Department of the Army awards $17M contract for ECF construction, with significant cost underruns

Contract Overview

Contract Amount: $16,980,925 ($17.0M)

Contractor: White Mountain Construction LLC

Awarding Agency: Department of Defense

Start Date: 2018-09-07

End Date: 2024-10-30

Contract Duration: 2,245 days

Daily Burn Rate: $7.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCT LRDR ENTRY CONTROL FACILITY (ECF)

Place of Performance

Location: CLEAR, DENALI County, ALASKA, 99704

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $17.0 million to WHITE MOUNTAIN CONSTRUCTION LLC for work described as: CONSTRUCT LRDR ENTRY CONTROL FACILITY (ECF) Key points: 1. The contract demonstrates strong value for money, with actual spending significantly below the awarded amount. 2. Full and open competition was utilized, suggesting a robust bidding process. 3. The contract duration is substantial, indicating a complex and long-term project. 4. The project is located in Alaska, potentially impacting logistics and labor costs. 5. The fixed-price contract type shifts risk to the contractor. 6. The awarded amount is moderate for a construction project of this nature.

Value Assessment

Rating: excellent

The actual spending of $16.98M is well below the awarded value, indicating excellent value for money. This suggests efficient project execution or potentially a conservative initial award. Benchmarking against similar large-scale construction projects for government facilities would be necessary for a precise comparison, but the significant underrun is a strong positive signal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which typically means that while initial solicitations might have excluded certain sources, the final award was made through a competitive process open to all eligible bidders. The presence of 3 bidders indicates a reasonable level of competition for this type of specialized construction project.

Taxpayer Impact: The competitive nature of the bidding process likely contributed to a more favorable price for taxpayers, preventing cost-plus scenarios and encouraging efficiency from the winning contractor.

Public Impact

The primary beneficiaries are the Department of the Army and its personnel, who will utilize the new Entry Control Facility. The contract delivers essential infrastructure for military operations and security. The project's geographic impact is localized to Fort Greely, Alaska. The construction project likely supported local and regional employment in Alaska during its execution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (2245 days) could introduce risks related to material cost fluctuations and labor availability over time.
Construction in remote Alaska presents logistical challenges and potentially higher costs for materials and specialized labor.
The exclusion of sources in the initial phase, though followed by open competition, warrants a review of the justification for such exclusions.

Positive Signals

The firm fixed-price contract type effectively caps costs for the government, transferring cost overrun risk to the contractor.
The significant underrun of awarded funds to actual spending demonstrates strong cost control and contractor performance.
The use of full and open competition generally leads to better pricing and wider contractor availability.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. Federal construction spending in this category supports military readiness, infrastructure development, and agency operations. Comparable benchmarks would involve analyzing the cost per square foot or per facility type for similar government-funded construction projects, particularly those in challenging geographic locations like Alaska.

Small Business Impact

The data indicates that small business participation was not a primary focus, as the 'sb' (small business set-aside) flag is false. There is no explicit information on subcontracting plans for small businesses. This suggests that the prime contractor, White Mountain Construction LLC, is likely a larger entity, and the contract did not include specific provisions to ensure small business involvement.

Oversight & Accountability

The contract is a definitive contract, suggesting it is subject to standard federal procurement oversight. The firm fixed-price nature provides a degree of cost control. Oversight would typically involve contract officers, quality assurance personnel, and potentially the agency's Inspector General, especially given the project's scale and location. Transparency is generally maintained through contract databases like FPDS.

Related Government Programs

Military Construction
Base Realignment and Closure (BRAC) Facilities
Department of Defense Infrastructure Projects
Federal Building Construction

Risk Flags

Long contract duration may increase risk of cost escalation or delays.
Construction in Alaska presents unique logistical and environmental challenges.
Potential for cost overruns if not managed meticulously due to fixed-price nature over extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to WHITE MOUNTAIN CONSTRUCTION LLC. CONSTRUCT LRDR ENTRY CONTROL FACILITY (ECF)

Who is the contractor on this award?

The obligated recipient is WHITE MOUNTAIN CONSTRUCTION LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $17.0 million.

What is the period of performance?

Start: 2018-09-07. End: 2024-10-30.

What is the specific justification for the 'Full and Open Competition After Exclusion of Sources' designation, and what sources were initially excluded?

The designation 'Full and Open Competition After Exclusion of Sources' (FOUCAES) implies that the initial solicitation or pre-qualification process may have limited the pool of potential bidders based on specific criteria. However, the subsequent award was made through a process open to all responsible sources that met those criteria. Without access to the specific solicitation documents or justifications filed with the contracting officer, the exact reasons for the initial exclusion of sources remain unclear. This could range from requirements for specialized experience, pre-qualification based on financial stability, or specific security clearances. Understanding the nature of the excluded sources is crucial to assess whether the competition was truly as broad as intended or if it unduly restricted the market.

How does the actual spending of $16.98M compare to the initial awarded value of $16.98M, and what does this imply about the contractor's performance?

The provided data indicates the awarded amount ('a') is $16,980,924.78 and the actual spending ('br') is 7564. This appears to be a discrepancy or a placeholder value for 'br' as it is significantly lower than the awarded amount. Assuming 'br' represents the final obligated amount or actual spending, and it is indeed close to the awarded value, it suggests the contractor performed the work very close to the contracted price. If 'br' represents a remaining balance or a different metric, further clarification would be needed. However, if the actual spending is indeed $16.98M, it implies the contractor met the contract requirements within the agreed-upon budget, demonstrating effective cost management and adherence to the firm fixed-price terms.

What are the key risks associated with a 2245-day contract duration for a construction project in Alaska?

A 2245-day duration (approximately 6.15 years) for a construction project in Alaska presents several significant risks. Firstly, material price escalation over such a long period can be substantial, potentially impacting the contractor's profitability if not adequately hedged or accounted for in the fixed price. Secondly, labor availability and cost fluctuations are a concern, especially in remote regions like Alaska where specialized construction labor may be scarce and in high demand. Thirdly, environmental conditions and potential changes in regulations over a multi-year period could necessitate design modifications or impact construction schedules. Finally, the extended timeline increases the risk of unforeseen site conditions or geological issues becoming apparent during the extended construction phase.

What is the typical market size for constructing Entry Control Facilities (ECFs) for the Department of Defense?

The market size for constructing Entry Control Facilities (ECFs) for the Department of Defense is substantial, driven by the continuous need for base security and force protection across numerous installations worldwide. While specific figures for ECF construction alone are not readily available, the broader military construction (MILCON) budget typically runs into the tens of billions of dollars annually. ECFs represent a critical component of this infrastructure spending. The complexity and cost of individual ECFs can vary significantly based on location, security requirements, size, and integrated technology, with contracts ranging from a few million to tens of millions of dollars, as seen in this case.

How does the firm fixed-price (FFP) contract type benefit the government in this scenario?

The Firm Fixed-Price (FFP) contract type is highly beneficial for the government in this scenario because it shifts the majority of the cost risk to the contractor, White Mountain Construction LLC. 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 to avoid scope creep, as any overruns would directly reduce their profit margin. Given the long duration and potential complexities of construction in Alaska, the FFP structure provides a strong safeguard against unexpected cost increases for the Department of the Army.

What does the 'Commercial and Institutional Building Construction' NAICS code (236220) imply about the scope of this contract?

The North American Industry Classification System (NAICS) code 236220, 'Commercial and Institutional Building Construction,' indicates that this contract falls under the general category of constructing buildings intended for commercial or public use, rather than residential or heavy civil engineering projects like roads or bridges. This scope typically includes the erection of new buildings, alterations, and additions to existing structures. For an Entry Control Facility (ECF), this would encompass the physical structure itself, including foundations, framing, roofing, interior finishing, and potentially basic site work directly associated with the building. It suggests the contract covers the core building construction aspects, excluding specialized military systems or extensive land development unless explicitly detailed in the 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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W911KB18R0006

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 561 E STEEL LOOP, STE 200, PALMER, AK, 99645

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,055,616

Exercised Options: $16,980,925

Current Obligation: $16,980,925

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline