Department of the Army awarded $320.9M for pre-construction services, with 6 bidders competing

Contract Overview

Contract Amount: $320,936,271 ($320.9M)

Contractor: Balfour/Walton, a Joint Venture

Awarding Agency: Department of Defense

Start Date: 2009-04-24

End Date: 2017-09-30

Contract Duration: 3,081 days

Daily Burn Rate: $104.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: PRE-CONSTRUCTION SERVICES

Place of Performance

Location: FORT RILEY, GEARY County, KANSAS, 66442

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $320.9 million to BALFOUR/WALTON, A JOINT VENTURE for work described as: PRE-CONSTRUCTION SERVICES Key points: 1. The contract value of $320.9 million for pre-construction services represents a significant investment in infrastructure development. 2. With 6 bidders, the competition level suggests a healthy market for these specialized services. 3. The firm-fixed-price contract type indicates that cost risks are largely borne by the contractor. 4. The long duration of 3081 days (approximately 8.5 years) suggests a phased or long-term project. 5. The contract was awarded by the Department of Defense, specifically the Department of the Army, highlighting a major federal infrastructure need. 6. The North American Industry Classification System (NAICS) code 236220 points to commercial and institutional building construction.

Value Assessment

Rating: good

Benchmarking the value of pre-construction services is challenging without specific project details. However, the scale of the award suggests a substantial undertaking. The firm-fixed-price nature of the contract, while offering cost certainty to the government, requires careful contractor estimation. Comparing this to similar large-scale federal infrastructure projects would provide a clearer picture of value for money, but the competitive award suggests a reasonable market price was achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with six bidders participating. This indicates a robust bidding process where multiple qualified firms had the opportunity to compete. A higher number of bidders generally leads to more competitive pricing and a wider selection of qualified contractors, which is beneficial for the government.

Taxpayer Impact: The full and open competition ensures that taxpayer dollars are likely being used efficiently by fostering a competitive environment that drives down costs and encourages innovation.

Public Impact

The primary beneficiaries are the Department of the Army and its personnel, who will gain access to improved facilities. The services delivered are critical for the planning and foundational stages of major construction projects. The geographic impact is centered in Kansas (ST: KS, SN: KANSAS), where the construction activities will take place. The contract implies a need for skilled labor in the construction and project management sectors within the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if initial estimates are inaccurate, despite the firm-fixed-price structure.
Long contract duration could lead to scope creep or changes in project requirements over time.
Dependence on a single joint venture for critical pre-construction phases could pose a risk if performance issues arise.

Positive Signals

The firm-fixed-price contract provides cost certainty for the government.
Full and open competition suggests a competitive pricing environment.
The award to a joint venture (BALFOUR/WALTON) may leverage specialized expertise from both entities.

Sector Analysis

This contract falls within the broader construction sector, specifically focusing on commercial and institutional building construction. The pre-construction services are a critical early phase, encompassing planning, design development, and cost estimation before physical construction begins. The market for such services is competitive, with firms specializing in large-scale project management and engineering. The $320.9 million award is substantial, indicating a project of significant scale, likely involving complex infrastructure or facilities for the Department of Defense.

Small Business Impact

The data indicates that small business participation was not a primary set-aside criterion for this contract (SB: false). While the prime contractor is a joint venture, the implications for small business subcontracting are not detailed here. Further analysis would be needed to determine if small businesses are being utilized in lower-tier roles or if opportunities exist within the broader project ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and relevant project management teams within the Department of the Army. Accountability measures are inherent in the firm-fixed-price contract, which holds the contractor responsible for delivering services within the agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements, though specific project details may be subject to security or operational sensitivities.

Related Government Programs

Military Construction
Facility Sustainment, Restoration, and Modernization
Architectural and Engineering Services
General Building Construction

Risk Flags

Long Contract Duration
Potential for Cost Overruns (despite FFP)
Scope Creep Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $320.9 million to BALFOUR/WALTON, A JOINT VENTURE. PRE-CONSTRUCTION SERVICES

Who is the contractor on this award?

The obligated recipient is BALFOUR/WALTON, A JOINT VENTURE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $320.9 million.

What is the period of performance?

Start: 2009-04-24. End: 2017-09-30.

What is the typical profit margin for pre-construction services on contracts of this magnitude?

Profit margins for pre-construction services can vary significantly based on project complexity, risk, and market conditions. For large-scale federal contracts, profit margins might typically range from 5% to 15% of the total contract value. However, this is a generalization, and specific margins depend heavily on the contractor's cost structure, overhead, and the competitive landscape. The firm-fixed-price nature of this contract implies that the contractor has factored in their anticipated costs and desired profit into the bid. Without access to the contractor's internal cost data or detailed bid breakdowns, it's impossible to determine the exact profit margin. However, the competitive bidding process suggests that the awarded price reflects a market-driven profit expectation.

How does the duration of this contract compare to similar pre-construction service contracts?

A contract duration of 3081 days (approximately 8.5 years) for pre-construction services is exceptionally long. Typically, pre-construction services, which involve planning, design development, and initial cost estimation, are completed within a much shorter timeframe, often ranging from a few months to a couple of years, depending on the project's scale and complexity. Such an extended duration might indicate that 'pre-construction services' in this context encompasses a very broad scope, potentially including long-term project management, phased design approvals, or ongoing support throughout a multi-year construction program. It's unusual for the planning phase alone to extend this long; it suggests a unique project delivery model or a misunderstanding of the term 'pre-construction' in the provided data.

What are the key risks associated with a firm-fixed-price contract for long-term pre-construction services?

The primary risk with a firm-fixed-price (FFP) contract, especially one with a long duration like this, is that the contractor may have underestimated costs or that unforeseen circumstances will significantly increase expenses. While FFP shifts cost risk to the contractor, if the initial estimates are substantially off, the contractor might struggle to complete the work profitably, potentially leading to quality compromises or disputes. For long-term pre-construction services, risks include changes in material costs, labor availability, regulatory requirements, or evolving project needs that were not anticipated at the time of the bid. The government's risk is that the fixed price might become uncompetitive over time if market conditions change drastically, or that the contractor, facing cost pressures, might cut corners on essential planning or design elements.

What is the historical spending trend for pre-construction services by the Department of the Army?

Analyzing historical spending trends for pre-construction services by the Department of the Army requires access to comprehensive historical contract data. This specific award of $320.9 million is a significant single contract. Without broader data, it's difficult to establish a trend. However, federal agencies like the Department of the Army consistently invest in infrastructure, which necessitates pre-construction services. Spending in this area can fluctuate based on military readiness needs, modernization programs, and congressional appropriations. Large-scale projects, such as those potentially related to this contract, would represent significant annual outlays. A trend analysis would involve examining annual spending on similar NAICS codes (like 236220) and contract types over several fiscal years to identify patterns, peaks, or declines in investment.

What are the implications of awarding a definitive contract for pre-construction services?

A 'definitive contract' is a broad term that typically refers to a contract that is firm, fixed, and final, outlining all terms and conditions. In the context of federal procurement, it often implies a contract that is not subject to further negotiation or modification unless through formal change orders. Awarding a definitive contract for pre-construction services, especially under firm-fixed-price terms, suggests a high degree of certainty regarding the scope and requirements at the time of award. This provides clarity for both the government and the contractor, minimizing ambiguity. It implies that the government has a well-defined need and has secured a commitment from the contractor to deliver the specified services at the agreed-upon price and terms, reducing the likelihood of disputes arising from unclear expectations.

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: W912DQ09R4005

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3100 MCKINNON ST FL 7, DALLAS, TX, 75201

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

Financial Breakdown

Contract Ceiling: $320,936,271

Exercised Options: $320,936,271

Current Obligation: $320,936,271

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: YES

Timeline