DoD's $66.6M HVAC contract for NMCSD Phase One awarded to RQ Construction, LLC

Contract Overview

Contract Amount: $66,578,759 ($66.6M)

Contractor: RQ Construction, LLC

Awarding Agency: Department of Defense

Start Date: 2012-07-31

End Date: 2019-10-01

Contract Duration: 2,618 days

Daily Burn Rate: $25.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: RM009-10 HVAC AND DUCTWORK REPAIRS NMCSD (PHASE ONE)

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92134

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $66.6 million to RQ CONSTRUCTION, LLC for work described as: RM009-10 HVAC AND DUCTWORK REPAIRS NMCSD (PHASE ONE) Key points: 1. The contract value represents a significant investment in critical infrastructure maintenance. 2. Full and open competition suggests a potentially competitive bidding environment. 3. The firm-fixed-price structure shifts cost risk to the contractor. 4. The contract duration of over 7 years indicates a long-term need for services. 5. The North American Industry Classification System (NAICS) code 236220 points to commercial and institutional building construction. 6. The contract was awarded as a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle or a similar framework.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the scope of HVAC and ductwork repairs. However, a total contract value of approximately $66.6 million over more than seven years suggests a substantial project. The firm-fixed-price (FFP) award type indicates that the contractor is responsible for all costs, which can be beneficial for the government if managed effectively. Without comparable project data or detailed cost breakdowns, a precise value-for-money assessment is difficult, but the duration and scale imply a significant commitment.

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. With seven bids received, the competition level appears moderate. This suggests that while multiple companies were interested, the market may not be saturated with potential bidders for this specific type of large-scale infrastructure repair. The presence of multiple bids generally supports price discovery and can lead to more competitive pricing for the government.

Taxpayer Impact: The full and open competition with seven bidders is positive for taxpayers, as it increases the likelihood of receiving a fair market price and encourages contractors to offer their best terms to secure the award.

Public Impact

Beneficiaries include military personnel and their families receiving services at the Naval Medical Center San Diego (NMCSD). The contract delivers essential repair and maintenance services for HVAC and ductwork systems, crucial for operational readiness and patient comfort. The geographic impact is localized to the NMCSD facility in San Diego, California. The contract supports jobs within the construction and building maintenance sectors, particularly for RQ CONSTRUCTION, LLC and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 7 years) could lead to potential cost overruns if not closely monitored.
Firm-fixed-price contracts can sometimes incentivize contractors to cut corners on quality if not adequately overseen.
Reliance on a single contractor for an extended period might limit flexibility in adopting new technologies or addressing unforeseen issues.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor, potentially saving taxpayer money if costs are managed well.
Full and open competition suggests a robust bidding process that should yield competitive pricing.
The contract addresses critical infrastructure needs, ensuring the continued operation of a key medical facility.

Sector Analysis

The contract falls within the Commercial and Institutional Building Construction sector, specifically addressing the maintenance and repair of essential building systems. This sector is vital for maintaining the functionality of government facilities, including critical healthcare infrastructure like the Naval Medical Center San Diego. Spending in this area is often driven by the need to preserve existing assets, ensure operational efficiency, and comply with safety and environmental regulations. Comparable spending benchmarks would typically involve analyzing other large-scale repair and renovation contracts for federal buildings or healthcare facilities.

Small Business Impact

The provided data indicates that small business participation (sb) was false and the contract was not a small business set-aside (ss). This suggests that the primary award went to a large business, RQ CONSTRUCTION, LLC. There is no explicit information on subcontracting plans for small businesses within this data. Therefore, the direct impact on the small business ecosystem from this specific prime contract award appears limited, though RQ CONSTRUCTION, LLC may engage small businesses for specific tasks.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contracting officer's representative (COR) within the Department of the Navy. Accountability measures are inherent in the firm-fixed-price contract structure, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Facilities Engineering Command (NAVFAC) Contracts
Department of Defense Facilities Maintenance
Healthcare Facility Construction and Repair
HVAC System Installation and Maintenance Contracts
General Building Construction Services

Risk Flags

Long contract duration
Potential for cost escalation over time
Need for sustained government oversight
Risk of contractor corner-cutting under FFP

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.6 million to RQ CONSTRUCTION, LLC. RM009-10 HVAC AND DUCTWORK REPAIRS NMCSD (PHASE ONE)

Who is the contractor on this award?

The obligated recipient is RQ CONSTRUCTION, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $66.6 million.

What is the period of performance?

Start: 2012-07-31. End: 2019-10-01.

What is the historical spending pattern for HVAC and ductwork repairs at NMCSD?

Analyzing historical spending patterns for HVAC and ductwork repairs at the Naval Medical Center San Diego (NMCSD) prior to this $66.6 million contract would provide crucial context. Without access to specific historical data for NMCSD's maintenance budgets and past repair contracts, it's difficult to establish a baseline. However, large medical facilities typically have significant ongoing needs for HVAC maintenance due to the critical nature of climate control for patient care, equipment, and infection control. A substantial contract like this suggests either a major upgrade/replacement project or a consolidation of previously fragmented repair efforts. Understanding if this represents an increase or decrease in overall spending, or a shift in how repairs are procured, would require a deeper dive into the facility's maintenance history and budget allocations over several fiscal years.

How does the per-unit cost of this contract compare to similar HVAC repair projects in the federal sector?

A direct per-unit cost comparison for this $66.6 million contract is challenging without detailed breakdowns of the specific services rendered (e.g., cost per square foot of ductwork replaced, cost per HVAC unit serviced, labor hours per repair type). The contract covers 'HVAC AND DUCTWORK REPAIRS NMCSD (PHASE ONE)', implying a broad scope. To benchmark effectively, one would need to identify comparable federal contracts for similar-sized medical facilities or large institutional buildings, focusing on the quantity and type of repairs. Factors such as geographic location (labor costs vary significantly), age and complexity of the existing systems, and the specific scope of work (e.g., emergency repairs vs. planned upgrades) heavily influence pricing. Generally, firm-fixed-price contracts aim to provide cost certainty, but assessing value requires comparing the final cost against the scope delivered and market rates for equivalent work.

What is RQ CONSTRUCTION, LLC's track record with similar large-scale federal construction and repair contracts?

RQ CONSTRUCTION, LLC has a history of performing large-scale federal construction and repair contracts. Examining their past performance, particularly with the Department of Defense and other federal agencies, is essential for assessing their capability to execute this $66.6 million HVAC and ductwork project. Key areas to review include their on-time and on-budget performance, safety records, quality of work, and any history of contract disputes or terminations. Information from sources like the Federal Procurement Data System (FPDS) and contractor performance assessment reporting tools (CPARS) can provide insights into their reliability and expertise in managing complex projects of this magnitude. A strong track record suggests a lower risk of performance issues for the NMCSD project.

What are the potential risks associated with the long duration (over 7 years) of this contract?

The extended duration of this contract, spanning over 2600 days (approximately 7.15 years), introduces several potential risks. Firstly, the cost of materials and labor can fluctuate significantly over such a long period, potentially impacting the contractor's profitability or leading to claims for equitable adjustments if not adequately accounted for in the initial pricing. Secondly, technological advancements in HVAC systems and repair techniques may occur, making the initially specified methods or equipment outdated by the contract's end. Thirdly, maintaining consistent quality and oversight across such a prolonged period requires sustained effort from the government's contracting officer's representative (COR) and quality assurance personnel. Finally, the long-term commitment might reduce the government's flexibility to adapt to changing facility needs or to incorporate newer, potentially more efficient, technologies if they emerge during the contract term.

How does the firm-fixed-price (FFP) contract type influence the government's risk exposure for this project?

The firm-fixed-price (FFP) contract type significantly shifts the primary cost risk from the government to the contractor, RQ CONSTRUCTION, LLC. Under an FFP agreement, the contractor is obligated to complete the specified scope of work for a predetermined price, regardless of their actual costs. This provides the government with cost certainty, as the total expenditure is known upfront, assuming no contract modifications or change orders. However, this structure can incentivize contractors to minimize costs, potentially leading to compromises in quality or scope if not rigorously monitored. The government's main risks under an FFP contract relate to inadequate definition of the scope of work, which can lead to disputes, or the contractor's potential financial instability, which could jeopardize project completion. Effective oversight and clear contract specifications are crucial to mitigate these risks.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6247309R1608

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3194 LIONSHEAD AVE, CARLSBAD, CA, 92010

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

Financial Breakdown

Contract Ceiling: $66,578,759

Exercised Options: $66,578,759

Current Obligation: $66,578,759

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $25,931,563

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6247310D5409

IDV Type: IDC

Timeline