State Department awards $55M construction contract for overseas building operations to Fluor Intercontinental, Inc

Contract Overview

Contract Amount: $54,971,717 ($55.0M)

Contractor: Fluor Intercontinental, Inc

Awarding Agency: Department of State

Start Date: 2003-09-29

End Date: 2013-08-26

Contract Duration: 3,619 days

Daily Burn Rate: $15.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCTION PROJECT FOR OVERSEAS BUILDING OPERATIONS

Plain-Language Summary

Department of State obligated $55.0 million to FLUOR INTERCONTINENTAL, INC for work described as: CONSTRUCTION PROJECT FOR OVERSEAS BUILDING OPERATIONS Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of 3619 days (over 9 years) indicates a long-term commitment for overseas construction. 3. The firm-fixed-price contract type aims to control costs for the government. 4. The project involves poured concrete foundation and structure contracting, a specialized construction service. 5. The award was made by the Department of State, highlighting its role in maintaining overseas facilities.

Value Assessment

Rating: fair

The total award amount of $54,971,717.39 for a nearly 10-year construction project for overseas building operations appears substantial. Without specific benchmarks for similar overseas construction projects of this scale and duration, a precise value-for-money assessment is challenging. However, the firm-fixed-price contract type suggests an effort to lock in costs. Further analysis would require comparison with similar projects in terms of scope, location, and duration to determine if the pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. The presence of 5 bids suggests a reasonable level of competition for this specialized overseas construction project. A higher number of bidders might typically lead to more aggressive pricing, but the complexity and specific requirements of overseas operations can sometimes limit the pool of qualified contractors.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation. The fact that five bids were received suggests that the government likely received a range of pricing options, potentially leading to a more cost-effective outcome compared to a sole-source or limited competition scenario.

Public Impact

The primary beneficiaries are the Department of State and its personnel operating in overseas locations, who will have improved or maintained building infrastructure. The services delivered include construction and potentially maintenance of critical overseas facilities, ensuring operational continuity and safety. The geographic impact is focused on unspecified overseas locations where the Department of State operates. Workforce implications could include employment for construction workers, engineers, project managers, and support staff, both domestically and potentially in the host countries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 9 years) increases the risk of cost overruns due to unforeseen economic changes or project scope creep.
Overseas construction projects inherently carry higher risks related to logistics, security, political stability, and local regulations.
Dependence on a single contractor for such a long period could limit flexibility in adapting to evolving needs or incorporating new technologies.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government, mitigating risks associated with fluctuating costs.
Award through full and open competition suggests a thorough vetting process and potential for competitive pricing.
The contractor, Fluor Intercontinental, Inc., likely has significant experience in large-scale international projects, implying a degree of capability and reliability.

Sector Analysis

This contract falls within the construction sector, specifically focusing on infrastructure development and maintenance for government facilities abroad. The North American Industry Classification System (NAICS) code 238110, 'Poured Concrete Foundation and Structure Contractors,' indicates a specialized focus. The total award of approximately $55 million over nearly a decade for overseas operations is significant, reflecting the high costs and complexities associated with building and maintaining facilities in foreign environments. Comparable spending benchmarks would typically involve other government agencies undertaking similar overseas construction or major renovation projects.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Fluor Intercontinental, Inc. is a large corporation, suggesting that subcontracting opportunities may exist for small businesses. However, without specific subcontracting plans or reporting data, the extent of small business participation remains unclear. The nature of specialized overseas construction often involves large prime contractors who may or may not prioritize small business subcontracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting and program management offices. Given the long duration and overseas nature, robust oversight mechanisms, including regular site inspections, progress reports, and financial audits, would be crucial. Transparency is facilitated by the contract award being publicly available, but detailed operational oversight specifics are typically internal. Inspector General jurisdiction would likely apply to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Department of State Overseas Building Operations
Federal Construction Contracts
International Infrastructure Projects
Firm Fixed Price Contracts
Long-Term Government Contracts

Risk Flags

Long-term contract duration
Overseas operational environment
Potential for cost escalation (mitigated by FFP)
Security risks in foreign locations

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $55.0 million to FLUOR INTERCONTINENTAL, INC. CONSTRUCTION PROJECT FOR OVERSEAS BUILDING OPERATIONS

Who is the contractor on this award?

The obligated recipient is FLUOR INTERCONTINENTAL, INC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $55.0 million.

What is the period of performance?

Start: 2003-09-29. End: 2013-08-26.

What is Fluor Intercontinental, Inc.'s track record with the Department of State and other federal agencies for similar overseas construction projects?

Fluor Intercontinental, Inc. has a substantial history of working with the U.S. government, including the Department of State, on large-scale engineering and construction projects, often in challenging overseas environments. Their portfolio includes significant work in base construction, infrastructure development, and facility management for various federal agencies such as the Department of Defense and the U.S. Army Corps of Engineers. Analyzing past performance reviews, contract modifications, and any disputes or terminations on similar projects would provide a clearer picture of their reliability and effectiveness in executing complex, long-term overseas construction contracts. Specific data on past performance metrics, such as on-time delivery, budget adherence, and quality of work, would be essential for a comprehensive assessment.

How does the awarded amount of $54.97 million compare to the estimated cost or bids from other competitors?

The provided data indicates an award amount of $54,971,717.39 and notes that there were 5 bids received. However, the specific bid amounts from the other four competitors are not detailed. To assess value for money, a comparison of Fluor Intercontinental's bid against the range of bids submitted would be necessary. If Fluor's bid was significantly lower than others, it might suggest aggressive pricing or a potentially lower scope. Conversely, if it was the highest, it would warrant closer scrutiny regarding the justification for selecting their bid. Without the comparative bid data, it's difficult to definitively state whether this award represents optimal value, though the full and open competition suggests a market-driven price was sought.

What are the primary risks associated with a construction project of this duration (over 9 years) and geographic scope (overseas)?

Construction projects spanning over nine years, especially in overseas locations, present a multitude of risks. These include significant geopolitical instability, changes in host country regulations, currency fluctuations, and potential security threats to personnel and assets. Logistical challenges related to transporting materials, equipment, and personnel to remote or politically sensitive areas are also heightened. Furthermore, the extended timeline increases the likelihood of unforeseen environmental conditions, material price escalations, and labor availability issues. For the government, risks also encompass potential scope creep, contractor performance degradation over time, and the challenge of maintaining consistent oversight across different political and economic climates. The firm-fixed-price nature of this contract attempts to mitigate cost escalation risks for the government, but it places more risk on the contractor for managing these variables.

What specific types of overseas building operations are covered under this contract?

The contract description 'CONSTRUCTION PROJECT FOR OVERSEAS BUILDING OPERATIONS' and the NAICS code '238110 Poured Concrete Foundation and Structure Contractors' suggest the primary focus is on the physical construction and structural elements of buildings. This likely includes the foundational work, structural framing, and potentially concrete-related aspects of new construction or major renovations of facilities used by the Department of State abroad. 'Overseas building operations' could encompass a range of facilities such as embassies, consulates, residential compounds, or support facilities. The contract may cover the initial build-out or significant structural upgrades necessary to ensure the safety, security, and functionality of these critical diplomatic and operational sites.

What are the implications of the firm-fixed-price contract type for cost control and contractor incentives?

A firm-fixed-price (FFP) contract type is generally favored by the government for its cost predictability. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of the actual costs incurred. This shifts the risk of cost overruns from the government to the contractor. For the contractor, this creates a strong incentive to manage costs efficiently, control waste, and optimize resource allocation to maximize profit. However, it can also incentivize contractors to cut corners on quality if not adequately monitored, or to resist scope changes that would increase their costs. For a long-term project like this, the initial pricing must carefully account for potential risks and inflation over the contract's duration.

How does the Department of State typically manage and oversee long-term construction contracts in overseas environments?

The Department of State employs a multi-faceted approach to manage and oversee long-term overseas construction contracts. This typically involves dedicated project management teams, often including contracting officers' representatives (CORs) and technical experts, stationed at or near the project site. Regular progress meetings, site inspections, and detailed reporting requirements are standard. Quality assurance surveillance plans (QASPs) are implemented to monitor adherence to specifications and standards. Given the overseas context, security assessments, coordination with local authorities, and contingency planning for political or environmental disruptions are also critical components of oversight. Financial oversight includes reviewing invoices against progress and conducting audits to ensure proper use of funds.

Industry Classification

NAICS: Construction › Foundation, Structure, and Building Exterior Contractors › Poured Concrete Foundation and Structure Contractors

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fluor Corporation (UEI: 006907190)

Address: ONE ENTERPRISE DRIVE, ALISO VIEJO, CA, 40

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

Financial Breakdown

Contract Ceiling: $54,971,717

Exercised Options: $54,971,717

Current Obligation: $54,971,717

Timeline