DoD's $33.7M construction contract for Hawaii facility awarded to NAN INC

Contract Overview

Contract Amount: $32,332,266 ($32.3M)

Contractor: NAN Inc

Awarding Agency: Department of Defense

Start Date: 2004-09-17

End Date: 2007-05-05

Contract Duration: 960 days

Daily Burn Rate: $33.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Place of Performance

Location: SCHOFIELD BARRACKS, HONOLULU County, HAWAII, 96857

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $32.3 million to NAN INC for work described as: Key points: 1. Value for money appears fair given the firm-fixed-price structure and duration. 2. Competition dynamics indicate a full and open process, potentially leading to better pricing. 3. Risk indicators are moderate, with a fixed-price contract and a 3-year performance period. 4. Performance context suggests a focus on commercial and institutional building construction. 5. Sector positioning is within the Defense construction domain, a significant area of federal spending.

Value Assessment

Rating: fair

The contract's total value of $33.7 million over approximately 3 years suggests a moderate annual spend. Benchmarking against similar large-scale construction projects within the Department of Defense is challenging without more granular cost data. However, the firm-fixed-price nature of the award implies that the contractor assumed the risk for cost overruns, which can be a positive indicator for value if the final cost aligns with the initial bid.

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. With two bids received, the level of competition was limited but still present. This suggests that while there was some price discovery, the limited number of bidders might have constrained the full potential for competitive pricing.

Taxpayer Impact: A full and open competition, even with only two bidders, generally provides a better opportunity for taxpayers to receive competitive pricing compared to sole-source or limited competition scenarios.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Department of the Army, receiving a new or improved facility. The service delivered is commercial and institutional building construction, crucial for military infrastructure. The geographic impact is localized to Hawaii, supporting military operations in the Pacific region. Workforce implications include job creation for construction workers and related trades in Hawaii during the contract period.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the fixed-price contract did not adequately account for all project complexities.
Risk of schedule delays impacting operational readiness for the military unit relying on the facility.
Quality control concerns inherent in large construction projects, requiring diligent oversight.

Positive Signals

Award to a single contractor (NAN INC) can streamline project management and communication.
Firm-fixed-price contract shifts cost risk to the contractor, potentially protecting the government from unexpected expenses.
Completion within a defined timeframe (960 days) provides a clear performance expectation.

Sector Analysis

The construction sector is a significant component of federal spending, particularly for agencies like the Department of Defense that require extensive infrastructure. This contract falls within the broader category of commercial and institutional building construction, which includes a wide range of facilities from administrative buildings to specialized operational structures. Comparable spending benchmarks would typically involve analyzing the cost per square foot or per project for similar military construction projects in high-cost areas like Hawaii.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award to NAN INC, without further information on its size, does not provide insight into subcontracting opportunities for small businesses. Further analysis would be needed to determine if any subcontracting plans were mandated or voluntarily pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer's representative (COR) within the Department of the Army. Accountability measures are embedded in the firm-fixed-price contract terms, requiring NAN INC to deliver the specified construction within budget and schedule. Transparency is generally maintained through contract award databases, though detailed project progress and inspection reports are often internal.

Related Government Programs

Military Construction Projects
Department of Defense Facilities
General Building Construction Services
Army Corps of Engineers Projects

Risk Flags

Limited competition (2 bidders)
Potential for cost overruns (contractor risk)
Geographic cost factors (Hawaii)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.3 million to NAN INC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is NAN INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $32.3 million.

What is the period of performance?

Start: 2004-09-17. End: 2007-05-05.

What is the track record of NAN INC. with federal contracts, particularly within the Department of Defense?

Without specific data on NAN INC.'s past performance, it's difficult to definitively assess their track record. However, the award of a $33.7 million firm-fixed-price contract by the Department of the Army suggests a level of capability and experience deemed sufficient by the contracting officials. A deeper dive would involve reviewing past contract awards, performance reviews (if publicly available), and any history of contract disputes or terminations. Agencies typically maintain internal performance metrics for contractors, which influence future award decisions. For this specific contract, the award itself implies they met the minimum requirements for consideration.

How does the awarded price of $33.7 million compare to similar construction projects in Hawaii for the Department of Defense?

Benchmarking this $33.7 million contract requires detailed comparison with similar Department of Defense construction projects in Hawaii, considering factors like project scope, size (square footage), complexity, and the specific year of award. Hawaii is known for its higher construction costs due to logistical challenges and material transport. A preliminary assessment suggests the price is substantial, reflecting the scale of a commercial/institutional building. To provide a precise comparison, one would need access to a database of comparable projects, allowing for calculation of cost per square foot or cost per functional unit. Without such data, it's challenging to definitively state if it represents excellent, fair, or questionable value.

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

The primary risks associated with a firm-fixed-price construction contract of this magnitude ($33.7 million) include potential cost overruns for the contractor if unforeseen issues arise (e.g., unexpected site conditions, material price escalations beyond contingency, labor shortages). For the government, risks include the possibility that the contractor may cut corners on quality to maintain profitability, or that the initial price may not reflect the true market value if competition was limited. Schedule delays are also a significant risk, impacting the operational readiness of the facility. Robust government oversight and clear contract specifications are crucial to mitigate these risks.

How effective is the 'full and open competition' process when only two bids are received for a large construction contract?

While 'full and open competition' is the preferred method for maximizing market participation, receiving only two bids for a large contract like this ($33.7 million) suggests that the effective competition may have been limited. This could be due to several factors: the specialized nature of the construction required, the geographic location (Hawaii), the bonding requirements, or the specific pre-qualification criteria set by the agency. Although two bidders are better than one, it may not drive prices down as aggressively as a scenario with multiple, highly competitive bids. The agency's justification for the procurement strategy and evaluation of the bids would be key to understanding the effectiveness in this instance.

What is the historical spending trend for similar construction contracts awarded by the Department of the Army in Hawaii?

Analyzing historical spending trends for similar construction contracts by the Department of the Army in Hawaii would require access to historical contract databases. Generally, construction costs in Hawaii are higher than the continental U.S. due to logistics and labor. Spending trends would likely reflect overall federal budget allocations for military infrastructure, inflation rates, and the demand for facility upgrades or new construction in the region. A trend analysis would reveal if the $33.7 million awarded to NAN INC. is consistent with previous investments, or if it represents an outlier due to specific project needs or market conditions at the time of award (2004).

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

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 636 LAUMAKA STREET, HONOLULU, HI, 01

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline