DoD's $32.8M Fort Shafter building repair contract awarded to NAN INC. raises value questions

Contract Overview

Contract Amount: $32,802,778 ($32.8M)

Contractor: NAN Inc

Awarding Agency: Department of Defense

Start Date: 2020-10-15

End Date: 2023-06-30

Contract Duration: 988 days

Daily Burn Rate: $33.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: REPAIR BUILDING 502, FORT SHAFTER, OAHU, HAWAII

Place of Performance

Location: FORT SHAFTER, HONOLULU County, HAWAII, 96858

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $32.8 million to NAN INC for work described as: REPAIR BUILDING 502, FORT SHAFTER, OAHU, HAWAII Key points: 1. The contract's duration of 988 days for a single building repair suggests potential for extended timelines and cost overruns. 2. A firm fixed-price contract type indicates that the contractor bears the risk of cost increases, which can incentivize efficiency. 3. The absence of small business set-aside or participation raises questions about opportunities for smaller firms in this construction project. 4. The contract's value, while substantial, needs benchmarking against similar large-scale facility repair projects to assess value for money. 5. The definitive contract award type, following full and open competition, suggests a structured procurement process. 6. The project's location in Hawaii may contribute to higher material and labor costs compared to continental US projects.

Value Assessment

Rating: fair

The contract value of $32.8 million for repairing a single building (Building 502) at Fort Shafter, Hawaii, appears substantial. Without specific details on the scope of repairs, direct comparison to similar projects is challenging. However, the duration of nearly three years (988 days) for a firm-fixed-price contract warrants scrutiny. While firm-fixed-price generally aims for cost control, extended project timelines can sometimes indicate unforeseen complexities or inefficiencies. Benchmarking this cost against per-square-foot repair costs for similar military facilities would provide a clearer picture of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The award type is a definitive contract, suggesting a well-defined scope of work. The number of bidders is not specified, but full and open competition generally fosters a competitive environment, which can lead to better pricing and terms for the government. The fact that it was competed broadly is a positive sign for price discovery.

Taxpayer Impact: Full and open competition is the most taxpayer-favorable method, as it maximizes the pool of potential bidders and encourages competitive pricing, potentially leading to cost savings for the government.

Public Impact

Military personnel and their families stationed at Fort Shafter will benefit from improved facility conditions. The project delivers essential repair and maintenance services for a critical piece of military infrastructure. The geographic impact is localized to Oahu, Hawaii, supporting the operational readiness of the base. The contract supports the construction and maintenance workforce in Hawaii, potentially creating or sustaining jobs in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The extended duration of the contract (988 days) for a single building repair could indicate potential for schedule slippage or scope creep, impacting overall cost-effectiveness.
Lack of specific details on the repair scope makes it difficult to fully assess if the $32.8 million price tag represents optimal value for the work performed.
The absence of small business participation or set-aside requirements may limit opportunities for local small businesses in Hawaii's construction sector.
The high cost of construction and labor in Hawaii can inflate project expenses, potentially reducing the overall value proposition compared to projects in lower-cost regions.

Positive Signals

The contract was awarded through full and open competition, suggesting a robust bidding process that likely yielded competitive pricing.
The firm-fixed-price contract type shifts cost overrun risk to the contractor, incentivizing efficient project execution.
The definitive contract award indicates a clear and defined scope of work, reducing ambiguity and potential for disputes.
The project addresses essential infrastructure needs at a military installation, contributing to operational readiness and safety.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on repairs and maintenance for government facilities. The construction industry is a significant component of the US economy, with federal contracts forming a notable portion of its activity. Spending on military base infrastructure is crucial for maintaining operational capabilities and ensuring the well-being of service members. Comparable spending benchmarks would typically involve analyzing per-square-foot renovation costs for similar government buildings, factoring in regional labor and material cost differences.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb: false'. Furthermore, there is no explicit mention of subcontracting goals for small businesses. This suggests that opportunities for small businesses to participate in this significant construction project may be limited, potentially impacting the local small business ecosystem in Hawaii. Future analysis could explore if NAN INC. has a history of subcontracting with small businesses on larger prime contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army, likely through contracting officers' representatives (CORs) and quality assurance personnel responsible for monitoring performance and ensuring compliance with contract terms. The Inspector General's office for the Department of Defense may conduct audits or investigations into contract execution if specific concerns arise regarding waste, fraud, or abuse. Transparency is facilitated through contract award databases, but detailed project performance reports are often not publicly accessible.

Related Government Programs

Military Construction
Facility Maintenance and Repair
Department of Defense Construction Contracts
General Building Construction

Risk Flags

Extended contract duration
High contract value for single building repair
Lack of specified small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.8 million to NAN INC. REPAIR BUILDING 502, FORT SHAFTER, OAHU, HAWAII

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 $32.8 million.

What is the period of performance?

Start: 2020-10-15. End: 2023-06-30.

What is the specific scope of work for the REPAIR BUILDING 502 contract, and how does it justify the $32.8 million cost?

The provided data does not detail the specific scope of work for the REPAIR BUILDING 502 contract. However, the contract value of $32.8 million suggests a significant undertaking, potentially involving extensive structural repairs, system upgrades (HVAC, electrical, plumbing), interior renovations, or a combination thereof. To justify the cost, a detailed breakdown of the work items, materials, labor hours, and associated costs would be necessary. Benchmarking against industry standards for similar repair projects, adjusted for the unique costs of construction in Hawaii (e.g., shipping, labor rates), would be essential for a thorough value assessment. Without this granular information, it's difficult to definitively assess if the price is commensurate with the work performed.

How does the 988-day duration of this contract compare to similar building repair projects of comparable value?

A contract duration of 988 days (approximately 2.7 years) for a single building repair project valued at $32.8 million is notably long. Typical large-scale renovation or repair projects for institutional buildings might range from 12 to 24 months, depending on complexity and size. The extended timeline here could indicate a very extensive scope of work, significant unforeseen challenges anticipated by the contractor, or potential inefficiencies. Comparing this duration requires analyzing projects with similar square footage, type of building (e.g., barracks, administrative, maintenance), and the extent of renovations (e.g., gut renovation vs. targeted repairs). If similar projects are completed in a shorter timeframe, this duration could be a risk indicator for potential delays and associated cost implications, even under a firm-fixed-price contract where contractor risk is higher.

What was the competitive landscape for this 'full and open competition' award, and how many bids were received?

The data indicates that the contract was awarded under 'full and open competition,' which is the preferred method for maximizing competition. However, the specific number of bids received is not provided in the summary data. Full and open competition means that the solicitation was made available to all responsible prospective contractors. The effectiveness of this competition in driving down price and ensuring value for taxpayers depends heavily on the number and quality of the bids submitted. A robust competition typically involves multiple qualified bidders submitting proposals. If only a few bids were received, or if the bids were not significantly varied in price, the competitive pressure might have been less intense than ideal, potentially impacting price discovery.

What is NAN INC.'s track record with similar large-scale construction and repair contracts, particularly for the Department of Defense?

Information regarding NAN INC.'s specific track record with similar large-scale construction and repair contracts, especially for the Department of Defense, is not detailed in the provided data. A comprehensive assessment would require reviewing NAN INC.'s past performance evaluations, contract history, and any reported issues or successes on previous government projects. Examining their experience with firm-fixed-price contracts, project management capabilities, and adherence to schedules and budgets on comparable projects would be crucial. Understanding their performance on previous DoD contracts would help gauge their reliability and capability in executing a project of this magnitude and duration.

Are there any specific risk indicators associated with this contract, such as performance issues, cost overruns on previous contracts, or contractor financial stability?

The provided data does not explicitly list risk indicators such as past performance issues, cost overruns, or contractor financial instability for NAN INC. on this specific contract. However, the extended duration (988 days) for a single building repair could be considered a potential risk factor, suggesting possible complexities or challenges that might lead to delays or scope adjustments. The firm-fixed-price nature of the contract mitigates direct cost overrun risk for the government, but contractor performance issues could still lead to delays or quality deficiencies. A deeper dive into NAN INC.'s performance history and the specific justifications for the long contract duration would be necessary to identify concrete risk factors.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W9128A20R0016

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 636 LAUMAKA ST, HONOLULU, HI, 96819

Business Categories: Asian Pacific American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,802,778

Exercised Options: $32,802,778

Current Obligation: $32,802,778

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline