DoD's $24.4M warehouse construction contract awarded to undisclosed foreign entities raises transparency concerns

Contract Overview

Contract Amount: $24,363,359 ($24.4M)

Contractor: Foreign Awardees (undisclosed)

Awarding Agency: Department of Defense

Start Date: 2010-04-19

End Date: 2011-11-25

Contract Duration: 585 days

Daily Burn Rate: $41.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCT THREE (3) STORAGE WAREHOUSES

Plain-Language Summary

Department of Defense obligated $24.4 million to FOREIGN AWARDEES (UNDISCLOSED) for work described as: CONSTRUCT THREE (3) STORAGE WAREHOUSES Key points: 1. Contract awarded to foreign entities with undisclosed specifics, impacting transparency and oversight. 2. Full and open competition was utilized, suggesting a broad search for qualified bidders. 3. The contract's duration of 585 days indicates a significant construction timeline. 4. Fixed-price contract type suggests cost certainty for the government, but potential for contractor profit. 5. The project involves the construction of three storage warehouses, a critical infrastructure need. 6. The award value of over $24 million represents a substantial investment in logistical capabilities.

Value Assessment

Rating: questionable

Benchmarking the value of this specific construction project is challenging without detailed cost breakdowns or comparable projects in similar geographic locations. The firm fixed-price nature of the contract implies that the contractor assumed the risk of cost overruns, which can be advantageous for the government if the initial pricing was competitive. However, the lack of transparency regarding the foreign awardees makes it difficult to assess if the pricing reflects fair market value or if there were opportunities for better value through more localized or transparent bidding processes.

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 the Army sought bids from all responsible sources. With 10 bidders participating, there was a reasonable level of competition. This suggests that the agency likely received multiple proposals and had a basis for selecting the most advantageous offer. The presence of multiple bidders generally supports price discovery and can lead to more competitive pricing.

Taxpayer Impact: The use of full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining competitive pricing and prevents potential price inflation associated with limited solicitations.

Public Impact

The primary beneficiaries are the Department of Defense and the Army, gaining enhanced storage and logistical capabilities. The services delivered include the physical construction of three substantial storage warehouses. The geographic impact is localized to the site of the warehouse construction, but the logistical benefits are broader for military operations. Workforce implications include employment opportunities for construction labor and related trades during the project's execution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency regarding the identity and location of the foreign awardees.
Potential for reduced oversight and accountability due to foreign contractor status.
Difficulty in verifying contractor past performance and financial stability for foreign entities.
Unknown implications for domestic job creation and economic impact compared to domestic awards.

Positive Signals

Awarded through full and open competition, indicating a broad search for qualified bidders.
Firm fixed-price contract type provides cost certainty for the government.
The project addresses a clear need for increased storage and logistical capacity.
Multiple bidders (10) participated, suggesting a competitive bidding environment.

Sector Analysis

This contract falls within the Industrial Building Construction sector, a segment of the broader construction industry focused on facilities for industrial purposes. The market for such construction is influenced by government infrastructure spending, particularly defense-related needs. Comparable spending benchmarks would typically involve analyzing other large-scale military construction projects or government warehouse facilities, considering factors like size, complexity, and location.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the scale and nature of constructing three storage warehouses, it is likely that the prime contract was awarded to a large business. Subcontracting opportunities may have arisen for specialized construction trades or material suppliers, but the extent to which small businesses benefited is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and project management offices. Accountability measures are typically enforced through contract clauses, performance monitoring, and payment schedules. Transparency is limited by the undisclosed nature of the foreign awardees. Inspector General jurisdiction may apply, particularly concerning fraud, waste, or abuse, but the effectiveness of oversight can be complicated by international contracting.

Related Government Programs

Military Construction
Logistics and Supply Chain Infrastructure
Department of Defense Facilities Management
Industrial Warehouse Construction

Risk Flags

Lack of transparency regarding foreign awardee identity.
Potential for reduced oversight due to foreign contractor status.
Unknown contractor past performance and financial stability.
Security risks associated with foreign entities in construction.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.4 million to FOREIGN AWARDEES (UNDISCLOSED). CONSTRUCT THREE (3) STORAGE WAREHOUSES

Who is the contractor on this award?

The obligated recipient is FOREIGN AWARDEES (UNDISCLOSED).

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.4 million.

What is the period of performance?

Start: 2010-04-19. End: 2011-11-25.

What specific criteria were used to evaluate the foreign awardees, and how was their responsibility and performance capability assessed?

The provided data does not specify the evaluation criteria or the methods used to assess the responsibility and performance capability of the foreign awardees. Typically, agencies assess factors such as financial resources, performance history, organizational structure, and technical qualifications. For foreign contractors, additional considerations might include compliance with international trade laws, security clearances, and the ability to operate within the host country's regulatory framework. Without this information, it is difficult to ascertain the rigor of the vetting process and the assurance of successful project completion.

How does the per-square-foot construction cost of these warehouses compare to industry benchmarks for similar facilities, considering the foreign awardee?

Calculating a precise per-square-foot cost requires detailed information on the total square footage of the three warehouses, which is not provided. Assuming a standard size for such facilities, a preliminary comparison could be made if the total construction cost ($24.4 million) is divided by an estimated square footage. However, direct comparison to industry benchmarks is complicated by the fact that the awardee is a foreign entity. Construction costs can vary significantly based on labor rates, material availability, local regulations, and logistical challenges associated with international contractors. Without specific cost breakdowns and square footage, a meaningful benchmark comparison is not feasible.

What are the potential risks associated with awarding a significant construction contract to undisclosed foreign entities, particularly regarding security and long-term maintenance?

Awarding construction contracts to undisclosed foreign entities introduces several potential risks. Security is a primary concern, as the vetting process for foreign individuals and companies may not be as robust as for domestic entities, potentially impacting site security and the integrity of the constructed facilities. Long-term maintenance could also be problematic if the foreign contractor lacks a local presence or established support network, leading to delays or increased costs for repairs and upkeep. Furthermore, geopolitical factors or changes in international relations could impact the contractor's ability to fulfill ongoing obligations. The lack of transparency exacerbates these risks by obscuring the specific nature of the contractor's capabilities and potential vulnerabilities.

What mechanisms are in place to ensure quality control and adherence to specifications throughout the construction process, given the foreign awardee?

Quality control and adherence to specifications for a contract with a foreign awardee would typically rely on a combination of government oversight personnel on-site, detailed contract requirements, and potentially third-party inspection services. The Department of the Army would likely assign project managers and quality assurance representatives to monitor progress, conduct inspections, and verify that materials and workmanship meet the contract's standards. However, the effectiveness of these mechanisms can be influenced by the contractor's location, communication challenges, and the extent of government access to the construction site and relevant documentation. The undisclosed nature of the foreign awardee makes it difficult to assess the specific quality assurance protocols implemented.

How does the historical spending pattern for industrial building construction by the Department of the Army compare to this specific contract's value and scope?

Analyzing historical spending patterns for industrial building construction by the Department of the Army requires access to comprehensive historical contract data. This specific contract, valued at approximately $24.4 million for three warehouses, represents a significant investment. To compare, one would need to examine the frequency and value of similar construction projects undertaken by the Army over recent years. Factors such as the average cost per warehouse, the typical number of warehouses constructed in a single contract, and the overall annual budget allocated to such infrastructure projects would provide context. Without this historical data, it's challenging to definitively state whether this contract is an outlier, a typical expenditure, or indicative of a trend in Army construction spending.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Industrial 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: W912ER10R0004

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1800 F ST NW, WASHINGTON, DC, 20405

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $24,363,359

Exercised Options: $24,363,359

Current Obligation: $24,363,359

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline