DoD's $26.7M construction management contract with Markon LLC shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $26,723,385 ($26.7M)

Contractor: Markon LLC

Awarding Agency: Department of Defense

Start Date: 2018-06-12

End Date: 2023-09-30

Contract Duration: 1,936 days

Daily Burn Rate: $13.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::CL::IGF WASHINGTON HEADQUARTERS SERVICES FACILITY SERVICES DIRECTORATE ENGINEERING AND CONSTRUCTION DIVISION AND SITE R CONSTRUCTION MANAGEMENT TECHNICAL SUPPORT SERVICES

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to MARKON LLC for work described as: IGF::CL::IGF WASHINGTON HEADQUARTERS SERVICES FACILITY SERVICES DIRECTORATE ENGINEERING AND CONSTRUCTION DIVISION AND SITE R CONSTRUCTION MANAGEMENT TECHNICAL SUPPORT SERVICES Key points: 1. Contract value appears reasonable given the scope of construction management and technical support. 2. Competition was limited, suggesting potential for higher pricing than a fully open market. 3. Performance risk appears low due to the firm-fixed-price structure. 4. Contract duration of nearly 4 years provides stability for project execution. 5. This contract fits within the broader DoD infrastructure and facilities management sector. 6. No small business set-aside was utilized, impacting potential for small business participation.

Value Assessment

Rating: good

The contract's total value of $26.7 million over approximately four years for construction management and technical support services appears to be within a reasonable range for federal projects of this nature. Benchmarking against similar large-scale construction management contracts for federal agencies suggests that the pricing structure, being firm-fixed-price, helps control costs. While specific cost breakdowns are not provided, the overall expenditure seems aligned with industry standards for managing complex facility projects.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while the initial solicitation was broad, certain sources were excluded before the final award. This suggests a more restricted competition than a truly open process. The number of bidders is not specified, but the limited nature of the competition could potentially lead to less aggressive pricing compared to a scenario with numerous qualified bidders vying for the contract.

Taxpayer Impact: The limited competition may mean taxpayers did not benefit from the lowest possible price that could have been achieved through a wider bidding process. This could translate to a less efficient use of public funds if alternative, more competitive avenues were available.

Public Impact

The Department of Defense benefits from professional construction management and technical support for its facilities. Services delivered include oversight and management of construction projects, ensuring adherence to timelines and budgets. The geographic impact is primarily within the Washington Headquarters Services area. The contract supports a workforce of construction managers, engineers, and technical specialists.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have restricted price discovery.
Exclusion of sources prior to award warrants further investigation into the rationale.
Lack of small business set-aside could limit opportunities for smaller firms.

Positive Signals

Firm-fixed-price contract type helps control costs and manage budget.
Long contract duration provides continuity for critical facility projects.
Awarded to a single contractor (Markon LLC) suggests a focused relationship for service delivery.

Sector Analysis

This contract falls within the broader construction and facilities management sector, which is a significant area of federal spending. The market for construction management services is competitive, with many firms offering specialized expertise. Federal agencies, particularly large ones like the Department of Defense, frequently contract for these services to manage their extensive real estate portfolios and construction projects. Comparable spending benchmarks would involve looking at other large federal construction management contracts, which often run into tens or hundreds of millions of dollars.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract are likely limited to subcontracting roles, if any are mandated by the prime contractor. The absence of a set-aside may reduce the direct impact on the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Washington Headquarters Services (WHS) Directorate. Accountability measures are embedded within the firm-fixed-price contract structure, which incentivizes the contractor to meet performance standards within the agreed-upon budget. Transparency is generally maintained through contract award databases, though detailed performance metrics may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Facilities Management
Federal Construction Projects
Construction Management Services
Washington Headquarters Services Contracts

Risk Flags

Limited competition procurement method
Exclusion of sources in competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to MARKON LLC. IGF::CL::IGF WASHINGTON HEADQUARTERS SERVICES FACILITY SERVICES DIRECTORATE ENGINEERING AND CONSTRUCTION DIVISION AND SITE R CONSTRUCTION MANAGEMENT TECHNICAL SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is MARKON LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Washington Headquarters Services).

What is the total obligated amount?

The obligated amount is $26.7 million.

What is the period of performance?

Start: 2018-06-12. End: 2023-09-30.

What is the track record of Markon LLC in performing similar federal construction management contracts?

Markon LLC has a history of performing federal contracts, including those related to construction management and technical support. A review of federal procurement data indicates they have been awarded numerous contracts across various agencies, including the Department of Defense, General Services Administration, and others. Their experience often involves project management, cost estimating, and construction oversight. While specific performance ratings for this particular contract are not detailed here, their broader federal contracting history suggests a capacity to handle such requirements. Further analysis would involve examining past performance evaluations and any reported issues on previous contracts to fully assess their track record.

How does the value of this contract compare to similar construction management contracts awarded by the Department of Defense?

The $26.7 million value for this contract, spanning nearly four years, positions it as a mid-to-large-sized federal construction management engagement. When compared to similar contracts for large-scale facility management and construction oversight within the DoD, this figure appears to be within a typical range. For instance, other contracts for base realignments, major facility upgrades, or new construction management support can range from tens to hundreds of millions of dollars, depending on the project's complexity, duration, and scope. The firm-fixed-price nature also suggests a degree of cost certainty that is often sought in comparable DoD procurements.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential cost overruns if the scope expands beyond initial estimates (though mitigated by the firm-fixed-price structure), performance issues leading to project delays or quality defects, and risks related to the limited competition. The firm-fixed-price contract type is a key mitigation strategy, placing the financial risk of cost overruns on the contractor, Markon LLC. Performance risk is managed through contract oversight, defined deliverables, and potential penalties for non-performance. The limited competition risk, which could lead to suboptimal pricing, is inherent in the procurement method chosen and is less directly mitigated within the contract itself, relying more on the initial solicitation and evaluation process.

How effective has this contract been in delivering construction management and technical support services for the Washington Headquarters Services?

Assessing the effectiveness of this contract requires detailed performance data, which is not fully available in the provided summary. However, the contract's duration (nearly four years) and its firm-fixed-price nature suggest an intent to ensure consistent service delivery and cost control. The fact that it was awarded and executed implies that Markon LLC has met the initial requirements. Effectiveness would be measured by project completion on time and within budget, quality of work, adherence to specifications, and overall client satisfaction from the Washington Headquarters Services. Without specific performance metrics or feedback, a definitive judgment on effectiveness remains qualitative.

What are the historical spending patterns for construction management services by the Washington Headquarters Services or similar DoD entities?

Historical spending patterns for construction management services by the Washington Headquarters Services and similar Department of Defense entities show a consistent and significant investment in maintaining and upgrading federal facilities. Agencies like WHS regularly procure these services to manage a vast portfolio of buildings and infrastructure. Spending can fluctuate based on major construction initiatives, base realignments, or deferred maintenance backlogs. Over the past decade, federal spending on construction management has remained substantial, often in the billions annually across the entire DoD, reflecting the ongoing need for facility modernization and upkeep. This specific contract represents a portion of that broader spending trend.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ003417R0028

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 400 S MAPLE AVE STE 230, FALLS CHURCH, VA, 22046

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

Financial Breakdown

Contract Ceiling: $26,723,385

Exercised Options: $26,723,385

Current Obligation: $26,723,385

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ003417D0016

IDV Type: IDC

Timeline