Department of the Navy awards $85.3M contract for Guam warehouse and facility construction, highlighting significant infrastructure investment

Contract Overview

Contract Amount: $85,291,414 ($85.3M)

Contractor: Core Tech-Hdcc-Kajima LLC

Awarding Agency: Department of Defense

Start Date: 2021-03-22

End Date: 2024-12-20

Contract Duration: 1,369 days

Daily Burn Rate: $62.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: N62742-21-C-1335, FY21 MCON P-312 DISTRIBUTION WAREHOUSE AND P-804 CENTRAL ISSUE FACILITY, JOINT REGION MARIANAS, GUAM

Place of Performance

Location: YIGO, GUAM County, GUAM, 96929

Plain-Language Summary

Department of Defense obligated $85.3 million to CORE TECH-HDCC-KAJIMA LLC for work described as: N62742-21-C-1335, FY21 MCON P-312 DISTRIBUTION WAREHOUSE AND P-804 CENTRAL ISSUE FACILITY, JOINT REGION MARIANAS, GUAM Key points: 1. The contract value represents a substantial investment in critical infrastructure for Joint Region Marianas. 2. Competition dynamics for this large-scale construction project are crucial for ensuring taxpayer value. 3. The fixed-price contract type aims to mitigate cost overruns, but vigilant oversight is still necessary. 4. Performance context will be key, as the project spans multiple years and involves complex construction. 5. This project positions the Department of the Navy to enhance logistical capabilities in the Pacific region. 6. The award to a single entity suggests a focus on specialized construction capabilities for this project.

Value Assessment

Rating: good

The $85.3 million award for the P-312 Distribution Warehouse and P-804 Central Issue Facility appears to be a significant investment in critical infrastructure for Joint Region Marianas. Benchmarking this specific project against comparable large-scale military construction in the Pacific region would provide further insight into its value. The firm fixed-price contract type suggests an effort to control costs, but the final value will depend on the contractor's execution and any potential change orders. Given the scale and complexity, ongoing monitoring of performance and costs against the initial award is essential for assessing overall value for money.

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 considered. The presence of 5 bids suggests a reasonably competitive environment for this large construction project. A competitive bidding process is generally expected to drive down prices and encourage efficiency, leading to better value for the government. The specific details of the bidding process and the evaluation criteria would further illuminate the effectiveness of the competition in securing optimal pricing and contractor performance.

Taxpayer Impact: The full and open competition for this substantial contract is beneficial for taxpayers as it increases the likelihood of receiving competitive pricing and high-quality construction services, maximizing the return on investment for public funds.

Public Impact

The primary beneficiaries are the Department of the Navy and its personnel stationed at Joint Region Marianas, who will gain improved logistical and operational facilities. The contract will deliver essential infrastructure, including a distribution warehouse and a central issue facility, enhancing supply chain management and readiness. The geographic impact is concentrated on Guam, supporting U.S. military presence and operations in the Indo-Pacific region. The project is expected to create numerous jobs in the construction sector on Guam, potentially benefiting local businesses and the workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns despite the firm fixed-price contract, especially given the multi-year duration and complexity of construction in a remote location.
Ensuring timely completion within the scheduled timeframe is critical to avoid impacting operational readiness.
Logistical challenges associated with construction in Guam could impact material delivery and labor availability.
Quality control and adherence to specifications will be paramount to ensure the long-term functionality of the facilities.

Positive Signals

The firm fixed-price contract structure provides cost certainty and incentivizes the contractor to manage expenses efficiently.
Awarding to a single entity (CORE TECH-HDCC-KAJIMA LLC) suggests confidence in their capability to manage this complex project.
The multi-year duration allows for phased construction and potentially better resource allocation.
The project addresses critical infrastructure needs, directly supporting military operations and readiness in a key strategic location.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a vital segment of the construction industry that supports government and private infrastructure development. The market for large-scale military construction projects is often characterized by significant barriers to entry, requiring specialized expertise, bonding capacity, and experience with government contracting regulations. The Department of the Navy's investment in Guam reflects a broader trend of increasing infrastructure spending in the Indo-Pacific region to support strategic objectives. Comparable spending benchmarks would typically involve other major military construction projects in similar geographic areas or for similar facility types.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside provisions. While the prime contractor is CORE TECH-HDCC-KAJIMA LLC, there is no explicit information regarding subcontracting plans for small businesses within the provided data. The impact on the small business ecosystem will depend on whether the prime contractor actively seeks to engage small businesses for specialized services or material supply during the project's execution.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and engineering departments, with potential involvement from the Naval Facilities Engineering Command (NAVFAC). Accountability measures are embedded in the firm fixed-price contract terms, which hold the contractor responsible for delivering the specified facilities within the agreed-upon price. Transparency is typically facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected during the contract's performance.

Related Government Programs

Department of Defense Military Construction
Naval Facilities Engineering Command Projects
Guam Infrastructure Development
Pacific Region Military Support Facilities
Distribution Warehouse Construction
Central Issue Facility Construction

Risk Flags

Potential for schedule delays
Risk of cost escalation (despite FFP)
Logistical challenges in remote location
Quality assurance and control
Environmental compliance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.3 million to CORE TECH-HDCC-KAJIMA LLC. N62742-21-C-1335, FY21 MCON P-312 DISTRIBUTION WAREHOUSE AND P-804 CENTRAL ISSUE FACILITY, JOINT REGION MARIANAS, GUAM

Who is the contractor on this award?

The obligated recipient is CORE TECH-HDCC-KAJIMA LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $85.3 million.

What is the period of performance?

Start: 2021-03-22. End: 2024-12-20.

What is the track record of CORE TECH-HDCC-KAJIMA LLC in executing large-scale federal construction contracts, particularly in overseas or remote locations like Guam?

CORE TECH-HDCC-KAJIMA LLC is a joint venture formed by CORE Tech LLC and HDCC-KAJIMA LLC. CORE Tech LLC has experience in various construction and engineering services, often supporting government contracts. HDCC-KAJIMA LLC is part of the Kajima Corporation, a global construction and engineering firm with extensive experience in large-scale projects worldwide, including military construction. The combined capabilities of this joint venture suggest a strong foundation for undertaking complex projects. However, a detailed review of their specific past performance on similar-sized federal contracts, especially those involving significant logistical challenges or overseas operations, would be necessary to fully assess their track record for this particular project. Information on past performance, including any issues encountered and their resolution, is typically available through federal contract databases and performance reports.

How does the awarded amount of $85.3 million compare to the estimated cost or budget for the P-312 Distribution Warehouse and P-804 Central Issue Facility project?

The provided data indicates an award amount of $85,291,413.71. Without access to the initial cost estimates or approved budget for this specific project, it is challenging to definitively state how the awarded amount compares. However, the fact that it was awarded under full and open competition with 5 bids suggests that the pricing was considered competitive and acceptable by the contracting agency. In large federal construction projects, the awarded amount can sometimes be higher or lower than initial estimates due to market conditions, contractor proposals, and the competitive bidding process. A thorough analysis would require comparing the awarded value against the government's independent government cost estimate (IGCE) and any publicly available budget allocations for this infrastructure development.

What are the primary risks associated with constructing a distribution warehouse and central issue facility in Guam, and how are they being mitigated by this contract?

Key risks associated with constructing large facilities in Guam include logistical challenges due to its remote location, potential for typhoons and seismic activity, availability of skilled labor, and environmental considerations. The firm fixed-price contract structure is a primary mitigation strategy, placing the financial risk of cost overruns on the contractor. The multi-year duration (2021-2024) allows for phased construction and potentially better planning for material procurement and labor. The Department of the Navy's oversight and the contractor's experience in managing complex projects are also crucial. Specific mitigation plans for environmental impacts and natural disaster resilience would typically be detailed within the contract's technical specifications and performance requirements.

What is the expected impact of these new facilities on the operational efficiency and supply chain management for Joint Region Marianas?

The construction of a new distribution warehouse and central issue facility is expected to significantly enhance operational efficiency and supply chain management for Joint Region Marianas. A modern distribution warehouse will likely improve inventory management, reduce storage times, and streamline the flow of goods and materials. The central issue facility will facilitate the efficient issuance of necessary equipment and supplies to personnel. These improvements are critical for maintaining readiness and supporting the diverse operational requirements of military forces stationed in the Indo-Pacific. Enhanced logistical capabilities can lead to reduced operational costs, faster response times, and overall improved mission effectiveness.

How does the spending on this Guam-based construction project fit into the broader context of U.S. military infrastructure investments in the Indo-Pacific region?

This $85.3 million contract for facilities in Guam is part of a larger, strategic U.S. military investment in the Indo-Pacific region. Guam serves as a critical hub for U.S. power projection and defense posture in the area. Increased spending on infrastructure, including distribution centers, airfields, and naval facilities, reflects the U.S. commitment to strengthening its presence and capabilities to address evolving geopolitical dynamics. This project aligns with broader defense strategies aimed at enhancing deterrence, ensuring freedom of navigation, and supporting allies in the region. The scale of investment underscores the strategic importance of Guam in U.S. national security objectives.

What are the potential long-term maintenance and operational costs associated with these new facilities, and how are they factored into the Navy's overall budget?

The long-term maintenance and operational costs for these new facilities will be a significant consideration for the Department of the Navy beyond the initial construction award. These costs typically include utilities, routine repairs, custodial services, security, and potential major system overhauls over the lifespan of the buildings. While the initial contract focuses on construction, the Navy's facilities management and budget planning processes would account for these ongoing expenses. Modern construction methods and materials may be employed to minimize future maintenance burdens. The specific lifecycle cost analysis and budget allocations for the operation and maintenance of these facilities would be part of the Navy's broader real property planning and budgeting cycles.

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: N6274220R1310

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 388 SOUTH MARINE CORPS DRIVE, TAMUNING, GU, 96913

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $85,291,414

Exercised Options: $85,291,414

Current Obligation: $85,291,414

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline