DoD's $36.4M Hensek Phelps Contract for Commercial Building Construction Shows Moderate Overrun
Contract Overview
Contract Amount: $36,383,682 ($36.4M)
Contractor: Hensel Phelps Construction CO
Awarding Agency: Department of Defense
Start Date: 2011-06-02
End Date: 2020-01-06
Contract Duration: 3,140 days
Daily Burn Rate: $11.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 19
Pricing Type: FIRM FIXED PRICE
Sector: Construction
Official Description: FUND ACRN AA
Place of Performance
Location: PATUXENT RIVER, SAINT MARYS County, MARYLAND, 20670
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $36.4 million to HENSEL PHELPS CONSTRUCTION CO for work described as: FUND ACRN AA Key points: 1. The contract value of $36.4 million is substantial for commercial building construction. 2. Hensel Phelps Construction Co. is a major player in the construction industry. 3. The contract experienced a 3140-day duration, indicating a long-term project. 4. The sector is commercial and institutional building construction, a common area for government spending.
Value Assessment
Rating: fair
The contract value of $36.4M is within a reasonable range for large-scale commercial construction projects. However, the significant duration and the reported overrun suggest potential cost inefficiencies that warrant further investigation.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically drives competitive pricing. However, the final cost overrun of $11.587M (approximately 31.8%) suggests that the initial pricing may have been underestimated or that unforeseen issues significantly impacted costs during execution.
Taxpayer Impact: The overrun of over $11.5M represents a significant increase in taxpayer expenditure beyond the initially contracted amount for this construction project.
Public Impact
Taxpayers funded a significant cost overrun on a large construction project. The long duration of the contract raises questions about project management and efficiency. The Department of the Navy awarded this contract, impacting military infrastructure or support facilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Significant cost overrun
- Long contract duration
- Potential for scope creep or unforeseen issues
Positive Signals
- Awarded under full and open competition
- Firm fixed price contract type
Sector Analysis
This contract falls within the Commercial and Institutional Building Construction sector. Government spending in this area is common for infrastructure, facilities, and support buildings. Benchmarks for cost overruns in large construction projects vary, but a 31.8% overrun is generally considered high.
Small Business Impact
The data does not indicate any specific set-asides for small businesses. Large construction contracts are often awarded to major prime contractors, and subcontracting opportunities for small businesses would depend on the prime contractor's strategy.
Oversight & Accountability
The significant cost overrun and long duration suggest potential areas for review by oversight bodies. Examining the reasons for the overrun and the effectiveness of project management during the 3140-day period would be crucial for accountability.
Related Government Programs
- Commercial and Institutional Building Construction
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Significant cost overrun (31.8%)
- Long contract duration (3140 days)
- Potential for inadequate initial cost estimation
- Lack of transparency on overrun causes
Tags
commercial-and-institutional-building-co, department-of-defense, md, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $36.4 million to HENSEL PHELPS CONSTRUCTION CO. FUND ACRN AA
Who is the contractor on this award?
The obligated recipient is HENSEL PHELPS CONSTRUCTION CO.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $36.4 million.
What is the period of performance?
Start: 2011-06-02. End: 2020-01-06.
What were the primary drivers behind the significant cost overrun of over $11.5 million on this construction contract?
The primary drivers for the cost overrun likely stem from a combination of factors inherent in long-term construction projects. These could include unforeseen site conditions, material price escalations, changes in design or scope requested by the agency, labor cost increases, or contractor-related inefficiencies. A detailed post-award review would be necessary to pinpoint the exact causes.
How effectively did the firm fixed price contract type mitigate risks given the substantial overrun and long duration?
While a firm fixed price contract aims to cap the government's liability, the significant overrun suggests that either the initial price was not adequately set to account for potential risks, or significant change orders were issued that altered the contract's scope and price. The contractor likely absorbed some costs, but the overrun indicates the fixed price was ultimately insufficient or modified extensively.
What is the estimated taxpayer impact of the 31.8% cost overrun on this specific project?
The direct taxpayer impact is the additional $11.587 million spent beyond the original contract value. This represents a substantial increase in the cost of delivering the intended construction project. This additional funding could have been allocated to other government priorities, highlighting the financial consequence of cost overruns.
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: N4008010R4418
Offers Received: 19
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 4437 BROOKFIELD CORPORATE DR STE 207, CHANTILLY, VA, 20151
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $36,383,682
Exercised Options: $36,383,682
Current Obligation: $36,383,682
Subaward Activity
Number of Subawards: 55
Total Subaward Amount: $25,824,004
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2011-06-02
Current End Date: 2020-01-06
Potential End Date: 2020-01-06 00:00:00
Last Modified: 2020-03-26
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