DoD awards $114M for Guam physical training complex, raising value-for-money questions

Contract Overview

Contract Amount: $114,337,459 ($114.3M)

Contractor: Core Tech-Hdcc-Kajima LLC

Awarding Agency: Department of Defense

Start Date: 2023-10-19

End Date: 2027-02-14

Contract Duration: 1,214 days

Daily Burn Rate: $94.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: JFY22 J-014 PHYSICAL TRAINING COMPLEX, CAMP BLAZ, MCB, GUAM

Place of Performance

Location: YIGO, GUAM County, GUAM, 96929

Plain-Language Summary

Department of Defense obligated $114.3 million to CORE TECH-HDCC-KAJIMA LLC for work described as: JFY22 J-014 PHYSICAL TRAINING COMPLEX, CAMP BLAZ, MCB, GUAM Key points: 1. Contract awarded to a joint venture with significant construction experience. 2. Project duration of over three years suggests complex logistical and execution challenges. 3. The contract is a firm-fixed-price award, which shifts cost risk to the contractor. 4. Geographic location in Guam presents potential supply chain and labor cost considerations. 5. The award was made under full and open competition, indicating a broad market search. 6. No small business set-aside was utilized for this large construction project.

Value Assessment

Rating: fair

The contract value of $114.3 million for a physical training complex appears substantial. Benchmarking against similar large-scale construction projects in military installations, particularly in remote or high-cost locations like Guam, is crucial for a definitive value assessment. The firm-fixed-price structure suggests the government has locked in a price, but the overall value depends on the quality of construction and adherence to schedule. Without detailed cost breakdowns or comparisons to similar projects, it's difficult to definitively assess if this represents excellent value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that the Department of the Navy sought bids from all responsible sources. The presence of three bidders indicates a degree of competition, but the specific number of proposals received and their relative strengths are not detailed. A higher number of bidders typically leads to more competitive pricing and better price discovery for the government.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages a wider range of offers, potentially leading to lower prices and better terms for the government.

Public Impact

Service members stationed at Camp Blaz, Guam, will benefit from improved physical training facilities. The project will deliver a new physical training complex, enhancing readiness and morale. The geographic impact is concentrated on Guam, supporting military infrastructure development in the Indo-Pacific region. Construction activities will likely create temporary employment opportunities for local and potentially imported labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions or logistical challenges arise in Guam.
Risk of schedule delays due to the remote location and potential supply chain disruptions.
Ensuring quality of construction meets military standards over a multi-year project timeline.

Positive Signals

Firm-fixed-price contract transfers cost risk to the contractor.
Award to an experienced joint venture (CORE TECH-HDCC-KAJIMA LLC) suggests capability to execute complex projects.
Full and open competition likely resulted in a competitive bid process.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically supporting defense infrastructure. The market for large-scale military construction is often characterized by a limited number of highly specialized contractors capable of undertaking projects in challenging locations. Spending on military construction is a significant component of the Department of Defense's budget, aimed at maintaining and modernizing global facilities.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary contract was awarded to larger entities capable of handling the scale and complexity of the project. The absence of small business participation could limit opportunities for smaller firms within the construction ecosystem for this specific project.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and engineering divisions. Accountability measures are typically embedded in the contract terms, including performance standards, inspection protocols, and payment schedules tied to milestones. Transparency is generally maintained through contract award databases, but detailed project progress and financial oversight information may be less publicly accessible.

Related Government Programs

Military Construction, Navy
Base Realignment and Closure (BRAC) Construction
Department of Defense Facilities Modernization

Risk Flags

Geographic isolation impacting logistics and costs
Potential for labor shortages in specialized construction trades
Environmental factors (typhoons, seismic activity) requiring specific building considerations
Long project duration increasing exposure to market fluctuations

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $114.3 million to CORE TECH-HDCC-KAJIMA LLC. JFY22 J-014 PHYSICAL TRAINING COMPLEX, CAMP BLAZ, MCB, 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 $114.3 million.

What is the period of performance?

Start: 2023-10-19. End: 2027-02-14.

What is the track record of CORE TECH-HDCC-KAJIMA LLC in executing large-scale military construction projects, particularly in overseas locations?

The joint venture CORE TECH-HDCC-KAJIMA LLC brings together entities with experience in large-scale construction. Kajima Corporation, a major global construction firm, has a long history of undertaking significant infrastructure and military projects worldwide. HDCC (likely Halmar International/Halmar Construction) and CORE TECH also contribute relevant expertise. However, the specific track record of this particular joint venture formation for a project of this magnitude and location requires further investigation. Assessing past performance on similar projects, including adherence to budget, schedule, and quality standards, is crucial for understanding the risk associated with this award. Information on their prior success in Guam or similar Pacific island environments would be particularly relevant.

How does the awarded price compare to similar physical training complex constructions at other military bases, considering regional cost differences?

A direct comparison of the $114.3 million award to similar projects requires detailed analysis of scope, size, materials, and location-specific cost factors. Construction costs in Guam are generally higher than in the continental United States due to transportation expenses for materials and equipment, limited local labor pools, and logistical complexities. Benchmarking against projects of comparable square footage, amenities, and structural requirements at other bases, adjusted for regional economic indices and construction cost escalations, would be necessary. Without such detailed comparative data, it is difficult to ascertain if the price represents a competitive market rate or if it is inflated due to the unique challenges of the Guam location.

What are the primary risk indicators associated with constructing a large facility in Guam, and how are they being mitigated?

Key risk indicators for construction in Guam include logistical challenges related to material and equipment delivery, potential shortages of skilled labor, environmental considerations, and the impact of typhoons or seismic activity. Mitigation strategies typically involve robust supply chain management, pre-positioning of critical materials, partnerships with local labor organizations, and adherence to stringent building codes designed for the region's climate. The firm-fixed-price contract structure places the onus on the contractor to manage these risks and absorb associated costs. The government's oversight will focus on ensuring the contractor's risk management plan is adequate and that performance milestones are met despite these inherent challenges.

What is the expected impact of this facility on the operational readiness and training capabilities of the Marines stationed at Camp Blaz?

The construction of a new physical training complex is expected to significantly enhance the operational readiness and training capabilities of the Marines at Camp Blaz. Modern training facilities provide a controlled environment for diverse physical conditioning programs, injury prevention, and rehabilitation, all critical components of military readiness. Improved facilities can lead to better physical fitness across the force, reduced training downtime due to inadequate infrastructure, and enhanced morale. This investment directly supports the Marine Corps' mission by ensuring personnel are physically prepared for demanding operational environments, particularly in the strategic Indo-Pacific region.

What has been the historical spending trend for similar construction projects by the Department of the Navy in the Pacific region?

The Department of the Navy has consistently invested in infrastructure development across its Pacific installations to support strategic posture and operational requirements. Historical spending trends reveal a pattern of significant capital investments in facilities modernization, expansion, and new construction, particularly in Guam, which serves as a key strategic hub. This spending is often driven by force posture realignments, aging infrastructure replacement needs, and the demand for state-of-the-art training and operational facilities. Analyzing past budgets and contract awards for similar projects in the region can provide context for the scale and frequency of such investments, highlighting both the commitment to the area and potential patterns in cost escalation or project timelines.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6274223R1313

Offers Received: 3

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: $114,337,459

Exercised Options: $114,337,459

Current Obligation: $114,337,459

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6274221D1325

IDV Type: IDC

Timeline