DoD's $25.8M Thule Air Base construction contract awarded to MT Højgaard for facility upgrades

Contract Overview

Contract Amount: $25,808,112 ($25.8M)

Contractor: MT Hoejgaard Groenland APS

Awarding Agency: Department of Defense

Start Date: 2016-06-13

End Date: 2020-11-26

Contract Duration: 1,627 days

Daily Burn Rate: $15.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF CONSTRUCTION NEW FACILITY FOR BASE CE AND SUPPLY SHOPS AT THULE AIR BASE, GREENLAND.

Plain-Language Summary

Department of Defense obligated $25.8 million to MT HOEJGAARD GROENLAND APS for work described as: IGF::OT::IGF CONSTRUCTION NEW FACILITY FOR BASE CE AND SUPPLY SHOPS AT THULE AIR BASE, GREENLAND. Key points: 1. Contract value represents a significant investment in critical infrastructure at a remote U.S. military installation. 2. Full and open competition was utilized, suggesting a broad market search for qualified contractors. 3. The contract duration of 1627 days indicates a complex, long-term construction project. 4. Fixed-price contract type likely shifts cost overrun risks to the contractor. 5. The project's remote location in Greenland presents unique logistical and operational challenges. 6. Performance period spans over four years, allowing for substantial project development and execution.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the unique nature of construction in remote Arctic locations like Thule Air Base. The $25.8 million price tag for a new facility, including CE and supply shops, needs to be assessed against specialized construction costs in similar extreme environments. Without direct comparisons to other Arctic base constructions, it's difficult to definitively state if this represents excellent or questionable value. However, the fixed-price nature suggests an attempt to control costs upfront.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that the Department of Defense sought bids from all responsible sources. The number of bids received (4) suggests a moderate level of competition for this specialized construction project. While four bidders is not exceptionally high, it does provide a basis for price discovery and ensures that multiple firms had the opportunity to compete for the work.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and better quality services.

Public Impact

U.S. military personnel stationed at Thule Air Base will benefit from improved facilities for command and control and supply chain operations. The construction project directly supports the operational readiness and logistical capabilities of the U.S. Air Force in the Arctic region. The geographic impact is localized to Thule Air Base, Greenland, a strategically important site for U.S. defense interests. The project likely involved a workforce of construction professionals, potentially including both U.S. and local Greenlandic labor, contributing to economic activity in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Logistical complexities and potential cost overruns associated with construction in a remote Arctic environment.
Ensuring contractor compliance and quality control over a multi-year project in a challenging location.
Potential for environmental impacts during construction in a sensitive Arctic ecosystem.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process.
Fixed-price contract type helps to mitigate cost escalation risks for the government.
The project addresses critical infrastructure needs for U.S. military operations at Thule Air Base.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically for government facilities. The market for such specialized construction, particularly in remote and harsh environments like Greenland, is limited to a few experienced firms. The Department of Defense is a major client for construction services, with significant annual spending allocated to maintaining and upgrading its global infrastructure. Benchmarking against similar remote base construction projects is difficult due to the unique logistical and environmental factors.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature and scale of construction required at Thule Air Base, it is likely that larger, experienced construction firms with specific capabilities for remote and challenging environments were the primary bidders. Subcontracting opportunities for small businesses may exist, but would depend on the prime contractor's procurement strategy.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Department of the Army contracting office responsible for overseas construction. Quality assurance representatives would likely be on-site to monitor progress and ensure compliance with specifications. Transparency is generally maintained through contract award databases and reporting requirements, though specific details of ongoing oversight might be internal.

Related Government Programs

Military Construction, Army
Base Realignment and Closure (BRAC) Construction
Arctic Infrastructure Development
Department of Defense Facilities Management

Risk Flags

Remote Location Logistics
Arctic Environment Challenges
Long-Term Construction Duration
Potential for Cost Overruns (mitigated by FFP)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.8 million to MT HOEJGAARD GROENLAND APS. IGF::OT::IGF CONSTRUCTION NEW FACILITY FOR BASE CE AND SUPPLY SHOPS AT 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 $25.8 million.

What is the period of performance?

Start: 2016-06-13. End: 2020-11-26.

What is the track record of MT Højgaard Groenland APS in executing large-scale government construction projects, particularly in remote or challenging environments?

MT Højgaard Groenland APS is a subsidiary of the Danish construction group MT Højgaard. The parent company has a long history of undertaking significant infrastructure and building projects, including in challenging climates. While specific details on their track record with U.S. Department of Defense contracts in remote locations like Thule are not readily available in public databases, their experience in Greenland suggests a capability to handle complex logistical and environmental demands. Further due diligence would involve reviewing past performance evaluations and project completion records for similar contracts undertaken by the company or its affiliates.

How does the cost per square foot or per unit of this facility compare to similar institutional buildings constructed in less remote locations?

Directly comparing the cost per square foot for this facility to those built in less remote locations is difficult without detailed project specifications (e.g., square footage, specific building systems, materials used). Construction costs in remote Arctic regions are significantly higher due to factors such as extreme weather, extended transportation of materials and personnel, specialized equipment needs, and higher labor costs. Therefore, a direct cost-per-square-foot comparison would likely show a substantially higher figure for the Thule Air Base project, reflecting these unique environmental and logistical premiums rather than necessarily indicating poor value.

What are the primary risks associated with this contract, and what mitigation strategies were likely employed by the DoD and the contractor?

The primary risks for this contract include logistical challenges in material and personnel transport to Greenland, potential delays due to severe weather, unforeseen site conditions, and ensuring quality control in a remote setting. Mitigation strategies likely employed by the DoD include thorough site investigations, robust contract terms (like fixed-price to shift cost risk), clear performance standards, and potentially requiring the contractor to develop detailed logistical and risk management plans. The contractor would also implement its own risk mitigation through experienced project management, contingency planning, and strong supplier/subcontractor relationships.

How effective has the DoD been historically in managing large construction projects in remote overseas bases, and what lessons learned might apply here?

The DoD has extensive experience managing construction projects in remote overseas bases, with varying degrees of success. Lessons learned often revolve around the critical importance of accurate initial site assessments, realistic cost and schedule estimations that account for unique environmental factors, and strong on-site project oversight. Past projects have sometimes faced challenges with cost overruns and schedule delays due to underestimating the complexities of remote logistics and Arctic conditions. For this Thule project, the DoD likely leveraged this experience to build a more resilient contract structure and oversight plan.

What is the historical spending pattern for construction and facility upgrades at Thule Air Base, and how does this $25.8M contract fit within that trend?

Historical spending data for construction at Thule Air Base is not readily available in a consolidated public format. However, as a strategically important U.S. military installation in the Arctic, it is reasonable to assume that periodic investments in infrastructure upgrades and maintenance have occurred over the years. This $25.8 million contract for new CE and supply facilities represents a significant, targeted investment aimed at modernizing critical operational support functions. It likely fits within a broader, long-term strategy of maintaining and enhancing U.S. presence and capabilities in the region, rather than being an isolated expenditure.

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: SEALED BID

Solicitation ID: W912DS16B0002

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sociedade DE Empreitadas E Trabalhos Hidraulicos S.A. (UEI: 306126962)

Address: QEQERTANUT 22, NUUSSUAQ

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

Financial Breakdown

Contract Ceiling: $25,808,112

Exercised Options: $25,808,112

Current Obligation: $25,808,112

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline