Hensel Phelps Construction Co. awarded $711M for Army construction, highlighting significant infrastructure investment

Contract Overview

Contract Amount: $711,349,220 ($711.3M)

Contractor: Hensel Phelps Construction CO

Awarding Agency: Department of Defense

Start Date: 2019-03-28

End Date: 2025-10-31

Contract Duration: 2,409 days

Daily Burn Rate: $295.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ECB3 BASE BID

Place of Performance

Location: FORT GEORGE G MEADE, ANNE ARUNDEL County, MARYLAND, 20755

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $711.3 million to HENSEL PHELPS CONSTRUCTION CO for work described as: ECB3 BASE BID Key points: 1. The contract value represents a substantial commitment to infrastructure development within the Department of the Army. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The firm-fixed-price contract type shifts performance risk to the contractor, encouraging cost control. 4. The duration of the contract (2409 days) indicates a long-term project with sustained contractor involvement. 5. The project's focus on commercial and institutional building construction points to the development of essential facilities. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

The contract's value of $711 million is significant, reflecting a large-scale construction project. Benchmarking against similar large-scale military construction projects would be necessary for a precise value-for-money assessment. However, the firm-fixed-price nature of the contract, coupled with full and open competition, generally indicates a mechanism for achieving competitive pricing and managing costs effectively. The contractor, Hensel Phelps Construction Co., has a history of undertaking large federal projects, suggesting experience relevant to this scale of work.

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 a bid. The data shows two bids were received. While two bids might seem low for a contract of this magnitude, the 'full and open' designation suggests the solicitation was widely advertised. The level of competition can influence price discovery; a higher number of bidders typically leads to more aggressive pricing, but the specific market conditions for large-scale construction in the relevant geographic area would also play a role.

Taxpayer Impact: For taxpayers, full and open competition is generally favorable as it aims to secure the best possible price through market forces. Even with two bids, the process is designed to prevent sole-source situations and encourage competitive offers.

Public Impact

The primary beneficiaries are the Department of the Army, which will receive new or improved facilities. The contract will deliver essential construction services for commercial and institutional buildings, likely supporting military operations and personnel. The geographic impact is concentrated in Maryland, where the construction activities will take place. The project will likely create numerous jobs in the construction sector, including skilled trades, project management, and support roles within Maryland.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bids (2) for a large contract could indicate potential market concentration or barriers to entry for other firms.
The long contract duration (2409 days) increases the risk of cost overruns due to unforeseen economic changes or material price fluctuations, despite the fixed-price nature.
Lack of specific details on the type of commercial/institutional buildings makes it difficult to assess the full scope and potential complexities.
No indication of small business participation or subcontracting goals requires further scrutiny to ensure broad economic benefit.

Positive Signals

Award to a known, experienced contractor (Hensel Phelps Construction Co.) suggests a higher likelihood of successful project execution.
Firm-fixed-price contract type aligns incentives for the contractor to manage costs efficiently.
Full and open competition, even with two bidders, provides a baseline for market-driven pricing.
The project's focus on essential facilities supports the Army's operational readiness and infrastructure needs.

Sector Analysis

The contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. This sector encompasses the building of non-residential structures such as offices, educational facilities, healthcare buildings, and government installations. The market size for federal construction projects is substantial, driven by the need to maintain, modernize, and expand government infrastructure. This specific contract, valued at over $700 million, represents a major investment within this sector, likely contributing to the economic activity of the construction industry in Maryland and potentially setting benchmarks for similar large-scale government building projects.

Small Business Impact

This contract was not awarded as a small business set-aside, and the data indicates no explicit small business participation goals were met through the primary award. Hensel Phelps Construction Co. is a large business. Further analysis would be needed to determine if subcontracting plans include provisions for small businesses. The absence of a set-aside or clear subcontracting targets could limit opportunities for small businesses to participate in this significant federal contract, potentially impacting the small business ecosystem in the region.

Oversight & Accountability

The contract is a Definitive Contract awarded by the Department of the Army, implying standard federal procurement regulations and oversight apply. Oversight mechanisms would typically include contract administration by the Army, performance monitoring, and potentially reviews by the Government Accountability Office (GAO) or the Department of Defense's Inspector General, especially if issues arise. Transparency is generally maintained through contract award databases like FPDS. The firm-fixed-price nature places the onus on the contractor for cost control, but the government retains oversight of performance and adherence to contract terms.

Related Government Programs

Military Construction Projects
Department of Defense Facilities Modernization
Federal Building and Infrastructure Development
Large-Scale Commercial Construction Contracts

Risk Flags

Limited number of bidders
Long contract duration
Potential for cost escalation (despite FFP)
Lack of explicit small business subcontracting goals

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $711.3 million to HENSEL PHELPS CONSTRUCTION CO. ECB3 BASE BID

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS CONSTRUCTION CO.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $711.3 million.

What is the period of performance?

Start: 2019-03-28. End: 2025-10-31.

What is Hensel Phelps Construction Co.'s track record with large federal construction contracts?

Hensel Phelps Construction Co. has a well-established track record of successfully executing large-scale federal construction projects. They have been involved in numerous contracts with various government agencies, including the Department of Defense, Department of Veterans Affairs, and General Services Administration. Their portfolio includes a wide range of facilities, from military barracks and training centers to federal courthouses and airport terminals. The company's history suggests significant experience in managing complex projects, adhering to stringent government requirements, and delivering projects on time and within budget. This extensive experience is a positive indicator for their ability to manage the $711 million Army construction contract.

How does the $711 million contract value compare to similar Department of the Army construction projects?

A contract valued at $711 million for commercial and institutional building construction is considered very large within the context of federal procurements. The Department of the Army regularly undertakes significant infrastructure investments, but projects exceeding the $500 million mark are typically major undertakings. Comparable projects might include the construction of large training facilities, major hospital complexes, or extensive housing developments for military personnel. The value suggests a project of substantial scope, likely involving the construction of multiple buildings or a single, very large, complex facility. Without specific project details, direct comparison is challenging, but the magnitude indicates a high level of investment in Army infrastructure.

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

The primary risks associated with a firm-fixed-price (FFP) contract of this duration (2409 days, approximately 6.6 years) primarily fall on the contractor, but the government is not entirely insulated. For the contractor, the main risk is accurately estimating all costs over such a long period. Unforeseen increases in material prices, labor costs, or regulatory changes could significantly erode profit margins if not adequately accounted for in the initial bid. For the government, the risk is that the contractor, in an effort to protect their profit margin on an FFP contract, might cut corners on quality or scope if oversight is not rigorous. Additionally, if the contractor faces severe financial distress or bankruptcy during the long performance period, project completion could be jeopardized, leading to delays and potential cost increases for the government to find a replacement.

How effective is 'full and open competition' with only two bidders for large construction contracts?

The effectiveness of 'full and open competition' with only two bidders for large construction contracts can be debated and depends heavily on market dynamics. While the process itself is designed to allow all qualified sources to compete, receiving only two bids suggests potential limitations in the market. This could be due to the specialized nature of the work, the high bonding and experience requirements that naturally limit the pool of eligible contractors, or the specific geographic location. In such scenarios, the competition might be less robust than if there were five or more bidders, potentially leading to less aggressive pricing. However, if these two bidders are highly capable and experienced, the competition between them could still yield a reasonable price. The key is whether the government received the best value considering the price, technical approach, and contractor capabilities.

What are the implications of the absence of small business set-asides for this contract?

The absence of small business set-asides for this $711 million contract means that the primary award was not specifically reserved for small businesses. This implies that large businesses were expected to compete and likely won the contract, as indicated by the award to Hensel Phelps Construction Co. While large prime contractors are often required to subcontract a portion of their work to small businesses, the lack of a specific set-aside or explicit subcontracting goals in the award data suggests that these opportunities might be less structured or guaranteed. Taxpayers may miss out on the broader economic benefits associated with fostering small business growth and participation in federal contracting. It also means that the government did not proactively use this large contract as a tool to meet its small business contracting goals.

How does the 'Definitive Contract' type influence oversight and accountability?

A 'Definitive Contract' is a standard contract type used for a fixed price and quantity, often awarded after initial negotiations or as a result of a competitive process. In this context, it implies that the terms, scope, price, and duration are clearly defined. This clarity aids oversight and accountability because it establishes a clear baseline against which performance can be measured. The Department of the Army's contract administration team would monitor progress against the defined schedule and specifications. Accountability is enforced through the contract's terms, including potential penalties for non-performance or incentives for exceptional performance. The firm-fixed-price nature further sharpens accountability by placing the primary financial risk on the contractor, incentivizing them to meet the defined terms efficiently.

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: W912DR17R0038

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1600 TYSONS BLVD STE 800, TYSONS CORNER, VA, 22102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $711,349,220

Exercised Options: $711,349,220

Current Obligation: $711,349,220

Actual Outlays: $22,773,518

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline