Department of the Army awards $25.3M contract for infrastructure improvements at Misawa Air Base, Japan

Contract Overview

Contract Amount: $25,282,061 ($25.3M)

Contractor: Sanken Setsubi Kogyo CO., Ltd.

Awarding Agency: Department of Defense

Start Date: 2014-09-27

End Date: 2017-06-30

Contract Duration: 1,007 days

Daily Burn Rate: $25.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF FY14 PAIP IMPROVE MFH INFRASTRUCTURE PH3. MISAWA AB, JAPAN

Plain-Language Summary

Department of Defense obligated $25.3 million to SANKEN SETSUBI KOGYO CO., LTD. for work described as: IGF::OT::IGF FY14 PAIP IMPROVE MFH INFRASTRUCTURE PH3. MISAWA AB, JAPAN Key points: 1. Contract awarded for foundation, structure, and building exterior work, indicating a focus on physical infrastructure. 2. The contract was secured through full and open competition, suggesting a competitive bidding process. 3. A firm-fixed-price contract type implies that the contractor bears the risk of cost overruns. 4. The duration of the contract is over 1000 days, suggesting a significant scope of work. 5. The awardee, SANKEN SETSUBI KOGYO CO., LTD., is a foreign entity, potentially impacting local economic benefits. 6. This contract falls under 'Other Foundation, Structure, and Building Exterior Contractors', a broad category.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the scope of 'MFH Infrastructure Ph3'. However, the award amount of approximately $25.3 million for a multi-year infrastructure project at a military installation is within a typical range for such undertakings. The firm-fixed-price nature of the contract suggests that the government has a defined budget and the contractor is responsible for managing costs to meet that budget. Further analysis would require comparing the specific deliverables and quality standards to similar projects in the region or for the Department of the Army.

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 two bidders suggests a moderate level of competition for this specific contract. While two bidders are better than one, a higher number of bidders typically leads to more robust price discovery and potentially lower prices for the government. The specific details of the bidding process and the evaluation criteria would provide further insight into the effectiveness of the competition.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a wide range of offers. However, with only two bidders, the potential for cost savings might be limited compared to scenarios with more extensive competition.

Public Impact

Military personnel and their families stationed at Misawa Air Base, Japan, will benefit from improved housing infrastructure. The contract delivers essential construction and repair services for building exteriors and foundations. The geographic impact is localized to Misawa Air Base, Japan, a key U.S. Air Force installation. The contract supports the Japanese construction workforce through the prime contractor, SANKEN SETSUBI KOGYO CO., LTD.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bidders could result in less favorable pricing.
The foreign awardee may limit direct economic benefits to the U.S. small business ecosystem.
Scope creep or unforeseen issues in infrastructure projects can lead to cost increases, despite fixed-price contracts.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Full and open competition ensures a broad search for qualified contractors.
The project addresses critical infrastructure needs, enhancing the quality of life for service members and families.

Sector Analysis

This contract falls within the construction and facilities maintenance sector, specifically focusing on building exteriors and foundations. The market for military base infrastructure improvements is substantial, driven by the need to maintain and upgrade aging facilities and ensure operational readiness. Comparable spending benchmarks would involve analyzing other contracts for similar renovation and construction projects at U.S. military installations, both domestically and internationally, considering factors like project scale, complexity, and location.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). The prime contractor, SANKEN SETSUBI KOGYO CO., LTD., is a foreign entity, suggesting that subcontracting opportunities for U.S. small businesses may be limited unless specifically incorporated into the prime contract's requirements. Further investigation into subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and project management offices. Accountability measures are inherent in the firm-fixed-price contract type, which places the onus on the contractor to deliver within the agreed-upon price. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Construction (MILCON)
Base Realignment and Closure (BRAC) related projects
Foreign Military Sales (FMS) infrastructure support
Department of Defense Facilities Maintenance and Repair

Risk Flags

Limited Competition
Foreign Contractor
Infrastructure Project Risks

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.3 million to SANKEN SETSUBI KOGYO CO., LTD.. IGF::OT::IGF FY14 PAIP IMPROVE MFH INFRASTRUCTURE PH3. MISAWA AB, JAPAN

Who is the contractor on this award?

The obligated recipient is SANKEN SETSUBI KOGYO CO., LTD..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.3 million.

What is the period of performance?

Start: 2014-09-27. End: 2017-06-30.

What is the specific scope of work for 'MFH Infrastructure Ph3' and what are the key performance indicators?

The provided data does not detail the specific scope of work for 'MFH Infrastructure Ph3' beyond the general categorization of 'Other Foundation, Structure, and Building Exterior Contractors.' MFH typically refers to Military Family Housing. Therefore, this contract likely involves significant repairs, upgrades, or renovations to the exterior components and foundational integrity of housing units at Misawa Air Base. Key performance indicators would likely include adherence to construction timelines, quality of materials and workmanship, safety compliance, and successful completion of all specified repair and upgrade tasks according to architectural and engineering standards. Without the full contract statement of work, a precise definition of deliverables and performance metrics remains elusive.

How does the $25.3 million award compare to similar infrastructure projects at overseas military bases?

Comparing this $25.3 million award to similar infrastructure projects at overseas military bases requires access to a broader dataset of contracts with comparable scope and location. However, for a multi-year project focused on building exteriors and foundations for housing, this amount is within a reasonable range for significant renovations or upgrades. Projects at high-cost-of-living or high-operational-complexity locations like Japan can naturally command higher prices. To provide a precise benchmark, one would need to identify contracts for similar MFH exterior and foundation work at other Pacific-region bases or comparable U.S. installations, adjusting for inflation and specific regional construction costs. The limited competition (two bidders) might also suggest the price is not aggressively low.

What are the potential risks associated with awarding this contract to a foreign entity like SANKEN SETSUBI KOGYO CO., LTD.?

Awarding this contract to a foreign entity, SANKEN SETSUBI KOGYO CO., LTD., presents several potential risks. Firstly, there could be challenges in oversight and communication due to language barriers and different business practices. Secondly, ensuring compliance with U.S. labor laws, safety standards, and environmental regulations might require extra diligence. Thirdly, the flow of funds may not directly benefit the U.S. economy or local small businesses as much as a domestic award. Finally, geopolitical factors or changes in international relations could potentially impact the contractor's ability to perform or the security of the project. However, the selection of a foreign contractor may also be due to specialized expertise, competitive pricing, or strategic presence in the region.

What is the historical spending pattern for 'Other Foundation, Structure, and Building Exterior Contractors' by the Department of the Army?

Historical spending on 'Other Foundation, Structure, and Building Exterior Contractors' by the Department of the Army is likely substantial, given the vast inventory of military facilities requiring maintenance and upgrades. This specific NAICS code (238190) encompasses a wide range of construction activities. Analyzing historical spending would involve querying contract databases for awards under this code by the Army over several fiscal years. Such an analysis would reveal trends in spending levels, identify major recipients of these contracts, and potentially highlight fluctuations based on budget allocations, infrastructure priorities, and global military posture. Without direct access to historical spending data for this specific NAICS code by the Army, a precise pattern cannot be determined, but it is reasonable to assume consistent and significant investment in this area.

How does the firm-fixed-price (FFP) contract type mitigate risks for the government in this infrastructure project?

The firm-fixed-price (FFP) contract type significantly mitigates risks for the government in this infrastructure project by transferring the majority of cost overrun risk to the contractor, SANKEN SETSUBI KOGYO CO., LTD. Under an FFP agreement, the contractor is obligated to complete the specified work for a predetermined price, regardless of unforeseen difficulties or increased material and labor costs. This provides the government with cost certainty, making budgeting and financial planning more predictable. The primary risk remaining for the government is ensuring the contractor meets the quality standards and performance requirements outlined in the contract. If the contractor fails to perform adequately, the government's recourse would be through contract remedies, potentially including termination or claims for damages, rather than absorbing unexpected cost increases.

Industry Classification

NAICS: Construction › Foundation, Structure, and Building Exterior Contractors › Other Foundation, Structure, and Building Exterior Contractors

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: W912HV14B0011

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1-17-21, SHINKAWA, CHUO-KU

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

Financial Breakdown

Contract Ceiling: $25,282,061

Exercised Options: $25,282,061

Current Obligation: $25,282,061

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline