DoD's $650M Tyndall AFB project awarded to Hensel Phelps Construction Co. for building construction

Contract Overview

Contract Amount: $649,996,490 ($650.0M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2022-05-20

End Date: 2026-07-26

Contract Duration: 1,528 days

Daily Burn Rate: $425.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ZONE 1 TYNDALL AFB, FL

Place of Performance

Location: PANAMA CITY, BAY County, FLORIDA, 32403

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $650.0 million to HENSEL PHELPS CONSTRUCTION CO for work described as: ZONE 1 TYNDALL AFB, FL Key points: 1. Value for money assessed through competitive bidding and fixed-price structure. 2. Competition dynamics indicate a robust market for large-scale construction. 3. Risk indicators include contract duration and potential for cost overruns. 4. Performance context is critical for timely completion of base reconstruction. 5. Sector positioning highlights significant investment in defense infrastructure.

Value Assessment

Rating: good

The contract value of $650 million for building construction at Tyndall AFB appears substantial, reflecting the scale of the reconstruction effort. Benchmarking against similar large-scale military construction projects is necessary for a precise value-for-money assessment. The firm fixed-price contract type suggests that the contractor bears the risk of cost overruns, which can be a positive indicator for the government if managed effectively. However, the sheer size of the contract warrants close monitoring of performance and adherence to the fixed price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of 3 bidders suggests a healthy level of competition for this significant project. A competitive environment generally leads to better pricing and terms for the government, as contractors vie for the award. The specific details of the bidding process, including the number of proposals received and the evaluation criteria, would provide further insight into the effectiveness of the competition.

Taxpayer Impact: The full and open competition for this large contract is beneficial for taxpayers, as it likely drove down costs through competitive pressure and ensured the government received the best value offer.

Public Impact

The primary beneficiaries are the Department of Defense and military personnel stationed at Tyndall Air Force Base, who will receive modernized facilities. Services delivered include the construction of commercial and institutional buildings, crucial for base operations and readiness. The geographic impact is concentrated in the Florida Panhandle, specifically at Tyndall AFB. Workforce implications include job creation in the construction sector within the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (1528 days) increases the risk of scope creep and potential for unforeseen cost increases.
Firm Fixed Price contracts can sometimes lead to reduced quality if not rigorously overseen, especially on large projects.
Reliance on a single large contractor for such a massive undertaking could pose risks if performance issues arise.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process that likely secured favorable pricing.
The firm fixed-price contract structure shifts cost overrun risk to the contractor.
The project addresses critical infrastructure needs for military readiness and modernization.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. The defense sector often represents a substantial portion of government construction spending due to the need for specialized facilities and infrastructure upgrades. Comparable spending benchmarks would involve analyzing other large-scale military base construction or renovation projects, which can run into hundreds of millions or even billions of dollars.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). While Hensel Phelps Construction Co. is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent to which the prime contractor engages small businesses in subcontracting roles will impact the small business ecosystem in the region.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army, given the agency assigned (sa). Mechanisms for oversight would include regular progress reviews, site inspections, and adherence to contract milestones. Accountability measures are built into the firm fixed-price structure, with penalties or incentives potentially tied to performance. Transparency is typically maintained through contract award databases and public reporting, though detailed project-specific oversight reports may not always be publicly available.

Related Government Programs

Tyndall Air Force Base Reconstruction Program
Military Construction Projects
Defense Infrastructure Modernization

Risk Flags

Large contract value
Long contract duration
Potential for scope creep
Reliance on a single prime contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $650.0 million to HENSEL PHELPS CONSTRUCTION CO. ZONE 1 TYNDALL AFB, FL

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS 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 $650.0 million.

What is the period of performance?

Start: 2022-05-20. End: 2026-07-26.

What is the track record of Hensel Phelps Construction Co. on similar large-scale government construction contracts?

Hensel Phelps Construction Co. is a well-established general contractor with a significant history of undertaking large-scale projects, including many for government and military clients. Their portfolio includes numerous complex construction endeavors, often involving significant dollar values and long durations, similar to the Tyndall AFB project. Analyzing their past performance on comparable projects, such as other Air Force base construction or major institutional buildings, would reveal their ability to manage budgets, adhere to schedules, and maintain quality standards. Past performance reviews and any documented issues or successes on previous federal contracts would provide crucial context for assessing their suitability and reliability for this $650 million award.

How does the per-square-foot cost of this project compare to similar military construction projects?

To compare the per-square-foot cost, we would need the total square footage of the buildings being constructed under this contract, which is not provided in the summary data. Assuming this information were available, we could calculate a per-square-foot cost and benchmark it against similar projects. For instance, if the average cost per square foot for similar military barracks or administrative buildings in the Southeast region is $300-$400, and this project comes in at $500 per square foot, it might indicate a higher cost. Conversely, if it falls within or below this range, it suggests better value. Factors like specialized requirements, site conditions, and material costs can significantly influence per-square-foot pricing, making direct comparisons require careful consideration of these variables.

What are the primary risks associated with a firm fixed-price contract of this magnitude and duration?

The primary risks associated with a firm fixed-price (FFP) contract of this magnitude ($650 million) and duration (1528 days) include potential for contractor underperformance or default, and the risk of disputes arising from scope changes or unforeseen conditions. While FFP shifts cost overrun risk to the contractor, it can incentivize cutting corners on quality if not rigorously overseen. For the government, the risk lies in the contractor's ability to execute the project successfully within the fixed price. If the contractor encounters significant unforeseen issues or the scope expands, they may struggle to complete the work, potentially leading to delays, disputes, or even project abandonment. Robust government oversight, clear contract terms, and a strong relationship with the contractor are crucial to mitigate these risks.

What is the historical spending pattern for building construction at Tyndall AFB prior to this award?

Historical spending data for building construction at Tyndall AFB prior to this $650 million award would provide context on the typical investment in base infrastructure. Analyzing past contracts for similar construction activities, including their value, duration, and type of competition, can reveal trends. For example, if previous spending was significantly lower, this award represents a substantial increase, possibly due to post-disaster reconstruction needs (like Hurricane Michael) or a broader modernization initiative. Conversely, if similar large-scale projects have been common, it suggests a consistent pattern of investment. Understanding this historical context helps assess whether the current spending level is an anomaly or part of an ongoing capital improvement plan.

How will the success of this contract impact future defense construction procurements?

The successful execution of this $650 million contract will likely have a positive impact on future defense construction procurements by reinforcing confidence in the chosen contractor (Hensel Phelps Construction Co.) and the procurement process (full and open competition with FFP). A well-managed project completed on time and within budget can serve as a benchmark for similar future endeavors, potentially leading to more competitive bids from other large construction firms seeking to emulate such success. Conversely, significant issues or cost overruns, despite the FFP structure, could lead to increased scrutiny of future large-scale defense construction contracts, potentially influencing contract types, competition strategies, or oversight requirements. Positive outcomes can streamline future processes, while negative ones may necessitate adjustments.

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: W9127820R0035

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6557 HAZELTINE NATIONAL DR STE 1, ORLANDO, FL, 32822

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $656,255,490

Exercised Options: $649,996,490

Current Obligation: $649,996,490

Actual Outlays: $-97,761,979

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline