Merco Inc. awarded $10.2M contract for tunnel improvements, highlighting infrastructure needs in Kansas

Contract Overview

Contract Amount: $10,222,261 ($10.2M)

Contractor: Merco Inc

Awarding Agency: Department of Defense

Start Date: 2006-09-28

End Date: 2009-12-01

Contract Duration: 1,160 days

Daily Burn Rate: $8.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: TUNNEL IMPROVEMENTS FOR TURKEY CREEK TO ADDRESS DETERIORATION OF THE LINER AND INVERT, AND EROSION OF EXPOSED ROCK.

Place of Performance

Location: KANSAS CITY, WYANDOTTE County, KANSAS, 66101

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $10.2 million to MERCO INC for work described as: TUNNEL IMPROVEMENTS FOR TURKEY CREEK TO ADDRESS DETERIORATION OF THE LINER AND INVERT, AND EROSION OF EXPOSED ROCK. Key points: 1. The contract addresses critical deterioration and erosion issues within existing tunnel infrastructure. 2. The firm-fixed-price structure aims to control costs for the government. 3. The project duration of 1160 days suggests a significant scope of work. 4. The award was made under full and open competition, indicating a broad market search. 5. The project is located in Kansas, potentially impacting regional infrastructure and workforce. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

The contract value of $10.2 million for tunnel improvements appears reasonable given the scope of addressing liner/invert deterioration and rock erosion. Without specific benchmarks for comparable tunnel repair projects of this scale and complexity, a precise value-for-money assessment is challenging. However, the firm-fixed-price contract type suggests the government has a clear understanding of the project's requirements and has sought to lock in costs. Further analysis would involve comparing the per-unit costs of specific repair elements (e.g., per linear foot of liner repair) to industry standards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that the Department of the Army actively solicited bids from a wide range of qualified contractors. The presence of two bidders indicates a degree of competition, which is generally beneficial for price discovery and ensuring the government receives competitive offers. The specific number of proposals received beyond the two awardees would provide a clearer picture of the market's responsiveness.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by fostering a competitive environment where contractors strive to offer their best value proposals.

Public Impact

The primary beneficiaries are the Department of Defense and potentially military operations reliant on the infrastructure. The services delivered include critical repairs to ensure the structural integrity and safety of a tunnel. The geographic impact is localized to Kansas, where the tunnel is situated. The project may create or sustain jobs in the construction and engineering sectors within the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen conditions arise during the extensive repair work.
Risk of schedule delays due to the long duration and complexity of tunnel infrastructure projects.
Dependence on Merco Inc.'s specialized expertise for complex civil engineering tasks.
Limited visibility into the specific performance metrics and quality control during the project execution.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Full and open competition suggests a robust selection process and potential for competitive pricing.
Addressing critical infrastructure deterioration proactively prevents more costly future repairs.
The project's focus on essential maintenance ensures operational continuity for the facility.

Sector Analysis

This contract falls within the Heavy and Civil Engineering Construction sector, specifically focusing on infrastructure repair and maintenance. The market for such specialized construction services is often characterized by a limited number of firms with the requisite expertise and bonding capacity. The $10.2 million award is a significant investment, reflecting the substantial costs associated with large-scale civil engineering projects. Comparable spending benchmarks would typically involve analyzing other government contracts for tunnel rehabilitation, bridge construction, or similar large-scale public works.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the primary award went to a larger entity, Merco Inc. It is important to assess whether subcontracting opportunities exist within this contract that could be utilized by small businesses. Without specific subcontracting plans or reporting, the direct impact on the small business ecosystem is unclear, but it highlights the need for agencies to actively promote small business participation in larger prime contracts.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and relevant project managers within the Department of the Army. Accountability measures are embedded in the firm-fixed-price contract terms, requiring Merco Inc. to deliver specified repairs within the agreed-upon cost. Transparency is generally facilitated through contract award databases, but detailed project progress and performance reports may not always be publicly accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Army Corps of Engineers Civil Works Projects
Department of Transportation Infrastructure Grants
Federal Highway Administration Tunnel Repair Programs
Public Works and Infrastructure Modernization Initiatives

Risk Flags

Potential for unforeseen site conditions impacting cost and schedule.
Complexity of specialized civil engineering work requires high contractor competency.
Long project duration increases exposure to external risks (economic, environmental).
Limited public information on specific quality assurance and performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.2 million to MERCO INC. TUNNEL IMPROVEMENTS FOR TURKEY CREEK TO ADDRESS DETERIORATION OF THE LINER AND INVERT, AND EROSION OF EXPOSED ROCK.

Who is the contractor on this award?

The obligated recipient is MERCO 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 $10.2 million.

What is the period of performance?

Start: 2006-09-28. End: 2009-12-01.

What is Merco Inc.'s track record with similar tunnel repair or civil engineering projects for the Department of Defense or other federal agencies?

Assessing Merco Inc.'s track record requires accessing historical contract data. A review of past performance would involve examining previous awards, contract values, project durations, and any reported issues such as cost overruns, schedule delays, or performance deficiencies. Specifically for tunnel projects, their experience with liner and invert repairs, as well as rock erosion mitigation, would be crucial. A positive track record with similar complex civil engineering projects would increase confidence in their ability to successfully execute this $10.2 million contract. Conversely, a history of performance issues could signal potential risks for this project.

How does the $10.2 million contract value compare to industry benchmarks for similar tunnel improvement projects?

Benchmarking the $10.2 million contract value requires detailed cost breakdowns and comparisons with similar projects. Factors influencing cost include the tunnel's length, diameter, material, the extent of deterioration, and the specific repair methods employed. Industry data from construction cost estimators or databases specializing in civil engineering projects could provide comparable figures. For instance, cost per linear foot of tunnel repair or cost per cubic yard of material stabilization could be used. Without such granular data, it's difficult to definitively state if this contract represents excellent, good, or fair value. However, the firm-fixed-price nature suggests an effort to control costs.

What are the primary risks associated with a tunnel improvement project of this magnitude and duration?

The primary risks associated with this $10.2 million tunnel improvement project include unforeseen geological conditions (e.g., unexpected soil instability, groundwater ingress) that could increase costs and extend the schedule. Technical risks involve the effectiveness of the chosen repair methods for long-term durability and potential failures during execution. Schedule risks are significant given the 1160-day duration, with potential for delays due to weather, contractor performance, or supply chain issues. Furthermore, safety risks inherent in underground construction operations require stringent management. The firm-fixed-price contract aims to mitigate cost risks for the government, but scope creep or change orders could still impact the final price.

What are the expected performance metrics and quality control measures for this tunnel improvement contract?

Performance metrics for this tunnel improvement contract would likely focus on the successful completion of specified repairs, adherence to structural integrity standards, and restoration of the tunnel's functionality. Quality control measures would involve rigorous inspections at various stages of the repair process, material testing to ensure compliance with specifications, and potentially third-party oversight. The contract documents would detail the acceptance criteria for completed work. While the firm-fixed-price structure incentivizes timely completion, the government's quality assurance team would be responsible for verifying that the repairs meet all technical requirements and safety standards before final acceptance.

How has federal spending on tunnel infrastructure maintenance and repair trended over the past five years?

Analyzing federal spending trends on tunnel infrastructure requires examining budget allocations and contract awards across relevant agencies like the Department of Transportation (DOT), Army Corps of Engineers, and potentially others involved in infrastructure. Over the past five years, there has been a growing emphasis on infrastructure investment, driven by aging systems and the need for modernization. This likely translates to an increasing trend in federal spending on repairs and upgrades for critical infrastructure, including tunnels. Specific data would reveal the total obligated amounts for tunnel-related projects, identifying key agencies and the types of work being prioritized (e.g., repair, replacement, new construction).

Industry Classification

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

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCT NONBUILDING FACILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912DQ06R0046

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1117 STATE ROUTE 31 STE 2, LEBANON, NJ, 08833

Business Categories: Category Business, Emerging Small Business, Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $10,920,111

Exercised Options: $10,920,111

Current Obligation: $10,222,261

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline