DoD Awards $327M Design-Build Contract for RGV Fence Segment in Texas

Contract Overview

Contract Amount: $326,887,353 ($326.9M)

Contractor: Southwest Valley Constructors CO

Awarding Agency: Department of Defense

Start Date: 2019-08-07

End Date: 2023-07-28

Contract Duration: 1,451 days

Daily Burn Rate: $225.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN BUILD CONSTRUCTION CONTRACT FOR RIO GRANDE VALLEY (RGV04) FENCE SEGMENT, HIDALGO COUNTY, TX.

Place of Performance

Location: MCALLEN, HIDALGO County, TEXAS, 78501

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $326.9 million to SOUTHWEST VALLEY CONSTRUCTORS CO for work described as: DESIGN BUILD CONSTRUCTION CONTRACT FOR RIO GRANDE VALLEY (RGV04) FENCE SEGMENT, HIDALGO COUNTY, TX. Key points: 1. The contract is for a significant infrastructure project in Hidalgo County, Texas. 2. Southwest Valley Constructors Co. was awarded the firm-fixed-price contract. 3. The project falls under the Highway, Street, and Bridge Construction NAICS code. 4. The award was made under full and open competition. 5. The contract duration is 1451 days.

Value Assessment

Rating: fair

The contract value of $326.9 million is substantial for a construction project of this nature. Benchmarking against similar large-scale infrastructure projects would be necessary to fully assess pricing, but the firm-fixed-price structure aims to control costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, suggesting a robust price discovery process. This method typically leads to more competitive pricing compared to limited or sole-source procurements.

Taxpayer Impact: The significant investment of $327 million represents a substantial allocation of taxpayer funds towards border infrastructure.

Public Impact

Impact on local economy in Hidalgo County, Texas, through job creation and subcontracts. Environmental considerations and potential impact on the Rio Grande Valley ecosystem. Security implications and effectiveness of the constructed fence segment. Long-term maintenance and operational costs associated with the infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (1451 days) may lead to cost overruns or scope creep.
Firm-fixed-price contracts can be risky for contractors on complex projects, potentially leading to disputes or quality issues if not managed carefully.
The specific nature of border infrastructure projects can involve unique security and political considerations.

Positive Signals

Awarded under full and open competition, indicating potential for good value.
Clear definition of scope through design-build contract type.
Department of Defense oversight ensures adherence to federal contracting standards.

Sector Analysis

This contract falls under the construction sector, specifically highway, street, and bridge construction. Large federal construction contracts can range from tens of millions to billions, with this project being in the upper-middle tier for a single segment.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this contract. Further investigation would be needed to determine if small businesses were involved as subcontractors.

Oversight & Accountability

The Department of Defense, through the Department of the Army, is responsible for overseeing this contract. Standard federal oversight mechanisms, including contract close-out procedures and performance reviews, would apply.

Related Government Programs

Highway, Street, and Bridge Construction
Department of Defense Contracting
Department of the Army Programs

Risk Flags

High contract value.
Long contract duration.
Potential for unforeseen site conditions.
Complexity of design-build projects.
National security implications.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $326.9 million to SOUTHWEST VALLEY CONSTRUCTORS CO. DESIGN BUILD CONSTRUCTION CONTRACT FOR RIO GRANDE VALLEY (RGV04) FENCE SEGMENT, HIDALGO COUNTY, TX.

Who is the contractor on this award?

The obligated recipient is SOUTHWEST VALLEY CONSTRUCTORS 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 $326.9 million.

What is the period of performance?

Start: 2019-08-07. End: 2023-07-28.

What is the projected economic impact on Hidalgo County from this $327 million construction contract, considering job creation and local business engagement?

The $327 million contract is expected to generate significant economic activity in Hidalgo County. This includes direct job creation for construction workers, engineers, and project managers, as well as indirect employment through material suppliers and local service providers. The scale of the project suggests substantial opportunities for local businesses to participate as subcontractors or suppliers, boosting the regional economy.

What are the primary risks associated with a firm-fixed-price, design-build contract of this magnitude and duration, particularly concerning potential cost overruns or quality compromises?

The primary risks include potential cost overruns if unforeseen site conditions or material price escalations occur, as the contractor bears most of this risk. For the government, the risk lies in potential quality compromises if the contractor attempts to cut corners to maintain profitability over the long duration. Scope creep, though less likely in design-build, can still occur if requirements are not rigidly defined and managed.

How will the effectiveness of the RGV fence segment be measured, and what metrics will be used to assess its contribution to border security objectives?

Effectiveness will likely be measured through a combination of physical integrity assessments, operational data on border crossings, and intelligence reports. Metrics may include the reduction in unauthorized crossings in the specific segment, the time required for interdiction by border patrol, and the overall operational efficiency gained. Post-construction reviews and ongoing performance monitoring by the Department of Homeland Security will be crucial.

Industry Classification

NAICS: Construction › Highway, Street, and Bridge Construction › Highway, Street, and Bridge 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: W9126G19R0118

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5130 MASTHEAD ST NE, ALBUQUERQUE, NM, 87109

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

Financial Breakdown

Contract Ceiling: $326,935,352

Exercised Options: $326,935,352

Current Obligation: $326,887,353

Subaward Activity

Number of Subawards: 40

Total Subaward Amount: $108,481,389

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline