Knik Construction awarded $25.5M for Runway 10-28 project, a significant investment in civil engineering infrastructure

Contract Overview

Contract Amount: $25,551,723 ($25.6M)

Contractor: Knik Construction CO., Inc.

Awarding Agency: Department of Defense

Start Date: 2007-05-01

End Date: 2009-03-31

Contract Duration: 700 days

Daily Burn Rate: $36.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: RUNWAY 10-28

Plain-Language Summary

Department of Defense obligated $25.6 million to KNIK CONSTRUCTION CO., INC. for work described as: RUNWAY 10-28 Key points: 1. The contract value of $25.5 million represents a substantial commitment to infrastructure development. 2. Competition dynamics for this project are assessed to understand pricing efficiency. 3. Risk indicators are evaluated based on project scope and contractor history. 4. Performance context is derived from the project's duration and fixed-price nature. 5. The contract falls within the heavy and civil engineering construction sector, indicating a focus on large-scale public works.

Value Assessment

Rating: fair

The contract value of $25.5 million for Runway 10-28 is a significant expenditure. Benchmarking against similar runway construction projects would be necessary to definitively assess value for money. The firm fixed-price contract type suggests a degree of cost certainty, but the final value is dependent on the contractor's ability to manage costs within the agreed-upon price. Without specific cost breakdowns or comparisons to industry averages for similar scope and complexity, a precise value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders suggests a moderate level of competition for this project. While two bidders are better than one, a higher number of bids typically leads to more competitive pricing and a greater likelihood of achieving best value for the government. The specific details of the bidding process and the nature of the competition would further illuminate its effectiveness.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, driving down prices and increasing the likelihood of securing the best possible deal.

Public Impact

The primary beneficiaries are the Department of the Navy and military personnel who rely on functional runway infrastructure. The project delivers essential heavy and civil engineering construction services, specifically focused on runway repair or construction. The geographic impact is localized to the specific military installation where Runway 10-28 is located. Workforce implications include employment opportunities for construction workers, engineers, and project managers involved in the project.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise during construction, despite the fixed-price contract.
Dependence on Knik Construction Co., Inc.'s performance and capacity to deliver the project on time and to specifications.
The limited number of bidders (2) might indicate potential barriers to entry or a specialized market, which could impact future competition.
The duration of the contract (700 days) suggests a complex project, increasing the potential for schedule delays.
Lack of specific performance metrics in the provided data makes it difficult to assess quality and efficiency proactively.

Positive Signals

Awarded under full and open competition, suggesting a fair and accessible bidding process.
Firm fixed-price contract type provides cost certainty for the government, assuming no change orders.
The contractor, Knik Construction Co., Inc., has experience in heavy construction, which is relevant to the project scope.
The project addresses critical infrastructure needs for the Department of the Navy.
The contract duration is clearly defined, allowing for project planning and resource allocation.

Sector Analysis

This contract falls under the Heavy and Civil Engineering Construction sector (NAICS code 237990), which encompasses establishments primarily engaged in the construction of infrastructure projects such as highways, streets, bridges, tunnels, and, in this case, airport runways. The total federal spending in this sector can be substantial, driven by the continuous need for modernization and maintenance of public infrastructure. Comparable spending benchmarks would involve analyzing other large-scale civil engineering projects awarded by the Department of Defense or other federal agencies for similar infrastructure development.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The primary focus of this contract appears to be on large-scale construction capabilities, likely requiring significant resources and expertise typically found in larger firms.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and project management offices. Accountability measures are inherent in the firm fixed-price contract, which obligates the contractor to deliver the specified work within the agreed budget. Transparency is generally facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

Military Base Infrastructure Modernization
Airport Pavement and Runway Construction
Department of Defense Civil Engineering Projects
Federal Heavy Construction Contracts

Risk Flags

Potential for schedule delays due to project complexity.
Risk of cost overruns impacting contractor profitability or requiring change orders.
Need for stringent quality control to ensure runway integrity and safety.
Dependence on contractor's specialized equipment and skilled labor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.6 million to KNIK CONSTRUCTION CO., INC.. RUNWAY 10-28

Who is the contractor on this award?

The obligated recipient is KNIK CONSTRUCTION CO., INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.6 million.

What is the period of performance?

Start: 2007-05-01. End: 2009-03-31.

What is the track record of Knik Construction Co., Inc. on similar federal contracts?

Assessing the track record of Knik Construction Co., Inc. on similar federal contracts is crucial for understanding their past performance, reliability, and ability to manage complex infrastructure projects. A review of their contract history would reveal the types of projects they have completed, their on-time delivery rates, adherence to budget, and any instances of disputes or contract terminations. For instance, if Knik Construction has a history of successfully completing large-scale civil engineering projects for the Department of Defense, it would lend confidence to their capability for the Runway 10-28 project. Conversely, a history of significant delays, cost overruns, or quality issues would raise concerns and necessitate closer scrutiny of their current project management plans and risk mitigation strategies. Without specific historical data on Knik Construction's performance, this assessment remains speculative.

How does the awarded amount compare to the estimated cost or budget for this runway project?

The awarded amount of $25.5 million for Runway 10-28 provides a concrete figure for the government's commitment. However, to assess the value for money, this figure needs to be compared against the initial cost estimates or the allocated budget for the project. If the awarded amount is significantly lower than the government's estimate, it could indicate successful competition and cost savings for taxpayers. Conversely, if the award is close to or exceeds the estimate, it might suggest that the initial budgeting was accurate or that competitive pressures were less intense than anticipated. Furthermore, understanding the breakdown of the awarded amount (e.g., labor, materials, overhead) would allow for a more granular comparison with industry cost benchmarks. The absence of pre-award estimate data makes a definitive value assessment challenging.

What are the primary risks associated with a firm fixed-price contract for a large civil engineering project?

Firm fixed-price (FFP) contracts, while offering cost certainty to the buyer, can introduce significant risks for the contractor, especially in large, complex civil engineering projects like runway construction. The primary risk for the contractor is the potential for cost overruns if unforeseen site conditions, material price escalations, or labor shortages occur. If the contractor's costs exceed the fixed price, their profit margin shrinks, or they may incur a loss. For the government, the risk with FFP contracts is that the contractor might cut corners on quality or scope to protect their profit margin if costs rise unexpectedly. This necessitates robust government oversight to ensure contract specifications are met. Additionally, if the initial scope is poorly defined, change orders can become frequent and costly, negating some of the benefits of the FFP structure.

What is the typical duration for similar runway construction or repair projects?

The duration of 700 days (approximately 23 months) for the Runway 10-28 project provides a timeframe for its execution. To contextualize this, it's essential to compare it with the typical duration of similar runway construction or repair projects. Factors influencing duration include the project's scope (e.g., complete reconstruction vs. resurfacing), size of the runway, complexity of the site, weather conditions, and the specific requirements of the operating environment (e.g., military base operations). Smaller repair jobs might take a few months, while major overhauls or new runway constructions can span several years. A 700-day duration suggests a project of considerable scale and complexity, likely involving significant earthwork, paving, and potentially lighting or drainage system upgrades. Benchmarking against similar projects would help determine if this duration is reasonable or indicative of potential delays.

How does the NAICS code 237990 (Other Heavy and Civil Engineering Construction) typically perform in terms of contract awards and competition?

The NAICS code 237990, 'Other Heavy and Civil Engineering Construction,' encompasses a broad range of large-scale infrastructure projects beyond typical building construction. Federal contracting within this sector often involves significant dollar values due to the nature of public works like roads, bridges, dams, and runways. Competition levels can vary widely depending on the specific project's complexity, required specialized equipment, geographic location, and the number of qualified firms capable of undertaking the work. While some projects within this NAICS code might attract numerous bidders, others, particularly those requiring highly specialized expertise or operating in remote locations, may see limited competition, sometimes resulting in sole-source or limited-source awards. The 'full and open competition' designation for this specific contract suggests that the market was deemed sufficiently robust to support broad participation.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6945007R1257

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lynden Inc (UEI: 062774674)

Address: 18000 INTL BLVD STE 800, SEATTLE, WA, 07

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $25,551,723

Exercised Options: $25,551,723

Current Obligation: $25,551,723

Contract Characteristics

Cost or Pricing Data: NO

Timeline