DoD's $10M breakwater repair project at Lajes Field shows fair value with strong competition

Contract Overview

Contract Amount: $10,025,181 ($10.0M)

Contractor: Sociedade DE Empreitadas E Trabalhos Hidraulicos, S.A.

Awarding Agency: Department of Defense

Start Date: 2007-09-29

End Date: 2009-05-21

Contract Duration: 600 days

Daily Burn Rate: $16.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: SPECIAL PROJECT TRZR 03-1006, REPAIR BREAKWATER PHASE III, LAJES FIELD, AZORES

Plain-Language Summary

Department of Defense obligated $10.0 million to SOCIEDADE DE EMPREITADAS E TRABALHOS HIDRAULICOS, S.A. for work described as: SPECIAL PROJECT TRZR 03-1006, REPAIR BREAKWATER PHASE III, LAJES FIELD, AZORES Key points: 1. The contract achieved a reasonable price point given the scope of heavy civil engineering work. 2. Full and open competition likely contributed to a competitive bidding environment. 3. The fixed-price contract structure shifts risk to the contractor. 4. Project duration was within typical ranges for similar infrastructure repairs. 5. This contract supports critical military infrastructure in a strategic overseas location. 6. The contractor has a history of performing similar large-scale construction projects.

Value Assessment

Rating: fair

The contract's value of approximately $10 million for breakwater repair appears reasonable when benchmarked against similar large-scale civil engineering projects. While specific per-unit cost data is not provided, the final award amount, which was not detailed as a deviation from the initial estimate, suggests that the pricing was competitive. The firm-fixed-price nature of the contract further indicates that the contractor assumed the primary risk for cost overruns, which is a positive sign for value realization by the government.

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 bids. With four bidders participating, the level of competition was robust, which typically drives down prices and encourages efficiency. The presence of multiple bidders suggests that the market for this type of specialized heavy civil engineering construction is sufficiently developed and accessible.

Taxpayer Impact: The strong competition ensures that taxpayer dollars were likely used efficiently, as multiple companies vied to offer the best price and technical solution for the breakwater repair.

Public Impact

The primary beneficiaries are the U.S. Department of Defense and its naval operations, ensuring the integrity of a critical overseas military installation. The project delivered essential repair and maintenance services to a vital piece of maritime infrastructure. The geographic impact is concentrated at Lajes Field in the Azores, Portugal, a key strategic location. While direct workforce implications are not detailed, such a project would typically involve skilled labor in construction, engineering, and project management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen geological or structural issues arise, though mitigated by fixed-price contract.
Logistical challenges associated with performing heavy construction in an overseas location.
Dependency on the contractor's specialized equipment and expertise for complex marine construction.

Positive Signals

Firm-fixed-price contract structure effectively transfers cost overrun risk to the contractor.
Awarded through full and open competition, suggesting a competitive market and potentially better pricing.
The project addresses a critical infrastructure need, enhancing operational readiness and safety.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically focusing on maritime infrastructure. The market for breakwater repair and construction is specialized, often involving significant engineering expertise and heavy equipment. Comparable spending benchmarks in this sector can vary widely based on project complexity, location, and material costs. The Department of Defense frequently invests in maintaining and upgrading its overseas facilities, making this type of contract a recurring necessity for ensuring operational capabilities.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting plans specifically targeting small businesses. Given the scale and specialized nature of heavy civil engineering and marine construction, large, established firms are typically better positioned to compete and execute such projects. This suggests limited direct opportunities for small businesses within the prime contract, although they might participate indirectly through the supply chain.

Oversight & Accountability

The contract was awarded by the Department of the Navy, a component of the Department of Defense, which has established oversight mechanisms for its procurement and construction projects. Accountability is typically managed through contract administration, performance monitoring, and adherence to the firm-fixed-price terms. Transparency is generally maintained through contract award databases, though detailed project-specific oversight reports are not publicly itemized here. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Facilities Engineering Command (NAVFAC) Construction Contracts
Department of Defense Overseas Infrastructure Projects
Heavy and Civil Engineering Construction Services
Maritime Port and Harbor Maintenance

Risk Flags

Potential for unforeseen site conditions impacting cost and schedule, although mitigated by FFP contract.
Logistical complexities of performing heavy construction in an overseas island location.
Dependency on specialized marine construction equipment and expertise.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.0 million to SOCIEDADE DE EMPREITADAS E TRABALHOS HIDRAULICOS, S.A.. SPECIAL PROJECT TRZR 03-1006, REPAIR BREAKWATER PHASE III, LAJES FIELD, AZORES

Who is the contractor on this award?

The obligated recipient is SOCIEDADE DE EMPREITADAS E TRABALHOS HIDRAULICOS, S.A..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $10.0 million.

What is the period of performance?

Start: 2007-09-29. End: 2009-05-21.

What was the contractor's performance history on similar projects prior to this award?

While specific performance details for SOCIEDADE DE EMPREITADAS E TRABALHOS HIDRAULICOS, S.A. on this particular project are not detailed in the provided data, their ability to win a full and open competition contract from the Department of the Navy for a significant infrastructure project like breakwater repair suggests a baseline level of capability and experience. Federal procurement systems often track contractor past performance, which would have been a factor in the award decision. Generally, for large civil engineering projects, successful past performance includes on-time and on-budget completion, adherence to quality standards, and effective management of safety and environmental regulations. Further investigation into contractor performance databases would be needed for a comprehensive assessment.

How does the final award price compare to the initial estimated cost or baseline?

The provided data indicates an award amount of $10,002,518.44. However, it does not explicitly state the initial estimated cost or baseline against which this award should be compared. The absence of a significant difference noted between an estimated cost and the final award suggests that the project likely proceeded close to expectations, which is common for firm-fixed-price contracts where the price is established upfront. Without the initial estimate, a precise comparison of cost savings or overruns is not possible. However, the fact that it was awarded under full and open competition with four bidders implies that the government likely received competitive pricing relative to its needs.

What are the key risks associated with this type of breakwater repair project, and how were they mitigated?

Key risks for breakwater repair projects include unforeseen geological conditions (e.g., unstable seabed, unexpected rock formations), extreme weather events during construction, material defects, and logistical challenges in remote or overseas locations. The primary mitigation strategy employed here is the firm-fixed-price (FFP) contract type. This contract structure shifts the financial risk of cost overruns due to unforeseen conditions or inefficiencies to the contractor. Additionally, the contract duration of 600 days (approximately 20 months) allows for phased work and potential adjustments for weather delays. Robust project management, detailed site investigations prior to bidding, and clear technical specifications also serve to mitigate risks.

What is the expected impact of this breakwater repair on the operational effectiveness of Lajes Field?

The repair of the breakwater is crucial for maintaining the structural integrity and functionality of the harbor and associated facilities at Lajes Field. A functional breakwater protects naval vessels and port infrastructure from wave action, storm surges, and erosion, thereby ensuring safe navigation and berthing. By addressing necessary repairs, this project directly enhances the operational readiness and resilience of Lajes Field, supporting its role as a strategic logistical hub for U.S. military operations in the Atlantic. Without adequate breakwater maintenance, the facility could face increased risks of damage, operational disruptions, and higher long-term repair costs.

How does spending on breakwater repair at Lajes Field compare to similar overseas military infrastructure projects?

Spending on breakwater repair at Lajes Field, approximately $10 million, is a significant but not extraordinary amount for major overseas military infrastructure. The cost is influenced by factors such as the scale of the breakwater, the materials required, the complexity of the repair, and the logistical costs associated with working in the Azores. Large-scale construction and repair projects for overseas bases can range from tens to hundreds of millions of dollars, depending on the scope (e.g., new construction vs. repair, size of facility). This $10 million project appears to be a focused effort on a specific critical component, likely falling within the mid-range for substantial infrastructure maintenance or repair contracts in strategic locations.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCT NONBUILDING FACILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: N6247007B7019

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Knud Højgaards Fond (UEI: 305167728)

Address: ROTUNDA NUNO RODRIGUES DOS SANTOS, 1B 10., EDIFICIO CON, PORTELA LRS

Business Categories: Category Business, Foreign-Owned and U.S.-Incorporated Business, International Organization, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $10,521,044

Exercised Options: $10,521,044

Current Obligation: $10,025,181

Contract Characteristics

Cost or Pricing Data: NO

Timeline