DoD's $24.7M Okinawa construction contract awarded to NES Pacific Limited Liability Co. for tower repairs

Contract Overview

Contract Amount: $24,685,539 ($24.7M)

Contractor: NES Pacific Limited Liability CO.

Awarding Agency: Department of Defense

Start Date: 2015-09-28

End Date: 2019-11-03

Contract Duration: 1,497 days

Daily Burn Rate: $16.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF FY-15 REPAIR TOWERS B867 (68 UNITS), B868 (68 UNITS), CAMP KINSER, KADENA AIR BASE, OKINAWA, JAPAN

Plain-Language Summary

Department of Defense obligated $24.7 million to NES PACIFIC LIMITED LIABILITY CO. for work described as: IGF::OT::IGF FY-15 REPAIR TOWERS B867 (68 UNITS), B868 (68 UNITS), CAMP KINSER, KADENA AIR BASE, OKINAWA, JAPAN Key points: 1. Contract value appears reasonable given the scope of work and duration. 2. Full and open competition suggests a competitive bidding process. 3. Definitive contract type indicates a fixed price for services. 4. Project duration of nearly 5 years suggests a complex undertaking. 5. Location in Okinawa, Japan, may introduce logistical complexities and costs. 6. Fixed-price contract type shifts cost overrun risk to the contractor.

Value Assessment

Rating: good

The contract's value of approximately $24.7 million for nearly five years of work on tower repairs at Kadena Air Base seems within a reasonable range for large-scale construction projects in a high-cost overseas location. Benchmarking against similar overseas military construction contracts would provide a more precise assessment, but the scale and duration suggest a significant investment. The fixed-price nature of the contract, while shifting risk, also implies a defined scope and expected cost structure.

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 three bidders suggests a moderate level of competition for this project. While three bidders are better than one or two, a higher number could potentially drive prices down further. However, the specialized nature of overseas construction and the specific requirements may limit the pool of qualified bidders.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging multiple bids, which can lead to more competitive pricing and better value for the government.

Public Impact

The primary beneficiaries are the U.S. military personnel and operations at Kadena Air Base, Okinawa, Japan, through the improved infrastructure. The contract delivers essential repair and maintenance services for critical tower facilities. The geographic impact is localized to Kadena Air Base in Okinawa, Japan. The contract likely supports local construction labor and potentially U.S. expatriate workers in Okinawa.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise during the extended repair period.
Logistical challenges and increased costs associated with performing construction in an overseas location like Okinawa.
Ensuring consistent quality control over a nearly five-year project duration.

Positive Signals

Awarded under full and open competition, suggesting a fair and transparent process.
Fixed-price contract type provides cost certainty for the government.
Long duration may indicate a comprehensive approach to infrastructure maintenance, ensuring long-term reliability.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on infrastructure repair and maintenance for military facilities. The global market for military construction and base support services is substantial, driven by defense spending worldwide. Contracts of this nature are crucial for maintaining operational readiness and the quality of life for service members stationed abroad. Comparable spending benchmarks would typically involve other large-scale construction or renovation projects at U.S. military installations, particularly those located overseas.

Small Business Impact

The contract was not set aside for small businesses and there is no indication of subcontracting requirements for small businesses. This suggests that the primary contractor, NES Pacific Limited Liability Co., is likely a larger entity capable of handling the full scope of work. The absence of small business set-asides means that opportunities for small businesses to participate in this specific contract are limited, potentially impacting the small business ecosystem for this particular project.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Army and the Department of Defense. Accountability measures are inherent in the definitive contract structure, which specifies deliverables and payment terms. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Military Construction
Base Operations Support
Facility Maintenance and Repair
Overseas Construction Contracts
Department of Defense Infrastructure Projects

Risk Flags

Potential for cost overruns due to long duration and overseas location.
Logistical challenges inherent in overseas construction projects.
Risk of scope creep or changes impacting fixed-price contract.
Ensuring consistent quality over a multi-year project timeline.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.7 million to NES PACIFIC LIMITED LIABILITY CO.. IGF::OT::IGF FY-15 REPAIR TOWERS B867 (68 UNITS), B868 (68 UNITS), CAMP KINSER, KADENA AIR BASE, OKINAWA, JAPAN

Who is the contractor on this award?

The obligated recipient is NES PACIFIC LIMITED LIABILITY CO..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.7 million.

What is the period of performance?

Start: 2015-09-28. End: 2019-11-03.

What is the track record of NES Pacific Limited Liability Co. in performing similar large-scale construction projects for the Department of Defense, particularly in overseas locations?

Assessing the track record of NES Pacific Limited Liability Co. requires a review of their past performance on similar contracts. Specifically, one would look for evidence of successful completion of large-scale construction, repair, or maintenance projects, especially those undertaken for the Department of Defense or other government agencies. Experience in overseas environments, such as Okinawa, is particularly relevant due to unique logistical, regulatory, and cultural considerations. Data on project timelines, budget adherence, and client satisfaction from previous contracts would be crucial. A history of timely and budget-compliant project delivery, coupled with positive performance reviews, would indicate a lower risk associated with this current contract. Conversely, a history of delays, cost overruns, or performance issues would raise concerns about the contractor's capability to execute this nearly five-year project effectively.

How does the per-unit cost or overall value of this contract compare to similar tower repair or construction projects at other U.S. military bases, both CONUS and OCONUS?

To benchmark the value of this $24.7 million contract for tower repairs at Kadena Air Base, a comparative analysis with similar projects is necessary. This would involve identifying contracts for tower construction, repair, or maintenance at other U.S. military installations, considering both Continental United States (CONUS) and Outside the Continental United States (OCONUS) locations. Factors such as the size and type of towers, the scope of repairs (e.g., structural, electrical, antenna), the duration of the contract, and the specific geographic location (which impacts labor and material costs) must be taken into account. Overseas locations like Okinawa typically incur higher costs due to transportation, logistics, and potentially higher wages for specialized labor. If comparable OCONUS projects show significantly lower costs per unit or overall, it might suggest this contract is priced at a premium, potentially due to the location or specific project complexities. Conversely, if costs align with or are lower than similar OCONUS projects, the value proposition appears stronger.

What are the primary risk indicators associated with this contract, considering its duration, location, and type of work?

Several risk indicators are associated with this contract. Firstly, the nearly five-year duration (1497 days) presents a significant risk of project delays due to unforeseen site conditions, weather events, or changes in requirements. Secondly, the location in Okinawa, Japan, introduces logistical complexities, potential supply chain disruptions, and higher labor costs, increasing the risk of budget overruns. Thirdly, the nature of tower repair work can involve inherent safety risks and technical challenges, especially if dealing with aging infrastructure. The fixed-price contract type, while beneficial for cost certainty, shifts the financial risk of cost overruns to the contractor; however, significant contractor financial distress could still impact project completion. Finally, the moderate competition (3 bidders) might suggest that fewer companies were willing or able to bid, potentially indicating underlying project risks or market limitations.

How effective is the fixed-price contract type in ensuring project completion and quality for long-term infrastructure projects like this one?

The Firm Fixed Price (FFP) contract type aims to provide cost certainty for the government by establishing a set price for the defined scope of work. For long-term infrastructure projects like the tower repairs in Okinawa, FFP shifts the risk of cost overruns to the contractor. This can incentivize the contractor to manage costs efficiently and complete the project within budget. However, the effectiveness hinges on a well-defined scope of work at the outset. If the scope is ambiguous or subject to significant changes, it can lead to disputes, change orders, or contractor attempts to cut corners to maintain profitability, potentially compromising quality. For a nearly five-year project, robust quality assurance and oversight mechanisms are critical to ensure the contractor upholds standards despite the cost pressures inherent in an FFP agreement. While FFP is generally preferred for its cost predictability, its success in ensuring quality over an extended period relies heavily on detailed specifications and diligent government oversight.

What are the historical spending patterns for tower maintenance and repair at Kadena Air Base or similar facilities within the Department of Defense?

Analyzing historical spending patterns for tower maintenance and repair at Kadena Air Base or comparable Department of Defense facilities is crucial for contextualizing the current $24.7 million contract. This involves examining past expenditures on similar projects over several fiscal years to identify trends in contract values, frequency of awards, and types of services procured. Understanding the average cost per repair, the typical contract duration, and the number of bidders on previous projects can reveal whether the current contract's value and terms are consistent with historical norms or represent a significant deviation. For instance, if historical data shows much smaller, more frequent repair contracts, this large, long-term definitive contract might indicate a shift in maintenance strategy or a more substantial, previously deferred, repair need. Conversely, if similar large-scale projects have been awarded in the past at comparable price points, it suggests this contract aligns with established spending patterns for major infrastructure upkeep.

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: SEALED BID

Solicitation ID: W912HV15B0013

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 411-3, IHEI, CHATANCHO, NAKAGAMI-GUN

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

Financial Breakdown

Contract Ceiling: $24,892,419

Exercised Options: $24,892,419

Current Obligation: $24,685,539

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline