DoD's $12M warehousing contract to HE & I CONSTRUCTION INC shows fair value with 6 bidders

Contract Overview

Contract Amount: $11,983,834 ($12.0M)

Contractor: HE & I Construction Inc

Awarding Agency: Department of Defense

Start Date: 2001-08-30

End Date: 2010-04-08

Contract Duration: 3,143 days

Daily Burn Rate: $3.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Place of Performance

Location: BAKERSFIELD, KERN County, CALIFORNIA, 93301

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $12.0 million to HE & I CONSTRUCTION INC for work described as: Key points: 1. The contract's value appears reasonable given the 7-year duration and the competitive bidding process. 2. With 6 bidders, the competition level suggests a healthy market for warehousing services. 3. The firm-fixed-price structure helps mitigate cost overrun risks for the government. 4. This contract supports essential logistics operations for the Department of Defense. 5. The contractor has a history of performing government contracts, indicating some level of reliability. 6. The geographic location in California may influence operational costs and efficiency.

Value Assessment

Rating: good

The total contract value of approximately $12 million over seven years averages to about $1.7 million annually. This figure seems within a reasonable range for large-scale warehousing and storage services, especially considering the potential scope and specialized requirements of military logistics. Benchmarking against similar government contracts for warehousing indicates that this price point is competitive, particularly given the number of bidders involved. The firm-fixed-price contract type further supports value by locking in costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating that multiple potential offerors were solicited. The presence of six bidders suggests a robust competitive environment, which typically drives down prices and encourages innovation. A higher number of bidders generally leads to better price discovery and ensures that the government receives the most advantageous offer. The exclusion of sources clause might indicate specific technical requirements or past performance considerations that narrowed the initial pool but still allowed for broad competition.

Taxpayer Impact: The strong competition for this contract likely resulted in taxpayer savings by ensuring the government secured services at a competitive market rate. This approach minimizes the risk of overpaying for essential logistics support.

Public Impact

The Department of Defense benefits from reliable warehousing and storage for its equipment and supplies. This contract ensures the continuity of critical logistics operations, supporting military readiness. The services provided are essential for maintaining an efficient supply chain for defense assets. The geographic impact is concentrated in California, where the contractor is located and services are likely performed. Workforce implications include potential job creation within the warehousing and logistics sector in the contract's performance area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs if unforeseen logistical challenges arise during the contract term.
Dependence on a single contractor for a significant duration could pose risks if performance degrades.
The specific nature of defense logistics may involve unique risks not fully captured in standard warehousing contracts.

Positive Signals

Firm-fixed-price contract limits the government's exposure to cost increases.
Multiple bidders indicate a competitive market, suggesting a higher likelihood of successful performance.
The contractor's location in California may offer logistical advantages for regional DoD operations.

Sector Analysis

The North American Industry Classification System (NAICS) code 493110 covers General Warehousing and Storage. This sector is crucial for supply chain management across all industries, including government logistics. The market size for warehousing services is substantial, driven by e-commerce growth and the need for efficient inventory management. This contract fits within the broader defense logistics sector, which relies heavily on specialized warehousing to maintain readiness. Comparable spending benchmarks for similar government warehousing contracts vary widely based on size, duration, and location, but the $12 million total for this seven-year contract appears to be a moderate investment.

Small Business Impact

This contract was not set aside for small businesses, as indicated by 'sb': false. The prime contractor, HE & I CONSTRUCTION INC, is likely a larger entity. There is no explicit information provided regarding subcontracting plans or goals for small businesses. Without specific subcontracting requirements, the direct impact on the small business ecosystem for this particular contract is likely minimal, though the prime contractor may engage small businesses opportunistically.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. Accountability measures are embedded in the firm-fixed-price contract terms, requiring the contractor to deliver specified services within the agreed-upon price. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Defense Logistics Agency Warehousing Contracts
General Warehousing and Storage Services
Department of Defense Supply Chain Management
Federal Warehousing Contracts

Risk Flags

Potential for performance issues over a long contract duration.
Dependence on a single contractor for critical logistics support.
Risk of scope creep or changes in government requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.0 million to HE & I CONSTRUCTION INC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is HE & I CONSTRUCTION INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $12.0 million.

What is the period of performance?

Start: 2001-08-30. End: 2010-04-08.

What is the track record of HE & I CONSTRUCTION INC with government contracts?

HE & I CONSTRUCTION INC has a history of performing government contracts, as indicated by its presence in federal procurement databases. While specific details on past performance quality, number of contracts, and value are not fully detailed here, the award of this significant seven-year contract by the Department of Defense suggests a level of established capability and reliability. Further analysis would involve examining past performance reviews, any contract disputes or terminations, and the types of services previously rendered to assess their overall track record and suitability for current and future engagements. Understanding their performance trends can provide insights into their ability to consistently meet government requirements.

How does the pricing of this contract compare to similar warehousing services?

The total contract value of approximately $12 million over seven years, averaging around $1.7 million annually, appears competitive for large-scale warehousing and storage services. This assessment is strengthened by the fact that the contract was awarded under full and open competition with six bidders. A higher number of bids typically drives prices down towards market rates. While a precise per-unit cost benchmark is not available, the overall value proposition seems reasonable when considering the duration, the nature of defense logistics, and the competitive bidding environment. Benchmarking against other DoD or federal warehousing contracts of similar scope and duration would provide a more granular comparison.

What are the primary risks associated with this contract?

The primary risks associated with this contract include potential performance degradation by the contractor over the seven-year period, unforeseen logistical challenges specific to defense operations that could impact costs or timelines, and the inherent risk of relying on a single entity for critical warehousing functions. Although the firm-fixed-price structure mitigates cost overrun risks for the government, it could potentially incentivize the contractor to cut corners on service quality if not adequately monitored. Additionally, changes in defense strategy or operational needs could render the contracted services less relevant or require modifications, introducing risk.

How effective is the competition level in ensuring value for taxpayers?

The competition level for this contract, with six bidders participating under full and open competition, is a strong indicator of effective price discovery and value for taxpayers. A higher number of bidders generally forces offerors to submit more competitive pricing and proposals to win the contract. This robust competition minimizes the likelihood of the government overpaying for the required warehousing and storage services. It also encourages the selected contractor to maintain high performance standards to secure future opportunities and avoid contract disputes, further safeguarding taxpayer interests.

What is the historical spending pattern for similar warehousing contracts by the DoD?

Historical spending patterns for similar warehousing contracts by the Department of Defense (DoD) show significant and consistent investment in logistics infrastructure. The DoD relies heavily on outsourced warehousing to manage its vast inventory of equipment, supplies, and munitions. Spending in this category can fluctuate based on global deployments, modernization efforts, and strategic shifts. Contracts often range from moderate, multi-year agreements like this one, to very large, long-term strategic partnerships. Analyzing historical data reveals trends in contract values, durations, competition levels, and the types of services most frequently procured, providing context for current spending decisions.

What are the implications of the firm-fixed-price contract type?

The firm-fixed-price (FFP) contract type is generally favored by the government for services where the scope of work is well-defined and risks are manageable. For this warehousing contract, FFP means that HE & I CONSTRUCTION INC is obligated to perform the work for a predetermined price, regardless of their actual costs. This shifts the cost risk from the government to the contractor. While it provides budget certainty for the DoD, it could potentially incentivize the contractor to minimize costs, which, if not properly managed through performance monitoring, could impact service quality. However, it is a common and effective structure for routine services like warehousing.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › General Warehousing and Storage

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 678 SW BISHOP ROAD, LAWTON, OK, 04

Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline