Naval Facilities Engineering Command awarded $326M construction contract to HSG Technischer Service GmbH for building construction in Italy

Contract Overview

Contract Amount: $13,531,295 ($13.5M)

Contractor: HSG Technischer Service Gmbh

Awarding Agency: Department of Defense

Start Date: 2001-08-02

End Date: 2008-05-05

Contract Duration: 2,468 days

Daily Burn Rate: $5.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE

Sector: Construction

Official Description: 200111!067641!1700!C3191 !NAVAL FACILITIES ENGINEERING COM!N3319101C0410 !A!N!*!N! !20010802!20050522!322632597!326888781!315730929!N!HSG PHILIPP HOLZMANN TECHNISCH!AN DER GEHESPITZ 50 !NEU ISENBURG !GM!* !* !* !IT!* !* !ITALY !+000015436596!N!N!000000000000!Y199!OTHER MISCELLANEOUS BUILDINGS !C2 !CONSTRUCTION !3000!NOT DISCERNABLE OR CLASSIFIED !233320!*!*!3! ! ! !*!*!*!B!*!*!B! !A !N!J!2!002!A! !Z!N!Z!B !GM!N!L!N! ! ! ! ! !A!A!000!A!B!N! ! ! ! ! ! !0001!

Plain-Language Summary

Department of Defense obligated $13.5 million to HSG TECHNISCHER SERVICE GMBH for work described as: 200111!067641!1700!C3191 !NAVAL FACILITIES ENGINEERING COM!N3319101C0410 !A!N!*!N! !20010802!20050522!322632597!326888781!315730929!N!HSG PHILIPP HOLZMANN TECHNISCH!AN DER GEHESPITZ 50 !NEU ISENBURG !GM!* !* !* !IT!* !* … Key points: 1. Contract value of $326.9M for building construction services. 2. Awarded to a single contractor, HSG Technischer Service GmbH. 3. Contract duration of approximately 6.7 years. 4. Fixed-price contract type suggests potential for cost overruns if scope changes. 5. Services provided under the 'Industrial Building Construction' NAICS code. 6. Geographic location of service delivery is Italy.

Value Assessment

Rating: fair

The contract value of $326.9 million for industrial building construction over nearly seven years appears substantial. Benchmarking this against similar large-scale construction projects for military facilities in overseas locations would be necessary for a precise value-for-money assessment. The fixed-price nature of the contract, while common, carries inherent risks if unforeseen issues arise during construction that necessitate scope adjustments or additional funding. Without detailed cost breakdowns or comparisons to industry standards for similar projects, it is difficult to definitively assess the pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of two bids suggests a competitive process, though the exact number of interested parties and the rigor of the competition are not fully detailed. A competitive process generally aims to secure the best value for the government by encouraging multiple firms to offer their most competitive pricing and technical solutions.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is intended to drive down prices through market forces and ensure the government receives a fair deal.

Public Impact

The primary beneficiaries are likely military personnel and their families stationed in Italy who will utilize the constructed facilities. The contract delivers essential industrial building construction services, contributing to infrastructure development. The geographic impact is concentrated in Italy, supporting U.S. military presence and operations abroad. Workforce implications could include employment opportunities for both U.S. and local Italian labor in the construction sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (nearly 7 years) increases the risk of cost escalation due to inflation or unforeseen construction challenges.
Fixed-price contract type can lead to increased costs for the government if the scope of work expands or if the contractor encounters unexpected difficulties.
Performance in a foreign country (Italy) may introduce logistical complexities and potential delays.
Limited information on the specific type of industrial buildings constructed makes it difficult to assess the complexity and associated risks.

Positive Signals

Awarded through full and open competition, suggesting a potentially competitive pricing environment.
The contractor, HSG Technischer Service GmbH, has secured a significant contract, indicating a level of capability and trust from the awarding agency.
The contract addresses a clear need for infrastructure development, supporting military operations.

Sector Analysis

This contract falls within the Construction sector, specifically Industrial Building Construction (NAICS 236210). The global construction market is vast, with significant government spending allocated to infrastructure projects, including those for defense and military installations. This contract represents a substantial investment within this sub-sector, likely contributing to the modernization or expansion of U.S. military facilities abroad. Comparable spending benchmarks would involve analyzing other large-scale construction contracts awarded by the Department of Defense or other government agencies for similar types of facilities in international locations.

Small Business Impact

There is no indication that this contract included a small business set-aside. The contractor is HSG Technischer Service GmbH, which is likely a larger entity given the contract's value. Subcontracting opportunities for small businesses may exist, but this information is not detailed in the provided data. The impact on the small business ecosystem is likely minimal unless significant subcontracting roles are specifically allocated to them.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Naval Facilities Engineering Command. Accountability measures are typically embedded within the contract terms, including performance standards, delivery schedules, and payment milestones. Transparency is generally facilitated through contract award databases, though detailed project progress and financial oversight reports may not be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Construction
Base Realignment and Closure (BRAC) projects
Overseas Military Facility Support
Department of Defense Construction Contracts
Naval Facilities Engineering Command Projects

Risk Flags

Long-term fixed-price contract risk
Overseas construction complexities
Potential for cost overruns
Limited competition (2 bidders)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.5 million to HSG TECHNISCHER SERVICE GMBH. 200111!067641!1700!C3191 !NAVAL FACILITIES ENGINEERING COM!N3319101C0410 !A!N!*!N! !20010802!20050522!322632597!326888781!315730929!N!HSG PHILIPP HOLZMANN TECHNISCH!AN DER GEHESPITZ 50 !NEU ISENBURG !GM!* !* !* !IT!* !* !ITALY !+000015436596!N!N!000000000000!Y199!OTHER MISCELLANEOUS BUILDINGS !C2 !CONSTRUCTION !3000!NOT DISCERNABLE OR CLASSIFIED !233320!*!*!3! ! ! !*!*!*!B!*!*!B!

Who is the contractor on this award?

The obligated recipient is HSG TECHNISCHER SERVICE GMBH.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $13.5 million.

What is the period of performance?

Start: 2001-08-02. End: 2008-05-05.

What is the specific nature and purpose of the industrial buildings being constructed in Italy under this contract?

The provided data identifies the NAICS code as 'Industrial Building Construction' (236210) and the Public Service Code (PSC) as 'C2' (CONSTRUCTION). However, it does not specify the exact type or purpose of these industrial buildings. They could range from maintenance facilities, storage depots, workshops, or other specialized structures required for military operations or support functions in Italy. Further investigation into the contract's statement of work or related documentation would be necessary to determine the precise nature and intended use of these facilities.

How does the awarded value of $326.9 million compare to similar industrial building construction contracts awarded by the Department of the Navy in overseas locations?

Benchmarking this contract's value requires access to a database of comparable projects. Generally, a contract of this magnitude for industrial building construction in a foreign location suggests a significant undertaking. Factors influencing its value would include the scale of the project, complexity of design, material costs, labor rates in Italy, logistical challenges of operating overseas, and the specific security requirements for a military facility. Without specific comparable contract data, it's difficult to definitively state if $326.9 million represents a high, low, or average cost for such a project. However, large-scale construction projects for military infrastructure often involve substantial budgets.

What are the potential risks associated with a fixed-price contract of this duration (nearly 7 years) for construction in Italy?

A fixed-price contract, especially one spanning nearly seven years, carries inherent risks for both the government and the contractor. For the government, the primary risk is that the fixed price may become uncompetitive if market conditions change significantly (e.g., material costs escalate, labor rates increase) or if unforeseen site conditions or design changes necessitate scope adjustments. The contractor bears the risk of cost overruns if their initial estimates prove inaccurate due to poor planning, unexpected technical challenges, or inefficient execution. For a long-duration project in a foreign country like Italy, risks also include currency fluctuations, changes in local regulations, geopolitical instability, and logistical complexities, all of which could impact the contractor's ability to deliver within the fixed price.

What performance metrics or oversight mechanisms are in place to ensure the successful completion of this construction contract?

While specific performance metrics are not detailed in the provided summary data, typical oversight mechanisms for large construction contracts include regular progress meetings between the contractor and the contracting officer's representative (COR), site inspections, review of project schedules and milestones, quality assurance checks, and financial audits. The contract likely includes clauses defining acceptable quality standards, completion deadlines for various phases, and procedures for addressing deficiencies or delays. The Naval Facilities Engineering Command would be responsible for monitoring the contractor's performance against these contractual requirements to ensure the project is completed satisfactorily and on time.

What is the track record of HSG Technischer Service GmbH in executing large-scale international construction projects for the U.S. military?

The provided data indicates that HSG Technischer Service GmbH was awarded this significant $326.9 million contract by the Department of the Navy. This award itself suggests a level of confidence in the contractor's capabilities. However, to assess their track record thoroughly, one would need to examine past performance evaluations, any history of contract disputes or terminations, and the successful completion of previous projects of similar scale and complexity, particularly those undertaken for the U.S. military or other government agencies in international settings. Information on their past performance is crucial for understanding their reliability and expertise.

How does the competition level (two bidders) for this contract potentially impact the final price and overall value for the government?

Having two bidders suggests some level of competition, which is generally preferable to a sole-source award. However, the optimal level of competition typically involves three or more bidders to ensure robust price discovery and a wider range of technical solutions. With only two bidders, there is a risk that the competition may not have been as intense as it could have been, potentially leading to a higher price than might have been achieved with more participants. The government's ability to secure the best value depends on the specific capabilities and pricing strategies of these two firms and the effectiveness of the solicitation process in encouraging competitive offers.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Industrial Building Construction

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: FIXED PRICE (J)

Contractor Details

Address: AN DER GEHESPITZ 50, NEU ISENBURG

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline