Department of the Army awards $28.3M contract for Kalaeloa Readiness Center Addition, a two-story, 34,578 sqft facility

Contract Overview

Contract Amount: $28,293,450 ($28.3M)

Contractor: S & M Sakamoto Inc

Awarding Agency: Department of Defense

Start Date: 2023-11-01

End Date: 2026-03-01

Contract Duration: 851 days

Daily Burn Rate: $33.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: PROJECT NO. 150084, KALAELOA READINESS CENTER ADDITION. THE BUILDING WILL BE A TWO-STORY ADDITION LOCATED ON THE WEST/MOUNTAIN SIDE OF EXISTING BUILDING 29. PROJECT SQUARE FOOTAGE IS ESTIMATED AT 34,578 SQFT.

Place of Performance

Location: KAPOLEI, HONOLULU County, HAWAII, 96707

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $28.3 million to S & M SAKAMOTO INC for work described as: PROJECT NO. 150084, KALAELOA READINESS CENTER ADDITION. THE BUILDING WILL BE A TWO-STORY ADDITION LOCATED ON THE WEST/MOUNTAIN SIDE OF EXISTING BUILDING 29. PROJECT SQUARE FOOTAGE IS ESTIMATED AT 34,578 SQFT. Key points: 1. The contract value of $28.3 million for a 34,578 sqft building suggests a cost per square foot of approximately $834, which warrants benchmarking against similar construction projects. 2. Awarded to S & M Sakamoto Inc., the contract's firm-fixed-price structure aims to control costs, but the duration of 851 days indicates a complex project with potential for cost overruns if not managed effectively. 3. The procurement method, 'Full and Open Competition After Exclusion of Sources,' is unusual and requires scrutiny to ensure fair market access was genuinely considered. 4. This project contributes to military readiness infrastructure, with the new addition likely enhancing training and operational capabilities at the Kalaeloa facility. 5. The contract's performance period extends into March 2026, suggesting a significant construction timeline that could be subject to various economic and logistical risks. 6. The absence of small business set-aside flags indicates this large contract was not specifically targeted to boost small business participation, though subcontracting opportunities may still exist.

Value Assessment

Rating: fair

The cost per square foot for this project is estimated at approximately $834 ($28.3M / 34,578 sqft). This figure appears high when compared to general commercial and institutional building construction benchmarks, which can range from $200-$500 per square foot depending on complexity, location, and materials. While military construction often incurs higher costs due to specific security, durability, and technological requirements, this rate necessitates further investigation into the project's unique demands and material specifications to justify the expense. Benchmarking against similar Department of Defense construction projects of comparable size and function in Hawaii would provide a more accurate assessment of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This procurement method is not standard and suggests that initial solicitations may have excluded certain potential bidders for specific reasons, followed by a broader competition among the remaining sources. With only 3 bidders identified, the level of competition appears limited. This could potentially lead to less competitive pricing than a truly open and unrestricted competition, as the pool of potential offerors was intentionally narrowed.

Taxpayer Impact: A limited competition may result in higher costs for taxpayers compared to a fully open process, as fewer companies were able to bid, potentially reducing downward pressure on prices.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will utilize the enhanced facilities at the Kalaeloa Readiness Center. The project delivers a new two-story building, expanding the capacity for training, administrative functions, and support services. The geographic impact is localized to Oahu, Hawaii, specifically at the Kalaeloa site, improving local military infrastructure. The construction and subsequent operation of the facility will likely have implications for the local workforce, creating jobs during the construction phase and potentially supporting long-term personnel needs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Full and Open Competition After Exclusion of Sources' is an unusual procurement method that warrants further investigation into the justification for excluding certain sources.
The high estimated cost per square foot ($834) requires validation against comparable military construction projects to ensure value for money.
The project duration of 851 days (over two years) presents risks related to potential cost escalations due to inflation, material availability, and unforeseen site conditions.
Limited competition (3 bidders) may have resulted in less favorable pricing for the government.
The contract is a definitive contract, which can sometimes be less flexible in scope definition than other contract types, potentially leading to change orders.

Positive Signals

The firm-fixed-price contract type provides cost certainty for the government, assuming the scope remains stable.
The project aims to enhance military readiness, a critical government function.
The award was made to S & M Sakamoto Inc., suggesting they were deemed capable of performing the required construction.
The project is located in Hawaii, potentially supporting local economic activity through construction jobs and services.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. The market for military construction is substantial, driven by the Department of Defense's continuous need to maintain, upgrade, and expand its facilities globally. Comparable spending benchmarks for institutional buildings, particularly those with specialized requirements like military readiness centers, can vary widely based on location, security mandates, and technological integration. This project represents a specific investment in regional military infrastructure within the larger context of national defense spending.

Small Business Impact

The contract data indicates that small business set-asides were not utilized for this procurement (ss: false, sb: false). This suggests the contract was not specifically designated for small businesses. While there is no explicit indication of subcontracting goals, large federal construction contracts often include provisions for small business participation. The impact on the small business ecosystem will depend on whether S & M Sakamoto Inc. actively seeks small business subcontractors for specialized services or materials, which could provide opportunities for local small firms in Hawaii.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Department of the Army, likely through contracting officers and project managers responsible for monitoring progress, quality, and adherence to terms. Transparency is facilitated through contract databases like FPDS. Accountability measures are embedded in the firm-fixed-price structure, which places cost risk on the contractor. Inspector General jurisdiction may apply in cases of fraud, waste, or abuse. The duration of the project suggests ongoing oversight will be critical.

Related Government Programs

Military Construction Program (MILCON)
Department of Defense Facilities Modernization
Army Corps of Engineers Construction Contracts
Readiness and Training Facility Projects

Risk Flags

Unusual procurement method ('Full and Open Competition After Exclusion of Sources')
High estimated cost per square foot
Long project duration (851 days)
Limited number of bidders (3)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 million to S & M SAKAMOTO INC. PROJECT NO. 150084, KALAELOA READINESS CENTER ADDITION. THE BUILDING WILL BE A TWO-STORY ADDITION LOCATED ON THE WEST/MOUNTAIN SIDE OF EXISTING BUILDING 29. PROJECT SQUARE FOOTAGE IS ESTIMATED AT 34,578 SQFT.

Who is the contractor on this award?

The obligated recipient is S & M SAKAMOTO INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $28.3 million.

What is the period of performance?

Start: 2023-11-01. End: 2026-03-01.

What is the track record of S & M Sakamoto Inc. with Department of Defense contracts, particularly for similar construction projects?

Information regarding S & M Sakamoto Inc.'s specific track record with the Department of Defense for similar construction projects is not detailed in the provided data. A comprehensive analysis would require accessing historical contract databases (e.g., FPDS) to review past performance, contract values, types of projects completed, and any reported issues or awards. Understanding their experience with large-scale institutional or military construction, adherence to schedules, and quality of work on previous government contracts is crucial for assessing their capability to successfully execute the Kalaeloa Readiness Center Addition project. Without this historical context, it is difficult to definitively evaluate their reliability for this specific undertaking.

How does the $834 per square foot cost compare to other recent Army construction projects of similar size and scope in Hawaii?

The estimated cost of $834 per square foot for the Kalaeloa Readiness Center Addition is significantly higher than typical commercial construction rates. To assess its value, it must be benchmarked against comparable Department of the Army construction projects, particularly those in Hawaii, which often have higher labor and material costs. Projects involving specialized military requirements, such as enhanced security, specific environmental controls, or advanced technological integration, can justify higher per-square-foot costs. A detailed comparison would involve analyzing the scope, materials, and specific functionalities of similar Army projects completed within the last 2-3 years in the region. If similar projects with comparable features fall within a lower cost range, this contract's pricing may warrant further scrutiny regarding potential inefficiencies or scope creep.

What are the specific risks associated with the 'Full and Open Competition After Exclusion of Sources' procurement method for this project?

The 'Full and Open Competition After Exclusion of Sources' method is unusual and presents specific risks. It implies that certain potential bidders were deliberately excluded from the initial solicitation phase, potentially limiting the overall pool of qualified offerors. The primary risk is that this exclusion may have inadvertently reduced the level of competition, potentially leading to higher prices for the government than if a truly unrestricted competition had been conducted. Furthermore, the justification for excluding sources needs to be robust to ensure fairness and prevent potential protests or allegations of impropriety. The limited number of bidders (3) resulting from this method reinforces the concern that competitive pressure may have been suboptimal, impacting the government's ability to secure the best possible value.

What are the potential impacts of the 851-day performance period on project costs and contractor performance?

An 851-day performance period, spanning over two years, introduces several potential risks and impacts on project costs and contractor performance. Firstly, the extended duration increases exposure to economic fluctuations, such as inflation in material costs and labor rates, which could drive up the final project expense, especially under a firm-fixed-price contract if not adequately accounted for in the initial pricing. Secondly, longer project timelines can lead to potential delays due to unforeseen site conditions, weather impacts (particularly in Hawaii), or supply chain disruptions, all of which can affect contractor performance and potentially lead to claims or disputes. Thirdly, maintaining consistent oversight and quality control over such an extended period requires sustained effort from the contracting agency. Finally, contractor performance can be affected by team turnover or shifts in company priorities over the multi-year duration.

How does the $28.3 million contract value compare to historical spending on similar readiness center construction by the Department of the Army?

The $28.3 million contract value for the Kalaeloa Readiness Center Addition needs to be contextualized against historical spending patterns for similar Department of the Army readiness center construction. Without specific historical data points for comparable projects, a direct comparison is challenging. However, the value suggests a significant investment in infrastructure. Factors influencing this value include the size (34,578 sqft), complexity of the two-story design, specific military requirements, and the location in Hawaii, which typically has higher construction costs. Analyzing past MILCON (Military Construction) appropriations and awards for readiness facilities of similar scale and function over the last five to ten years would reveal whether this project's cost is within the expected range or represents an outlier, potentially indicating unique project demands or market conditions.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912J623R0006

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: S Group Inc.

Address: 1928 HAU ST, HONOLULU, HI, 96819

Business Categories: Asian Pacific American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $28,293,450

Exercised Options: $28,293,450

Current Obligation: $28,293,450

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline