VA awards $10.4M task order for mechanical systems at Palo Alto facility

Contract Overview

Contract Amount: $10,429,178 ($10.4M)

Contractor: Sergents Mechanical Systems Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2021-11-01

End Date: 2026-02-20

Contract Duration: 1,572 days

Daily Burn Rate: $6.6K/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: TASK ORDER FOR VA PALO ALTO DIVISION BUILDING 520 MECHANICAL

Place of Performance

Location: PALO ALTO, SANTA CLARA County, CALIFORNIA, 94304

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $10.4 million to SERGENTS MECHANICAL SYSTEMS INC for work described as: TASK ORDER FOR VA PALO ALTO DIVISION BUILDING 520 MECHANICAL Key points: 1. Value for money appears reasonable given the project scope and duration. 2. The contract was awarded under full and open competition, suggesting a competitive pricing environment. 3. Risk indicators are moderate, with a long performance period potentially introducing some uncertainty. 4. Performance context is specific to building infrastructure upgrades, a common need for federal facilities. 5. Sector positioning is within commercial and institutional building construction, a mature market. 6. The firm-fixed-price structure shifts cost risk to the contractor.

Value Assessment

Rating: good

The $10.4 million award for mechanical systems at the VA Palo Alto facility represents a significant investment in infrastructure. Benchmarking against similar large-scale mechanical upgrade contracts for federal buildings suggests this price is within a reasonable range, especially considering the 4-year performance period. The firm-fixed-price contract type indicates that the contractor is responsible for managing costs to meet the agreed-upon price, which can be advantageous for the government if managed effectively. However, without detailed cost breakdowns or comparisons to specific market rates for the services rendered, a precise value-for-money assessment is challenging.

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 the solicitation was broadly advertised, and multiple bids were likely considered. The presence of 3 bids suggests a degree of competition, which is generally positive for price discovery. However, the 'exclusion of sources' clause warrants further investigation to understand if specific capabilities or pre-qualifications limited the pool of potential bidders, potentially impacting the breadth of competition.

Taxpayer Impact: The full and open competition process is designed to ensure taxpayers receive the best possible value by encouraging multiple companies to bid, driving down prices through market forces.

Public Impact

The primary beneficiary is the Department of Veterans Affairs, ensuring the operational integrity of its Palo Alto facility. The contract delivers essential mechanical system upgrades and maintenance, crucial for facility functionality and safety. The geographic impact is localized to Palo Alto, California, supporting federal infrastructure in that region. Workforce implications include employment opportunities for skilled tradespeople in the construction and mechanical services sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long performance period (over 4 years) increases the risk of cost overruns due to unforeseen market fluctuations or scope creep.
The 'exclusion of sources' clause, while allowing for competition, might have limited the number of potential bidders, potentially impacting the lowest price achievable.
Firm-fixed-price contracts can sometimes lead to reduced scope or quality if not meticulously monitored, especially over extended periods.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
Firm-fixed-price contract aligns incentives for the contractor to control costs.
The contractor, SERGENTS MECHANICAL SYSTEMS INC, has a track record with federal contracts, suggesting familiarity with government requirements.
The task order is for a specific, well-defined need (mechanical systems), reducing ambiguity.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a broad category encompassing the erection, alteration, and repair of non-residential buildings. The market for such services is substantial, driven by ongoing infrastructure needs across government and private sectors. Federal spending in this area is consistent, with agencies like the VA requiring continuous maintenance and upgrades to their extensive facilities. Comparable spending benchmarks would typically involve analyzing other large-scale mechanical system contracts for federal buildings of similar size and complexity.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). While the prime contractor is a large business, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on the prime contractor's strategy and the specific requirements of the mechanical systems work. Further analysis of subcontracting plans would be needed to assess the direct impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Department of Veterans Affairs contracting officers and project managers. Accountability measures are embedded in the firm-fixed-price contract terms, requiring the contractor to deliver specified services within the agreed budget. Transparency is facilitated through contract award databases, though detailed performance metrics and cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

VA Facilities Management
Federal Building Construction
Mechanical Systems Maintenance
Commercial Building Upgrades
Infrastructure Modernization Programs

Risk Flags

Potential for cost escalation due to long performance period.
Ambiguity in 'exclusion of sources' could limit competition.
Need for robust government oversight to ensure quality and scope adherence.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $10.4 million to SERGENTS MECHANICAL SYSTEMS INC. TASK ORDER FOR VA PALO ALTO DIVISION BUILDING 520 MECHANICAL

Who is the contractor on this award?

The obligated recipient is SERGENTS MECHANICAL SYSTEMS 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 $10.4 million.

What is the period of performance?

Start: 2021-11-01. End: 2026-02-20.

What is the track record of SERGENTS MECHANICAL SYSTEMS INC with the Department of Veterans Affairs and similar federal agencies?

SERGENTS MECHANICAL SYSTEMS INC has a history of performing work for the federal government, including contracts with the Department of Veterans Affairs. Analyzing their past performance on similar mechanical system projects, particularly those involving firm-fixed-price awards and long durations, would provide insight into their reliability, cost control capabilities, and adherence to schedules. A review of contract performance reports and any past disputes or corrective actions would be crucial for a comprehensive assessment of their track record. Their experience with VA facilities specifically suggests a familiarity with the agency's unique operational requirements and compliance standards.

How does the awarded price compare to industry benchmarks for similar mechanical system upgrades in institutional buildings?

The $10.4 million award for mechanical systems at the VA Palo Alto facility needs to be benchmarked against industry standards for similar projects. Factors such as the size of the building (square footage), the complexity of the mechanical systems being upgraded (HVAC, plumbing, electrical integration), and the specific geographic location (California labor costs) are critical for comparison. Without detailed project specifications and cost breakdowns, a precise comparison is difficult. However, general industry data suggests that large-scale mechanical upgrades for institutional buildings can range from $50 to $200+ per square foot, depending on the scope. The VA Palo Alto facility's size and the specific nature of the upgrades would determine where this $10.4 million falls within that spectrum.

What are the primary risks associated with this firm-fixed-price contract and its extended performance period?

The primary risks associated with this firm-fixed-price contract, especially with a performance period extending to February 2026, include potential cost overruns for the contractor if material prices or labor costs escalate unexpectedly. This could lead to the contractor seeking change orders or potentially cutting corners on quality to maintain profitability. For the government, the risk lies in ensuring the contractor maintains performance standards throughout the contract duration and that the final delivered product meets all specifications. Scope creep, if not managed tightly through the contract's modification process, also poses a significant risk, potentially leading to increased costs beyond the initial award.

How effective is the 'full and open competition after exclusion of sources' clause in ensuring competitive pricing for taxpayers?

The 'full and open competition after exclusion of sources' clause aims to balance broad competition with the need for specific capabilities. While 'full and open' suggests an intention to solicit widely, the 'exclusion of sources' indicates that certain types of contractors or specific pre-qualifications were required. This can limit the number of potential bidders compared to a truly unrestricted competition. The effectiveness in ensuring competitive pricing depends on how narrowly the exclusion criteria were defined. If the exclusion was justified and still allowed for a reasonable number of qualified bidders (in this case, 3), it can lead to competitive pricing. However, overly restrictive exclusions can stifle competition and potentially lead to higher prices for taxpayers.

What are the potential long-term implications for the VA Palo Alto facility's operational efficiency and maintenance costs?

The long-term implications of these mechanical system upgrades for the VA Palo Alto facility are expected to be positive, focusing on improved operational efficiency and potentially reduced long-term maintenance costs. Modernized systems are typically more energy-efficient, leading to lower utility bills. Furthermore, new or refurbished mechanical components are less prone to breakdowns, reducing emergency repair needs and associated costs. This investment should enhance the reliability and comfort of the facility, contributing to a better environment for staff and patients. The success of these benefits hinges on the quality of the installation and the contractor's adherence to specifications.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 36C26121R0064

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1617 PACIFIC AVENUE SUITE 116, OXNARD, CA, 93033

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

Financial Breakdown

Contract Ceiling: $19,080,231

Exercised Options: $10,429,178

Current Obligation: $10,429,178

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C26120D0089

IDV Type: IDC

Timeline