Army awards $234.6M contract to Michels Corp for heavy civil engineering in New York
Contract Overview
Contract Amount: $234,601,537 ($234.6M)
Contractor: Michels Corp
Awarding Agency: Department of Defense
Start Date: 2021-11-16
End Date: 2026-04-02
Contract Duration: 1,598 days
Daily Burn Rate: $146.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 5
Pricing Type: FIRM FIXED PRICE
Sector: Construction
Official Description: ROCKAWAY CONTRACT 2
Place of Performance
Location: ROCKAWAY PARK, QUEENS County, NEW YORK, 11694
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $234.6 million to MICHELS CORP for work described as: ROCKAWAY CONTRACT 2 Key points: 1. Contract value represents a significant investment in infrastructure. 2. Full and open competition suggests a potentially competitive bidding process. 3. Contract duration of nearly 4 years indicates a substantial, long-term project. 4. Fixed-price contract type may offer cost certainty for the government. 5. The award is for heavy and civil engineering construction, a critical sector.
Value Assessment
Rating: fair
The contract value of $234.6 million is substantial for a single heavy civil engineering project. Benchmarking this against similar large-scale Army Corps of Engineers projects would be necessary to determine if the pricing is competitive. The firm fixed-price structure provides cost predictability, but the ultimate value for money depends on project execution and adherence to scope. Without detailed cost breakdowns or comparisons to similar projects, a definitive value assessment is challenging.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 5 bidders suggests a reasonable level of competition for this significant project. A higher number of bidders generally leads to more competitive pricing and better value for the government, but the specific dynamics of the heavy civil engineering market in the region would influence this.
Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, potentially driving down costs and ensuring the government receives the best possible price.
Public Impact
The primary beneficiaries are the Department of the Army and potentially local communities in New York through infrastructure improvements. The contract will deliver heavy and civil engineering construction services. Geographic impact is concentrated in New York, where the construction will take place. The project is likely to create or sustain jobs in the construction sector in the New York region.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if unforeseen site conditions arise in heavy civil engineering.
- Ensuring timely completion within the nearly 4-year duration is crucial for project success.
- Managing a contract of this magnitude requires robust oversight to ensure quality and compliance.
Positive Signals
- Firm fixed-price contract provides budget certainty.
- Full and open competition suggests a competitive bidding environment.
- Award to an established contractor like Michels Corp may indicate a track record of successful project delivery.
Sector Analysis
This contract falls within the heavy and civil engineering construction sector, which is vital for national infrastructure development and military readiness. The market for large-scale civil engineering projects is often characterized by a limited number of highly specialized firms capable of undertaking such complex work. The Army Corps of Engineers is a major procurer in this space, awarding numerous contracts for projects ranging from flood control to base infrastructure.
Small Business Impact
The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Large federal construction contracts often involve significant subcontracting opportunities, but the extent to which small businesses will participate in this specific project is not detailed. Further analysis of subcontracting plans would be needed to assess the impact on the small business ecosystem.
Oversight & Accountability
The Department of the Army, specifically the Army Corps of Engineers, will provide oversight for this contract. Accountability measures are typically embedded in contract terms, including performance standards, payment schedules tied to milestones, and potential penalties for non-compliance. Transparency is facilitated through contract award databases, but detailed project progress and financial reporting may be less publicly accessible.
Related Government Programs
- Army Corps of Engineers Construction Contracts
- Heavy and Civil Engineering Services
- Infrastructure Development Projects
- Department of Defense Major Construction Awards
Risk Flags
- Potential for cost overruns due to unforeseen site conditions.
- Risk of material price escalation over the contract duration.
- Ensuring adequate contractor performance and quality control.
- Managing scope changes effectively to prevent budget impacts.
Tags
construction, department-of-defense, department-of-the-army, new-york, definitive-contract, firm-fixed-price, full-and-open-competition, heavy-and-civil-engineering, large-contract, infrastructure
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $234.6 million to MICHELS CORP. ROCKAWAY CONTRACT 2
Who is the contractor on this award?
The obligated recipient is MICHELS CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $234.6 million.
What is the period of performance?
Start: 2021-11-16. End: 2026-04-02.
What is Michels Corp's track record with similar large-scale federal construction contracts, particularly with the Department of the Army?
Michels Corp has a history of securing and executing large federal contracts, including significant work with the Department of Defense and Army Corps of Engineers. Their portfolio often includes complex civil engineering projects such as dams, tunnels, and infrastructure upgrades. Analyzing their past performance on similar firm-fixed-price contracts, their on-time and on-budget delivery rates, and any past disputes or contract modifications would provide a clearer picture of their reliability for this $234.6 million award. Specific contract databases and agency performance reports would be the primary sources for this detailed assessment.
How does the $234.6 million contract value compare to the average cost of similar heavy civil engineering projects undertaken by the Army?
The $234.6 million value positions this contract as a major infrastructure undertaking. To benchmark its value, one would compare it to the average cost of similar Army Corps of Engineers projects, such as bridge construction, port development, or large-scale facility foundations, awarded over the past 3-5 years. Factors like geographic location (which influences labor and material costs), project complexity, and specific engineering requirements would need to be considered. If this contract's per-unit cost (e.g., cost per square foot of constructed area, or cost per linear foot of a structure) is significantly higher than comparable projects, it could indicate potential overpricing or unique project challenges.
What are the primary risks associated with a contract of this size and duration in the heavy civil engineering sector?
Key risks for a contract of this magnitude and duration include unforeseen geological or environmental conditions, which are common in heavy civil engineering and can lead to significant cost overruns and schedule delays. Material price escalation over the nearly four-year period is another major risk, especially for a firm-fixed-price contract. Labor shortages or disputes, permitting issues, and contractor performance failures are also significant concerns. Furthermore, scope creep, where the project requirements expand beyond the original agreement, can strain budgets and timelines. Robust risk management plans, contingency funding, and strong government oversight are critical to mitigate these potential issues.
How effective are the 'full and open competition' and 'firm fixed price' contract types in ensuring value for money on large construction projects?
Full and open competition is generally considered the most effective method for achieving value for money, as it maximizes the pool of potential bidders, fostering price competition and encouraging innovation. A firm fixed-price (FFP) contract aims to transfer risk to the contractor, providing cost certainty to the government. However, on complex construction projects with potential for unforeseen issues, an FFP contract can incentivize contractors to cut corners on quality or safety to protect their profit margins if risks materialize. Conversely, if the contractor accurately anticipates all costs and risks, the government benefits from a predictable price. The effectiveness hinges on the accuracy of the initial cost estimates and the contractor's ability to manage risks effectively.
What is the historical spending trend for 'Other Heavy and Civil Engineering Construction' by the Department of the Army?
The Department of the Army, primarily through the Army Corps of Engineers, consistently allocates substantial funding towards 'Other Heavy and Civil Engineering Construction' to maintain and modernize its infrastructure, support military operations, and execute civil works missions. Historical spending in this category fluctuates based on national priorities, infrastructure needs, and specific major projects. Analyzing annual reports and budget allocations would reveal trends, such as periods of increased investment driven by infrastructure initiatives or specific defense build-ups, versus periods of more stable, maintenance-focused spending. Understanding these patterns provides context for the current $234.6 million award.
Industry Classification
NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering 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: W912DS21B0008
Offers Received: 5
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 817 W MAIN ST, BROWNSVILLE, WI, 53006
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $238,937,372
Exercised Options: $234,601,537
Current Obligation: $234,601,537
Actual Outlays: $42,455,872
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2021-11-16
Current End Date: 2026-04-02
Potential End Date: 2026-04-02 00:00:00
Last Modified: 2025-12-17
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