State Department spent over $32.7M on Vilnius embassy HVAC upgrade, awarded via full and open competition

Contract Overview

Contract Amount: $32,759,567 ($32.8M)

Contractor: Enviro-Management & Research, Inc.

Awarding Agency: Department of State

Start Date: 2013-09-27

End Date: 2017-07-29

Contract Duration: 1,401 days

Daily Burn Rate: $23.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CHANCERY SPRINKLER&HVAC UPGRADE AT VILNIUS, LITHUANIA. IGF::OT::IGF.

Plain-Language Summary

Department of State obligated $32.8 million to ENVIRO-MANAGEMENT & RESEARCH, INC. for work described as: CHANCERY SPRINKLER&HVAC UPGRADE AT VILNIUS, LITHUANIA. IGF::OT::IGF. Key points: 1. The contract value of $32.7M for an HVAC upgrade appears substantial, necessitating a close review of scope and market rates. 2. Full and open competition suggests a potentially robust bidding process, but the number of bidders (2) warrants scrutiny for price discovery. 3. The contract duration of 1401 days (nearly 4 years) indicates a long-term project, potentially exposing it to scope creep and cost overruns. 4. The definitive contract type, while common, can sometimes offer less flexibility for the government compared to other contract types. 5. The project's focus on infrastructure at a U.S. embassy abroad highlights the importance of secure and functional diplomatic facilities. 6. The absence of small business set-aside or subcontracting goals suggests this was not a primary focus for this specific procurement.

Value Assessment

Rating: fair

The total contract value of $32.7 million for an HVAC upgrade at a U.S. embassy in Vilnius, Lithuania, is a significant investment. Without specific details on the scope of work, it is difficult to benchmark against similar projects. However, the duration of nearly four years suggests a complex undertaking. The fixed-price nature of the contract provides cost certainty for the government, but the final price should be evaluated against the actual work performed and market conditions at the time of award and throughout the contract period.

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 bids. However, only two bids were received. While full and open competition is generally preferred for maximizing price discovery and ensuring fair access for contractors, a low number of bidders can sometimes suggest market limitations, high barriers to entry, or insufficient outreach. This limited competition may have impacted the government's ability to secure the most competitive pricing.

Taxpayer Impact: A low number of bidders in a full and open competition means taxpayers may not have benefited from the full spectrum of potential price reductions that a more robustly contested bid could have yielded.

Public Impact

The primary beneficiaries are the U.S. Department of State and its personnel stationed at the U.S. Embassy in Vilnius, Lithuania, who will have improved and reliable HVAC systems. The services delivered include the upgrade and modernization of critical building infrastructure, ensuring operational continuity and safety. The geographic impact is specific to the U.S. Embassy in Vilnius, Lithuania, enhancing the functionality of a key diplomatic post. Workforce implications would primarily involve construction and technical labor for the installation and upgrade, potentially including both U.S. and local Lithuanian workers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bidders could indicate potential issues with market reach or contractor interest, possibly leading to suboptimal pricing.
The long contract duration (1401 days) increases the risk of cost escalation due to unforeseen issues, inflation, or scope creep.
The definitive contract type, while providing a clear path, might lack the flexibility needed for complex, long-term infrastructure projects if requirements evolve significantly.

Positive Signals

Awarded under full and open competition, which theoretically allows for the widest possible range of qualified contractors to bid.
The firm-fixed-price contract type provides cost certainty for the government, protecting against cost overruns if the scope is well-defined.
The project addresses essential infrastructure at a U.S. diplomatic facility, crucial for national security and operational effectiveness abroad.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on upgrades to critical infrastructure for a government facility abroad. The market for large-scale construction and HVAC services for government installations is competitive, with specialized firms often bidding on such projects. Benchmarking this specific contract's value is challenging without detailed scope, but large embassy renovations or upgrades can run into tens of millions of dollars, depending on size, complexity, and location.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting goals for small businesses. This suggests that the primary focus was on securing the necessary expertise for a large-scale infrastructure project, rather than specifically promoting small business participation. The prime contractor, Enviro-Management & Research, Inc., is likely a larger entity capable of handling such a significant project independently or through its own established supply chains.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Department of State's Bureau of Overseas Buildings Operations (OBO) or equivalent contracting and project management offices. Accountability measures would be embedded in the contract terms, including performance standards, delivery schedules, and payment milestones. Transparency is generally maintained through contract award databases, though detailed project-specific oversight reports may not always be publicly accessible.

Related Government Programs

Department of State Facilities Management
Embassy Infrastructure Upgrades
Overseas Building Operations
HVAC System Modernization
Government Construction Contracts

Risk Flags

Limited Competition
Long Contract Duration
Potential for Scope Creep

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $32.8 million to ENVIRO-MANAGEMENT & RESEARCH, INC.. CHANCERY SPRINKLER&HVAC UPGRADE AT VILNIUS, LITHUANIA. IGF::OT::IGF.

Who is the contractor on this award?

The obligated recipient is ENVIRO-MANAGEMENT & RESEARCH, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $32.8 million.

What is the period of performance?

Start: 2013-09-27. End: 2017-07-29.

What was the specific scope of work for the CHANCERY SPRINKLER&HVAC UPGRADE AT VILNIUS, LITHUANIA?

The provided data does not detail the specific scope of work for the CHANCERY SPRINKLER&HVAC UPGRADE AT VILNIUS, LITHUANIA. However, the contract title suggests it involved comprehensive upgrades to the sprinkler and heating, ventilation, and air conditioning (HVAC) systems within the U.S. Embassy chancery building in Vilnius, Lithuania. Such projects typically include replacing aging equipment, improving energy efficiency, ensuring compliance with current safety and environmental standards, and potentially integrating new technologies for better control and monitoring. The substantial contract value of over $32.7 million indicates a significant undertaking, likely encompassing design, procurement of materials, installation, testing, and commissioning of new systems across the entire facility.

How does the $32.7 million contract value compare to similar embassy HVAC upgrade projects?

Directly comparing the $32.7 million contract value for the Vilnius embassy HVAC upgrade to similar projects is challenging without detailed project scope, location-specific construction costs, and the specific year of award for comparison projects. However, large-scale infrastructure upgrades for U.S. embassies abroad can be very costly due to security requirements, specialized materials, logistical challenges in remote locations, and the need for high-quality, durable systems. Projects of this magnitude, involving comprehensive HVAC and sprinkler system overhauls in major diplomatic facilities, can easily reach tens of millions of dollars. The value appears within a plausible range for such a critical and extensive undertaking, though a detailed cost-benefit analysis against the specific deliverables would be necessary for a definitive value assessment.

What are the potential risks associated with a 1401-day contract duration for this project?

A contract duration of 1401 days (approximately 3.86 years) for an HVAC and sprinkler upgrade presents several potential risks. Firstly, the extended timeline increases the likelihood of encountering unforeseen site conditions or material price fluctuations, which could strain a firm-fixed-price contract if not adequately managed through contingency planning or change orders. Secondly, there's a risk of scope creep, where additional requirements or modifications are introduced over the long period, potentially leading to disputes or cost overruns if not handled through a formal change management process. Thirdly, maintaining consistent project oversight and quality control over such an extended period requires sustained effort and resources from the contracting agency. Finally, technological advancements in HVAC systems might occur during the project, potentially making the installed systems less cutting-edge by the time of completion.

What does the fact that only two bids were received under full and open competition imply?

The receipt of only two bids under a full and open competition for the $32.7 million Vilnius embassy HVAC upgrade suggests a few possibilities. It could indicate that the market for such specialized, large-scale international construction projects is inherently limited, with only a few firms possessing the required expertise, bonding capacity, and security clearances. Alternatively, it might suggest that the pre-solicitation outreach or the solicitation itself was not sufficiently broad or attractive to elicit more interest, or that the project's requirements were highly specific, deterring potential bidders. From a taxpayer perspective, limited competition, even within a full and open framework, can reduce the downward pressure on pricing, potentially leading to a higher final cost than if more bidders had competed.

What is the track record of Enviro-Management & Research, Inc. with the Department of State?

The provided data does not include information on the track record of Enviro-Management & Research, Inc. with the Department of State or any other agency. To assess their track record, one would need to examine past performance evaluations, contract history, and any reported issues or successes on previous government contracts. This information is typically available through federal procurement databases like SAM.gov (System for Award Management) or through agency-specific performance management systems. A thorough review would involve looking at the types of contracts they've held, their performance ratings, and their experience with similar projects, particularly those involving international facilities or complex infrastructure.

How does the firm-fixed-price contract type impact cost control for this project?

The firm-fixed-price (FFP) contract type is generally favored by the government for projects where the scope of work is well-defined and unlikely to change significantly. Under an FFP contract, the contractor agrees to a total price for a well-defined product or service. This provides the government with cost certainty, as the contractor bears the primary risk of cost overruns. For the Vilnius HVAC upgrade, the FFP structure means Enviro-Management & Research, Inc. is obligated to complete the project for the agreed-upon price, regardless of their actual costs. However, this also means that if unforeseen issues arise that necessitate changes to the scope, the government would need to issue change orders, which could increase the total contract cost. Effective management of the initial scope definition and change order process is crucial for realizing the cost control benefits of an FFP contract.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

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: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5415-B BACKLICK RD, SPRINGFIELD, VA, 22151

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,759,567

Exercised Options: $32,759,567

Current Obligation: $32,759,567

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline