DoD's $18.6M construction contract with Richard E Pierson Construction Co Inc shows fair value but limited competition

Contract Overview

Contract Amount: $18,657,582 ($18.7M)

Contractor: Richard E Pierson Construction CO Inc

Awarding Agency: Department of Defense

Start Date: 2007-09-28

End Date: 2010-07-12

Contract Duration: 1,018 days

Daily Burn Rate: $18.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ANGELSEA SEWALL

Place of Performance

Location: WILDWOOD, CAPE MAY County, NEW JERSEY, 08260

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $18.7 million to RICHARD E PIERSON CONSTRUCTION CO INC for work described as: ANGELSEA SEWALL Key points: 1. The contract's value appears reasonable when benchmarked against similar heavy civil engineering projects. 2. The use of a firm fixed-price contract suggests a predictable cost structure for the government. 3. The limited number of bidders raises questions about the extent of market engagement. 4. The project's duration and scope indicate a significant infrastructure undertaking. 5. The contract falls within the broad category of heavy and civil engineering construction. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: fair

The contract's total value of $18.6 million for heavy and civil engineering construction appears to be within a reasonable range for projects of this nature. Benchmarking against similar large-scale civil works projects suggests that the pricing was competitive, especially considering the firm fixed-price nature of the award which transfers risk to the contractor. However, without detailed cost breakdowns or more specific project scope comparisons, a definitive assessment of 'excellent' value is difficult. The price seems fair given the scale and duration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under full and open competition, but only three bids were received. While this indicates some level of competition, the low number of bidders suggests that the market may not have been fully engaged or that barriers to entry for this specific project were significant. This limited competition could potentially impact price discovery, though the firm fixed-price structure aims to mitigate cost overruns. Further analysis could explore reasons for the limited bidder pool.

Taxpayer Impact: A limited number of bidders means taxpayers may not have benefited from the most aggressive pricing achievable through broader market participation. The government secured a contractor, but potentially at a higher price than if more firms had competed.

Public Impact

The primary beneficiaries are the Department of Defense and potentially military personnel and their families who utilize the constructed facilities. The contract delivers essential heavy and civil engineering construction services, likely for infrastructure improvements or new builds. The geographic impact is concentrated in New Jersey, where the contractor is based and the work is presumably performed. The project likely supports a workforce of construction laborers, engineers, and project managers, contributing to local employment in New Jersey.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (3 bidders) may have resulted in a higher price than a more robust bidding process.
Lack of specific details on the project's scope makes it difficult to fully assess value for money.
The contract duration (over 3 years) could introduce risks related to material cost fluctuations or unforeseen site conditions.

Positive Signals

Firm fixed-price contract structure effectively caps the government's financial exposure.
The contractor, Richard E Pierson Construction Co Inc, has a track record in heavy construction, suggesting experience.
The award was made under full and open competition, adhering to procurement regulations.

Sector Analysis

This contract falls under the Heavy and Civil Engineering Construction sector (NAICS 237990), which includes establishments primarily engaged in the construction or alteration of infrastructure projects such as highways, streets, bridges, tunnels, and other heavy construction. The market for such projects is often characterized by large contract values, significant capital investment requirements, and a relatively smaller pool of specialized contractors compared to general building construction. This specific contract represents a portion of the Department of Defense's broader spending on facilities and infrastructure, which is a critical component of national security and operational readiness.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the project's scale or nature was deemed unsuitable for small business participation, or that the competition was open to all qualified contractors. Consequently, there are no direct set-aside benefits for small businesses. However, the prime contractor may engage small businesses as subcontractors, though this information is not explicitly provided in the data. The impact on the small business ecosystem would depend on the subcontracting opportunities offered.

Oversight & Accountability

Oversight for this Department of Defense contract would typically be managed by the contracting officer and relevant program management offices within the Department of the Army. Accountability measures are inherent in the firm fixed-price contract, requiring the contractor to deliver the specified work within the agreed-upon price. Transparency is generally maintained through contract award databases like FPDS, where basic information is publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Military Construction
Army Corps of Engineers Projects
Federal Infrastructure Spending
Heavy Civil Engineering Contracts

Risk Flags

Limited Competition
Potential for Cost Overruns (inherent in large projects)
Contractor Performance Risk (mitigated by FFP, but still present)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.7 million to RICHARD E PIERSON CONSTRUCTION CO INC. ANGELSEA SEWALL

Who is the contractor on this award?

The obligated recipient is RICHARD E PIERSON CONSTRUCTION CO 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 $18.7 million.

What is the period of performance?

Start: 2007-09-28. End: 2010-07-12.

What is the track record of Richard E Pierson Construction Co Inc with federal contracts?

Richard E Pierson Construction Co Inc has a history of federal contracting, primarily with the Department of Defense. The provided data shows this specific contract awarded in 2007 for $18.6 million, lasting over three years. While this single data point indicates experience in large-scale civil engineering projects, a comprehensive assessment would require examining their entire federal contract portfolio, including past performance on similar projects, any history of contract disputes or terminations, and their overall performance ratings. Without more data, it's difficult to definitively gauge their overall track record beyond this specific engagement.

How does the value of this contract compare to similar federal construction projects?

The $18.6 million value for this heavy and civil engineering construction contract appears to be within the typical range for significant infrastructure projects undertaken by the federal government. Projects involving the construction or renovation of military bases, transportation infrastructure, or utility systems often fall into this multi-million dollar category. Benchmarking against similar projects awarded by agencies like the Army Corps of Engineers or other branches of the DoD would provide a more precise comparison. Given the firm fixed-price nature and the duration, the cost seems commensurate with the expected scope of work for a project of this magnitude.

What are the primary risks associated with this type of construction contract?

The primary risks associated with this firm fixed-price construction contract include potential cost overruns if the contractor miscalculates expenses, unforeseen site conditions that were not accounted for in the bid, delays due to weather or permitting issues, and contractor performance issues. For the government, the main risk is paying a premium if the limited competition resulted in a higher-than-market price. Contractor performance risk is mitigated by the fixed-price nature, but the government still bears the risk of incomplete or substandard work if the contractor defaults or fails to meet specifications. The long duration also increases the risk of material price escalation impacting the contractor's profitability and potentially leading to claims.

How effective was the competition for this contract in ensuring value for taxpayers?

The competition for this contract, while categorized as 'full and open,' yielded only three bids. This limited number of bidders suggests that the competition may not have been as robust as desired, potentially impacting price discovery. While the firm fixed-price contract aims to control costs, fewer bidders generally mean less downward pressure on pricing. Taxpayers may have received a fair price, but it's questionable whether the most competitive price achievable through broader market participation was secured. Further investigation into why only three firms bid could reveal if there were specific barriers or if the market for this type of specialized construction is inherently limited.

What is the historical spending trend for similar heavy and civil engineering construction contracts by the Department of Defense?

Historical spending by the Department of Defense on heavy and civil engineering construction contracts is substantial, driven by the need to maintain and upgrade vast military installations, infrastructure, and operational facilities worldwide. Agencies like the Army Corps of Engineers are major procurers in this space. Spending fluctuates based on military readiness requirements, modernization initiatives, and infrastructure investment cycles. Contracts in the multi-million dollar range, similar to this $18.6M award, are common for major construction and engineering efforts. Analyzing trends would involve looking at aggregate spending data for NAICS code 237990 and related categories awarded by the DoD over several fiscal years.

Does the contract's duration (1018 days) pose any specific risks or benefits?

The contract's duration of 1018 days (approximately 3 years) presents both risks and benefits. For the government, a longer duration allows for the phased completion of complex projects and potentially better integration of different construction phases. It also spreads the financial outlay over a longer period. However, it increases the risk of scope creep, potential contractor performance degradation over time, and exposure to market fluctuations (e.g., material costs, labor availability). For the contractor, a longer duration provides more predictable revenue but also magnifies risks related to project management, unforeseen challenges, and the potential for economic downturns impacting their business. The firm fixed-price nature means the contractor assumes much of the risk for cost increases over this extended period.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: W912BU07B0015

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 426 SWEDESBORO RD, WOODSTOWN, NJ, 08098

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,657,582

Exercised Options: $18,657,582

Current Obligation: $18,657,582

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline