Department of Defense awards $27.8M for dormitory construction at Thule Air Base, Greenland

Contract Overview

Contract Amount: $27,772,211 ($27.8M)

Contractor: MT Hoejgaard Groenland APS

Awarding Agency: Department of Defense

Start Date: 2012-05-11

End Date: 2014-05-27

Contract Duration: 746 days

Daily Burn Rate: $37.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCTION OF NEW DORMITORY, THULE AIR BASE, GREENLAND

Plain-Language Summary

Department of Defense obligated $27.8 million to MT HOEJGAARD GROENLAND APS for work described as: CONSTRUCTION OF NEW DORMITORY, THULE AIR BASE, GREENLAND Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is a definitive contract with a firm fixed price, indicating price certainty. 3. The project duration of 746 days (approximately 2 years) suggests a significant construction undertaking. 4. The awarding agency is the Department of Defense, with the Department of the Army as the specific service. 5. The North American Industry Classification System (NAICS) code 236220 points to commercial and institutional building construction. 6. The contract was awarded to MT HOEJGAARD GROENLAND APS, a specific contractor for this project.

Value Assessment

Rating: fair

The contract value of $27.8 million for dormitory construction at Thule Air Base appears to be a significant investment. Without specific benchmarks for dormitory construction in remote Arctic locations, a direct value-for-money assessment is challenging. However, the firm fixed-price nature of the contract provides cost predictability. Further analysis would require comparing this cost to similar projects in comparable geographic and logistical environments, which are likely scarce.

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 presence of 2 bidders suggests a degree of competition, though the exact number of potential bidders for such a specialized project in Greenland is unknown. A higher number of bidders typically leads to more competitive pricing for the government.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best possible price through market forces. The fact that there were at least two bids suggests that the government received multiple offers, potentially leading to a more cost-effective outcome than a sole-source or limited competition award.

Public Impact

Personnel stationed at Thule Air Base in Greenland will benefit from improved living quarters. The project delivers new dormitory facilities, enhancing the quality of life and operational readiness for military personnel. The geographic impact is localized to Thule Air Base, Greenland, a critical strategic location. The construction project likely involved a workforce, potentially including local hires or specialized construction crews, contributing to employment in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen logistical challenges arise in Greenland.
Limited competition (2 bidders) may have resulted in a higher price than if more firms had participated.
The remote location of Thule Air Base presents unique logistical and operational risks for construction projects.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Awarded under full and open competition, indicating a structured procurement process.
Construction of essential personnel housing addresses a critical need for military readiness.

Sector Analysis

This contract falls within the construction sector, specifically commercial and institutional building construction. The market for large-scale construction projects in remote, international locations like Greenland is specialized, often involving a limited number of contractors with the expertise and logistical capabilities to operate in such environments. Benchmarking this spending against similar projects is difficult due to the unique location and potential logistical premiums.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. The primary contractor, MT HOEJGAARD GROENLAND APS, is likely a larger entity capable of undertaking such a significant project. The impact on the small business ecosystem would depend on whether the prime contractor utilizes small business subcontractors, which is not detailed in this data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting officers and potentially the Inspector General's office within the Department of Defense. Transparency is provided through contract award databases like FPDS. Accountability measures are inherent in the firm fixed-price contract type, which places the risk of cost overruns on the contractor. The specific oversight mechanisms for construction projects in remote overseas locations would also involve logistical and quality assurance teams.

Related Government Programs

Military Housing Construction
Base Infrastructure Projects
Department of Defense Construction Contracts
Arctic Region Infrastructure Development

Risk Flags

Remote Location Logistics
Arctic Climate Challenges
Limited Competition Bidders

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.8 million to MT HOEJGAARD GROENLAND APS. CONSTRUCTION OF NEW DORMITORY, THULE AIR BASE, GREENLAND

Who is the contractor on this award?

The obligated recipient is MT HOEJGAARD GROENLAND APS.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $27.8 million.

What is the period of performance?

Start: 2012-05-11. End: 2014-05-27.

What is the track record of MT HOEJGAARD GROENLAND APS in performing similar government contracts?

Information regarding the specific track record of MT HOEJGAARD GROENLAND APS in performing similar government contracts is not directly available within the provided data. To assess their performance, one would typically review past contract awards, performance evaluations (such as Past Performance Information), and any reported disputes or claims associated with their previous work for the U.S. government or other clients. A thorough review would involve searching government contract databases and potentially seeking feedback from relevant contracting officers. Without this detailed performance history, it is difficult to definitively gauge their reliability and past success on comparable projects, especially those in challenging environments like Greenland.

How does the cost per square foot of this dormitory construction compare to similar projects?

The provided data does not include the square footage of the dormitory, making a direct cost-per-square-foot comparison impossible. To perform such an analysis, the total construction cost ($27,772,211.08) would need to be divided by the total area of the facility. Furthermore, meaningful comparisons would require data on similar dormitory construction projects, ideally in comparable geographic locations (e.g., other remote Arctic bases) and with similar construction standards. The unique logistical challenges and higher operating costs associated with building in Greenland would likely make direct comparisons to stateside projects unreliable. Without these key pieces of information, a benchmark assessment of the cost efficiency is not feasible.

What are the primary risks associated with constructing a dormitory in Thule Air Base, Greenland?

Constructing a dormitory in Thule Air Base, Greenland, presents several significant risks. The extreme Arctic climate, including harsh weather conditions, permafrost, and limited daylight hours during winter, poses substantial challenges to construction timelines and material integrity. Logistical complexities are paramount; transporting materials, equipment, and personnel to such a remote location is expensive and prone to delays due to weather or shipping availability. Environmental considerations are also critical, requiring careful management to minimize impact in a sensitive ecosystem. Furthermore, the availability of a skilled local workforce may be limited, potentially necessitating the use of specialized, costly labor. Finally, the potential for unforeseen ground conditions or infrastructure limitations at the base could lead to scope changes and cost increases.

What is the historical spending trend for dormitory construction at Thule Air Base or similar remote installations?

The provided data focuses on a single contract award and does not offer historical spending trends for dormitory construction at Thule Air Base or similar remote installations. To analyze historical spending, one would need to access contract databases over multiple fiscal years, filtering for projects of similar scope (dormitory construction) and location (remote bases, particularly in Arctic regions). This would allow for the identification of patterns in contract values, award frequencies, and the types of contractors utilized. Understanding these trends is crucial for budgeting, identifying potential cost escalation, and assessing the overall investment in infrastructure at such strategic, yet challenging, locations.

How does the firm fixed-price contract type mitigate risks for the government in this project?

A firm fixed-price (FFP) contract type is designed to shift the majority of cost risk from the government to the contractor. In this project, MT HOEJGAARD GROENLAND APS is obligated to complete the dormitory construction for the agreed-upon price of $27,772,211.08, regardless of their actual costs. This provides the Department of the Army with significant cost certainty and predictability, making budgeting more straightforward. The contractor bears the responsibility for managing their expenses, including labor, materials, and overhead. If the contractor incurs higher costs than anticipated due to unforeseen issues (e.g., material price increases, logistical delays), their profit margin will decrease, but the government's expenditure remains fixed. This structure incentivizes the contractor to manage the project efficiently and control costs.

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: W912DS12B0002

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Knud Højgaards Fond (UEI: 305167728)

Address: POSTBOKS 230, NUUK

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $28,630,342

Exercised Options: $27,772,211

Current Obligation: $27,772,211

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline