DOD's $297M Regional Security Operations Center contract awarded to Hensel Phelps/Kiewit JV

Contract Overview

Contract Amount: $296,816,166 ($296.8M)

Contractor: Hensel Phelps/Kiewit, a Joint Venture

Awarding Agency: Department of Defense

Start Date: 2006-12-07

End Date: 2010-06-17

Contract Duration: 1,288 days

Daily Burn Rate: $230.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: AWARD CLIN ITEMS 0001 - 0003 REGIONAL SECURITY OPERATIONS CENTER

Place of Performance

Location: AUGUSTA, RICHMOND County, GEORGIA, 30905

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $296.8 million to HENSEL PHELPS/KIEWIT, A JOINT VENTURE for work described as: AWARD CLIN ITEMS 0001 - 0003 REGIONAL SECURITY OPERATIONS CENTER Key points: 1. The contract value represents a significant investment in regional security infrastructure. 2. Competition dynamics for this large-scale construction project are crucial for ensuring value. 3. Performance risks are associated with the complexity and duration of the construction. 4. This project falls within the broader context of defense infrastructure development. 5. The awardee is a joint venture, indicating a capacity for large, complex projects.

Value Assessment

Rating: good

The contract's total value of approximately $297 million for a Regional Security Operations Center appears to be within a reasonable range for a project of this scale and complexity. Benchmarking against similar large-scale government construction projects for secure facilities suggests that the pricing is competitive, especially considering the firm-fixed-price nature of the contract which shifts risk to the contractor. The duration of the contract (1288 days) also aligns with the typical timeline for such substantial construction endeavors.

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 offers. The presence of 7 bidders suggests a healthy level of competition for this significant construction project. A competitive environment like this generally leads to better price discovery and encourages contractors to offer their best value propositions to secure the award.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and higher quality services as contractors vie to win the bid. This process helps ensure that government funds are used efficiently.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, who will utilize the new security operations center. The contract delivers critical infrastructure for regional security operations, enhancing national defense capabilities. The geographic impact is centered in Georgia, where the facility will be constructed. The project will likely create numerous jobs in the construction sector, benefiting the local and regional workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen construction challenges arise.
Schedule delays could impact operational readiness and incur additional costs.
Ensuring compliance with stringent security and construction standards requires diligent oversight.

Positive Signals

Firm-fixed-price contract structure mitigates cost escalation risk for the government.
Award to a joint venture of established firms suggests strong technical and managerial capabilities.
Full and open competition indicates a robust bidding process likely resulting in competitive pricing.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the U.S. economy. Large-scale government construction projects, particularly those for defense and security, represent a substantial portion of federal spending in this area. The market for such specialized construction is characterized by a limited number of large firms capable of undertaking projects of this magnitude and complexity, often requiring extensive security clearances and specialized expertise.

Small Business Impact

While this contract was awarded under full and open competition and the awardee is a joint venture, there is no explicit indication of a small business set-aside. However, large prime contractors are often required to meet subcontracting goals for small businesses. The joint venture structure itself may involve smaller firms as partners or subcontractors, contributing to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and their representatives within the Department of the Army. The firm-fixed-price nature of the contract places a significant portion of the performance risk on the contractor. Accountability is ensured through contract terms, performance metrics, and potential penalties for non-compliance. Transparency is generally maintained through contract award databases and reporting requirements.

Related Government Programs

Military Construction
Defense Infrastructure Projects
Government Building Construction
Regional Security Facilities

Risk Flags

Large contract value
Complex construction project
Firm-fixed-price contract
Joint venture awardee

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $296.8 million to HENSEL PHELPS/KIEWIT, A JOINT VENTURE. AWARD CLIN ITEMS 0001 - 0003 REGIONAL SECURITY OPERATIONS CENTER

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS/KIEWIT, A JOINT VENTURE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $296.8 million.

What is the period of performance?

Start: 2006-12-07. End: 2010-06-17.

What is the track record of Hensel Phelps and Kiewit in executing large-scale government construction projects?

Hensel Phelps and Kiewit are both highly reputable and experienced construction firms with extensive track records in executing large-scale government and military projects. Hensel Phelps is known for its work on major aviation, healthcare, and federal facilities, often emphasizing safety and quality. Kiewit has a strong history in infrastructure, including military bases, transportation, and energy projects, often tackling complex and challenging undertakings. Their joint venture for this Regional Security Operations Center project leverages their combined expertise, resources, and established performance histories, suggesting a high likelihood of successful project completion within the specified parameters. Both companies have demonstrated capabilities in managing complex logistics, adhering to strict security protocols, and delivering projects on time and within budget for various government agencies.

How does the awarded price compare to similar government construction projects for secure facilities?

The awarded price of approximately $297 million for the Regional Security Operations Center is substantial, reflecting the scale and specialized nature of the facility. Benchmarking against similar large-scale government construction projects, particularly those involving secure operational centers or sensitive government facilities, suggests that this price is competitive. Projects of this magnitude, requiring advanced security features, robust infrastructure, and adherence to stringent government standards, typically command significant investment. The firm-fixed-price contract structure further indicates that the government has secured a defined cost, with the contractor assuming the risk for cost overruns. While specific comparable projects may vary in exact scope and location, the overall investment appears aligned with market rates for high-security, complex construction endeavors undertaken by the federal government.

What are the primary risks associated with this contract, and how are they being managed?

The primary risks associated with this contract are typical for large-scale construction projects: potential for schedule delays due to unforeseen site conditions, weather, or supply chain disruptions; cost overruns if the firm-fixed-price contract is not managed effectively by the contractor; and performance risks related to meeting stringent security and operational requirements. These risks are being managed through several mechanisms. The firm-fixed-price contract shifts significant cost risk to the contractor, incentivizing efficient management. The award to a joint venture of experienced firms like Hensel Phelps and Kiewit suggests a strong capacity to mitigate technical and logistical challenges. Furthermore, the government will likely employ robust oversight through contracting officers' representatives (CORs) to monitor progress, quality, and compliance with specifications, ensuring the facility meets all required security and operational standards.

What is the historical spending pattern for Regional Security Operations Centers or similar defense infrastructure?

Historical spending on Regional Security Operations Centers (RSOCs) and similar defense infrastructure projects indicates a consistent and significant investment by the Department of Defense. While specific RSOC construction costs can vary widely based on location, size, and technological requirements, projects of this nature often fall into the multi-million to hundreds of millions of dollars range. The U.S. military and intelligence agencies have historically allocated substantial budgets towards enhancing their operational capabilities through the construction and modernization of secure facilities. This includes command centers, intelligence processing hubs, and communication nodes. Spending in this category is driven by evolving geopolitical threats, the need for advanced technological integration, and the ongoing maintenance and upgrade of existing infrastructure. The $297 million award for this RSOC aligns with the established pattern of significant capital investment in critical defense infrastructure.

What are the implications of the joint venture structure for project execution and oversight?

The formation of a joint venture between Hensel Phelps and Kiewit for this Regional Security Operations Center project has several implications for project execution and oversight. Firstly, it pools the resources, expertise, and financial capacity of two major construction firms, enabling them to undertake a project of this significant scale and complexity that might be challenging for a single entity. This can lead to enhanced project management, broader access to skilled labor and specialized equipment, and potentially more efficient execution. Secondly, from an oversight perspective, the government will be dealing with a single contractual entity (the joint venture), simplifying communication and accountability. However, the government will need to ensure that the internal management structure of the joint venture is robust and that responsibilities between the partners are clearly defined to avoid potential disputes that could impact project timelines or quality. The established reputations of both firms suggest a strong commitment to successful project delivery.

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: W912HN06R0024

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4437 BROOKFIELD CORPORATE DR #207, CHANTILLY, VA, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $296,816,166

Exercised Options: $296,816,166

Current Obligation: $296,816,166

Contract Characteristics

Cost or Pricing Data: NO

Timeline