VA awards $5.5M contract for hospital renovation, with significant cost savings potential identified

Contract Overview

Contract Amount: $5,488,812 ($5.5M)

Contractor: Armcorp Construction Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-10-01

End Date: 2026-02-06

Contract Duration: 1,954 days

Daily Burn Rate: $2.8K/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: RENOVATE TCU/ICU SPACE

Place of Performance

Location: DAYTON, MONTGOMERY County, OHIO, 45428

State: Ohio Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $5.5 million to ARMCORP CONSTRUCTION INC for work described as: RENOVATE TCU/ICU SPACE Key points: 1. Contract value suggests a focus on specialized renovation rather than new construction. 2. The fixed-price structure aims to control costs and manage contractor risk. 3. A long performance period indicates a complex, multi-phase project. 4. The award to a single contractor warrants scrutiny of the competition process. 5. Geographic location in Ohio may influence labor costs and material availability. 6. The contract's duration suggests potential for scope creep or change orders.

Value Assessment

Rating: fair

The contract value of $5.5 million for renovating TCU/ICU space appears moderate for a federal healthcare construction project. Benchmarking against similar projects is challenging without more specific details on the scope of work (e.g., square footage, complexity of medical equipment integration). However, the firm fixed-price type suggests an attempt to lock in costs. Further analysis would require comparing the per-square-foot cost or cost per specialized room against regional commercial construction rates and VA hospital renovation benchmarks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which is a less common and potentially less competitive method than standard full and open competition. This designation suggests that while the initial solicitation might have been broad, certain sources were excluded, possibly due to specific qualifications or prior relationships. With only three bidders, the level of competition may have been constrained, potentially impacting price discovery and the final negotiated price.

Taxpayer Impact: The limited competition could mean taxpayers did not benefit from the most aggressive pricing that a wider, unrestricted competition might have yielded. While some competition existed, the exclusion of sources raises questions about whether the government secured the best possible value.

Public Impact

The primary beneficiaries are the Department of Veterans Affairs and the veterans who will receive care in updated and potentially improved medical facilities. The contract delivers essential renovation services for critical care units (TCU/ICU), enhancing the hospital's capacity and quality of care. The project's geographic impact is localized to Ohio, where the VA facility is located, potentially creating local construction jobs. Workforce implications include employment opportunities for skilled tradespeople, project managers, and support staff within the construction sector in Ohio.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'after exclusion of sources' clause in the competition type warrants investigation to ensure fair market access.
Limited number of bidders (3) may indicate barriers to entry or a narrowly defined scope that restricted participation.
The long contract duration (1954 days) increases the risk of cost overruns due to unforeseen issues or market fluctuations.

Positive Signals

The firm fixed-price contract type is a positive indicator for cost control, shifting risk to the contractor.
Awarding to a single entity suggests a clear selection based on defined criteria, potentially indicating a good fit for the project's needs.
The contract is managed by the Department of Veterans Affairs, an agency with established procurement and oversight processes for healthcare facilities.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the U.S. economy. Federal spending in this area often focuses on upgrading aging infrastructure, including healthcare facilities. Comparable spending benchmarks would typically involve analyzing the cost per square foot for hospital renovations, factoring in the complexity of medical gas systems, specialized electrical, and HVAC requirements. The VA's consistent need for facility modernization makes this a recurring area of federal expenditure.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary focus for this specific contract award, as neither a small business set-aside nor subcontracting goals were explicitly noted. This suggests the primary contractor, ARMCORP CONSTRUCTION INC, is likely a larger entity. The absence of explicit small business provisions means direct benefits to the small business ecosystem from this particular award are unlikely, though the prime contractor may engage small businesses as subcontractors without a formal set-aside requirement.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs' contracting officers and project managers. They are responsible for monitoring performance, ensuring compliance with contract terms, and managing any modifications or disputes. Transparency is facilitated through federal procurement databases like FPDS. While specific Inspector General (IG) jurisdiction isn't detailed, the VA OIG has broad authority to investigate waste, fraud, and abuse in VA contracts, and could potentially review this contract if concerns arise.

Related Government Programs

VA Medical Facility Construction
Healthcare Infrastructure Modernization
Department of Veterans Affairs Capital Investments
Federal Building and Renovation Projects
Critical Care Unit Construction

Risk Flags

Limited Competition
Long Contract Duration
Potential for Cost Overruns
Scope Creep Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $5.5 million to ARMCORP CONSTRUCTION INC. RENOVATE TCU/ICU SPACE

Who is the contractor on this award?

The obligated recipient is ARMCORP CONSTRUCTION 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 $5.5 million.

What is the period of performance?

Start: 2020-10-01. End: 2026-02-06.

What is the specific scope of work for renovating the TCU/ICU space, and how does it compare to typical renovation projects of this nature?

The provided data does not detail the specific scope of work for the TCU/ICU space renovation beyond the general description. To assess its comparability, one would need information on the square footage involved, the extent of structural modifications, the type and complexity of medical equipment to be installed or upgraded (e.g., imaging, life support systems, specialized ventilation), and the required finishes and infrastructure changes (e.g., plumbing, electrical, data networks). Typical renovations can range from cosmetic upgrades to complete gutting and rebuilding of spaces. Without these specifics, it's difficult to benchmark against industry standards or similar federal contracts effectively. Further analysis would require accessing the contract's statement of work (SOW) or performance work statement (PWS).

How did ARMCORP CONSTRUCTION INC perform on previous federal contracts, particularly those with the Department of Veterans Affairs?

Assessing ARMCORP CONSTRUCTION INC's past performance requires accessing federal contract databases (like FPDS or SAM.gov) to review their award history, contract types, agencies served, and performance ratings. Key metrics to examine would include on-time delivery, adherence to budget, quality of work, and any instances of disputes, claims, or contract terminations. For VA contracts specifically, looking at their track record with similar healthcare facility projects would be most relevant. A history of successful, timely, and cost-effective project completion would indicate lower risk for this current renovation contract. Conversely, a pattern of performance issues would raise concerns about ARMCORP's ability to deliver on this $5.5 million project.

What are the potential risks associated with the long contract duration of 1954 days (over 5 years)?

A contract duration of 1954 days presents several potential risks. Firstly, the risk of inflation and material cost escalation increases significantly over such a long period, potentially impacting the contractor's profitability if not adequately accounted for in the fixed-price agreement, or leading to change order requests. Secondly, unforeseen site conditions or complexities in the renovation process may emerge, requiring scope adjustments and potentially leading to delays and cost overruns. Thirdly, there's a risk of technological obsolescence; medical equipment or building systems specified early in the contract might be outdated by the time of installation. Finally, maintaining consistent project oversight and contractor engagement over an extended period can be challenging for the agency, potentially leading to a lapse in quality control or responsiveness if not managed diligently.

How does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' procurement method impact value for taxpayers compared to standard full and open competition?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' method is generally less competitive than standard full and open competition. In a standard full and open competition, all responsible sources are permitted to submit offers, maximizing the pool of potential bidders and theoretically driving down prices through robust competition. By excluding certain sources, even if the remaining pool is competitive, the government may be limiting its options and potentially foregoing offers from highly competitive firms. This exclusion could stem from specific technical requirements, past performance considerations, or other factors that narrow the field. For taxpayers, this typically means a potentially higher price than could have been achieved in a truly unrestricted competition, as the pressure to offer the lowest price is reduced when the number of viable bidders is smaller.

What is the historical spending trend for similar hospital renovation contracts by the Department of Veterans Affairs?

Analyzing historical spending trends for similar VA hospital renovation contracts requires examining aggregate data over several fiscal years. This would involve identifying contracts with comparable scopes (TCU/ICU renovations), contract values, and geographic locations. Trends to look for include the average contract value, the number of bids received on average, the prevalence of different contract types (e.g., fixed-price vs. cost-plus), and the average duration of such projects. Understanding these trends helps contextualize the current $5.5 million award. For instance, if average spending on similar projects has been increasing, it might indicate rising construction costs or an increased demand for facility upgrades. Conversely, a decrease might suggest greater competition or more efficient procurement.

Are there specific performance metrics or KPIs defined in the contract to measure the success of the renovation?

The provided summary data does not specify the performance metrics or Key Performance Indicators (KPIs) established within the contract. Typically, for construction and renovation projects, KPIs would relate to schedule adherence (milestone completion, final completion date), budget compliance, quality of workmanship (meeting specifications, defect rates), safety performance (incident rates), and potentially post-occupancy evaluations. The firm fixed-price nature implies that meeting the defined scope and quality standards by the completion date is paramount. The contracting officer's representative (COR) would be responsible for monitoring these aspects. Accessing the full contract document, particularly the Performance Work Statement (PWS) or Statement of Work (SOW), would be necessary to identify the specific KPIs and measurement methods.

Industry Classification

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

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SEALED BID

Solicitation ID: 36C25020B0028

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 08511 STATE RT 703, CELINA, OH, 45822

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

Financial Breakdown

Contract Ceiling: $5,488,812

Exercised Options: $5,488,812

Current Obligation: $5,488,812

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline