Army awards $30.9M construction contract for dormitory, highlighting firm fixed-price structure

Contract Overview

Contract Amount: $30,948,461 ($30.9M)

Contractor: Macnak-Korte Joint Venture

Awarding Agency: Department of Defense

Start Date: 2014-06-04

End Date: 2017-09-22

Contract Duration: 1,206 days

Daily Burn Rate: $25.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF FY14 240PN DORMITORY, COMPLETE TO 5'

Place of Performance

Location: NELLIS AFB, CLARK County, NEVADA, 89191

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $30.9 million to MACNAK-KORTE JOINT VENTURE for work described as: IGF::OT::IGF FY14 240PN DORMITORY, COMPLETE TO 5' Key points: 1. Contract awarded using firm fixed-price terms, indicating predictable costs for the government. 2. Competition was full and open after exclusion of sources, suggesting a robust bidding process. 3. The contract duration of 1206 days (over 3 years) implies a significant, long-term construction project. 4. The project is categorized under Commercial and Institutional Building Construction, a common sector for federal spending. 5. The award to a joint venture suggests the need for specialized capabilities or capacity for this project. 6. The contract was awarded in FY14, providing historical context for current construction spending.

Value Assessment

Rating: fair

The contract's value of $30.9 million for dormitory construction appears within a reasonable range for a project of this scale and duration. Without specific details on the dormitory's size, capacity, and amenities, a precise value-for-money assessment is challenging. However, the firm fixed-price structure suggests that cost overruns were intended to be borne by the contractor, which can be a positive indicator for cost control if managed effectively. Benchmarking against similar military dormitory construction projects would provide a clearer picture of its competitiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources.' This indicates that while the competition was broad, certain sources may have been excluded based on specific criteria, possibly related to security, capability, or prior performance. The fact that it was still 'full and open' suggests that multiple bidders were likely considered, contributing to price discovery and potentially competitive pricing. The number of bidders (4) is a moderate level of competition for a project of this magnitude.

Taxpayer Impact: A full and open competition, even with exclusions, generally benefits taxpayers by encouraging multiple firms to bid, which can drive down prices and ensure the government receives competitive offers.

Public Impact

Service members stationed at the Nevada facility will benefit from new dormitory accommodations. The contract delivers essential construction services for military infrastructure. The geographic impact is localized to the specific Army installation in Nevada. The project likely involved a construction workforce, contributing to employment in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if initial requirements were not fully defined, given the long duration.
Risk of contractor performance issues impacting project timelines or quality.
Dependency on the joint venture's ability to manage complex construction operations.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Full and open competition suggests a competitive bidding process.
Award to a joint venture may indicate access to specialized expertise.

Sector Analysis

The Commercial and Institutional Building Construction sector is a significant area of federal spending, encompassing a wide range of projects from administrative buildings to specialized facilities like dormitories. Federal agencies, particularly the Department of Defense, are major clients in this sector, requiring construction services for bases, barracks, and support infrastructure. The market is characterized by a mix of large prime contractors and numerous subcontractors, with varying levels of specialization. This contract fits within the broader trend of federal investment in maintaining and upgrading military facilities.

Small Business Impact

The contract data indicates that small business participation (sb) was false, and there is no explicit mention of a small business set-aside. This suggests the contract was not specifically targeted towards small businesses. While the prime contractor is a joint venture, it is unclear if this entity itself qualifies as a small business or if subcontracting opportunities were made available to small businesses. Further analysis would be needed to determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and project management offices. The firm fixed-price nature of the contract implies that financial oversight would focus on ensuring adherence to the agreed-upon price and scope. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

Military Construction Projects
Dormitory Construction
Federal Building Construction
Department of Defense Infrastructure

Risk Flags

Long contract duration may increase risk of cost escalation for contractor.
Potential for unforeseen site conditions in construction projects.
Need for robust quality assurance over extended performance period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.9 million to MACNAK-KORTE JOINT VENTURE. IGF::OT::IGF FY14 240PN DORMITORY, COMPLETE TO 5'

Who is the contractor on this award?

The obligated recipient is MACNAK-KORTE 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 $30.9 million.

What is the period of performance?

Start: 2014-06-04. End: 2017-09-22.

What was the specific nature of the 'exclusion of sources' in this full and open competition?

The 'exclusion of sources' in a 'full and open competition after exclusion of sources' award typically means that while the competition was generally open to all responsible sources, certain pre-identified sources were excluded from consideration. This exclusion is usually based on specific, documented reasons such as security concerns, past performance issues, or a lack of required specialized capabilities. The contracting officer must justify these exclusions. Without access to the specific contract file or justification documentation, the precise reasons for excluding certain sources remain unknown. However, the intent is to ensure that only qualified and appropriate entities participate, while still maintaining a competitive environment among the remaining eligible bidders.

How does the $30.9 million cost compare to similar dormitory construction projects for the military?

Benchmarking the $30.9 million cost requires detailed comparison with similar military dormitory projects, considering factors like square footage, number of occupants, location (which impacts labor and material costs), and specific amenities. Projects of similar scale and complexity for the Department of Defense can range significantly. For instance, a basic barracks might cost less per square foot than a dormitory with private rooms and enhanced common areas. Given the contract was awarded in FY14, inflation and changing construction costs since then would also need to be factored in for contemporary comparisons. A preliminary assessment suggests the figure is substantial, indicative of a significant construction undertaking, but without more granular data on the project's scope, a definitive value comparison is difficult.

What were the primary risks associated with this long-duration construction contract?

Long-duration construction contracts like this one (1206 days) inherently carry several risks. A primary risk is the potential for cost escalation of materials and labor over the project's lifespan, although the firm fixed-price (FFP) structure aims to mitigate this for the government by placing the risk on the contractor. Schedule delays are another significant risk, often caused by unforeseen site conditions, weather, permitting issues, or contractor performance problems. Quality control can also be a concern over an extended period, requiring diligent government oversight to ensure adherence to specifications. Furthermore, changes in military requirements or funding priorities could potentially impact the project's scope or continuation, though FFP contracts offer less flexibility for scope changes without formal modifications.

What is the track record of MACNAK-KORTE JOINT VENTURE in federal contracting?

Information regarding the specific track record of 'MACNAK-KORTE JOINT VENTURE' in federal contracting is not readily available within the provided data snippet. As a joint venture, its performance history might be a composite of its individual member companies or specific to projects undertaken as a joint entity. To assess their track record, one would typically need to search federal procurement databases (like SAM.gov or FPDS) for other contracts awarded to this specific joint venture name or its constituent companies. Key performance indicators to examine would include on-time delivery, adherence to budget, quality of work, and any history of disputes or contract terminations. Without this external data, their reliability and past performance remain undetermined.

How does the 'definitive contract' type influence oversight and flexibility?

A 'definitive contract' is a type of contract that contains all the terms and conditions necessary for performance. In this case, it's a 'firm fixed price' definitive contract. This means the price is set and not subject to adjustment based on the contractor's cost experience. For oversight, this simplifies financial monitoring as the cost is known upfront; the focus shifts to ensuring the contractor meets the defined scope, quality, and schedule. Flexibility is inherently limited in an FFP definitive contract. Changes to the scope of work typically require formal contract modifications, often involving negotiation of additional costs and time, which can be a cumbersome process. This structure prioritizes cost certainty for the government over flexibility.

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: W912PL14R0003

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2624 112TH ST S STE 1A, LAKEWOOD, WA, 98499

Business Categories: Category Business, Minority Owned Business, Native American Owned Business, Partnership or Limited Liability Partnership, SBA Certified 8 a Joint Venture, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $30,948,461

Exercised Options: $30,948,461

Current Obligation: $30,948,461

Subaward Activity

Number of Subawards: 213

Total Subaward Amount: $140,723,777

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline