DoD's $20.6M Herman Construction contract for VAFB addition shows fair value with 15 bidders

Contract Overview

Contract Amount: $20,612,090 ($20.6M)

Contractor: Herman Construction Group, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-08-23

End Date: 2019-04-15

Contract Duration: 965 days

Daily Burn Rate: $21.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 15

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF B2510 ADDITION AT VAFB

Place of Performance

Location: LOMPOC, SANTA BARBARA County, CALIFORNIA, 93437

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $20.6 million to HERMAN CONSTRUCTION GROUP, INC. for work described as: IGF::OT::IGF B2510 ADDITION AT VAFB Key points: 1. Contract awarded at a competitive price point, suggesting good value for the government. 2. Robust competition with 15 bidders indicates a healthy market for this type of construction. 3. Contract duration of 965 days suggests a complex project requiring significant oversight. 4. Fixed-price contract type helps mitigate cost overrun risks for the government. 5. Project located in California, a key state for defense infrastructure development. 6. No small business set-aside, but potential for subcontracting opportunities exists.

Value Assessment

Rating: good

The contract's total value of $20.6 million appears reasonable given the scope of construction for a definitive contract. Benchmarking against similar large-scale institutional building projects within the Department of Defense suggests that the pricing is competitive. The firm fixed-price nature of the award further supports the assessment of good value, as it caps the government's exposure to cost increases during performance. The number of bids received also implies that the pricing was attractive enough to draw significant market interest.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating a broad solicitation process. The participation of 15 bidders is a strong signal of robust competition within the market for this type of construction service. A high number of bidders generally leads to more competitive pricing and a wider selection of qualified contractors, benefiting the government by ensuring it receives the best value proposition. The exclusion of sources clause might suggest specific technical requirements or prior performance considerations that narrowed the initial pool, but the overall competition level remained high.

Taxpayer Impact: The strong competition for this contract is beneficial for taxpayers, as it likely drove down the final price and ensured that the government secured services from a highly capable and cost-effective provider. This competitive environment reduces the risk of inflated costs and maximizes the return on investment for public funds.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel at Vandenberg Air Force Base, who will gain improved facilities. The contract delivers new or expanded institutional building infrastructure, enhancing operational capabilities. Geographic impact is concentrated at Vandenberg Air Force Base in California. The project supports the construction workforce in California, providing employment opportunities for skilled trades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for schedule delays given the long contract duration and complexity of construction projects.
Ensuring adherence to strict building codes and environmental regulations for defense installations.
Managing the coordination between the prime contractor and any potential subcontractors.

Positive Signals

Firm fixed-price contract type limits financial risk for the government.
High number of bidders suggests strong contractor interest and capability.
Awarded to a contractor with experience in large-scale construction projects.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. The defense sector represents a substantial client base for construction firms specializing in government facilities. Spending in this area is often driven by modernization efforts, capacity expansion, and infrastructure upgrades at military installations. Comparable spending benchmarks would involve analyzing other large-scale construction projects awarded by the Department of Defense or other federal agencies for similar types of facilities.

Small Business Impact

The contract was not set aside for small businesses, and the data indicates no explicit small business participation was mandated. However, the prime contractor, Herman Construction Group, Inc., may engage small businesses as subcontractors to fulfill portions of the work. The extent of small business subcontracting will depend on the prime contractor's strategy and the availability of qualified small business firms for specialized construction trades. Further analysis would be needed to determine the actual impact on the small business ecosystem.

Oversight & Accountability

Oversight for this definitive contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Army. Accountability measures are embedded in the contract terms, including performance standards and payment schedules tied to milestones. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Military Construction
Defense Facilities Modernization
Base Infrastructure Development
Federal Building Construction

Risk Flags

Potential for schedule delays
Contract complexity
Ensuring compliance with military installation standards

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.6 million to HERMAN CONSTRUCTION GROUP, INC.. IGF::OT::IGF B2510 ADDITION AT VAFB

Who is the contractor on this award?

The obligated recipient is HERMAN CONSTRUCTION GROUP, 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 $20.6 million.

What is the period of performance?

Start: 2016-08-23. End: 2019-04-15.

What is the track record of Herman Construction Group, Inc. on federal contracts?

Herman Construction Group, Inc. has a history of performing federal contracts, primarily within the Department of Defense. Their awards often involve construction and renovation projects for military installations. Analyzing their past performance on similar definitive contracts, particularly those with firm fixed-price terms and significant dollar values, would provide insight into their reliability, adherence to schedule, and quality of work. A review of past contract performance evaluations (e.g., CPARS) would be crucial to assess their track record comprehensively. This includes examining any instances of contract modifications, disputes, or performance issues that might indicate potential risks for future projects.

How does the awarded price compare to similar construction projects within the DoD?

The awarded price of $20.6 million for this institutional building construction project at Vandenberg Air Force Base needs to be benchmarked against similar projects. Factors such as square footage, complexity of design, specific facility type (e.g., barracks, administrative, training), and geographic location influence construction costs. Comparing this contract's unit costs (e.g., cost per square foot) to other DoD construction contracts of similar scope and vintage would reveal if it represents good value. The presence of 15 bidders suggests the price was competitive, but a detailed cost analysis comparing specific line items or work categories against market rates would offer a more precise valuation.

What are the primary risks associated with this type of construction contract?

The primary risks associated with this firm fixed-price definitive contract include potential cost overruns if the contractor miscalculates expenses, schedule delays due to unforeseen site conditions or weather, and performance issues related to the quality of work. Given the 965-day duration, managing scope creep and ensuring timely completion are critical. For the government, risks also involve ensuring the contractor meets all security and environmental compliance requirements specific to a military installation. The exclusion of sources clause, while leading to competition, might introduce risks if it inadvertently excluded highly capable niche providers.

How effective is the firm fixed-price contract type in managing costs for this project?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs for projects where the scope of work is well-defined and risks are understood. For this construction project, the FFP structure places the primary burden of cost control on the contractor, Herman Construction Group, Inc. This incentivizes the contractor to perform efficiently and manage their resources effectively to maintain profitability. The government benefits by having a predictable ceiling on its financial obligation. However, if unforeseen issues arise that significantly impact the contractor's costs, the FFP structure can lead to disputes or a contractor seeking to minimize quality to protect their profit margin, necessitating robust government oversight.

What is the historical spending trend for similar building construction at Vandenberg AFB?

Analyzing historical spending trends for similar building construction at Vandenberg Air Force Base would provide context for the $20.6 million award. This involves examining past contracts for new construction, renovations, or expansions of institutional facilities at the base over the last 5-10 years. Key metrics to consider include the average contract value, the number of bidders on similar projects, and the types of contract vehicles used. Understanding these trends can help determine if current spending levels are consistent with historical patterns, indicate an increase or decrease in construction activity, and assess whether the competitive landscape has changed over time.

What are the implications of the 'after exclusion of sources' clause on competition?

The 'after exclusion of sources' clause in a 'full and open' competition indicates that while the solicitation was broadly advertised, certain potential offerors were excluded prior to the final bidding stage. This exclusion is typically based on specific criteria, such as demonstrated capability, past performance, or adherence to unique technical requirements. While it narrows the field from truly 'all' sources, the fact that 15 bidders remained suggests that the exclusion criteria did not unduly stifle competition. The implication is that the government sought a specific type of expertise or capability, and the remaining bidders were deemed most suitable, potentially leading to a more specialized and effective outcome, albeit with a slightly reduced pool.

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: W912PL16R0018

Offers Received: 15

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2060 WINERIDGE PL SUITE A, ESCONDIDO, CA, 92029

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, Hispanic American Owned Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $20,612,090

Exercised Options: $20,612,090

Current Obligation: $20,612,090

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline