DoD's $99M Saudi Arabia facilities contract awarded to Gilbane Federal shows strong competition

Contract Overview

Contract Amount: $98,924,252 ($98.9M)

Contractor: Gilbane Federal

Awarding Agency: Department of Defense

Start Date: 2018-04-16

End Date: 2021-10-12

Contract Duration: 1,275 days

Daily Burn Rate: $77.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF:CL: IGF FFP/SATOC SAUDI ARABIA DESIGN-BUILD FACILITIES-KING ABDULAZIZ AB-DHAHRAN

Plain-Language Summary

Department of Defense obligated $98.9 million to GILBANE FEDERAL for work described as: IGF:CL: IGF FFP/SATOC SAUDI ARABIA DESIGN-BUILD FACILITIES-KING ABDULAZIZ AB-DHAHRAN Key points: 1. Contract awarded under full and open competition, indicating a robust bidding process. 2. The contract value of approximately $99 million suggests a significant project scope. 3. The duration of 1275 days points to a long-term commitment for construction services. 4. The firm-fixed-price contract type shifts risk to the contractor, potentially stabilizing costs. 5. The project is located in Saudi Arabia, highlighting international defense infrastructure efforts. 6. The award to Gilbane Federal, a known entity, suggests a focus on experienced contractors.

Value Assessment

Rating: good

The contract value of $98.9 million for design-build facilities in Saudi Arabia appears reasonable given the scope and duration. Benchmarking against similar international construction projects for defense infrastructure is challenging due to unique geopolitical and logistical factors. However, the firm-fixed-price structure suggests that the initial bid was considered competitive and that cost overruns are primarily the contractor's responsibility. The number of bids received (3) indicates a degree of competition, which typically drives better pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. Three bids were received, indicating a healthy level of interest and competition for this significant international construction project. The presence of multiple bidders suggests that the government had a range of options to choose from, which generally leads to more competitive pricing and better value for the taxpayer.

Taxpayer Impact: The full and open competition for this contract is beneficial for taxpayers as it likely resulted in a more competitive bid and a better overall price for the construction services. The government was able to leverage market forces to secure a favorable outcome.

Public Impact

The primary beneficiaries are the U.S. Department of the Air Force, which will receive upgraded or new facilities in Saudi Arabia. The services delivered include design and construction of facilities, crucial for supporting military operations and personnel. The geographic impact is concentrated in Saudi Arabia, specifically at King Abdulaziz Air Base in Dhahran. Workforce implications include employment opportunities for construction workers, engineers, and project managers, both locally and potentially from the U.S.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Geopolitical risks associated with performing construction in Saudi Arabia.
Potential for unforeseen logistical challenges in a foreign deployment.
Contractor performance risks inherent in large-scale design-build projects.

Positive Signals

Firm-fixed-price contract structure mitigates cost escalation risk for the government.
Award to an established federal contractor like Gilbane Federal suggests a degree of confidence in their capabilities.
Full and open competition indicates a thorough vetting of potential bidders.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on defense infrastructure. The global market for defense construction is substantial, driven by geopolitical needs and military modernization efforts. Projects of this nature often involve complex logistical coordination, adherence to stringent security protocols, and specialized design requirements. Comparable spending benchmarks are difficult to establish precisely due to the unique international location and specific military requirements, but large-scale design-build projects for government entities typically represent significant investments.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). There is no explicit information regarding subcontracting plans for small businesses within this data. Therefore, the direct impact on the small business ecosystem is likely minimal unless Gilbane Federal voluntarily engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting and project management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring the contractor to deliver specified facilities within the agreed-upon price and schedule. Transparency is generally maintained through contract award databases and reporting requirements, though specific project oversight details are often internal.

Related Government Programs

Defense Base Realignment and Closure (BRAC)
Foreign Military Sales (FMS) infrastructure support
U.S. Army Corps of Engineers construction projects
Naval Facilities Engineering Command (NAVFAC) contracts

Risk Flags

Geopolitical Risk
Logistical Complexity
International Operations
Large-Scale Construction

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $98.9 million to GILBANE FEDERAL. IGF:CL: IGF FFP/SATOC SAUDI ARABIA DESIGN-BUILD FACILITIES-KING ABDULAZIZ AB-DHAHRAN

Who is the contractor on this award?

The obligated recipient is GILBANE FEDERAL.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $98.9 million.

What is the period of performance?

Start: 2018-04-16. End: 2021-10-12.

What is Gilbane Federal's track record with similar international design-build projects for the Department of Defense?

Gilbane Federal has a significant history of executing large-scale design-build projects for the Department of Defense, both domestically and internationally. While specific details on prior Saudi Arabian projects are not provided in this data snippet, the company has a proven track record in constructing complex facilities in challenging environments. Their experience often includes managing logistics, security, and local labor in overseas operations. A deeper dive into their contract history would reveal the scale and type of previous international assignments, providing further context on their capabilities and performance in similar geopolitical settings. This contract's success would build upon that established foundation.

How does the $98.9 million contract value compare to similar international defense construction projects?

Benchmarking the $98.9 million contract value against similar international defense construction projects is complex due to variations in project scope, location, security requirements, and market conditions. However, for a design-build project involving significant facilities construction in a foreign country, this value is substantial but not necessarily outside the typical range for major defense infrastructure. Projects of this scale often require extensive planning, specialized materials, and robust logistical support, all of which contribute to the overall cost. The firm-fixed-price nature suggests that this was the agreed-upon ceiling cost after competitive bidding, implying it was deemed a fair market price at the time of award.

What are the primary risks associated with executing this design-build contract in Saudi Arabia?

Executing this design-build contract in Saudi Arabia presents several key risks. Geopolitical instability and evolving regional security dynamics are primary concerns, potentially impacting personnel safety and project continuity. Logistical challenges are significant, including importing materials, equipment, and personnel, navigating customs regulations, and ensuring secure transportation within the country. Labor relations and availability of skilled local workforce can also pose risks. Furthermore, cultural differences and adherence to local building codes and environmental regulations require careful management. Finally, currency exchange rate fluctuations could impact costs if not adequately hedged.

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 like this, as it shifts the primary cost-control risk to the contractor, Gilbane Federal. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently and avoid cost overruns. For the government, this provides cost certainty, assuming the initial price was competitive. However, if the contractor underestimated costs or encountered unforeseen issues, they bear the financial burden, which could potentially lead to disputes or quality compromises if not managed carefully.

What is the historical spending pattern for similar facilities construction contracts by the Department of the Air Force in the Middle East?

Historical spending patterns for similar facilities construction contracts by the Department of the Air Force in the Middle East show a consistent need for infrastructure development and upgrades to support U.S. military presence in the region. Spending levels can fluctuate based on geopolitical events, strategic realignments, and specific operational requirements. Contracts often range from tens to hundreds of millions of dollars, depending on the scale and complexity of the facilities required, such as airfields, barracks, maintenance depots, and command centers. The Air Force frequently utilizes both firm-fixed-price and cost-plus contract types, with a tendency towards FFP for well-defined construction scopes to ensure cost predictability.

What does the number of bidders (3) suggest about the market for large-scale defense construction in Saudi Arabia?

The fact that three bids were received for this significant design-build contract suggests a moderately competitive market for large-scale defense construction in Saudi Arabia. While three bidders indicate that the opportunity was known and attractive enough for multiple firms to invest in preparing proposals, it is not indicative of an intensely competitive landscape where numerous companies vie for the work. This level of competition is generally sufficient to drive reasonable pricing and ensure the government has viable options. However, a higher number of bidders might have potentially led to even more aggressive pricing and a wider selection of innovative solutions.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Gilbane AECOM JV

Address: 2730 SHADELANDS DR # 100, WALNUT CREEK, CA, 94598

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Small Business, Small Disadvantaged Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business

Financial Breakdown

Contract Ceiling: $98,924,252

Exercised Options: $98,924,252

Current Obligation: $98,924,252

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA300208D0008

IDV Type: IDC

Timeline