Factors influencing cost include the specific scope of work (e.g., new construction vs. renovation), technological integration, security requirements, and site-specific challenges. While direct comparisons are difficult without identical project parameters, this figure appears consistent with the high cost of major federal infrastructure development, particularly in secure border environments. Further analysis would involve comparing the cost per square foot or cost per lane of traffic processed against similar projects.

What are the primary risks associated with this design-build contract?

The primary risks associated with this design-build contract include potential schedule delays due to unforeseen site conditions, weather impacts in Arizona, or complexities in coordinating the design and construction phases. Cost risks, although mitigated by the firm-fixed-price structure, can still arise from scope creep if not managed tightly, or from escalation of material and labor costs beyond initial projections, especially over a multi-year project. There's also a risk related to the integration of new technologies and security systems, ensuring they function as intended and meet evolving federal requirements. Contractor performance risk, while generally considered lower with established firms like Hensel Phelps, always exists. Finally, ensuring compliance with all environmental regulations and local permitting processes adds another layer of potential risk.

How effective is the firm-fixed-price contract type in managing costs for this project?

The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for projects where the scope of work is well-defined, as is typical for design-build modernization. It shifts the majority of the cost risk to the contractor, Hensel Phelps, who is obligated to complete the work for the agreed-upon price. This provides significant cost certainty for the government (GSA). However, the effectiveness relies heavily on the accuracy of the initial bid and the contractor's ability to manage their own costs. If unforeseen issues arise that necessitate significant changes to the scope, change orders could increase the total contract cost, though these are typically subject to negotiation and approval. Overall, FFP is a strong choice for cost control in this scenario.

What is the historical spending pattern for land port of entry modernization by the GSA?

Historical spending patterns for land port of entry modernization by the GSA indicate a consistent and significant investment in upgrading border infrastructure. The GSA, often in collaboration with Customs and Border Protection (CBP), undertakes projects that range from tens of millions to several hundred million dollars, depending on the size and scope of the port. Spending tends to be cyclical, driven by infrastructure needs, security imperatives, and funding appropriations. Major modernization efforts are often multi-year endeavors, reflecting the complexity and scale. Analyzing past GSA expenditures on similar projects reveals a trend towards larger, more technologically advanced facilities designed to handle increased trade volumes and enhance security protocols. The $343.6 million for San Luis fits within the upper range of these historical investments for significant upgrades.

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: 47PK0121R0007

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Hensel Phelps Construction CO

Address: 3125 E WOOD ST STE 100, PHOENIX, AZ, 85040

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

Financial Breakdown

Contract Ceiling: $343,835,877

Exercised Options: $343,835,877

Current Obligation: $343,558,497

Actual Outlays: $164,815,748

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline