DoD awards $5.45M for modular buildings, with a 9963% price markup over estimated costs

Contract Overview

Contract Amount: $5,449,980 ($5.4M)

Contractor: Cencore LLC

Awarding Agency: Department of Defense

Start Date: 2025-08-29

End Date: 2027-02-27

Contract Duration: 547 days

Daily Burn Rate: $10.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: MODULAR BUILDING 1

Place of Performance

Location: SPRINGVILLE, UTAH County, UTAH, 84663

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $5.4 million to CENCORE LLC for work described as: MODULAR BUILDING 1 Key points: 1. Significant price markup suggests potential for overpayment or underestimation of initial costs. 2. Contract awarded via full and open competition after exclusion of sources, indicating a complex procurement process. 3. Delivery order under an existing contract, potentially limiting direct comparison to standalone procurements. 4. Fixed-price contract type shifts risk to the contractor, but the high markup warrants scrutiny of the base price. 5. The contract duration of 547 days aligns with typical project timelines for construction-related services. 6. Geographic focus on Utah may indicate specific installation or logistical requirements.

Value Assessment

Rating: concerning

The contract's reported price of $5,449,980 is 9963% higher than the estimated cost of $54,499.80. This extreme markup is highly unusual and raises serious concerns about the fairness and reasonableness of the pricing. While fixed-price contracts aim to control costs, such a vast difference between estimated and awarded amounts suggests either a flawed initial estimate or an inflated final price. Benchmarking against similar modular building contracts is difficult without more detailed cost breakdowns, but this markup is an outlier.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This specific procurement method implies that while the competition was intended to be open, certain sources were excluded, possibly due to pre-qualification requirements or specific technical needs. The exact number of bidders is not provided, but the exclusion of sources suggests a potentially narrower competitive field than a truly open competition.

Taxpayer Impact: The limited competition, even if following a structured process, may have reduced the pressure on bidders to offer the lowest possible price, potentially leading to higher costs for taxpayers.

Public Impact

Military personnel and operations in Utah will benefit from the delivery of modular buildings. The contract will provide essential infrastructure, likely for barracks, offices, or support facilities. The geographic impact is concentrated in Utah, where the modular buildings will be delivered and installed. The contract may support jobs in the prefabricated metal building manufacturing sector and construction trades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Extreme price markup (9963%) over estimated costs raises significant value-for-money concerns.
Procurement method 'after exclusion of sources' limits transparency and potentially competitive pressure.
Lack of detail on the number of bidders makes it difficult to fully assess competition.
The significant difference between estimated and awarded cost warrants further investigation into cost estimation accuracy.

Positive Signals

Awarded under a fixed-price contract, which generally shifts cost overrun risk to the contractor.
The contract specifies a clear delivery period, providing a defined timeline for project completion.
The procurement method, while limited, suggests a structured approach to selecting a contractor.

Sector Analysis

The prefabricated metal building and component manufacturing sector (NAICS 332311) is a key part of the construction and manufacturing industries. This contract falls within the broader defense construction and infrastructure spending category. The market for modular buildings is substantial, driven by demand for rapid deployment of facilities in various sectors, including military, education, and commercial. Benchmarking this specific contract's value is challenging due to the extreme price markup, but typical modular building projects are cost-competitive with traditional construction.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not explicitly provided for this contract. As the contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' it is less likely to have been specifically set aside for small businesses. Further analysis would be needed to determine if subcontracting opportunities for small businesses were mandated or encouraged.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The fixed-price nature of the contract implies that financial oversight will focus on ensuring delivery according to specifications rather than detailed cost monitoring. Transparency regarding the specific reasons for the exclusion of sources and the justification for the final price would be key areas for oversight.

Related Government Programs

Department of Defense Modular Building Procurements
Naval Facilities Engineering Command Contracts
Construction and Facilities Support Services
Prefabricated Building Manufacturing Contracts

Risk Flags

Excessive Price Markup
Limited Competition Justification Unclear
Potential for Inflated Pricing
Questionable Value for Money

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.4 million to CENCORE LLC. MODULAR BUILDING 1

Who is the contractor on this award?

The obligated recipient is CENCORE 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 $5.4 million.

What is the period of performance?

Start: 2025-08-29. End: 2027-02-27.

What is the justification for the 9963% price markup from the estimated cost to the awarded contract value?

The provided data indicates an estimated cost of $54,499.80 and an awarded contract value of $5,449,980, representing a 9963% markup. Such a substantial difference is highly irregular and suggests a significant discrepancy in the initial cost estimation or a substantial change in project scope/requirements not detailed in the summary. Possible explanations include a severely underestimated initial bid, unforeseen site conditions, expedited delivery requirements, or a flawed initial estimate by the government. Without further documentation from the Department of Defense, such as a Justification for Other Than Full and Open Competition (JOFOC) or detailed cost-reconciliation reports, the precise reason for this extreme markup remains unclear and warrants thorough investigation by oversight bodies.

How does the awarded price compare to market rates for similar modular buildings?

Directly comparing the awarded price of $5,449,980 to market rates is difficult without knowing the exact specifications, size, materials, and features of the modular buildings. However, the reported price markup over the estimated cost ($54,499.80) is so extreme that it strongly suggests the awarded price is significantly above typical market rates for standard modular construction. Market research for similar military-grade modular facilities would be necessary to establish a benchmark. Given the markup, it is highly probable that this contract's pricing is not competitive with standard industry pricing, raising concerns about value for money.

What were the specific reasons for excluding certain sources in this 'full and open competition after exclusion of sources' procurement?

The designation 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' implies that the Department of the Navy initially intended to compete the contract broadly but subsequently identified specific criteria or requirements that led to the exclusion of certain potential bidders. This could be due to specialized technical capabilities, unique security clearances, prior performance history, or specific integration requirements with existing systems. The exact criteria for exclusion are not detailed in the provided data. Understanding these criteria is crucial for assessing whether the exclusion was justified and if it unduly limited competition, potentially impacting price discovery and overall value for the government.

What is the track record of CENCORE LLC in delivering similar modular building contracts for the Department of Defense?

Assessing CENCORE LLC's track record requires accessing historical contract data and performance reviews beyond the scope of this single award. Information such as past performance ratings, history of cost overruns or delays on similar projects, and the volume of work they have completed for the DoD would be relevant. Without this specific data, it's impossible to definitively state their reliability for this type of contract. However, the significant price markup on this particular contract could be an indicator of potential issues, either in their bidding strategy or in the government's cost estimation process, warranting a closer look at their past performance.

What are the potential risks associated with a fixed-price contract that has such a large markup over estimated costs?

While fixed-price contracts are designed to transfer risk to the contractor, a massive markup over estimated costs introduces unique risks. Firstly, it raises questions about the accuracy of the government's initial cost estimation, potentially indicating poor planning or insufficient market research. Secondly, it could signal that the contractor anticipates significant unforeseen costs or challenges, or is pricing in a substantial profit margin due to perceived market conditions or limited competition. This could lead to a situation where the contractor is highly incentivized to cut corners on quality or delivery to protect their profit, despite the fixed-price nature. It also represents a significant financial exposure for the government if the project scope is less complex than the pricing suggests.

How does this contract fit into the broader context of DoD spending on modular and prefabricated facilities?

The Department of Defense frequently utilizes modular and prefabricated facilities to rapidly deploy infrastructure across various global locations, often prioritizing speed and cost-effectiveness over traditional construction. Spending in this category can fluctuate based on operational needs, base realignments, and emergency requirements. While specific figures for modular building spending are not provided, the DoD is a major consumer of such solutions. This contract, valued at $5.45 million, represents a moderate investment within the DoD's overall facilities budget. The key differentiator here is the extreme price markup, which deviates from the expected value proposition of cost efficiency often associated with modular construction.

Industry Classification

NAICS: Manufacturing › Architectural and Structural Metals Manufacturing › Prefabricated Metal Building and Component Manufacturing

Product/Service Code: PREFAB STRUCTURES/SCAFFOLDING

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 59 W 900 N, SPRINGVILLE, UT, 84663

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $5,449,980

Exercised Options: $5,449,980

Current Obligation: $5,449,980

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6523625D3800

IDV Type: IDC

Timeline