California DOT highway reconstruction contract awarded to Mercer, Fraser Company for over $41.6 million

Contract Overview

Contract Amount: $41,646,220 ($41.6M)

Contractor: Mercer, Fraser Company

Awarding Agency: Department of Transportation

Start Date: 2017-05-08

End Date: 2020-08-31

Contract Duration: 1,211 days

Daily Burn Rate: $34.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CA FLAP SR36(13) STATE ROUTE 36 HUMBOLDT COUNTY IGF::CT::IGF RECONSTRUCTION OF 4.4 MILES OF HIGHWAY ON STATE ROUTE 36

Place of Performance

Location: ARCATA, HUMBOLDT County, CALIFORNIA, 95518

State: California Government Spending

Plain-Language Summary

Department of Transportation obligated $41.6 million to MERCER, FRASER COMPANY for work described as: CA FLAP SR36(13) STATE ROUTE 36 HUMBOLDT COUNTY IGF::CT::IGF RECONSTRUCTION OF 4.4 MILES OF HIGHWAY ON STATE ROUTE 36 Key points: 1. Contract value appears reasonable for the scope of work, involving significant highway reconstruction. 2. Full and open competition suggests a potentially competitive bidding environment. 3. Contract duration of over three years indicates a substantial, long-term project. 4. Project is located in Humboldt County, California, impacting local infrastructure. 5. Firm fixed-price contract type helps mitigate cost overrun risks for the government. 6. The contractor, Mercer, Fraser Company, has a history of performing large-scale construction projects.

Value Assessment

Rating: good

The contract value of approximately $41.6 million for reconstructing 4.4 miles of State Route 36 in Humboldt County, California, seems aligned with the scale of the project. Benchmarking against similar federal highway reconstruction projects of comparable mileage and complexity would provide a more precise value-for-money assessment. However, given the scope, the price appears to be within a reasonable range for a firm fixed-price contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of two bidders suggests a moderate level of competition for this project. While more bidders could potentially drive prices lower, two offers in a specialized construction field like highway reconstruction can still lead to a competitive outcome, especially with a firm fixed-price structure.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging multiple companies to bid, which can lead to more favorable pricing and better resource allocation for infrastructure projects.

Public Impact

Residents and commuters in Humboldt County, California, will benefit from improved highway infrastructure. The project delivers essential reconstruction services for 4.4 miles of State Route 36. The geographic impact is localized to Humboldt County, enhancing regional transportation. The project likely supports local construction jobs and related industries in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for delays impacting local traffic and commerce.
Weather-related disruptions are a common risk in large-scale construction projects.
Ensuring compliance with environmental regulations during reconstruction.

Positive Signals

Firm fixed-price contract limits government financial exposure.
Full and open competition suggests a robust bidding process.
Project addresses critical infrastructure needs, enhancing safety and efficiency.

Sector Analysis

This contract falls within the Highway, Street, and Bridge Construction sector, a significant segment of the broader construction industry. Federal spending in this area is crucial for maintaining and upgrading the nation's transportation network. Comparable projects often involve substantial investments, and the value of this contract aligns with typical expenditures for major highway rehabilitation efforts.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside provisions. Therefore, the direct impact on small business set-asides appears minimal. However, the prime contractor, Mercer, Fraser Company, may engage small businesses as subcontractors for specialized services or materials, contributing indirectly to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Federal Highway Administration (FHWA) and the California Department of Transportation (Caltrans). Mechanisms likely include regular progress reports, site inspections, and adherence to contract specifications. Transparency is generally maintained through contract award databases and public reporting of federal spending. Inspector General jurisdiction would apply if fraud or mismanagement were suspected.

Related Government Programs

Federal Highway Administration Grants
State Transportation Improvement Programs
National Highway System Projects

Risk Flags

Potential for cost overruns if unforeseen conditions arise.
Risk of project delays due to weather or logistical issues.
Ensuring contractor compliance with quality and safety standards throughout the project lifecycle.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $41.6 million to MERCER, FRASER COMPANY. CA FLAP SR36(13) STATE ROUTE 36 HUMBOLDT COUNTY IGF::CT::IGF RECONSTRUCTION OF 4.4 MILES OF HIGHWAY ON STATE ROUTE 36

Who is the contractor on this award?

The obligated recipient is MERCER, FRASER COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Highway Administration).

What is the total obligated amount?

The obligated amount is $41.6 million.

What is the period of performance?

Start: 2017-05-08. End: 2020-08-31.

What is the track record of Mercer, Fraser Company with federal contracts, particularly with the Department of Transportation?

Mercer, Fraser Company has a history of performing large-scale construction projects, including significant work on highways and bridges. While specific details on their federal contract history with the Department of Transportation require deeper database analysis, their involvement in a project of this magnitude suggests they possess the necessary experience and capacity. Reviewing past performance evaluations and any past performance issues would provide a more comprehensive understanding of their reliability and effectiveness in executing federal projects. Their ability to secure this contract under full and open competition also implies a satisfactory track record.

How does the cost per mile of this reconstruction project compare to national averages for similar federal highway projects?

The contract value of $41,646,219.76 for 4.4 miles of reconstruction equates to approximately $9.46 million per mile. National averages for highway reconstruction can vary significantly based on factors like terrain, complexity of work (e.g., widening, bridge repair), materials used, and labor costs. However, for major reconstruction projects, costs can range from $5 million to over $15 million per mile. This project's cost per mile appears to be within the mid-to-higher end of this range, suggesting it may be a complex or costly undertaking, potentially due to specific engineering challenges in Humboldt County or the scope of the reconstruction.

What are the primary risks associated with a multi-year, firm-fixed-price highway reconstruction contract?

The primary risks for a firm-fixed-price contract of this duration (over three years) include potential cost increases for the contractor due to unforeseen material price escalations or labor shortages, which they must absorb. For the government, risks include potential delays impacting the project timeline, which can disrupt traffic and commerce, and the possibility that the fixed price might not reflect the absolute best value if market conditions change drastically. Contractor performance risk is also present, where the quality of work might be compromised to maintain profitability, necessitating robust oversight. Environmental factors and unexpected subsurface conditions are also significant risks in large-scale construction.

What is the expected impact of this project on local employment and the regional economy in Humboldt County?

This reconstruction project is expected to have a positive impact on local employment and the regional economy in Humboldt County. Large-scale infrastructure projects typically require a significant workforce, including skilled laborers, engineers, project managers, and support staff. Mercer, Fraser Company will likely hire locally or draw from the surrounding region to staff the project. Furthermore, the project will stimulate economic activity through the procurement of local materials, equipment rentals, and services from local businesses, creating a multiplier effect within the Humboldt County economy.

How does the competition level (2 bidders) for this contract potentially affect the final price and value for taxpayers?

A competition level of two bidders for this contract suggests a moderate level of competition. While more bidders generally lead to greater price pressure and potentially lower costs for taxpayers, two offers can still result in a competitive price, especially under a firm fixed-price contract. The government can leverage the bids against each other to negotiate a favorable outcome. However, a lower number of bidders might indicate barriers to entry, such as specialized equipment or experience requirements, or a limited number of qualified contractors in the region. This could mean taxpayers are not realizing the full potential savings that a more robustly competitive market might offer.

What are the key performance indicators (KPIs) likely used to measure the success of this highway reconstruction project?

Key performance indicators for this highway reconstruction project would likely include adherence to the project schedule and completion by the specified deadline (August 31, 2020). Meeting quality standards for materials and workmanship, as defined in the contract specifications, is crucial. Cost control, ensuring the project stays within the firm fixed price, is another critical KPI. Safety performance, measured by incident rates and compliance with safety regulations, is paramount. Finally, minimizing disruption to local traffic and the public during construction, and ensuring the final reconstructed highway meets or exceeds performance and durability expectations, would also be key indicators of success.

Industry Classification

NAICS: Construction › Highway, Street, and Bridge Construction › Highway, Street, and Bridge Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: DTFH6817B00004

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 77 W 2ND ST, EUREKA, CA, 95501

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

Financial Breakdown

Contract Ceiling: $41,646,220

Exercised Options: $41,646,220

Current Obligation: $41,646,220

Actual Outlays: $16,105,971

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline