DoD's $620M Dry Dock Recapitalization Awarded to Alberici-Mortenson JV, Facing Cost Overruns and Schedule Delays

Contract Overview

Contract Amount: $620,217,197 ($620.2M)

Contractor: Alberici-Mortenson a Joint Venture

Awarding Agency: Department of Defense

Start Date: 2020-03-20

End Date: 2023-09-22

Contract Duration: 1,281 days

Daily Burn Rate: $484.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE AWARD FEE

Sector: Construction

Official Description: NSB KINGS BAY DRY DOCK RECAPITALIZATION PHASE A

Place of Performance

Location: KINGS BAY, CAMDEN County, GEORGIA, 31547

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $620.2 million to ALBERICI-MORTENSON A JOINT VENTURE for work described as: NSB KINGS BAY DRY DOCK RECAPITALIZATION PHASE A Key points: 1. Significant cost growth observed, with the contract value increasing substantially from its initial award. 2. Schedule slippage is evident, with the project duration extending beyond the original planned completion. 3. The contract type, Fixed Price Award Fee, introduces performance incentives but also potential for cost escalation if not managed tightly. 4. The project is critical for naval readiness, focusing on essential infrastructure upgrades at a key naval base. 5. Competition was robust, suggesting a competitive market for this specialized construction service. 6. The project's complexity and scale present inherent risks that require diligent oversight.

Value Assessment

Rating: questionable

The initial award value was approximately $620 million. While specific cost performance data is limited, the extended duration and potential for cost growth suggest that the final cost may exceed initial projections. Benchmarking against similar large-scale naval infrastructure projects is challenging due to the unique nature of dry dock recapitalization, but the observed schedule delays and potential cost increases warrant scrutiny. The award fee structure implies performance targets, but the extent to which these were met and influenced the final cost is not fully transparent.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of four bidders (no) suggests a healthy level of competition for this significant construction project. This competitive environment is generally expected to drive more favorable pricing and encourage contractors to offer their best value propositions. The specific details of the bidding process and the evaluation criteria would provide further insight into how this competition translated into value for the government.

Taxpayer Impact: Full and open competition typically benefits taxpayers by fostering a market that encourages competitive pricing and innovation, potentially leading to lower overall project costs and higher quality outcomes.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring critical maintenance and repair capabilities for naval vessels. The project delivers essential infrastructure upgrades to a vital naval facility, supporting national defense objectives. The geographic impact is concentrated at NSB Kings Bay, Georgia, a strategic location for submarine operations. Workforce implications include employment opportunities for skilled construction labor, engineers, and project management professionals in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the complexity and extended timeline of the project.
Schedule delays may impact naval operational readiness and maintenance schedules.
The award fee structure requires careful monitoring to ensure performance targets are met and justified.
Reliance on a joint venture for a project of this magnitude carries inherent integration and management risks.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
The project addresses critical infrastructure needs for national security.
The joint venture brings together potentially complementary expertise for a complex undertaking.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically focusing on specialized maritime infrastructure. The market for large-scale dry dock construction and modernization is relatively niche, often dominated by a few experienced firms capable of handling the technical complexity and scale. The Department of Defense, particularly the Navy, is a significant client for such specialized construction services, with spending often driven by strategic asset maintenance and modernization needs. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of each dry dock project, but large infrastructure projects of this scale typically represent substantial investments.

Small Business Impact

The data indicates that small business participation (sb) was not a specific set-aside requirement for this contract (ss: false, sb: false). Therefore, the direct impact on small business set-asides is minimal. However, the prime contractor, a joint venture, may engage small businesses as subcontractors for specialized services or materials. The extent of subcontracting to small businesses would be a key factor in assessing the broader impact on the small business ecosystem for this project.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and engineering departments. Accountability measures are embedded within the contract's fixed-price award fee structure, linking payment to performance. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse, with the DoD IG having oversight authority.

Related Government Programs

Naval Shipyard Infrastructure Modernization Programs
Military Construction Projects
Public Works and Utilities Contracts
Heavy Engineering and Construction Services

Risk Flags

Potential for cost growth beyond initial estimates.
Schedule delays impacting project completion.
Complexity of large-scale marine construction.
Need for robust oversight of award fee performance criteria.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $620.2 million to ALBERICI-MORTENSON A JOINT VENTURE. NSB KINGS BAY DRY DOCK RECAPITALIZATION PHASE A

Who is the contractor on this award?

The obligated recipient is ALBERICI-MORTENSON A JOINT VENTURE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $620.2 million.

What is the period of performance?

Start: 2020-03-20. End: 2023-09-22.

What is the track record of Alberici-Mortenson A Joint Venture on similar large-scale federal construction projects?

Information on the specific track record of the joint venture 'Alberici-Mortenson A Joint Venture' on large-scale federal construction projects is not directly provided in the data. However, Alberici and Mortenson are established construction companies. Alberici Constructors, Inc. has a history of large infrastructure projects, including marine and industrial facilities. Mortenson Construction is known for large-scale commercial, institutional, and industrial projects. The success of this specific joint venture would depend on the integration of their respective capabilities and past performance on projects of similar complexity and scale. Further investigation into their individual and joint project portfolios, client feedback, and any past performance issues would be necessary for a comprehensive assessment.

How does the final cost of this dry dock recapitalization compare to similar projects in terms of value for money?

Direct comparison of the final cost to similar projects for value-for-money assessment is challenging without detailed cost breakdowns and project specifics. The initial award was $620 million, and the contract duration extended significantly (1281 days). While the contract type is Fixed Price Award Fee, the potential for cost growth and schedule delays suggests that the final cost might have exceeded initial projections. Benchmarking requires identifying projects with comparable scope (dry dock size, depth, capabilities), location (geotechnical conditions, labor costs), and age of existing infrastructure. Without such comparable data, assessing whether the government received optimal value for money is difficult. However, the competitive bidding process suggests an effort to achieve fair pricing.

What are the primary risks associated with this large-scale civil engineering construction contract, and how are they being managed?

The primary risks associated with this large-scale civil engineering construction contract include: 1. **Technical Complexity:** Dry dock recapitalization involves intricate engineering challenges, including underwater construction, structural integrity, and integration of specialized equipment. 2. **Schedule Delays:** Extended durations (1281 days) increase the risk of delays due to weather, unforeseen site conditions, or supply chain issues, impacting naval readiness. 3. **Cost Overruns:** The complexity and extended timeline inherently carry a risk of exceeding the initial budget, especially if scope changes or unforeseen issues arise. 4. **Environmental Factors:** Construction in marine environments presents environmental compliance and management risks. Management strategies likely include robust project planning, detailed site investigations, contingency planning, strong contract oversight, and performance incentives tied to the award fee structure. The joint venture structure may also aim to mitigate risks by pooling expertise.

What is the historical spending pattern for dry dock recapitalization and similar naval infrastructure projects by the Department of the Navy?

Historical spending patterns for dry dock recapitalization and similar naval infrastructure projects by the Department of the Navy are substantial and cyclical, driven by the aging of existing facilities and the need to maintain a modern fleet. The Navy operates numerous shipyards requiring significant ongoing investment in maintenance, repair, and modernization of dry docks, piers, and supporting infrastructure. Specific spending figures for dry dock recapitalization vary annually based on budget allocations, strategic priorities, and the condition of assets. These projects are often multi-year endeavors, with significant capital outlays spread over several fiscal years. The total investment in naval infrastructure modernization can run into billions of dollars annually across all Navy facilities, with dry dock projects representing a critical component of this expenditure.

How does the 'Fixed Price Award Fee' contract type influence contractor performance and cost control in this project?

The 'Fixed Price Award Fee' (FPAF) contract type aims to balance cost control with performance incentives. In an FPAF contract, the contractor is paid a fixed price for the work performed, but a portion of the total potential fee is contingent upon meeting or exceeding specific performance objectives outlined in the contract. These objectives typically relate to quality, schedule, cost control, and technical performance. The government establishes criteria for evaluating performance, and the contractor can earn an award fee based on this evaluation. This structure incentivizes the contractor to perform well beyond minimum requirements to maximize their profit. For this dry dock project, it encourages efficient execution and high-quality construction to earn the full award fee, while the fixed-price element provides a baseline cost control mechanism. However, effective administration and clear performance metrics are crucial for the government to ensure fair evaluation and prevent potential disputes.

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 NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6945019R0508

Offers Received: 4

Pricing Type: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Address: 8800 PAGE AVE, SAINT LOUIS, MO, 63114

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $620,217,197

Exercised Options: $620,217,197

Current Obligation: $620,217,197

Actual Outlays: $7,276,974

Subaward Activity

Number of Subawards: 85

Total Subaward Amount: $129,314,192

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline