State Department awards $124.6M for Matamoros Embassy construction, exceeding initial estimates

Contract Overview

Contract Amount: $124,609,274 ($124.6M)

Contractor: BL Harbert International LLC

Awarding Agency: Department of State

Start Date: 2015-09-30

End Date: 2018-04-01

Contract Duration: 914 days

Daily Burn Rate: $136.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN AND CONSTRUCTION OF NEW EMBASSY COMPOUND IN MATAMOROS, MEXICO. IGF::OT::IGF

Plain-Language Summary

Department of State obligated $124.6 million to BL HARBERT INTERNATIONAL LLC for work described as: DESIGN AND CONSTRUCTION OF NEW EMBASSY COMPOUND IN MATAMOROS, MEXICO. IGF::OT::IGF Key points: 1. The contract value of $124.6 million represents a significant investment in diplomatic infrastructure. 2. Competition dynamics for this project are crucial for ensuring taxpayer value. 3. Performance risks are inherent in large-scale construction projects, requiring robust oversight. 4. The project's duration of 914 days indicates a complex undertaking. 5. This contract falls within the broader sector of commercial and institutional building construction.

Value Assessment

Rating: fair

The final award of $124.6 million appears to be a substantial sum for embassy construction. Benchmarking against similar embassy projects would be necessary to determine if this represents good value for money. The firm-fixed-price contract type suggests that cost overruns beyond the agreed price are the contractor's responsibility, which can be a positive indicator if the initial price was well-estimated. However, without detailed cost breakdowns or comparisons to similar projects, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. With 3 bidders, the competition level suggests a reasonable degree of market interest. This level of competition is generally expected to drive prices toward market rates and encourage efficiency from the winning contractor. However, the specific number of bids received and the spread of those bids would provide a clearer picture of the competitive intensity.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of securing competitive pricing and encourages contractors to offer their best value propositions.

Public Impact

The primary beneficiaries are the U.S. Department of State and its personnel, who will gain a new, secure embassy compound. The project delivers essential construction services for diplomatic facilities. The geographic impact is focused on Matamoros, Mexico, enhancing U.S. diplomatic presence in the region. The construction phase will likely involve a significant workforce, including skilled trades and project management personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if initial estimates were not robust, despite firm-fixed-price.
Delays in construction schedule could impact diplomatic operations.
Quality control during construction is critical to ensure long-term durability and security.
Geopolitical factors in the region could pose unforeseen risks to the project.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Full and open competition suggests a competitive bidding process.
Award to an experienced construction firm (BL Harbert International LLC) implies a degree of capability.
The project addresses a clear need for diplomatic infrastructure.

Sector Analysis

This contract falls within the construction sector, specifically commercial and institutional building construction. The market for constructing government facilities, including embassies, is specialized, often requiring adherence to stringent security and design standards. The global market for such projects is significant, with major international construction firms competing for these high-value contracts. Benchmarking against other embassy construction projects or large-scale government building projects would provide further context.

Small Business Impact

The contract details do not indicate any specific small business set-asides. Given the scale and specialized nature of embassy construction, it is common for prime contracts to be awarded to large, experienced firms. However, the prime contractor, BL Harbert International LLC, may engage small businesses as subcontractors for various aspects of the construction, which would be a positive outcome for the small business ecosystem.

Oversight & Accountability

Oversight for this project would typically be managed by the Department of State's Bureau of Overseas Buildings Operations (OBO), which is responsible for planning, building, and maintaining U.S. diplomatic facilities worldwide. Accountability measures would include contract milestones, quality inspections, and adherence to the firm-fixed-price agreement. Transparency is generally maintained through contract awards databases and public reporting, though specific project details might be sensitive.

Related Government Programs

Embassy Construction Projects
Department of State Facilities Management
Overseas Infrastructure Development
International Construction Contracts

Risk Flags

Potential for schedule delays
Risk of cost escalation beyond initial estimates (though mitigated by FFP)
Security concerns in the project's geographic location
Quality control during construction

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $124.6 million to BL HARBERT INTERNATIONAL LLC. DESIGN AND CONSTRUCTION OF NEW EMBASSY COMPOUND IN MATAMOROS, MEXICO. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is BL HARBERT INTERNATIONAL LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $124.6 million.

What is the period of performance?

Start: 2015-09-30. End: 2018-04-01.

What is the track record of BL Harbert International LLC in constructing similar diplomatic facilities?

BL Harbert International LLC has a significant track record in constructing large-scale projects, including government facilities and international projects. While specific details on their prior embassy construction projects would require deeper research into their portfolio, their experience in complex construction is evident. The Department of State typically vets contractors for such critical infrastructure projects, suggesting that BL Harbert International LLC likely met stringent pre-qualification requirements. Examining their past performance on similar Department of State or Department of Defense contracts could provide further insight into their capabilities and reliability in delivering projects on time and within budget.

How does the final award amount compare to the initial estimated cost or budget for the Matamoros Embassy project?

The provided data indicates a final award amount of $124,609,273.54. Without access to the initial estimated cost or the specific budget allocated by the Department of State for this project, a direct comparison is not possible. However, the fact that it was awarded under full and open competition with 3 bidders suggests that the final price was determined through a competitive process. If the award significantly exceeded initial projections, it could indicate unforeseen challenges during the bidding phase or a need for revised cost assessments. Further investigation into the project's lifecycle documentation would be required to ascertain the relationship between estimated and awarded costs.

What are the primary risk indicators associated with the construction of an embassy in a location like Matamoros, Mexico?

The primary risk indicators for constructing an embassy in Matamoros, Mexico, include security concerns inherent to the region, potential for supply chain disruptions, labor availability and quality, and adherence to complex U.S. government construction standards. Geopolitical stability and local regulatory environments also pose risks. Furthermore, large-scale construction projects inherently carry risks related to unforeseen site conditions, weather impacts, and contractor performance. The firm-fixed-price contract mitigates some financial risk for the government, but schedule delays and quality issues remain potential concerns that require diligent oversight.

How effective are the oversight mechanisms for large overseas construction projects managed by the Department of State?

The Department of State, through its Bureau of Overseas Buildings Operations (OBO), employs a multi-layered oversight system for its overseas construction projects. This typically includes on-site project representatives, regular progress reviews, quality assurance inspections, and adherence to strict security protocols. The use of firm-fixed-price contracts, while setting a ceiling, necessitates close monitoring of performance against schedule and specifications. Inspector General reports and audits also play a role in ensuring accountability and identifying areas for improvement. The effectiveness can vary depending on project complexity, location-specific challenges, and the resources allocated to oversight.

What has been the historical spending trend for embassy construction and related infrastructure by the Department of State?

The Department of State's spending on embassy construction and related infrastructure has historically been substantial, driven by the need to maintain and upgrade diplomatic facilities worldwide. Annual budgets for the Bureau of Overseas Buildings Operations (OBO) often run into billions of dollars, reflecting the ongoing program of new construction, major renovations, and security enhancements. Spending trends are influenced by global security needs, aging infrastructure, and diplomatic priorities. Major construction projects, like new embassy compounds, represent significant capital investments that are planned over multi-year horizons.

What is the significance of the 'DEFINITIVE CONTRACT' award type in this context?

A 'Definitive Contract' is a common type of contract used for large-scale projects where the terms and conditions are fully negotiated and agreed upon upfront. In the context of constructing a new embassy compound, this means that the scope of work, price (firm-fixed-price in this case), delivery schedule, and other contractual clauses were finalized before the work commenced. This provides a high degree of certainty for both the government and the contractor regarding their obligations and expectations, reducing ambiguity and facilitating project management. It signifies a commitment to proceed with the project under the agreed-upon terms.

Industry Classification

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

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - GENERAL

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SAQMMA15R0192

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: B.L. Harbert Holdings, L.L.C. (UEI: 147371236)

Address: 820 SHADES CREEK PKWY STE 3000, BIRMINGHAM, AL, 35209

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $124,609,274

Exercised Options: $124,609,274

Current Obligation: $124,609,274

Subaward Activity

Number of Subawards: 113

Total Subaward Amount: $13,681,458

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline