DoD awards $59M for Eielson AFB F-35A weather shelter, raising questions on value and competition

Contract Overview

Contract Amount: $59,027,036 ($59.0M)

Contractor: Watterson Construction CO

Awarding Agency: Department of Defense

Start Date: 2018-01-25

End Date: 2020-04-01

Contract Duration: 797 days

Daily Burn Rate: $74.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN AND CONSTRUCT F-35A AIRCRAFT WEATHER SHELTER SQUADRON #1, EIELSON AFB, ALASKA (EIE378)

Place of Performance

Location: EIELSON AFB, FAIRBANKS NORTH STAR County, ALASKA, 99702

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $59.0 million to WATTERSON CONSTRUCTION CO for work described as: DESIGN AND CONSTRUCT F-35A AIRCRAFT WEATHER SHELTER SQUADRON #1, EIELSON AFB, ALASKA (EIE378) Key points: 1. The contract awarded to Watterson Construction Co. for $59.03 million represents a significant investment in critical infrastructure for F-35 operations. 2. Analysis of the contract's value proposition is needed, especially given the firm-fixed-price structure which shifts risk to the contractor. 3. The 'full and open competition' suggests a robust bidding process, but the number of bidders (3) warrants scrutiny for potential price discovery limitations. 4. Performance context is limited without data on project milestones, delays, or cost overruns during the 797-day duration. 5. The contract falls within the broader 'Commercial and Institutional Building Construction' sector, with specific application to defense infrastructure. 6. Benchmarking this cost against similar military construction projects is crucial for assessing value for money.

Value Assessment

Rating: fair

The contract's total value of $59.03 million for constructing a weather shelter for F-35A aircraft at Eielson AFB appears substantial. Without specific details on the shelter's size, complexity, and features, a direct comparison to similar contracts is challenging. However, the firm-fixed-price nature suggests that the contractor assumed the risk for cost overruns. Further analysis would require benchmarking against other military construction projects of similar scope and scale to determine if the pricing is competitive and represents good value for the taxpayer.

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. However, only three bids were received. While this suggests some level of competition, a lower number of bidders compared to what might be expected for a project of this magnitude could potentially limit robust price discovery and may suggest barriers to entry for other potential contractors.

Taxpayer Impact: A competitive process, even with a limited number of bidders, is generally beneficial for taxpayers as it encourages multiple firms to offer their best pricing. However, with only three bids, there is a risk that the final price may not reflect the lowest possible cost achievable in a more robustly contested market.

Public Impact

The primary beneficiaries are the U.S. Air Force personnel and operations at Eielson AFB, ensuring the readiness and protection of F-35A aircraft. The contract delivers essential infrastructure in the form of a weather shelter, crucial for maintaining aircraft condition and operational availability in Alaska's climate. The geographic impact is localized to Eielson AFB, Alaska, supporting a key strategic military installation in the region. The project likely created temporary construction jobs in Alaska, contributing to the local economy during the construction phase.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (3 bidders) may have impacted price optimization.
Lack of detailed performance metrics makes value assessment difficult.
Potential for cost overruns if scope was not precisely defined, despite fixed-price contract.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Full and open competition process theoretically allows for broad market participation.
Project addresses critical infrastructure needs for advanced military assets.

Sector Analysis

This contract falls within the broader construction sector, specifically Commercial and Institutional Building Construction. The defense sector frequently procures such facilities to support its operational readiness and asset protection. The market for military construction is characterized by large-scale projects, often requiring specialized expertise and adherence to stringent government standards. Benchmarking this contract's cost against other Department of Defense construction projects for aircraft shelters or similar facilities would provide a clearer picture of its relative cost-effectiveness.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale construction project, it is unlikely that small businesses would be the primary awardees, though they may have participated as subcontractors to the prime contractor, Watterson Construction Co. Further investigation into subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this Department of the Army contract would typically involve contracting officers, project managers, and potentially the Defense Contract Management Agency (DCMA). The firm-fixed-price nature of the contract implies that the government's primary oversight would focus on ensuring the project is completed according to specifications and on schedule. Transparency is generally maintained through contract award databases, but detailed project performance data may be less publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Construction, Army
Aircraft Maintenance Facilities
Defense Infrastructure Projects
F-35 Program Support Contracts

Risk Flags

Limited competition
Potential for cost overruns (inherent risk in construction)
Lack of detailed performance data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.0 million to WATTERSON CONSTRUCTION CO. DESIGN AND CONSTRUCT F-35A AIRCRAFT WEATHER SHELTER SQUADRON #1, EIELSON AFB, ALASKA (EIE378)

Who is the contractor on this award?

The obligated recipient is WATTERSON CONSTRUCTION CO.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $59.0 million.

What is the period of performance?

Start: 2018-01-25. End: 2020-04-01.

What is the track record of Watterson Construction Co. on similar federal contracts, particularly regarding performance and cost adherence?

Watterson Construction Co. has a history of performing federal construction contracts. A detailed review of their past performance on similar projects, especially those involving military infrastructure or aircraft facilities, would be necessary to assess their reliability. This would involve examining contract close-out data, any reported disputes or claims, and performance evaluations from previous government agencies. Understanding their history with firm-fixed-price contracts and their ability to manage costs within budget is crucial for evaluating the risk associated with this specific award. Without access to specific performance metrics and historical data for Watterson Construction Co., it is difficult to definitively assess their track record for this particular contract.

How does the cost per square foot or per unit of this weather shelter compare to similar military construction projects awarded over the past five years?

To benchmark the value of this $59.03 million contract, a comparison of cost per square foot or per unit against similar military construction projects is essential. This would involve identifying comparable projects, such as other aircraft shelters or maintenance facilities built for the Department of Defense or other federal agencies, within a similar timeframe. Factors such as geographic location (and associated labor/material costs), specific design requirements, and the complexity of the structure would need to be accounted for. If data indicates that this contract's cost metrics are significantly higher than comparable projects, it would suggest potential issues with pricing or value for money. Conversely, if costs are in line or lower, it would support the assessment of fair value.

What were the specific criteria used to determine the 'full and open competition' and the evaluation process for the three submitted bids?

The determination of 'full and open competition' implies that the solicitation was broadly advertised, allowing any responsible contractor to submit a proposal. The evaluation process for the three bids would have followed the criteria outlined in the solicitation, which typically includes factors such as technical approach, past performance, price, and small business utilization. The specific weighting of these factors would determine how the contract was awarded. Understanding the evaluation criteria and the relative scores of the bidders is important. If the lowest price technically acceptable (LPTA) method was used, it might suggest less emphasis on optimizing value beyond meeting minimum requirements. Conversely, a best-value tradeoff process could indicate a more nuanced evaluation aimed at achieving the best overall outcome for the government.

Are there any documented performance issues, delays, or cost changes associated with this contract during its execution period (2018-2020)?

The contract duration was from January 25, 2018, to April 1, 2020, spanning 797 days. As a firm-fixed-price contract, the expectation is that the contractor would adhere to the agreed-upon price and schedule. However, construction projects, especially in remote or challenging environments like Alaska, can encounter unforeseen issues. Information regarding any change orders, contract modifications, delays due to weather or unforeseen site conditions, or performance disputes would be critical. Publicly available contract databases or agency reports might contain such details. The absence of readily available information on performance issues does not guarantee flawless execution, but it suggests no major disputes or significant contract modifications were publicly reported.

What is the estimated operational lifespan and maintenance cost associated with this weather shelter, and how does it factor into the long-term value assessment?

The initial contract value of $59.03 million covers the design and construction of the weather shelter. However, a comprehensive assessment of its long-term value requires considering the operational lifespan and projected maintenance costs. Military infrastructure is expected to serve for decades, and understanding the materials used, the quality of construction, and the anticipated maintenance burden is crucial. Information on the expected lifespan (e.g., 20-50 years) and estimates for routine and major maintenance would allow for a life-cycle cost analysis. This analysis would compare the total cost of ownership against the benefits derived from protecting the F-35A aircraft and ensuring operational readiness, providing a more complete picture of the investment's value beyond the initial construction price.

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

Solicitation ID: W911KB17R0003

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6500 INTERSTATE CIR, ANCHORAGE, AK, 99518

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

Financial Breakdown

Contract Ceiling: $59,027,036

Exercised Options: $59,027,036

Current Obligation: $59,027,036

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $34,234,605

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline