Navy awards $35.7M for new housing construction, exceeding initial estimates by $18.9M

Contract Overview

Contract Amount: $35,700,855 ($35.7M)

Contractor: Imc-Landsouth, LLC

Awarding Agency: Department of Defense

Start Date: 2015-06-30

End Date: 2020-08-29

Contract Duration: 1,887 days

Daily Burn Rate: $18.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF H106 REPLACE BASE HOUSING

Plain-Language Summary

Department of Defense obligated $35.7 million to IMC-LANDSOUTH, LLC for work described as: IGF::OT::IGF H106 REPLACE BASE HOUSING Key points: 1. Contract value significantly surpassed initial estimates, indicating potential cost overruns or scope changes. 2. The contract was awarded through full and open competition, suggesting a competitive bidding process. 3. A single award was made, which can sometimes limit price negotiation leverage. 4. The project involves new single-family housing construction, a critical infrastructure need for military personnel. 5. The duration of the contract (1887 days) suggests a long-term construction project with potential for extended cost impacts. 6. The firm-fixed-price contract type shifts most cost risk to the contractor.

Value Assessment

Rating: fair

The final award of $35.7 million is substantially higher than the initial estimate of $18.9 million, representing an increase of over 88%. This significant deviation warrants scrutiny into the reasons for the cost escalation, such as unforeseen site conditions, material price increases, or changes in project scope. Without detailed cost breakdowns or comparisons to similar housing projects in the region, it is difficult to definitively assess value for money. However, the large variance suggests that the initial cost projections may have been inaccurate or that market conditions significantly impacted the final price.

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. While the data shows 3 bids were received, the specific number of bidders does not inherently guarantee optimal price discovery. The significant difference between the estimated cost and the final award price, despite competition, might suggest that the initial estimate was too low, or that the competitive landscape did not drive the price down to the initial projection.

Taxpayer Impact: Taxpayers benefit from the competitive process potentially leading to a more efficient allocation of resources. However, the substantial increase over the initial estimate means taxpayers are funding a project significantly more expensive than initially planned.

Public Impact

Military families stationed at the naval facility will benefit from new, modern housing. The contract delivers essential infrastructure improvements, enhancing quality of life for service members. The project's geographic impact is localized to the specific naval installation where the housing is being built. The construction project will likely create jobs for skilled trades and construction workers in the local area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost increase from estimate to award price ($18.9M difference).
Long contract duration (1887 days) increases exposure to market volatility and potential delays.
Limited information on the specific reasons for the cost escalation.
Only 3 bids received, which may not represent the full competitive potential.

Positive Signals

Awarded via full and open competition, maximizing potential bidder pool.
Firm-fixed-price contract type transfers cost risk to the contractor.
Addresses a critical need for military family housing.

Sector Analysis

This contract falls within the construction sector, specifically new single-family housing. The market for military housing construction is often influenced by government funding cycles and specific base requirements. Comparable spending benchmarks would typically involve analyzing the cost per square foot or cost per unit for similar military housing projects awarded by the Department of Defense or other federal agencies. The size of this contract ($35.7M) is moderate for a large construction project, but the significant cost growth is a key factor to consider within this sector.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract, nor does it detail subcontracting plans. As a large construction project, it is possible that a portion of the work could be subcontracted to small businesses. However, without explicit set-aside goals or reporting on subcontracting, the direct impact on the small business ecosystem remains unclear. Further analysis would be needed to determine if small businesses were involved in the bidding process or as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The firm-fixed-price nature of the contract implies that the government's primary oversight will focus on ensuring the contractor meets the defined scope, quality standards, and delivery schedule. Transparency is generally facilitated through contract award databases like FPDS. Specific Inspector General (IG) jurisdiction would depend on whether the Naval IG or a broader DoD IG has oversight over housing construction projects of this magnitude.

Related Government Programs

Military Construction (MILCON)
Family Housing Construction
Department of Defense Housing Programs
Naval Facilities Engineering Command Contracts

Risk Flags

Significant Cost Growth
Long Contract Duration
Potential for Underestimation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.7 million to IMC-LANDSOUTH, LLC. IGF::OT::IGF H106 REPLACE BASE HOUSING

Who is the contractor on this award?

The obligated recipient is IMC-LANDSOUTH, 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 $35.7 million.

What is the period of performance?

Start: 2015-06-30. End: 2020-08-29.

What were the primary drivers for the significant cost increase from the initial estimate to the final award price?

The substantial increase from an estimated $18.9 million to an awarded $35.7 million (an 88% rise) suggests several potential factors. These could include underestimation of material and labor costs in the initial bid, unforeseen site conditions requiring additional work (e.g., soil remediation, utility relocation), changes in architectural or engineering requirements during the design phase, or market fluctuations in construction material prices and labor availability between the estimate and award dates. Without access to the contractor's detailed cost proposal or post-award reviews, pinpointing the exact drivers is speculative. However, such a large variance often prompts a review by the procuring agency to understand the discrepancies and improve future estimating accuracy.

How does the per-unit cost of housing compare to similar military housing projects?

To assess the per-unit cost, we first need to estimate the number of housing units constructed. Assuming a typical size for military family housing, if this $35.7 million contract built, for example, 100 units, the cost per unit would be approximately $357,000. This figure needs to be benchmarked against similar projects. Factors like location (cost of living, land acquisition), type of construction (e.g., single-family detached vs. multi-family), included amenities, and prevailing wage rates significantly influence per-unit costs. Comparing this to other Navy or DoD housing projects of similar scope and vintage, particularly those in comparable geographic regions, would be necessary to determine if this contract represents good value or is an outlier.

What is the track record of IMC-LANDSOUTH, LLC in performing similar large-scale construction contracts for the federal government?

IMC-LANDSOUTH, LLC has a history of federal contracting, primarily within the construction domain. Analyzing their past performance on similar projects, particularly those involving military housing or large residential developments for government entities, is crucial. Key indicators include on-time and on-budget completion rates, quality of work, and any history of contract disputes or terminations. A review of their contract history, including award values, contract types, and client agencies (e.g., Army, Air Force, Navy), would provide insight into their capacity and reliability for a project of this scale and complexity. Positive past performance on comparable projects would increase confidence in their ability to deliver this housing development successfully.

What are the potential risks associated with the long contract duration of 1887 days (over 5 years)?

A contract duration of 1887 days presents several risks. Firstly, it increases exposure to market volatility, particularly concerning the price of construction materials (e.g., lumber, steel, concrete) and labor costs, which can fluctuate significantly over a five-year period. Secondly, extended timelines can lead to potential design obsolescence if building codes or technological standards change during the contract period. Thirdly, there's a higher risk of contractor performance degradation over time, or key personnel turnover, which could impact project quality and schedule. Finally, prolonged projects are more susceptible to unforeseen environmental or regulatory changes that might necessitate costly modifications or delays. The firm-fixed-price nature mitigates some financial risk for the government, but schedule delays and quality issues remain concerns.

How does the firm-fixed-price contract type impact risk allocation and potential for cost overruns?

The firm-fixed-price (FFP) contract type is generally favored by the government for its predictability in cost. Under an FFP agreement, the contractor agrees to a set price for the work, regardless of their actual costs incurred. This shifts the majority of the financial risk to the contractor. If the contractor's costs exceed the agreed-upon price, their profit margin shrinks, or they may incur a loss. Conversely, if they manage costs efficiently, their profit increases. For the government, this means the final price is largely fixed, protecting against cost overruns due to contractor inefficiencies. However, it can also incentivize contractors to cut corners on quality if not adequately monitored, and it may lead to higher initial bid prices to account for the contractor's risk premium.

Industry Classification

NAICS: Construction › Residential Building Construction › New Single-Family Housing Construction (except For-Sale Builders)

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: N6945015R1107

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3070 BLANDING BLVD, MIDDLEBURG, FL, 32068

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $35,700,855

Exercised Options: $35,700,855

Current Obligation: $35,700,855

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline