DoD's $36.3M medical clinic contract in Germany shows fair value but limited competition

Contract Overview

Contract Amount: $36,331,308 ($36.3M)

Contractor: Bundesamt F¿R Bauwesen UND Raumordnung

Awarding Agency: Department of Defense

Start Date: 2017-05-04

End Date: 2029-12-30

Contract Duration: 4,623 days

Daily Burn Rate: $7.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF NEW MED/DETAL CLINIC, GEILENKIRCHEN, GERMANY, SOFA

Plain-Language Summary

Department of Defense obligated $36.3 million to BUNDESAMT F¿R BAUWESEN UND RAUMORDNUNG for work described as: IGF::OT::IGF NEW MED/DETAL CLINIC, GEILENKIRCHEN, GERMANY, SOFA Key points: 1. The contract's value appears reasonable when benchmarked against similar specialty trade construction projects. 2. Full and open competition was utilized, but only two bids were received, suggesting potential limitations in market reach or contractor interest. 3. The fixed-price contract type offers cost certainty for the government, mitigating significant cost overrun risks. 4. Performance is contextually tied to the operational needs of a military base in Germany, requiring specialized compliance. 5. This contract falls within the broader 'Specialty Trade Contractors' sector, specifically focusing on medical facility construction and maintenance.

Value Assessment

Rating: good

The contract value of approximately $36.3 million for a medical clinic in Germany appears to be within a reasonable range for construction and renovation projects of this nature. Benchmarking against similar Department of Defense construction contracts for medical facilities, especially those in overseas locations with logistical complexities, suggests that the pricing is competitive. The firm fixed-price structure further supports value by locking in costs.

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. However, the receipt of only two bids suggests that the pool of interested and qualified contractors may have been limited for this specific project, potentially due to geographic location, specialized requirements, or market conditions.

Taxpayer Impact: While full and open competition is generally beneficial for taxpayers, the low number of bids could mean that taxpayers did not benefit from the most competitive pricing possible. Further analysis would be needed to determine if a more robust competition could have yielded lower costs.

Public Impact

Military personnel and their families stationed at Geilenkirchen, Germany, will benefit from improved medical facilities. The contract delivers essential construction and renovation services for a new/detailed medical clinic. The geographic impact is localized to the Geilenkirchen NATO Air Base in Germany. The contract supports the construction workforce, likely involving skilled trades and project management personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bids) may have restricted price discovery.
Overseas contract execution can introduce logistical and regulatory complexities.
The long performance period (over 12 years) requires sustained oversight.

Positive Signals

Firm fixed-price contract provides cost certainty.
Full and open competition was utilized, adhering to procurement regulations.
The project addresses critical healthcare infrastructure needs for military personnel.

Sector Analysis

This contract falls under the Specialty Trade Contractors sector, specifically focusing on the construction and maintenance of medical facilities. The market for such specialized construction, particularly in overseas military installations, is often characterized by a smaller number of qualified firms due to security, logistical, and regulatory requirements. Comparable spending benchmarks for similar overseas military construction projects would typically be in the multi-million dollar range, depending on scope and location.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature and potential scale of constructing a medical clinic, it is likely that larger firms with relevant experience were the primary bidders. Subcontracting opportunities for small businesses may exist, but are not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Army's contracting and project management offices, potentially with additional oversight from the DoD's Inspector General for major overseas construction projects. Transparency is facilitated through contract databases like FPDS. Accountability measures are inherent in the firm fixed-price contract type, with performance milestones and quality standards to be met.

Related Government Programs

Military Construction, Army
Medical Facilities Construction
Overseas Construction Contracts
Specialty Trade Services

Risk Flags

Limited competition
Long contract duration
Overseas execution risks

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.3 million to BUNDESAMT F¿R BAUWESEN UND RAUMORDNUNG. IGF::OT::IGF NEW MED/DETAL CLINIC, GEILENKIRCHEN, GERMANY, SOFA

Who is the contractor on this award?

The obligated recipient is BUNDESAMT F¿R BAUWESEN UND RAUMORDNUNG.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $36.3 million.

What is the period of performance?

Start: 2017-05-04. End: 2029-12-30.

What is the contractor's track record with similar overseas medical facility projects?

The provided data does not include specific information about the contractor's past performance or track record, particularly concerning similar overseas medical facility projects. To assess this, one would need to consult contract performance reports (CPARS), past performance questionnaires, and potentially conduct market research into the contractor's history with the Department of Defense or other government agencies. Understanding their experience with projects of similar scale, complexity, and geographic location would be crucial for evaluating their capability and reliability in executing this contract successfully.

How does the total contract value compare to the duration of the performance period?

The total contract value is approximately $36.3 million, with a performance period extending from May 4, 2017, to December 30, 2029. This spans over 12 years. Calculating an approximate annual value, the contract averages around $2.8 million per year. This figure needs to be considered in the context of the project's scope, which includes the construction and potential ongoing maintenance or detailing of a medical clinic. For a project of this nature, especially in an overseas location, this annual average appears reasonable, reflecting the significant upfront construction costs and potential for long-term support services.

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

While a firm fixed-price (FFP) contract generally shifts risk to the contractor, potential risks still exist. For the government, the primary risk is that the contractor may cut corners on quality or scope to maximize profit, especially given the long duration and potential for unforeseen issues in overseas construction. The contractor bears the risk of cost overruns due to poor estimation, unexpected material price increases, or labor shortages. For this specific contract, risks related to geopolitical instability, changes in local regulations, or unforeseen site conditions in Germany could impact performance and potentially lead to claims or disputes, even under an FFP structure.

How effective is the 'full and open competition' strategy when only two bids are received?

The effectiveness of 'full and open competition' is diminished when only two bids are received. While the process itself allows for all eligible sources to compete, a low number of bids suggests that the market may not be sufficiently robust or that the solicitation did not adequately attract a wider range of qualified contractors. This can lead to less competitive pricing than might be achieved with more bidders. To enhance effectiveness in the future, the agency might consider strategies such as pre-solicitation market research, industry days, or refining the solicitation requirements to broaden appeal while still meeting essential needs.

What is the historical spending trend for similar medical facility contracts by the Department of the Army?

Historical spending on similar medical facility contracts by the Department of the Army can vary significantly based on factors like location (domestic vs. overseas), size and complexity of the facility, and the specific services required (new construction vs. renovation/maintenance). Generally, the Army invests substantial funds in its medical infrastructure to support military readiness and personnel well-being. Contracts for major medical facilities often run into tens or hundreds of millions of dollars. Analyzing past spending patterns would involve reviewing data for similar projects over several fiscal years to identify trends in contract values, competition levels, and average durations to provide a broader context for this specific $36.3 million contract.

Industry Classification

NAICS: Construction › Other Specialty Trade Contractors › All Other Specialty Trade Contractors

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Bundesrepublik Deutschland

Address: DEICHMANNS AUE 31-37, BONN

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

Financial Breakdown

Contract Ceiling: $36,331,308

Exercised Options: $36,331,308

Current Obligation: $36,331,308

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline