GSA awards $296.6M design-build contract for Douglas, AZ facility to Hensel Phelps Construction Co

Contract Overview

Contract Amount: $296,564,454 ($296.6M)

Contractor: Hensel Phelps Construction CO.

Awarding Agency: General Services Administration

Start Date: 2024-09-20

End Date: 2028-12-29

Contract Duration: 1,561 days

Daily Burn Rate: $190.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: NEW AWARD 47PK0124C0011 - DESIGN BUILD SERVICES - NEW DOUGLAS COMMERCIAL LPOE, DOUGLAS, ARIZONA, AZ 85607

Place of Performance

Location: DOUGLAS, COCHISE County, ARIZONA, 85607

State: Arizona Government Spending

Plain-Language Summary

General Services Administration obligated $296.6 million to HENSEL PHELPS CONSTRUCTION CO. for work described as: NEW AWARD 47PK0124C0011 - DESIGN BUILD SERVICES - NEW DOUGLAS COMMERCIAL LPOE, DOUGLAS, ARIZONA, AZ 85607 Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract is a firm-fixed-price definitive contract, providing cost certainty for the government. 3. The project involves design and build services for a commercial facility in Douglas, Arizona. 4. The duration of the contract is over 4 years, indicating a significant, long-term undertaking. 5. The award value of nearly $300 million positions this as a substantial federal construction project.

Value Assessment

Rating: good

Benchmarking the $296.6 million award for design-build services requires comparison to similar large-scale federal construction projects. Given the scope of a commercial facility, the price appears within a reasonable range for a project of this magnitude and complexity. The firm-fixed-price structure helps mitigate cost overruns, which is a positive indicator for value. Further analysis would involve comparing the per-square-foot cost or specific unit costs against similar GSA projects or Department of Defense construction contracts.

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 bids suggests a moderate level of competition for this significant project. A higher number of bidders might typically drive prices lower, but with a firm-fixed-price contract, the focus is on the best value proposal received. The competition level here likely ensured a reasonable price was obtained.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more cost-effective solutions and a wider range of innovative approaches.

Public Impact

The primary beneficiaries are the General Services Administration (GSA) and the federal agencies that will utilize the new Douglas Commercial Land Port of Entry (LPOE). The contract will deliver a new, fully designed and constructed commercial facility, enhancing border security and trade operations. The geographic impact is concentrated in Douglas, Arizona, potentially bringing economic benefits to the local community through job creation and related services. Workforce implications include employment opportunities for construction workers, engineers, architects, and project managers during the design and build phases.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in design-build projects if not managed meticulously.
Ensuring timely completion within the 4+ year timeframe can be challenging for large construction projects.
Coordination between design and construction phases needs robust oversight to prevent conflicts and delays.

Positive Signals

Firm-fixed-price contract provides cost certainty and limits government exposure to cost overruns.
Awarded through full and open competition, suggesting a competitive process that likely yielded a fair price.
The project addresses a critical infrastructure need for border operations in Arizona.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. Federal construction spending, particularly for infrastructure and agency facilities, represents a substantial portion of this market. The GSA's Public Buildings Service is a major player in federal real estate, managing and acquiring space. Comparable spending benchmarks would include other large-scale federal building projects, such as courthouses, agency headquarters, or other port of entry facilities, often valued in the tens to hundreds of millions of dollars.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications specifically mandated for small business set-asides. However, the prime contractor, Hensel Phelps Construction Co., may still engage small businesses as subcontractors to fulfill project needs, contributing to the broader small business ecosystem. The absence of a set-aside means the primary competition was open to all eligible firms, not specifically targeting small business participation.

Oversight & Accountability

Oversight for this contract will likely be managed by the General Services Administration (GSA), specifically its Public Buildings Service. Accountability measures are inherent in the firm-fixed-price contract type, which holds the contractor responsible for delivering the project within the agreed-upon cost. Transparency is typically facilitated through contract award databases and public reporting. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected during the contract's performance or closeout.

Related Government Programs

Federal Building Construction
Port of Entry Infrastructure
GSA Public Buildings Service Projects
Design-Build Contracts
Arizona Federal Projects

Risk Flags

Potential for cost overruns if design is not fully defined upfront.
Risk of schedule delays due to complexity of design-build integration.
Ensuring quality control throughout a large-scale construction project.

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $296.6 million to HENSEL PHELPS CONSTRUCTION CO.. NEW AWARD 47PK0124C0011 - DESIGN BUILD SERVICES - NEW DOUGLAS COMMERCIAL LPOE, DOUGLAS, ARIZONA, AZ 85607

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 $296.6 million.

What is the period of performance?

Start: 2024-09-20. End: 2028-12-29.

What is Hensel Phelps Construction Co.'s track record with large federal design-build contracts?

Hensel Phelps Construction Co. has a significant track record with large federal design-build projects. They have been involved in numerous complex undertakings for agencies like the Department of Defense, GSA, and others. Their experience often includes large-scale infrastructure, aviation facilities, and government buildings. Reviewing their past performance on similar projects, particularly those involving design-build delivery methods and firm-fixed-price contracts, would provide insight into their capability to manage scope, schedule, and budget effectively. Past performance evaluations and any reported issues on previous federal contracts would be key indicators of their reliability for this Douglas, AZ project.

How does the $296.6 million award compare to similar GSA design-build projects?

The $296.6 million award for the Douglas Commercial LPOE design-build project is substantial, placing it among larger federal construction contracts. To benchmark its value, one would compare it against other GSA design-build projects for similar facilities, such as other ports of entry, federal courthouses, or office buildings, particularly those awarded in the last 1-3 years. Factors like geographic location (construction costs vary regionally), project complexity, square footage, and specific functional requirements (e.g., security, technology integration) are crucial for a fair comparison. Without specific comparable project data, it's difficult to definitively state if the price is high or low, but the firm-fixed-price nature and full and open competition suggest a considered value proposition was presented.

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

The primary risks associated with a firm-fixed-price (FFP) design-build contract, while generally favorable to the government for cost control, still carry potential risks. For the contractor, the main risk is underestimating the costs associated with design and construction, potentially leading to reduced profit margins or even losses if unforeseen issues arise that are not covered by contract contingencies or change orders. For the government, the risk lies in the potential for the contractor to cut corners on quality to maintain profitability, or in disputes over scope interpretation if the design is not fully detailed upfront. Robust government oversight, clear contract specifications, and effective change order management are critical to mitigating these risks.

How effective is full and open competition in ensuring value for taxpayer money on large construction projects?

Full and open competition is generally considered a highly effective mechanism for ensuring value for taxpayer money on large construction projects. By allowing all responsible sources to compete, it maximizes the pool of potential bidders, increasing the likelihood of receiving competitive pricing and innovative solutions. This competitive pressure incentivizes contractors to offer their best value proposals to win the contract. While the number of bidders (3 in this case) can influence the intensity of competition, the principle of allowing broad participation is fundamental to achieving fair market prices and preventing monopolies or undue influence. Oversight during the evaluation process is crucial to ensure the lowest price isn't prioritized over overall best value.

What is the historical spending pattern for GSA design-build projects of this scale?

Historical spending patterns for GSA design-build projects of this scale (approaching $300 million) indicate that such awards are significant but not unprecedented. The GSA regularly undertakes large capital construction projects to meet federal real estate needs. Spending in this category fluctuates based on agency requirements, infrastructure modernization initiatives, and budget allocations. Analyzing historical data would reveal trends in award values, typical durations, and the prevalence of design-build versus other contracting methods. It would also highlight which regions or types of facilities (like ports of entry) have seen consistent investment. This specific award aligns with the GSA's ongoing mission to provide and manage federal facilities.

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: 47PK0124R0001

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Hensel Phelps Construction CO

Address: 3125 E WOOD ST, 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: $296,564,454

Exercised Options: $296,564,454

Current Obligation: $296,564,454

Actual Outlays: $21,495,397

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline