DoD awards $32M construction contract for Luke AFB facility, with 3 bidders competing

Contract Overview

Contract Amount: $31,982,265 ($32.0M)

Contractor: HHI Corporation

Awarding Agency: Department of Defense

Start Date: 2023-09-15

End Date: 2025-12-09

Contract Duration: 816 days

Daily Burn Rate: $39.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: SQUADRON 6TH AMU FACILITY, LUKE AFB, AZ

Place of Performance

Location: LUKE AFB, MARICOPA County, ARIZONA, 85309

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $32.0 million to HHI CORPORATION for work described as: SQUADRON 6TH AMU FACILITY, LUKE AFB, AZ Key points: 1. Contract value appears reasonable given the scope of construction for a military facility. 2. Full and open competition suggests a healthy bidding environment, potentially leading to better pricing. 3. Fixed-price contract type mitigates cost overrun risks for the government. 4. Project duration of over two years indicates a significant construction undertaking. 5. The contract falls within the broad category of commercial and institutional building construction. 6. The award to HHI Corporation signifies a significant win for the contractor in the defense construction sector.

Value Assessment

Rating: good

The contract value of $31.98 million for the SQUADRON 6TH AMU FACILITY at Luke AFB is within a typical range for large-scale institutional construction projects. Benchmarking against similar military facility construction projects of comparable size and complexity would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract helps control costs, but the ultimate value will depend on the quality of execution and adherence to the original scope.

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. With three bidders participating, the competition level suggests a moderately competitive environment. While three bidders are better than one or two, a higher number of bidders could potentially drive prices down further and increase the likelihood of selecting the most cost-effective and technically superior offer. The agency's process for soliciting and evaluating bids under this competition is crucial for ensuring fair market pricing.

Taxpayer Impact: The full and open competition with three bidders is a positive signal for taxpayers, as it increases the likelihood of achieving a fair market price. However, the relatively low number of bidders compared to potentially larger projects might mean that taxpayers are not realizing the absolute lowest possible price that could have been achieved with more intense competition.

Public Impact

The primary beneficiaries are the U.S. Air Force personnel stationed at Luke AFB, who will gain a new or improved facility. The contract delivers essential construction services for a military aviation support unit. The geographic impact is localized to Luke AFB in Arizona. The project will likely create numerous jobs in the construction sector within Arizona, including skilled trades and support roles. The facility is intended to support the operational readiness and efficiency of the 6th Aircraft Maintenance Unit.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for schedule delays given the multi-year duration and complexity of military construction.
Risk of scope creep if requirements are not clearly defined and managed throughout the project lifecycle.
Dependence on the contractor's ability to secure and manage a skilled workforce for the duration of the project.

Positive Signals

Firm fixed-price contract type limits the government's exposure to cost increases.
Full and open competition suggests a robust bidding process that should yield a competitive price.
The contract is for a definitive contract, implying a clear scope and expected completion.
The contractor, HHI Corporation, likely has experience with similar government construction projects.

Sector Analysis

This contract falls under the Commercial and Institutional Building Construction sector (NAICS 236220), which encompasses the construction of non-residential buildings such as offices, warehouses, and public facilities. The defense construction sub-sector is a significant part of this market, characterized by stringent requirements, security protocols, and specific government contracting procedures. Comparable spending benchmarks for military facility construction can vary widely based on location, specific purpose, and scale, but projects in the tens of millions are common for significant infrastructure upgrades or new builds on military installations.

Small Business Impact

The data indicates this contract was awarded under 'FULL AND OPEN COMPETITION' and the 'small business' flag is false (ss: false, sb: false). This suggests that small businesses were not specifically targeted through a set-aside program for this particular award. While HHI Corporation may be a large business, or the competition was open to all, there is no explicit indication of a small business set-aside. Subcontracting opportunities for small businesses may still exist if HHI Corporation chooses to engage them for specialized services or materials, but this is not guaranteed by the contract terms presented.

Oversight & Accountability

Oversight for this definitive contract will likely be managed by the contracting officer and relevant Department of the Army personnel responsible for construction at Luke AFB. Accountability measures are inherent in the firm fixed-price contract, which obligates the contractor to deliver the specified facility within the agreed-upon price. Transparency is generally maintained through contract award databases and public reporting, although detailed project progress reports may be internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Military Construction Projects
Air Force Base Infrastructure
Department of Defense Facilities
General Building Construction

Risk Flags

Potential for schedule delays
Risk of cost overruns (contractor side)
Quality control challenges in large construction projects
Workforce availability and skill shortages

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.0 million to HHI CORPORATION. SQUADRON 6TH AMU FACILITY, LUKE AFB, AZ

Who is the contractor on this award?

The obligated recipient is HHI CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $32.0 million.

What is the period of performance?

Start: 2023-09-15. End: 2025-12-09.

What is HHI Corporation's track record with similar Department of Defense construction contracts?

HHI Corporation's track record with the Department of Defense (DoD) is crucial for assessing their capability to successfully execute this $31.98 million facility construction project. A review of their past performance on similar contracts, particularly those involving military bases, aviation facilities, or large institutional buildings, would reveal their experience with government regulations, security protocols, and project management demands. Analyzing their history of on-time and on-budget delivery, as well as any past performance issues or disputes, provides insight into their reliability. Information on their safety records and quality control processes on previous DoD projects would further inform the assessment of their suitability for this contract. Without specific historical data on HHI Corporation's DoD contract performance, it is difficult to definitively gauge their suitability beyond the general assumption that they were deemed qualified during the bidding process.

How does the awarded price of $31.98 million compare to similar military facility construction projects?

Benchmarking the $31.98 million award for the SQUADRON 6TH AMU FACILITY against similar military construction projects is essential for evaluating value for money. Factors such as the facility's square footage, specific functional requirements (e.g., hangar space, administrative offices, maintenance areas), location, and the prevailing construction market conditions in Arizona at the time of award would need to be considered. Projects of comparable scale and complexity on other Air Force bases or DoD installations could serve as benchmarks. For instance, if similar projects recently awarded in the region or for similar units cost significantly less or more, it would indicate whether this contract represents a particularly good or poor deal for the government. The firm fixed-price nature suggests the price was deemed appropriate at the time of award, but ongoing market analysis is key to confirming long-term value.

What are the primary risks associated with a firm fixed-price construction contract of this magnitude and duration?

The primary risks associated with a firm fixed-price (FFP) construction contract of this magnitude ($31.98 million) and duration (over two years) primarily lie with the contractor, HHI Corporation. The main risk is that unforeseen issues, such as material cost escalations, labor shortages, or unexpected site conditions, could erode the contractor's profit margin or even lead to financial losses if they cannot manage these effectively within the fixed price. For the government, the risk is less about cost overruns and more about potential impacts on project quality or schedule if the contractor faces financial distress or attempts to cut corners to maintain profitability. Ensuring robust contract administration, clear specifications, and diligent oversight are critical to mitigating these risks and ensuring the government receives a facility that meets all requirements and quality standards.

How effective is the 'full and open competition' approach likely to be in ensuring competitive pricing for this project?

The 'full and open competition' approach is generally considered the most effective method for ensuring competitive pricing, as it allows all responsible sources to participate. In this case, with three bidders submitting proposals for the SQUADRON 6TH AMU FACILITY, the competition level is moderate. While this is preferable to sole-source or limited competition, the effectiveness in driving down prices depends on the number and capability of the bidders. If the three bidders were highly competitive and had closely aligned cost proposals, the pricing achieved is likely to be fair. However, if one bidder was significantly more capable or had a substantial cost advantage, the other two might have been less motivated to aggressively price their bids. The agency's evaluation process plays a critical role in ensuring that the lowest price technically acceptable or best value offer is selected, maximizing the benefit of the competition.

What are the potential workforce implications of this $31.98 million construction project in Arizona?

This $31.98 million construction project is expected to have significant positive workforce implications, particularly within Arizona. The construction of a facility of this scale requires a substantial labor force, encompassing a wide range of skilled trades such as electricians, plumbers, carpenters, masons, heavy equipment operators, and general laborers. It will also necessitate project management, engineering, and administrative support roles. The duration of the project, estimated at over two years, suggests sustained employment opportunities. This influx of work can stimulate local economies by providing jobs, increasing demand for local services, and potentially boosting wages in the construction sector. Furthermore, it offers opportunities for training and skill development for workers in the region, contributing to the long-term capacity of the local construction workforce.

Are there any specific performance metrics or Key Performance Indicators (KPIs) typically associated with such military construction contracts?

Military construction contracts, including this $31.98 million award for the SQUADRON 6TH AMU FACILITY, typically incorporate specific performance metrics and Key Performance Indicators (KPIs) to ensure project success. These often include adherence to the project schedule, with penalties for delays and potential incentives for early completion. Quality control is paramount, measured through inspections, adherence to building codes, material testing, and defect resolution rates. Safety performance is another critical KPI, tracked through metrics like incident rates (e.g., OSHA recordable incidents) and compliance with safety regulations. Furthermore, compliance with the contract's scope of work, budget management (especially relevant for cost-reimbursable elements if any, though this is FFP), and timely submission of required documentation (e.g., progress reports, as-built drawings) are also key performance indicators monitored by the contracting officer's representative (COR).

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912PL23R0038

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 736 W HARRISVILLE RD, OGDEN, UT, 84404

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $33,222,499

Exercised Options: $31,982,265

Current Obligation: $31,982,265

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $113,780

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline