VA awards $44.6M construction contract to ESA South, Inc. for EHRM VAGLA project

Contract Overview

Contract Amount: $44,566,328 ($44.6M)

Contractor: ESA South, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2021-10-14

End Date: 2026-12-30

Contract Duration: 1,903 days

Daily Burn Rate: $23.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: EHRM VAGLA CONSTRUCTION

Place of Performance

Location: LOS ANGELES, LOS ANGELES County, CALIFORNIA, 90073

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $44.6 million to ESA SOUTH, INC. for work described as: EHRM VAGLA CONSTRUCTION Key points: 1. Contract value represents a significant investment in healthcare infrastructure. 2. Full and open competition suggests a robust bidding process. 3. Fixed-price contract type may offer cost certainty but limits flexibility. 4. Project duration of over 5 years indicates a long-term commitment. 5. Geographic focus on California aligns with specific VA facility needs. 6. The contract falls within the commercial and institutional building construction sector.

Value Assessment

Rating: good

The contract value of $44.6 million for EHRM VAGLA construction appears reasonable given the scope of a large-scale facility project. Benchmarking against similar large-scale healthcare construction contracts would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an expectation of predictable costs, but the final cost will depend on the contractor's efficiency and management of unforeseen issues. The award to ESA South, Inc. indicates they were deemed the best value among competitors.

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 bidders were likely considered. The presence of two bidders suggests a competitive environment, which generally benefits price discovery and can lead to more favorable pricing for the government. The specific exclusion of sources clause needs further review to understand its implications on the breadth of competition.

Taxpayer Impact: The competitive bidding process for this contract is expected to have yielded a fair market price, potentially saving taxpayer funds compared to a sole-source award.

Public Impact

Veterans in the VAGLA service area will benefit from improved healthcare facilities. The project will deliver enhanced Electronic Health Record Management (EHRM) capabilities. Construction activities will primarily impact the Los Angeles, California region. The project is expected to create jobs in the construction sector within California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen construction challenges arise, despite fixed-price contract.
Delays in project completion could impact the timely delivery of enhanced healthcare services.
Scope creep could occur if project requirements are not clearly defined and managed.
Dependence on a single contractor for a large-scale, multi-year project introduces performance risk.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Full and open competition suggests a strong likelihood of selecting a qualified contractor.
Long-term contract duration allows for focused execution of a complex project.
The project addresses critical needs for the VA's EHRM modernization.

Sector Analysis

The construction sector is a significant area of federal spending, particularly for infrastructure and facility upgrades. This contract falls under Commercial and Institutional Building Construction, a sub-sector that includes a wide range of projects from office buildings to healthcare facilities. Federal spending in this area is often driven by the need to modernize aging infrastructure, expand capacity, or implement new technologies, as is the case with the EHRM VAGLA project. Comparable spending benchmarks would involve analyzing other large-scale healthcare construction projects awarded by federal agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses mandated by a set-aside. However, the prime contractor, ESA South, Inc., may still engage small businesses as subcontractors to fulfill portions of the contract, depending on their own subcontracting plans and the nature of the work required. The absence of a set-aside means the primary competition was open to all eligible large businesses.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs contracting officers and project managers. Accountability measures are embedded in the contract terms, including performance standards and payment schedules tied to milestones. Transparency is facilitated through federal contract databases where award information is published. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Veterans Health Administration (VHA) Facility Construction
Department of Veterans Affairs IT Infrastructure Projects
Healthcare Facility Modernization Programs
Federal Construction Contracts
Electronic Health Record Systems Implementation

Risk Flags

Long project duration increases risk of cost escalation or delays.
Firm fixed-price contract may limit flexibility for unforeseen site conditions.
Potential for disputes if scope definition is not precise.
Dependence on contractor performance over a multi-year period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $44.6 million to ESA SOUTH, INC.. EHRM VAGLA CONSTRUCTION

Who is the contractor on this award?

The obligated recipient is ESA SOUTH, 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 $44.6 million.

What is the period of performance?

Start: 2021-10-14. End: 2026-12-30.

What is the track record of ESA South, Inc. with federal construction contracts, particularly with the Department of Veterans Affairs?

ESA South, Inc. has a history of performing federal construction contracts. A detailed review of their past performance with the Department of Veterans Affairs and other federal agencies is crucial. This includes examining past project completion records, any instances of contract disputes or terminations, and client satisfaction feedback. Understanding their experience with similar-sized projects and healthcare facilities specifically would provide further insight into their capability to successfully execute the EHRM VAGLA construction. Analyzing their financial stability and bonding capacity is also a key component of assessing their reliability as a contractor for a project of this magnitude.

How does the awarded amount of $44.6 million compare to similar VA construction projects of comparable size and scope?

To benchmark the $44.6 million award, one would need to compare it against recent VA construction contracts for similar-sized healthcare facilities or major renovation projects. Key comparison points include the square footage of the facility, the complexity of the construction (e.g., specialized medical equipment integration), and the geographic location, as construction costs vary regionally. Analyzing the price per square foot or price per bed for similar projects would offer a quantitative comparison. Without specific data on comparable projects, it's difficult to definitively state if this award represents excellent or fair value, but it falls within the expected range for significant healthcare infrastructure development.

What are the primary risk indicators associated with this firm fixed-price construction contract?

The primary risk indicator for a firm fixed-price contract is the potential for cost overruns if the contractor encounters unforeseen issues (e.g., subsurface conditions, material price escalations) that were not adequately accounted for in their bid. While the price is fixed, the contractor bears the risk, which could lead to pressure to cut corners on quality or safety if margins are too thin. Another risk is the potential for disputes if the scope of work is not precisely defined, leading to change order requests. The long duration (over 5 years) also increases the risk of material price fluctuations and labor availability issues impacting the contractor's ability to maintain the fixed price without compromising quality.

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

The 'full and open competition after exclusion of sources' clause aims to balance broad competition with specific needs. It allows the agency to exclude certain sources if there's a justifiable reason (e.g., specific technical requirements, past performance issues with certain vendors), while still opening the competition to all other responsible sources. This can be effective if the exclusions are narrowly tailored and well-justified, preventing unnecessary limitations on competition. However, if the exclusions are too broad or not adequately justified, it could inadvertently reduce the number of potential bidders, potentially leading to less competitive pricing and suboptimal value for taxpayers. The key is the transparency and justification behind any exclusions.

What are the historical spending patterns for similar construction projects within the Department of Veterans Affairs?

Historical spending patterns for similar construction projects within the VA reveal a consistent and substantial investment in facility upgrades and new construction to meet the healthcare needs of veterans. The VA typically awards numerous large-scale construction contracts annually, ranging from tens to hundreds of millions of dollars, depending on the project's complexity and scale. Spending is often concentrated in areas with high veteran populations or where existing facilities require significant modernization. Analyzing past VA construction spending data can reveal trends in average contract values, project durations, and the types of construction services most frequently procured, providing context for the current $44.6 million award.

What is the potential impact of the contract's duration (1903 days) on project management and cost control?

The contract duration of 1903 days (approximately 5.2 years) for the EHRM VAGLA construction project presents both opportunities and challenges for project management and cost control. A longer duration allows for more detailed planning, phased construction, and integration of complex systems, potentially reducing rushed work and improving quality. However, it also increases exposure to market volatility, such as fluctuations in material costs and labor rates, which can strain a fixed-price contract if not adequately managed. Effective project management, including robust scheduling, risk mitigation strategies, and proactive communication, is critical to controlling costs and ensuring timely completion over such an extended period.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SEALED BID

Solicitation ID: 36C26221B0009

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1681 SUCCESS DR, CANTONMENT, FL, 32533

Business Categories: Category Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $44,566,328

Exercised Options: $44,566,328

Current Obligation: $44,566,328

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline