Hensel Phelps Construction Co. awarded $47.1M for KAFB administrative building, a firm-fixed-price contract

Contract Overview

Contract Amount: $47,134,118 ($47.1M)

Contractor: Hensel Phelps Construction CO.

Awarding Agency: Department of Defense

Start Date: 2021-06-03

End Date: 2024-07-01

Contract Duration: 1,124 days

Daily Burn Rate: $41.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN BUILD FY21 DTRA ADMINISTRATIVE BUILDING, KAFB, NM.

Place of Performance

Location: KIRTLAND AFB, BERNALILLO County, NEW MEXICO, 87117

State: New Mexico Government Spending

Plain-Language Summary

Department of Defense obligated $47.1 million to HENSEL PHELPS CONSTRUCTION CO. for work described as: DESIGN BUILD FY21 DTRA ADMINISTRATIVE BUILDING, KAFB, NM. Key points: 1. The contract value represents a significant investment in facility infrastructure for the Defense Threat Reduction Agency. 2. The firm-fixed-price structure shifts cost risk to the contractor, potentially leading to predictable expenses. 3. Competition was robust with 6 bidders, suggesting a healthy market for this type of construction. 4. The project is located in New Mexico, potentially impacting the local construction workforce and economy. 5. The duration of the contract (over 3 years) indicates a complex and substantial construction undertaking.

Value Assessment

Rating: good

The contract value of $47.1 million for a design-build administrative building appears reasonable given the scope and duration. Benchmarking against similar large-scale government construction projects suggests that prices within this range are typical for complex facilities. The firm-fixed-price contract type generally aims for cost certainty, and the presence of multiple bidders indicates that the pricing was likely competitive. Without specific cost breakdowns or detailed comparisons to identical projects, a precise value-for-money assessment is challenging, but the competitive nature of the award provides a positive signal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with six bids received. This level of competition is generally considered healthy and suggests that multiple qualified contractors were interested in the project. A higher number of bidders typically leads to more competitive pricing as contractors vie for the award. The agency likely benefited from a range of proposals, allowing for selection of the best value based on technical and price factors.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely drove down the final price compared to a sole-source or limited competition scenario. This ensures that government funds are used more efficiently for essential infrastructure.

Public Impact

The primary beneficiaries are the personnel of the Defense Threat Reduction Agency (DTRA) who will utilize the new administrative building. The project delivers essential administrative and operational space, supporting DTRA's mission. The geographic impact is focused on Kirtland Air Force Base (KAFB) in New Mexico. The construction phase will likely create temporary jobs for skilled trades and construction workers in the local New Mexico area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise, despite the fixed-price nature.
Schedule delays could impact operational readiness if construction timelines are not met.
Ensuring compliance with all environmental and safety regulations during construction is critical.

Positive Signals

Firm-fixed-price contract mitigates budget uncertainty for the government.
Multiple bidders indicate strong contractor interest and potential for high-quality execution.
Design-build approach can streamline project delivery and potentially reduce overall timeline.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. Government facility construction, particularly for defense agencies, often involves large-scale projects with stringent requirements. Spending in this area is influenced by defense budgets, infrastructure modernization needs, and geopolitical factors. Comparable spending benchmarks would typically involve other large federal building projects, with values often ranging from tens to hundreds of millions of dollars depending on complexity and size.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications specifically mandated for small businesses through a set-aside program. However, the prime contractor, Hensel Phelps Construction Co., may still engage small businesses as subcontractors to fulfill project needs, contributing to the broader small business ecosystem. The absence of a set-aside means the primary competition was open to all qualified firms, large and small.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army, under the Department of Defense, with specific contract administration functions potentially handled by a contracting officer's representative (COR). The firm-fixed-price nature of the contract provides a degree of accountability by placing cost control responsibility on the contractor. Transparency is generally maintained through contract award databases and public reporting mechanisms. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Facility Construction
Administrative Building Construction
Design-Build Contracts
Defense Threat Reduction Agency (DTRA) Operations

Risk Flags

Potential for scope creep if requirements are not clearly defined upfront.
Risk of contractor default or performance issues, though mitigated by contractor's experience.
Dependency on timely government approvals and site access.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.1 million to HENSEL PHELPS CONSTRUCTION CO.. DESIGN BUILD FY21 DTRA ADMINISTRATIVE BUILDING, KAFB, NM.

Who is the contractor on this award?

The obligated recipient is HENSEL PHELPS CONSTRUCTION CO..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $47.1 million.

What is the period of performance?

Start: 2021-06-03. End: 2024-07-01.

What is the track record of Hensel Phelps Construction Co. with federal contracts, particularly within the Department of Defense?

Hensel Phelps Construction Co. has a substantial history of performing federal construction contracts, including numerous projects for the Department of Defense and its various branches like the Army and Air Force. Their portfolio often includes large-scale, complex projects such as administrative facilities, barracks, and specialized operational buildings. Analyzing their past performance on similar design-build projects would reveal their ability to manage budgets, adhere to schedules, and meet quality standards. Historical data from contract databases often shows a pattern of successful contract completions, though like any large contractor, occasional performance issues or disputes may arise and are typically addressed through contract close-out procedures or dispute resolution processes.

How does the awarded price compare to similar administrative building construction projects for federal agencies?

Benchmarking this $47.1 million contract against similar federal administrative building projects requires careful consideration of project size, complexity, location, and specific requirements (e.g., security, technology integration). Generally, large administrative facilities for federal agencies can range significantly in cost. Projects of this magnitude, especially those involving design-build elements and located on military installations, often fall within the multi-million dollar range. The firm-fixed-price nature and the competitive bidding process suggest the price was vetted against market rates. A detailed comparison would involve analyzing cost-per-square-foot metrics from comparable projects, adjusted for regional economic factors and specific project scope.

What are the primary risks associated with this design-build contract for the government?

The primary risks for the government in this design-build contract, despite the firm-fixed-price structure, revolve around ensuring the final product meets all specified requirements and performance standards. While the contractor assumes most cost risk, the government bears the risk of inadequate design or construction quality if oversight is insufficient. Schedule delays, though less likely to impact government budget directly under a fixed price, can still disrupt agency operations. Furthermore, unforeseen site conditions or changes in regulatory requirements during the extended construction period could necessitate contract modifications, potentially impacting the overall value. Robust government oversight and clear performance metrics are crucial to mitigate these risks.

How effective is the firm-fixed-price contract type in ensuring value for money for this type of construction project?

The firm-fixed-price (FFP) contract type is generally considered effective for ensuring value for money in construction projects where the scope of work is well-defined and risks can be reasonably anticipated. For this administrative building project, FFP shifts the primary financial risk to Hensel Phelps Construction Co., incentivizing them to control costs and manage the project efficiently to maximize profit. This predictability benefits the government's budget. However, to ensure true value for money, the initial scope definition must be comprehensive, and the government must maintain diligent oversight to ensure the contractor meets quality standards and avoids costly change orders that could undermine the FFP benefits. The competitive award process further enhances value by ensuring the price reflects market conditions.

What are the historical spending patterns for administrative building construction within the Department of Defense?

Historical spending patterns for administrative building construction within the Department of Defense show a consistent and significant investment in facilities infrastructure. Budgets allocated to such projects fluctuate based on overall defense spending priorities, modernization initiatives, and the lifecycle of existing facilities. Agencies like the Army, Air Force, and Navy regularly procure contracts for new construction, renovations, and expansions of administrative spaces across numerous installations worldwide. These expenditures are often substantial, reflecting the scale and security requirements of military operations. Analyzing past contract awards reveals trends in contract types (e.g., design-build, traditional design-bid-build), average contract values, and the prevalence of full and open competition versus set-asides.

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: W912PP21R0009

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Hensel Phelps Construction CO

Address: 3125 E WOOD ST STE 100, PHOENIX, AZ, 85040

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $47,533,017

Exercised Options: $47,533,017

Current Obligation: $47,134,118

Actual Outlays: $1,305,297

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline