VA awards $14M construction contract for Ann Arbor medical center, highlighting firm fixed-price structure

Contract Overview

Contract Amount: $14,049,383 ($14.0M)

Contractor: Blue Spader Contractors Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-04-18

End Date: 2026-02-13

Contract Duration: 2,493 days

Daily Burn Rate: $5.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF CONSTRUCTION PROJECT 506-330 AAVAMC ANN ARBOR, MI

Place of Performance

Location: ANN ARBOR, WASHTENAW County, MICHIGAN, 48105

State: Michigan Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $14.0 million to BLUE SPADER CONTRACTORS INC for work described as: IGF::OT::IGF CONSTRUCTION PROJECT 506-330 AAVAMC ANN ARBOR, MI Key points: 1. The contract utilizes a firm fixed-price model, aiming to control costs and provide predictability. 2. Awarded to Blue Spader Contractors Inc., the contract is for construction services at the AAVAMC. 3. The duration of the contract is substantial, spanning over 2400 days, indicating a large-scale project. 4. Competition was conducted under 'full and open competition after exclusion of sources,' suggesting a specific reason for source exclusion. 5. The project falls under the Commercial and Institutional Building Construction NAICS code. 6. The contract is a definitive contract, typically used for complex or uncertain scope projects. 7. The project is located in Ann Arbor, Michigan, serving the local veteran population.

Value Assessment

Rating: good

The contract value of approximately $14 million for a large-scale construction project at a VA medical center appears within a reasonable range for such undertakings. The firm fixed-price (FFP) structure is generally favored for construction to mitigate cost overrun risks for the government. Benchmarking against similar large institutional building construction projects would provide a more precise value-for-money assessment, but the FFP nature suggests an effort to establish a clear ceiling.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'full and open competition after exclusion of sources.' This indicates that while the competition was intended to be broad, specific sources were excluded, possibly due to pre-qualification requirements, past performance issues, or other specific criteria. The number of bidders (8) suggests a reasonable level of interest, but the exclusion of sources limits the scope of true open competition and could impact price discovery.

Taxpayer Impact: The exclusion of sources, even with 8 bidders, means taxpayers may not have benefited from the absolute lowest possible price that could have been achieved in a completely unrestricted open competition. However, the fixed-price nature helps contain costs once a price is set.

Public Impact

Veterans in the Ann Arbor, Michigan area will benefit from improved or expanded medical facilities. The contract delivers essential construction services for a major federal healthcare facility. The project's geographic impact is concentrated in Ann Arbor, Michigan. The construction activities will likely create temporary employment opportunities in the local Michigan workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in a 'full and open competition' raises questions about the breadth of competition and potential for higher costs.
The long contract duration (2493 days) increases the risk of unforeseen issues or changes in requirements impacting the final cost or schedule.
As a definitive contract, the scope may have inherent uncertainties that could lead to modifications and potential cost increases.

Positive Signals

The use of a Firm Fixed Price (FFP) contract is a positive indicator for cost control and budget certainty.
Awarding to a contractor with 8 bids suggests a degree of market interest and potential for competitive pricing.
The contract is for essential infrastructure improvements at a VA medical center, directly supporting veteran healthcare.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the construction industry. Federal spending in this area often supports critical infrastructure for government agencies like the Department of Veterans Affairs. The market size for such projects can be substantial, with numerous contractors capable of undertaking large-scale builds. Benchmarking against other VA medical center construction projects or similar large institutional facilities would provide context for the $14 million award.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary set-aside consideration for this contract. There is no explicit mention of small business subcontracting goals. This suggests that the prime contractor is likely a larger entity, and the direct impact on the small business ecosystem may be limited unless they are engaged as subcontractors, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs, likely through its contracting officers and project managers. The Inspector General's office for the VA would have jurisdiction for audits and investigations into potential fraud, waste, or abuse. Transparency is facilitated by the public nature of contract awards, but detailed project progress and specific oversight activities are not publicly detailed in this summary.

Related Government Programs

VA Medical Facility Construction
Federal Building Construction Contracts
Department of Veterans Affairs Procurement
Large Scale Construction Projects
Firm Fixed Price Contracts

Risk Flags

Potential for limited competition due to source exclusion.
Long contract duration increases risk of cost escalation and unforeseen issues.
Uncertainty in scope definition inherent in definitive contracts.
Need for robust oversight due to project complexity and duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $14.0 million to BLUE SPADER CONTRACTORS INC. IGF::OT::IGF CONSTRUCTION PROJECT 506-330 AAVAMC ANN ARBOR, MI

Who is the contractor on this award?

The obligated recipient is BLUE SPADER CONTRACTORS 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 $14.0 million.

What is the period of performance?

Start: 2019-04-18. End: 2026-02-13.

What specific reasons led to the exclusion of certain sources in this 'full and open competition'?

The designation 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' implies that while the solicitation was publicly advertised, specific pre-qualified or previously considered sources were excluded from the bidding process. Common reasons for such exclusions include: failure to meet specific technical requirements in a prior phase, past performance issues, security concerns, or specific statutory/regulatory requirements that limit the pool of eligible contractors. Without further documentation from the solicitation or award notice, the precise rationale remains unclear. This exclusion can limit the number of potential bidders and potentially affect the final price achieved, as the government may not have received offers from all capable contractors in the market.

How does the firm fixed-price (FFP) structure mitigate risk for the VA in this large construction project?

A Firm Fixed Price (FFP) contract is designed to provide the government with price certainty. Under an FFP contract, the contractor agrees to perform a specific scope of work for a predetermined price, regardless of the contractor's actual costs. This shifts the risk of cost overruns from the government to the contractor. For a large construction project like this, the FFP structure helps the Department of Veterans Affairs (VA) manage its budget effectively, as the total cost is largely known upfront. However, it requires a well-defined scope of work at the time of award to be most effective; significant scope changes can lead to costly change orders.

What is the typical cost range for similar institutional building construction projects of this magnitude?

The cost range for institutional building construction projects of this magnitude (approximately $14 million) can vary significantly based on location, specific facility type (e.g., hospital vs. administrative building), complexity of systems (e.g., specialized medical equipment integration), and prevailing market conditions. For a VA medical center project, costs can be influenced by stringent healthcare facility standards and security requirements. While $14 million is a substantial sum, it may fall within the expected range for a significant renovation or new construction at a medical campus. Detailed benchmarking against comparable VA projects or other federal healthcare construction awards would be necessary for a precise comparison.

What are the potential implications of the long contract duration (2493 days) on project management and cost?

A contract duration of 2493 days (approximately 6.8 years) for a construction project indicates a very large, complex undertaking, potentially involving multiple phases, extensive site work, or integration with ongoing facility operations. Such a long duration increases the risk of: 1) Material price escalation, even with an FFP contract, if not adequately accounted for in the initial pricing. 2) Changes in building codes, regulations, or VA standards over the project lifecycle. 3) Contractor performance degradation or key personnel turnover. 4) Unforeseen site conditions or environmental factors. Effective project management, clear phasing, and robust contract administration are crucial to successfully navigate such extended timelines and control costs.

How does the 'definitive contract' type influence the risk and flexibility of this project?

A definitive contract is typically established after initial contract-like arrangements (e.g., letter contracts, basic ordering agreements) have been put in place, often when the full scope, cost, or schedule is not precisely known at the outset. For a construction project, this might suggest that the initial phases involved preliminary work, design development, or site assessment before the final construction scope and price were locked in. While it allows for flexibility in defining the full scope over time, it can also introduce uncertainty regarding the final cost and completion date if not managed carefully. The FFP nature, however, aims to cap the cost once the scope is defined.

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: SEALED BID

Solicitation ID: 36C25018B0817

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 53254 KENTLAND, MACOMB, MI, 48042

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

Financial Breakdown

Contract Ceiling: $14,049,383

Exercised Options: $14,049,383

Current Obligation: $14,049,383

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline