Department of Defense awards $18M warehouse construction contract to Direct Steel LLC

Contract Overview

Contract Amount: $17,974,127 ($18.0M)

Contractor: Direct Steel LLC

Awarding Agency: Department of Defense

Start Date: 2021-01-12

End Date: 2025-08-15

Contract Duration: 1,676 days

Daily Burn Rate: $10.7K/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: FT HOOD 69TH ADA SSA WAREHOUSE

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76102

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $18.0 million to DIRECT STEEL LLC for work described as: FT HOOD 69TH ADA SSA WAREHOUSE Key points: 1. Contract awarded for warehouse construction at Fort Hood, Texas. 2. Direct Steel LLC secured the contract through full and open competition. 3. The contract has a firm fixed price structure. 4. Performance period spans over four years, from January 2021 to August 2025. 5. The contract value is approximately $18 million. 6. This award falls under the Commercial and Institutional Building Construction NAICS code.

Value Assessment

Rating: good

The contract value of $17.97 million for a warehouse of this size and scope appears reasonable when benchmarked against similar construction projects. While specific per-unit cost data is not provided, the firm fixed-price nature suggests that the contractor assumed the risk for cost overruns, which can be a positive indicator of value. Further analysis would require detailed cost breakdowns and comparisons to recent construction costs in the Texas region for similar facilities.

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,' indicating that multiple bids were solicited and considered. With three bidders participating, the competition level suggests a reasonable opportunity for price discovery and selection of the most advantageous offer for the government. This approach generally leads to more competitive pricing compared to sole-source or limited competition scenarios.

Taxpayer Impact: The competitive bidding process for this contract likely resulted in a more favorable price for taxpayers by encouraging multiple firms to offer their best terms.

Public Impact

The primary beneficiaries are the U.S. Army units stationed at Fort Hood, Texas, who will gain improved logistical and storage capabilities. The contract delivers essential infrastructure in the form of a new warehouse facility. The geographic impact is localized to Fort Hood, Texas, supporting military operations in the region. The contract will likely create jobs in the construction sector in Texas, benefiting local workers and businesses.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for construction delays impacting operational readiness at Fort Hood.
Risk of cost escalation if unforeseen site conditions arise, despite fixed-price contract.

Positive Signals

Firm fixed-price contract structure mitigates cost overrun risk for the government.
Award to a single contractor streamlines project management and execution.
Long-term performance period allows for phased construction and integration.

Sector Analysis

This contract falls within the broader construction sector, specifically Commercial and Institutional Building Construction. The market for military construction is substantial, driven by ongoing modernization and infrastructure needs at bases worldwide. Comparable spending benchmarks would involve analyzing recent awards for similar-sized warehouse or facility construction projects by the Department of Defense or other federal agencies, considering regional cost variations.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside. There is no explicit information regarding subcontracting plans for small businesses. Without this data, it is difficult to assess the direct impact on the small business ecosystem, though prime contractors are often encouraged to utilize small businesses for portions of their work.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Army's contracting command and potentially the Department of Defense Inspector General. Transparency is facilitated through contract award databases like FPDS. Accountability measures are inherent in the firm fixed-price contract type, with penalties or remedies for non-performance.

Related Government Programs

Military Construction, Army
Base Realignment and Closure (BRAC) projects
Department of Defense Facilities Management
Logistics and Supply Chain Infrastructure

Risk Flags

Potential for construction delays
Risk of quality compromise in fixed-price contracts
Dependence on contractor's financial stability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.0 million to DIRECT STEEL LLC. FT HOOD 69TH ADA SSA WAREHOUSE

Who is the contractor on this award?

The obligated recipient is DIRECT STEEL 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 $18.0 million.

What is the period of performance?

Start: 2021-01-12. End: 2025-08-15.

What is the track record of Direct Steel LLC in securing and completing government contracts, particularly within the Department of Defense?

Direct Steel LLC has secured multiple contracts with the federal government, primarily within the Department of Defense. A review of available data indicates a history of awarded contracts related to construction and facility maintenance. While specific details on past performance metrics like on-time completion rates or quality of work are not readily available in this summary, the award of this significant contract suggests a level of capability and past success deemed sufficient by the contracting officers. Further investigation into past performance reviews and any reported disputes or contract terminations would provide a more comprehensive understanding of their track record.

How does the awarded price of $17.97 million compare to similar warehouse construction projects awarded by the Department of Defense in recent years?

Benchmarking the $17.97 million award requires comparing it to similar projects based on size, scope, location, and construction type. Without precise square footage or detailed specifications for this warehouse, a direct comparison is challenging. However, general market data for institutional and commercial building construction in Texas suggests that project costs can vary significantly based on materials, labor rates, and specific requirements. The firm fixed-price nature of this contract implies that the government has secured a defined cost, but a detailed cost-per-square-foot analysis against comparable DoD projects would be necessary to definitively assess value for money.

What are the primary risk indicators associated with this firm fixed-price contract for warehouse construction?

The primary risk indicator for the government in a firm fixed-price (FFP) contract is the potential for the contractor to cut corners on quality or materials to maintain profitability if their initial cost estimates were too low or if unforeseen issues arise during construction. While FFP shifts cost overrun risk to the contractor, the government still bears the risk of receiving a substandard product if oversight is insufficient. For Direct Steel LLC, the risk lies in accurately estimating all costs and managing the project efficiently to ensure profitability within the fixed price. Delays, labor shortages, or material price spikes could impact their bottom line.

What is the expected effectiveness of this new warehouse in enhancing logistical capabilities at Fort Hood?

The effectiveness of the new warehouse hinges on its design, capacity, and integration into the existing logistical framework at Fort Hood. Assuming the facility is designed to meet current and future storage and distribution needs, it is expected to significantly enhance operational readiness by providing secure, climate-controlled, and efficient space for equipment, supplies, and munitions. Improved storage can lead to better inventory management, reduced lead times for deployment, and enhanced support for training exercises and real-world operations. The long-term performance will depend on maintenance, utilization, and adaptability to evolving military requirements.

How has federal spending on similar construction projects evolved over the past five years, and does this contract align with those trends?

Federal spending on construction projects, particularly within the Department of Defense, has remained substantial over the past five years, driven by infrastructure modernization, new facility requirements, and maintenance of existing bases. Trends often reflect priorities such as energy efficiency, force protection, and technological integration. This $18 million warehouse contract aligns with the ongoing need for robust logistical infrastructure to support military readiness. While specific year-over-year spending fluctuations exist, the consistent investment in base infrastructure suggests this contract is in line with established federal spending patterns for facility development.

Are there any specific performance metrics or key performance indicators (KPIs) defined in the contract that will be used to measure the success of the warehouse construction?

While the provided data does not detail specific performance metrics or KPIs, typical government construction contracts include clauses related to timely completion, adherence to specifications and drawings, quality of workmanship, safety standards, and final acceptance of the work. For this contract, key indicators would likely involve meeting the substantial completion date (August 15, 2025), ensuring the facility meets all specified architectural and engineering requirements, and passing all required inspections. The contracting officer's representative (COR) would be responsible for monitoring progress and ensuring compliance with these performance standards.

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: SEALED BID

Solicitation ID: W9126G19B0029

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3321 S IL ROUTE 31, CRYSTAL LAKE, IL, 60012

Business Categories: Category Business, Limited Liability Corporation, Self-Certified Small Disadvantaged Business, Small Business, Sole Proprietorship, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $17,974,127

Exercised Options: $17,974,127

Current Obligation: $17,974,127

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline