VA awards $10.3M contract for utility upgrades at Lexington VA campus, highlighting construction needs

Contract Overview

Contract Amount: $10,258,765 ($10.3M)

Contractor: Semper TEK Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-05-15

End Date: 2027-11-15

Contract Duration: 914 days

Daily Burn Rate: $11.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: REPLACE DETERIORATED UNDERGROUND UTILITIES AT LEXINGTON VA HEALTH CARE SYSTEM, FRANKLIN R. SOUSLEY CAMPUS

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40511

State: Kentucky Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $10.3 million to SEMPER TEK INC for work described as: REPLACE DETERIORATED UNDERGROUND UTILITIES AT LEXINGTON VA HEALTH CARE SYSTEM, FRANKLIN R. SOUSLEY CAMPUS Key points: 1. Contract addresses critical infrastructure maintenance for veteran healthcare. 2. Competition was open, suggesting a potentially competitive bidding environment. 3. Fixed-price contract type aims to control costs for the government. 4. Project duration of 914 days indicates a significant scope of work. 5. Location in Kentucky suggests regional economic impact and workforce needs. 6. The award to Semper Tek Inc. warrants review of their past performance.

Value Assessment

Rating: good

The contract value of $10.3 million for utility system upgrades appears reasonable given the scope and duration. Benchmarking against similar large-scale construction and renovation projects for federal facilities suggests this price point is within expected ranges. The firm fixed-price structure provides cost certainty, which is a positive indicator for value, assuming the contractor can execute within budget. Further analysis would involve comparing specific unit costs for materials and labor against market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating that multiple potential bidders were allowed to submit proposals. The presence of 3 bids suggests a moderate level of competition. While more bidders could potentially drive prices lower, a competitive process was still employed, which is generally favorable for price discovery and ensuring the government receives a fair offer.

Taxpayer Impact: The use of full and open competition helps ensure that taxpayer dollars are used efficiently by allowing market forces to influence pricing. A competitive process increases the likelihood of obtaining the best value for the government.

Public Impact

Veterans receiving care at the Lexington VA Health Care System will benefit from improved facility reliability and safety. The project will deliver essential upgrades to underground utility systems, ensuring uninterrupted service. The geographic impact is concentrated at the Franklin R. Sousley Campus in Lexington, Kentucky. Construction activities will likely create temporary employment opportunities in the local region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise during excavation.
Risk of project delays due to weather or supply chain disruptions.
Ensuring contractor compliance with all safety and environmental regulations.

Positive Signals

Firm fixed-price contract provides cost certainty.
Full and open competition suggests a robust bidding process.
Project addresses critical infrastructure, reducing long-term maintenance risks.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the federal contracting market. Federal agencies frequently award contracts for facility maintenance, repair, and upgrades to ensure operational continuity and safety. The market for such services is competitive, with numerous firms capable of undertaking large-scale construction projects. This specific award contributes to the overall federal spending on infrastructure modernization.

Small Business Impact

The contract was not set aside for small businesses, and the awardee, Semper Tek Inc., is not explicitly identified as a small business in the provided data. This suggests that the primary focus was on securing the best technical and price proposal from the broader market. There is no immediate indication of subcontracting opportunities for small businesses, which would require further investigation into the contractor's subcontracting plan.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs contracting officers and project managers. The firm fixed-price nature of the contract provides a degree of accountability for the contractor to deliver the specified work within budget. Transparency is facilitated through federal contract databases where award details are published. Inspector General involvement would typically be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

VA Facility Modernization Projects
Federal Infrastructure Repair Contracts
Underground Utility Construction
Healthcare Facility Construction

Risk Flags

Potential for unforeseen site conditions impacting cost and schedule.
Risk of construction delays due to external factors (weather, supply chain).
Need to verify contractor's past performance on similar projects.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $10.3 million to SEMPER TEK INC. REPLACE DETERIORATED UNDERGROUND UTILITIES AT LEXINGTON VA HEALTH CARE SYSTEM, FRANKLIN R. SOUSLEY CAMPUS

Who is the contractor on this award?

The obligated recipient is SEMPER TEK INC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $10.3 million.

What is the period of performance?

Start: 2025-05-15. End: 2027-11-15.

What is Semper Tek Inc.'s track record with the federal government, particularly on similar construction projects?

A review of Semper Tek Inc.'s federal contract history would be necessary to assess their track record. This would involve examining past performance evaluations, any documented disputes or contract terminations, and the successful completion of projects of comparable size and complexity. Specifically, looking at their experience with VA facilities or large-scale utility upgrades would provide relevant context. Without access to a detailed past performance database, it's difficult to definitively assess their reliability for this $10.3 million project.

How does the $10.3 million cost compare to similar utility upgrade projects at other VA medical centers?

Benchmarking this $10.3 million contract against similar utility upgrade projects at other VA medical centers requires access to a broader dataset of federal construction contracts. Factors such as the specific scope of work (e.g., types of utilities, extent of excavation, system complexity), geographic location (which impacts labor and material costs), and the age and condition of the existing infrastructure at other facilities would need to be considered. Generally, large-scale infrastructure projects for federal facilities can range from several million to tens of millions of dollars, making this award appear within a plausible range, but a precise comparison is not possible with the provided data alone.

What are the primary risks associated with replacing deteriorated underground utilities, and how are they mitigated in this contract?

The primary risks associated with replacing deteriorated underground utilities include unforeseen subsurface conditions (e.g., encountering unexpected utilities, hazardous materials, or unstable soil), potential environmental impacts, and disruption to ongoing facility operations. This contract mitigates some risks through its firm fixed-price structure, which shifts the burden of cost overruns due to unforeseen conditions to the contractor, provided the contract includes appropriate clauses for differing site conditions. The project duration of over two years also allows for phased work, potentially minimizing disruption. However, thorough site investigation prior to award and robust project management during execution are crucial for managing these inherent risks.

What is the expected impact of these utility upgrades on the operational effectiveness and patient care at the Lexington VA Health Care System?

These utility upgrades are expected to significantly enhance the operational effectiveness and reliability of the Lexington VA Health Care System. Deteriorated underground utilities can lead to service interruptions (e.g., water, power, sewage), equipment failures, and potential safety hazards. By replacing these aging systems, the VA ensures a stable and dependable infrastructure, which is critical for uninterrupted patient care, medical equipment function, and overall facility operations. This investment reduces the risk of costly emergency repairs and enhances the safety and comfort of both patients and staff.

How has federal spending on construction and infrastructure maintenance at VA facilities trended in recent years?

Federal spending on construction and infrastructure maintenance at VA facilities has generally trended upwards in recent years, driven by an aging infrastructure, increased demand for healthcare services, and congressional appropriations aimed at modernization. The VA has historically faced challenges with deferred maintenance, leading to significant investments in upgrading and repairing its vast network of medical centers and clinics. This includes substantial funding allocated for both new construction and the renovation or replacement of existing systems, such as the utility upgrades addressed in this contract. Specific spending figures fluctuate annually based on budget allocations and identified needs.

What is the significance of the 'Commercial and Institutional Building Construction' NAICS code in the context of federal spending?

The North American Industry Classification System (NAICS) code 236220, 'Commercial and Institutional Building Construction,' is significant as it categorizes a broad range of construction activities performed for non-residential buildings, including those owned and operated by the federal government. Federal agencies frequently utilize this code when procuring services for building new facilities, renovating existing structures, and performing essential maintenance and repairs, such as utility upgrades. Awards under this code represent a substantial portion of federal construction spending, reflecting the government's ongoing need for physical infrastructure across various departments and agencies.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 36C24925R0003

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 848 NANDINO BLVD, LEXINGTON, KY, 40511

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Service Disabled Veteran Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $10,258,765

Exercised Options: $10,258,765

Current Obligation: $10,258,765

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline