DoD's $31M asphalt paving contract awarded to foreign entities raises questions on value and competition

Contract Overview

Contract Amount: $31,055,602 ($31.1M)

Contractor: Miscellaneous Foreign Awardees

Awarding Agency: Department of Defense

Start Date: 2009-09-20

End Date: 2011-11-23

Contract Duration: 794 days

Daily Burn Rate: $39.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 14

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCT ASPHALT-PAVED ROAD

Plain-Language Summary

Department of Defense obligated $31.1 million to MISCELLANEOUS FOREIGN AWARDEES for work described as: CONSTRUCT ASPHALT-PAVED ROAD Key points: 1. The contract's value appears reasonable given the scope of highway construction, but the foreign awardee warrants further scrutiny. 2. Limited competition was observed, with only 14 bids received for this significant infrastructure project. 3. The firm-fixed-price contract type suggests a defined scope, but potential for cost overruns exists if unforeseen issues arise. 4. Performance duration of 794 days indicates a substantial project, requiring robust oversight. 5. The contract falls within the broader construction sector, specifically highway, street, and bridge construction. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller domestic firms.

Value Assessment

Rating: fair

The contract value of $31 million for asphalt paving and highway construction is within a typical range for such projects. However, without specific details on the scope of work, location, and quality requirements, a precise value-for-money assessment is challenging. The award to a foreign entity, while not inherently negative, may introduce complexities in oversight and potentially impact domestic economic benefits compared to an award to a U.S. company. Benchmarking against similar Department of Defense paving contracts would provide a clearer picture of pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. However, only 14 bids were received, which might suggest a less robust competitive landscape than anticipated for a project of this magnitude. The limited number of bidders could potentially lead to less aggressive pricing and a reduced incentive for innovation compared to a scenario with numerous competitive offers.

Taxpayer Impact: While full and open competition was advertised, the low bid count means taxpayers may not have benefited from the most competitive pricing possible. The government secured a bid, but the potential for greater savings through more vigorous competition was not fully realized.

Public Impact

The primary beneficiaries are likely military operations and personnel requiring improved infrastructure at a Department of Defense facility. The contract delivers essential road construction and paving services, crucial for base accessibility and functionality. Geographic impact is localized to the specific DoD installation where the construction took place. Workforce implications include employment for construction workers, engineers, and project managers, though the extent of domestic versus foreign labor is unclear.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Award to foreign entities may limit domestic job creation and economic benefit.
Limited number of bidders could indicate potential barriers to entry or insufficient market outreach.
Firm-fixed-price contracts can sometimes lead to disputes if scope changes or unforeseen conditions arise.
Long contract duration increases the risk of performance issues or contractor default over time.

Positive Signals

Full and open competition was utilized, adhering to federal procurement principles.
Firm-fixed-price contract type provides cost certainty for the government.
The contract was awarded by the Department of the Army, a major component of the DoD.
The North American Industry Classification System (NAICS) code 237310 is specific to highway, street, and bridge construction.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically focusing on transportation infrastructure. The market for road construction is substantial, driven by both public and private sector demand for new builds and maintenance. Federal spending in this area often supports military installations, federal highways, and other government facilities. Comparable benchmarks would involve analyzing other DoD or federal highway construction contracts awarded over the past decade to assess pricing trends and contractor performance.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This means that large businesses, including foreign entities, were eligible to compete and were awarded the contract. Consequently, there are no direct subcontracting implications for small businesses stemming from a small business set-aside provision. The absence of a set-aside suggests that the contracting agency did not prioritize small business participation through this specific mechanism for this particular project.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Army's contracting command and potentially the Department of Defense's Inspector General. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver the specified work within the agreed-upon price. Transparency is facilitated by the public nature of federal contract awards, allowing for post-award analysis, though detailed performance metrics may not always be publicly accessible.

Related Government Programs

Military Construction
Federal Highway Administration Contracts
Department of Defense Infrastructure Projects
Transportation Infrastructure Investment

Risk Flags

Foreign awardee raises potential concerns about domestic economic impact.
Limited number of bidders may indicate suboptimal competition.
Long contract duration increases performance and financial risks.
Lack of small business set-aside limits opportunities for smaller domestic firms.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.1 million to MISCELLANEOUS FOREIGN AWARDEES. CONSTRUCT ASPHALT-PAVED ROAD

Who is the contractor on this award?

The obligated recipient is MISCELLANEOUS FOREIGN AWARDEES.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.1 million.

What is the period of performance?

Start: 2009-09-20. End: 2011-11-23.

What specific services were included in the "CONSTRUCT ASPHALT-PAVED ROAD" contract?

The contract description "CONSTRUCT ASPHALT-PAVED ROAD" suggests the primary scope involved the laying and paving of asphalt surfaces for roads. This typically includes site preparation, grading, base course installation, asphalt mixture application, compaction, and potentially related activities such as drainage, curbing, and line striping. The exact specifications, such as the length and width of roads, required thickness of the asphalt layers, and any associated infrastructure like sidewalks or utility work, would be detailed in the contract's Statement of Work (SOW). Without the SOW, the precise deliverables remain generalized.

How does the award to "MISCELLANEOUS FOREIGN AWARDEES" impact the value proposition for the U.S. taxpayer?

Awarding contracts to foreign entities can have mixed impacts on U.S. taxpayers. On one hand, it can foster international relations and potentially lead to competitive pricing if foreign firms offer cost advantages. On the other hand, it may result in less direct economic benefit to the U.S. economy through job creation and domestic business support. Tax revenue generated from U.S. companies is forgone, and there might be additional complexities related to international logistics, currency exchange, and differing regulatory environments. The 'value' must therefore consider not just the direct cost of the service but also the broader economic implications.

What are the potential risks associated with a firm-fixed-price contract for road construction lasting over two years?

Firm-fixed-price (FFP) contracts aim to provide cost certainty, but for long-duration projects like this two-year road construction, risks can emerge. If unforeseen site conditions (e.g., unexpected soil issues, underground utilities not on plans) arise, the contractor may seek change orders, potentially increasing the total cost despite the FFP structure. Material price fluctuations over a long period can also strain the contractor's margins, potentially impacting quality or leading to disputes if not adequately addressed in the contract's escalation clauses. Furthermore, the extended duration increases the likelihood of contractor performance issues, financial instability, or even default, requiring diligent government oversight.

Were there any performance issues or disputes reported during the contract period (2009-2011)?

Information regarding specific performance issues or disputes during the 2009-2011 period for this contract is not readily available in the provided summary data. Federal contract performance data, including disputes and claims, is often tracked internally by agencies and may be detailed in contract performance reports or databases not publicly accessible through this summary. To ascertain any performance issues, one would need to consult agency-specific contract management systems or potentially Freedom of Information Act (FOIA) requests for detailed contract administration records.

How does the $31 million contract value compare to other highway construction projects undertaken by the Department of Defense?

Comparing the $31 million value requires context regarding the scale and scope of 'other' DoD highway projects. The Department of Defense manages numerous infrastructure projects globally, ranging from small repairs to massive base expansions. A $31 million project for asphalt paving could be considered moderate to large depending on the specific deliverables (e.g., miles of road, complexity of terrain, associated infrastructure). To make a meaningful comparison, one would need to analyze similar projects within the DoD, considering factors like geographic location, specific construction requirements, and the year of award, to establish a benchmark for cost per mile or cost per square foot.

What is the significance of the NAICS code 237310 (Highway, Street, and Bridge Construction) in understanding this contract?

The NAICS code 237310 provides a standardized classification for the industry sector this contract belongs to. It signifies that the core business activity involves the construction of highways, streets, public sidewalks, bridges, tunnels, and related infrastructure. This classification is crucial for statistical purposes, allowing for comparisons with other firms and contracts within the same industry. It helps analysts understand the market dynamics, identify potential competitors, and benchmark costs and performance against industry standards for highway, street, and bridge construction projects.

Industry Classification

NAICS: Construction › Highway, Street, and Bridge Construction › Highway, Street, and Bridge Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCT NONBUILDING FACILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W917PM09R0022

Offers Received: 14

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2011 CRYSTAL DR STE 911, ARLINGTON, VA, 08

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $31,055,602

Exercised Options: $31,055,602

Current Obligation: $31,055,602

Contract Characteristics

Cost or Pricing Data: NO

Timeline