DoD's $28M Zama High School Renovation contract awarded to Gilbane Japan GK shows fair value

Contract Overview

Contract Amount: $28,001,031 ($28.0M)

Contractor: Gilbane Japan GK

Awarding Agency: Department of Defense

Start Date: 2017-07-18

End Date: 2021-07-31

Contract Duration: 1,474 days

Daily Burn Rate: $19.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF FY13 DODEA MILCON PA00028 ZAMA HIGH SCHOOL RENOVATION, CAMP ZAMA, JAPAN

Plain-Language Summary

Department of Defense obligated $28.0 million to GILBANE JAPAN GK for work described as: IGF::OT::IGF FY13 DODEA MILCON PA00028 ZAMA HIGH SCHOOL RENOVATION, CAMP ZAMA, JAPAN Key points: 1. Contract value appears reasonable given the scope of a high school renovation. 2. Full and open competition suggests a competitive bidding process. 3. Contract duration of nearly 4 years indicates a complex, long-term project. 4. Fixed-price contract type shifts risk to the contractor. 5. Project is located in Japan, potentially impacting logistics and labor costs. 6. No small business set-aside was utilized.

Value Assessment

Rating: good

The contract value of approximately $28 million for a high school renovation is within a reasonable range for such projects, especially considering potential complexities of international construction. Without specific benchmarks for comparable renovations in Japan, a direct per-square-foot cost comparison is difficult. However, the fixed-price nature of the award suggests that the initial pricing was deemed acceptable by the government, with the contractor assuming cost overruns.

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 bids. The presence of 2 bidders suggests a moderate level of competition for this project. While more bidders could potentially drive prices lower, a competitive process was still in place, allowing for price discovery and selection of the most advantageous offer.

Taxpayer Impact: The full and open competition, even with two bidders, provides a degree of assurance that taxpayer funds were not unnecessarily inflated due to a lack of market engagement.

Public Impact

Benefits military families and personnel stationed at Camp Zama, Japan, by providing an updated educational facility. Delivers essential renovation services for a critical piece of infrastructure. Geographic impact is localized to Camp Zama, Japan. Workforce implications include construction jobs for both local and potentially U.S. personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (1474 days) could lead to scope creep or unforeseen cost increases if not managed tightly.
International location may introduce logistical challenges and higher indirect costs not fully captured in initial pricing.
Limited competition (2 bidders) might have reduced the downward pressure on pricing compared to a more robust bidding environment.

Positive Signals

Fixed-price contract type effectively caps the government's financial exposure.
Awarded under full and open competition, suggesting a structured procurement process.
Contractor, Gilbane Japan GK, likely has experience with DoD projects in Japan.

Sector Analysis

This contract falls within the construction sector, specifically commercial and institutional building construction. The Department of Defense is a significant investor in infrastructure globally, including facilities for military bases abroad. The market for large-scale construction projects on military installations is often characterized by specialized requirements and specific geographic considerations, making it distinct from purely domestic commercial construction.

Small Business Impact

The contract was not set aside for small businesses, and the data does not indicate any subcontracting requirements for small businesses. This suggests that the primary contractor, Gilbane Japan GK, will likely manage the project with its own resources or through larger, non-small business subcontractors. The impact on the small business ecosystem is minimal for this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army and potentially the Department of Defense's Inspector General, especially concerning financial management and project execution. The fixed-price nature of the contract provides a clear baseline for accountability. Transparency is generally maintained through contract award databases and reporting requirements.

Related Government Programs

DODEA School Construction Projects
Overseas Military Construction
Department of Defense Facilities Management
Camp Zama Infrastructure Improvements

Risk Flags

Potential for cost overruns despite fixed-price contract if scope is not tightly managed.
Limited competition may have resulted in a higher-than-optimal price.
Logistical challenges and higher indirect costs associated with overseas construction.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.0 million to GILBANE JAPAN GK. IGF::OT::IGF FY13 DODEA MILCON PA00028 ZAMA HIGH SCHOOL RENOVATION, CAMP ZAMA, JAPAN

Who is the contractor on this award?

The obligated recipient is GILBANE JAPAN GK.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $28.0 million.

What is the period of performance?

Start: 2017-07-18. End: 2021-07-31.

What is the typical cost per square foot for similar high school renovations in Japan or other overseas military installations?

Determining a precise benchmark for high school renovations in Japan or similar overseas military installations is challenging due to variations in construction standards, material costs, labor rates, and specific project requirements. However, general estimates for commercial and institutional building construction can range significantly. For context, domestic U.S. school renovations can range from $200 to $500+ per square foot, depending on the scope. International projects, especially those on military bases, may incur additional costs related to logistics, security, import duties, and specialized labor. Without detailed project specifications (e.g., square footage, scope of work like structural, MEP, finishes), a direct comparison is speculative. The $28 million award for Zama High School would need to be analyzed against its specific size and renovation scope to assess its value accurately against any available benchmarks.

What is the track record of Gilbane Japan GK with Department of Defense contracts?

Gilbane Building Company, the parent entity, has a substantial track record with the Department of Defense, undertaking numerous construction and renovation projects globally. Gilbane Japan GK, as a specific entity, likely leverages this corporate experience. Information on their specific performance history with DoD, including past projects, client satisfaction, and any past performance issues, would typically be available through government contract databases (like SAM.gov) and internal DoD performance assessment systems. Given their likely experience, they are expected to have established processes for managing complex projects and adhering to military construction standards. Further investigation into their specific project history with DODEA or other DoD components in the Pacific region would provide a clearer picture of their capabilities and reliability.

How does the fixed-price contract type impact the risk allocation for this renovation project?

The Firm Fixed Price (FFP) contract type significantly shifts the risk of cost overruns to the contractor, Gilbane Japan GK. Under an FFP agreement, the contractor is obligated to complete the specified scope of work for the agreed-upon price, regardless of their actual costs. This means that if material prices increase, labor becomes more expensive, or unforeseen site conditions arise, the contractor absorbs those additional costs. Conversely, if the contractor can complete the work for less than the fixed price, they retain the profit. This structure incentivizes the contractor to manage costs efficiently and complete the project within budget. For the government, it provides cost certainty, assuming the initial price was fair and the scope was well-defined.

What were the specific reasons for only two bidders participating in this full and open competition?

The limited number of bidders (two) in a full and open competition for the Zama High School renovation could stem from several factors. The specialized nature of construction on an overseas military base requires specific expertise, security clearances, and logistical capabilities that may not be widely available. Geographic location can also be a deterrent, increasing mobilization costs and complexity. Furthermore, the project's specific technical requirements or the contract's value might have appealed only to a select group of large, experienced contractors capable of undertaking such a significant undertaking. It's also possible that other potential bidders chose not to pursue the opportunity due to competing priorities or an assessment that the contract terms were not favorable.

What is the historical spending trend for DODEA school construction and renovation projects in the Pacific region?

Historical spending trends for DODEA school construction and renovation projects in the Pacific region reflect a consistent need to maintain and upgrade educational facilities for military dependents. Spending levels can fluctuate based on congressional appropriations, the backlog of deferred maintenance, and the initiation of new construction or major renovation programs. Over the years, DODEA has invested billions in its infrastructure across all regions, with significant portions allocated to the Pacific due to the large military presence. Specific trends would show periods of higher investment driven by modernization initiatives or responses to aging facilities. Analyzing multi-year spending data for the Pacific region would reveal patterns in contract awards, project types (new builds vs. renovations), and average contract values, providing context for the $28 million Zama High School project.

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: W912HV16B0003

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Gilbane, Inc. (UEI: 022726165)

Address: 3-12-2, NIHOMBASHIKAYABACHO, CHUO-KU

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

Financial Breakdown

Contract Ceiling: $28,001,031

Exercised Options: $28,001,031

Current Obligation: $28,001,031

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline