State Department spent $78.4M on Beijing Annex construction, awarded via full and open competition

Contract Overview

Contract Amount: $78,408,544 ($78.4M)

Contractor: Miscellaneous Foreign Awardees

Awarding Agency: Department of State

Start Date: 2011-11-01

End Date: 2020-03-20

Contract Duration: 3,062 days

Daily Burn Rate: $25.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCTION OF THE BEIJING ANNEX

Plain-Language Summary

Department of State obligated $78.4 million to MISCELLANEOUS FOREIGN AWARDEES for work described as: CONSTRUCTION OF THE BEIJING ANNEX Key points: 1. The contract value represents a significant investment in diplomatic infrastructure. 2. Full and open competition suggests a potentially competitive bidding process. 3. The long duration of the contract (over 8 years) may indicate complex project requirements. 4. The awardee is listed as 'Miscellaneous Foreign Awardees,' requiring further due diligence. 5. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 6. The North American Industry Classification System (NAICS) code 238990 points to specialty trade contractors.

Value Assessment

Rating: fair

Benchmarking the value of this construction contract is challenging without specific details on the scope of work and market conditions in Beijing during the award period. The $78.4 million price tag for an annex construction project over an eight-year period suggests a substantial undertaking. However, without comparable projects or detailed cost breakdowns, it's difficult to definitively assess value for money. The Firm Fixed Price contract type indicates that the contractor bore the risk of cost overruns, which can be a positive indicator of price control if the contractor was experienced and efficient.

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 7 bids suggests a reasonable level of competition for this project. A competitive bidding process generally leads to better price discovery and can result in more favorable terms for the government.

Taxpayer Impact: Taxpayers likely benefited from the competitive nature of the bidding process, which should have driven down costs compared to a sole-source award. The multiple bids received suggest that the government had options and could select the most cost-effective proposal.

Public Impact

The primary beneficiary is the Department of State, which gains enhanced diplomatic facilities in Beijing. The project delivers construction services for a significant diplomatic infrastructure asset. The geographic impact is localized to Beijing, China, supporting U.S. diplomatic operations. Workforce implications would include construction labor and project management roles, likely a mix of local and potentially U.S. personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific awardee name beyond 'Miscellaneous Foreign Awardees' raises concerns about contractor vetting and accountability.
The extended performance period (over 8 years) could present risks related to changing requirements, inflation, and contractor performance over time.
Construction projects of this magnitude can be susceptible to unforeseen site conditions or geopolitical factors impacting completion.

Positive Signals

Awarded under full and open competition, suggesting a robust and fair bidding process.
Firm Fixed Price contract type shifts cost overrun risk to the contractor.
The existence of 7 bids indicates a degree of market interest and potential for competitive pricing.

Sector Analysis

This contract falls within the construction sector, specifically related to specialty trade contracting for government facilities. The global construction market is vast, and large-scale government infrastructure projects represent a significant segment. Comparable spending benchmarks would typically involve other embassy or consulate construction/renovation projects, which often run into tens or hundreds of millions of dollars depending on scale and location.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Given the large dollar value and specialized nature of constructing a diplomatic annex, it is unlikely that small businesses would be the primary awardees. However, the prime contractor may have subcontracting opportunities for smaller firms, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of State's contracting officers and potentially its Office of Inspector General. The Firm Fixed Price nature of the contract implies oversight focused on schedule adherence, quality of work, and compliance with contract terms rather than detailed cost auditing. Transparency is generally expected for federal contracts, though specific project details and oversight reports may vary.

Related Government Programs

Department of State Facilities Management
Overseas Building Operations
Embassy and Consulate Construction Projects
Federal Construction Contracts

Risk Flags

Awardee Identity Ambiguity
Long Contract Duration Risk
Geopolitical Location Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $78.4 million to MISCELLANEOUS FOREIGN AWARDEES. CONSTRUCTION OF THE BEIJING ANNEX

Who is the contractor on this award?

The obligated recipient is MISCELLANEOUS FOREIGN AWARDEES.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $78.4 million.

What is the period of performance?

Start: 2011-11-01. End: 2020-03-20.

What specific services were included under the 'All Other Specialty Trade Contractors' NAICS code for this Beijing Annex construction?

The NAICS code 238990, 'All Other Specialty Trade Contractors,' is a broad category encompassing establishments primarily engaged in construction activities not elsewhere classified. For a project like the Beijing Annex, this could include a wide range of specialized tasks such as foundation work, structural framing, electrical installations, plumbing, HVAC systems, interior finishing, facade construction, and potentially specialized security or communication infrastructure. The specific breakdown of services would be detailed in the contract's Statement of Work (SOW), which is not provided here. However, the large contract value and long duration suggest a comprehensive scope covering all major aspects of building construction and outfitting.

How does the $78.4 million cost compare to similar overseas diplomatic facility construction projects?

Comparing the $78.4 million cost requires context regarding the size, scope, and location of the Beijing Annex. Construction costs for diplomatic facilities can vary dramatically based on factors like land acquisition, local labor rates, material costs, security requirements, and the complexity of the design. For instance, building a new embassy compound in a high-cost Western European capital might exceed this figure significantly, while a smaller annex in a less developed region could be less. Generally, projects of this scale for major diplomatic missions often fall within the tens to hundreds of millions of dollars. Without specific details on the square footage, amenities, and security features of the Beijing Annex, a precise comparison is difficult, but the figure is within the expected range for substantial overseas government construction.

What are the potential risks associated with a construction contract spanning over 8 years (November 2011 to March 2020)?

A contract duration of over eight years presents several potential risks. Firstly, there's the risk of scope creep, where project requirements may evolve significantly over time, leading to change orders and potential cost increases if not managed strictly. Secondly, inflation and fluctuating material costs can impact the contractor's profitability and potentially lead to claims if the contract doesn't adequately account for these economic factors. Thirdly, contractor performance can degrade over such a long period due to personnel turnover or shifts in company priorities. Geopolitical factors, especially in a location like Beijing, could also introduce unforeseen delays or operational challenges. Finally, maintaining consistent government oversight and project management across such an extended timeframe requires sustained commitment and resources.

Given the 'Miscellaneous Foreign Awardees' designation, what due diligence was likely performed by the State Department?

When awarding contracts to foreign entities, especially for significant projects, the Department of State would typically conduct thorough due diligence. This process often involves verifying the legal status and registration of the foreign entity, assessing its financial stability and capacity to undertake the project, reviewing its past performance record on similar projects, and ensuring compliance with U.S. government standards and regulations. Depending on the country and the nature of the awardee, this might also include checks related to security, ethical business practices, and potential conflicts of interest. The designation 'Miscellaneous Foreign Awardees' suggests a grouping of entities rather than a single named contractor, which could imply a more complex vetting process or a need for further clarification on the specific entities involved.

How does the Firm Fixed Price (FFP) contract type benefit the government in this construction scenario?

The Firm Fixed Price (FFP) contract type is generally advantageous for the government in construction projects like the Beijing Annex because it shifts the majority of the cost risk to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides the government with cost certainty and predictability, making budgeting more straightforward. It incentivizes the contractor to manage their costs efficiently and control project expenses to maximize their profit margin. The primary benefit for taxpayers is the protection against unexpected cost overruns that could occur with other contract types, such as Cost-Plus contracts, where the government bears more of the financial risk.

Industry Classification

NAICS: Construction › Other Specialty Trade Contractors › All Other Specialty Trade 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: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2011 CRYSTAL DR STE 911, ARLINGTON, VA, 22202

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $78,408,544

Exercised Options: $78,408,544

Current Obligation: $78,408,544

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: SERVICES PURSUANT TO FAR 12.102(G)

Cost or Pricing Data: YES

Timeline