DOJ's $151M USP Hazelton design-build contract awarded to Hensel Phelps Construction Co. for $190.7M

Contract Overview

Contract Amount: $190,691,000 ($190.7M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Justice

Start Date: 2009-09-11

End Date: 2012-12-25

Contract Duration: 1,201 days

Daily Burn Rate: $158.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: 151003 - DESIGN-BUILD CONSTRUCTION OF UNITED STATES PENITENTIARY (USP) HAZELTON, WV

Place of Performance

Location: BRUCETON MILLS, PRESTON County, WEST VIRGINIA, 26525

State: West Virginia Government Spending

Plain-Language Summary

Department of Justice obligated $190.7 million to HENSEL PHELPS CONSTRUCTION CO for work described as: 151003 - DESIGN-BUILD CONSTRUCTION OF UNITED STATES PENITENTIARY (USP) HAZELTON, WV Key points: 1. The final award amount exceeded the initial estimate by approximately 26%, indicating potential cost overruns or scope changes. 2. The contract was awarded using full and open competition, suggesting a robust bidding process. 3. The firm-fixed-price contract type shifts most of the cost risk to the contractor. 4. The project duration of 1201 days (over 3 years) is substantial for a construction project. 5. The project falls under Commercial and Institutional Building Construction, a broad category with varying market dynamics. 6. The contractor, Hensel Phelps Construction Co., has a significant track record in large-scale construction projects.

Value Assessment

Rating: fair

The final award of $190.7 million for the design-build construction of USP Hazelton appears to be on the higher end when considering the initial estimate. While firm-fixed-price contracts aim to control costs, the significant difference between the initial estimate and the final award warrants scrutiny. Benchmarking against similar federal prison construction projects would be necessary for a more precise value-for-money assessment. The complexity of design-build projects can also contribute to cost variations.

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 data shows 5 bids were received, suggesting a reasonable level of competition for this large-scale construction project. A healthy number of bidders generally leads to more competitive pricing and better value for the government.

Taxpayer Impact: The full and open competition likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition award. The presence of multiple bids helps ensure that the government is not overpaying for the construction services.

Public Impact

The primary beneficiaries are the Federal Prison System / Bureau of Prisons, which will gain a new or improved correctional facility. The project delivers design and construction services for a United States Penitentiary. The geographic impact is concentrated in Hazelton, West Virginia, potentially creating local jobs during the construction phase. The construction workforce in West Virginia and surrounding areas may see employment opportunities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The final award significantly exceeded the initial estimate, raising concerns about cost control and budgeting accuracy.
The long project duration could introduce risks related to material cost fluctuations and labor availability.
The complexity of a design-build project for a federal penitentiary may present unforeseen challenges.

Positive Signals

The use of a firm-fixed-price contract transfers significant cost risk to the contractor.
Awarding under full and open competition suggests a competitive bidding process that should yield fair pricing.
The contractor, Hensel Phelps Construction Co., is a reputable firm with experience in large federal projects.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. Federal construction projects, particularly for correctional facilities, often involve specialized requirements and stringent security protocols. The market for such projects is competitive, with established firms like Hensel Phelps often bidding. Comparable spending benchmarks would typically be derived from other large-scale federal building projects, considering factors like square footage, security features, and location.

Small Business Impact

The data indicates that small business participation was not a primary set-aside criterion for this contract (ss: false, sb: false). While Hensel Phelps is a large prime contractor, there may be subcontracting opportunities for small businesses within the construction trades. The extent of small business subcontracting would need to be reviewed in the contract's performance details to assess its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this project would typically be managed by the Bureau of Prisons' facilities division, with potential involvement from the Department of Justice's Office of the Inspector General. Transparency is generally maintained through contract award notices and performance reports. Accountability measures are inherent in the firm-fixed-price contract, where the contractor is responsible for delivering the project within the agreed-upon cost and schedule.

Related Government Programs

Federal Prison Construction
Design-Build Contracts
Bureau of Prisons Facilities
Large-Scale Construction Projects
Commercial Building Construction

Risk Flags

Cost Overrun Potential
Schedule Delay Risk
Design Complexity
Site-Specific Conditions
Security Requirement Adherence

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $190.7 million to HENSEL PHELPS CONSTRUCTION CO. 151003 - DESIGN-BUILD CONSTRUCTION OF UNITED STATES PENITENTIARY (USP) HAZELTON, WV

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS CONSTRUCTION CO.

Which agency awarded this contract?

Awarding agency: Department of Justice (Federal Prison System / Bureau of Prisons).

What is the total obligated amount?

The obligated amount is $190.7 million.

What is the period of performance?

Start: 2009-09-11. End: 2012-12-25.

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

Hensel Phelps Construction Co. has a substantial track record in executing large-scale federal construction projects, including correctional facilities, courthouses, and military installations. Their experience often involves complex design-build delivery methods, similar to the USP Hazelton project. Analyzing their past performance on projects of comparable size and complexity, including any reported cost overruns or schedule delays, would provide further insight into their capabilities and reliability for this specific contract. Publicly available contract databases and agency performance reviews can offer details on their project history and client satisfaction.

How does the final award amount compare to the initial estimate and industry benchmarks for similar facilities?

The final award of $190.7 million for USP Hazelton exceeded the initial estimate by approximately 26%. This variance suggests potential scope changes, unforeseen site conditions, or market fluctuations in material and labor costs between the estimation and award phases. To benchmark this value, one would compare the cost per square foot or cost per bed capacity against recently completed federal penitentiaries of similar size and security levels. Without specific benchmark data for comparable facilities, it is difficult to definitively state if the price was competitive, but the significant increase from the estimate warrants further investigation into the factors driving the higher cost.

What were the primary risk factors identified during the bidding process, and how were they mitigated?

For a design-build federal penitentiary project, primary risk factors likely included design complexity, site-specific geological or environmental conditions, security requirements, material procurement challenges, and labor availability. Given the firm-fixed-price nature of the contract, the primary risk mitigation strategy was to transfer these risks to the contractor, Hensel Phelps. The bidding process would have involved detailed technical proposals and cost breakdowns, allowing the agency to assess the contractor's understanding of these risks and their proposed mitigation plans. The number of bids received (5) suggests that contractors found the risk profile manageable within the contract terms.

How effective has the Bureau of Prisons been in managing large design-build construction contracts historically?

The Bureau of Prisons (BOP) has a history of managing large design-build construction contracts, with varying degrees of success. While design-build can offer efficiencies, it also requires robust oversight to ensure the design meets all operational and security needs while staying within budget and schedule. Historical performance reviews and Inspector General reports for BOP construction projects can provide insights into common challenges, such as cost overruns, schedule delays, and issues related to contractor performance or oversight. The effectiveness often depends on the agency's internal project management capacity, the clarity of contract requirements, and the diligence of oversight personnel.

What are the historical spending patterns for federal prison construction, and how does this contract fit within that trend?

Historical spending on federal prison construction has fluctuated based on federal inmate population trends, legislative mandates, and budget appropriations. Periods of increasing inmate populations often drive demand for new facilities or expansions. Large design-build projects like USP Hazelton represent significant capital investments. This contract, awarded in 2009 and completed in 2012, falls within a period where the federal prison system was managing a substantial inmate population. Analyzing overall BOP capital expenditure trends during that era would contextualize the scale and significance of this particular project within broader federal correctional infrastructure development.

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: RFP-X00-0575

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4437 BROOKFIELD CORP DR, CHANTILLY, VA, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $190,691,000

Exercised Options: $190,691,000

Current Obligation: $190,691,000

Timeline