GUAM – The Department of Defense has saved 17 percent on Guam military buildup construction costs so far as tough economic conditions elsewhere for contractors and the allure of multi-billion-dollar contracts intensified competition among bidders.
The bidding process has saved the military $92.8 million, with savings so far in 11 of 13 contracts awarded to help prepare for the transfer of at least 8,600 U.S. Marines and their dependants and support staff from Okinawa to Guam in coming years, according data released by the Government Accountability Office.
“The Department of Defense attributes the savings to favorable construction market conditions,” the GAO said in the report released earlier this week. It noted that the conditions “may not persist over the course of the buildup period.”
The GAO analyzed the 13 military construction projects awarded from fiscal years 2009 and 2010 to support the Guam buildup for the report and found that the total appropriated for the projects by Congress was $556 million while the amount of the contracts actually awarded was $464 million, for total savings of 17 percent.
“In these cases, the winning contract bids were lower than the amounts that Congress had appropriated or the amount that was otherwise designated for the project. Bid savings may be used to offset cost overruns or future requirements for a specific military construction project or for other projects around the world,” the GAO said. “As a result, as of the time of our report, DOD and military service officials had already applied most of these bid savings to certain congressional rescissions of military construction appropriations or had reprogrammed leftover funds to other uses.”
The GAO data was part of a larger report released this week that concluded the military buildup in Guam and associated projects will probably cost at least $23.9 billion over the next 10 years. The GAO report, which expands on a study released a month ago that cited the buildup costs at $17.4 billion, broadens the accounting and includes spending on additional items.
The Guam military buildup has drawn the interest of construction-related giants such as Hensel Phelps Construction Co., Jacobs Engineering Group Inc., and others as the Navy awards contracts as large as the $4 billion Design Build Guam multiple award construction contract and the $3 billion Mamizu MACC, for which companies submitted bids on June 21.
While the large contracts have attracted attention of major contractors, slow economic growth elsewhere and competition among companies to get a foot in the door through bidding on the early projects related to the military buildup have also helped heighten competition and drive down costs.
The biggest saving for the military so far through competitive bidding for Guam came in the project to build a new naval hospital, which saved the military $51 million, followed by savings of $14.4 million in an award for the hospital’s central utility plant, according to the GAO data.
The only project that came in above the appropriated budget was the contract to realign Arc Light Boulevard at Guam’s Andersen Air Force Base, including road widening streets, adding roundabouts and building bicycle lanes, according to the GAO. The 2009 project cost the military $887,000 more than appropriated. The Apra Harbor Wharf improvements so far have come in at exactly the budget appropriated, the GAO said.
Correction: An earlier version of this story was corrected. The GAO report released a month ago cited the buildup costs at $17.4 billion.
Image used in this article courtesy Kongsky / FreeDigitalPhotos.net