VA San Diego Healthcare System awards $2.7M contract for office conversion to procedure rooms

Contract Overview

Contract Amount: $2,727,422 ($2.7M)

Contractor: Capex Construction LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-05-23

End Date: 2026-09-30

Contract Duration: 860 days

Daily Burn Rate: $3.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: PROJECT NO.:664-24-314: CONVERT OFFICES TO MOHS PROCEDURE ROOM, 3 SOUTH BLDG. 1, VA SAN DIEGO HEALTHCARE SYSTEM, 3350 LA JOLLA VILLAGE DRIVE, SAN DIEGO, CA 92161

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92161

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.7 million to CAPEX CONSTRUCTION LLC for work described as: PROJECT NO.:664-24-314: CONVERT OFFICES TO MOHS PROCEDURE ROOM, 3 SOUTH BLDG. 1, VA SAN DIEGO HEALTHCARE SYSTEM, 3350 LA JOLLA VILLAGE DRIVE, SAN DIEGO, CA 92161 Key points: 1. Contract awarded to CAPEX CONSTRUCTION LLC for conversion of office space. 2. Project aims to create Mohs procedure rooms, enhancing dermatological services. 3. The contract is a firm-fixed-price definitive contract, indicating clear cost expectations. 4. Project duration spans over two years, from May 2024 to September 2026. 5. The contract was not competed, raising questions about potential cost savings. 6. The North American Industry Classification System (NAICS) code 236220 points to commercial building construction.

Value Assessment

Rating: fair

The contract value of $2.7 million for converting office space into procedure rooms appears within a reasonable range for construction projects of this nature. However, without specific details on the scope of work, square footage, and the complexity of the required medical infrastructure, a precise value-for-money assessment is challenging. Benchmarking against similar VA or healthcare facility renovation projects would provide a clearer picture of cost-effectiveness. The absence of competition makes direct price comparison difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in specific circumstances where competition is not feasible or advantageous. The lack of competition means that the Department of Veterans Affairs did not benefit from a bidding process that could potentially drive down costs through market forces.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. A sole-source award limits the government's ability to leverage market competition to ensure cost efficiency.

Public Impact

Veterans in the San Diego area will benefit from enhanced dermatological services through the new Mohs procedure rooms. The project will deliver improved healthcare infrastructure at the VA San Diego Healthcare System. The geographic impact is localized to San Diego, California, serving the veteran population in that region. The construction activities may create temporary employment opportunities in the local construction sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs than a competed contract.
Sole-source awards require strong justification to ensure fair pricing.
Project timeline could be subject to delays impacting service availability.

Positive Signals

Addresses a specific healthcare need for veterans requiring Mohs procedures.
Firm-fixed-price contract provides cost certainty for the government.
Project is managed by the Department of Veterans Affairs, an experienced agency.

Sector Analysis

The construction sector, particularly commercial and institutional building construction, is a significant area of federal spending. This contract falls under the broader category of healthcare facility upgrades and renovations. The market for such specialized medical construction can be niche, but federal agencies like the VA frequently undertake projects to modernize and expand their healthcare infrastructure. Benchmarking against similar projects within the VA or other federal healthcare providers would offer context on the scale and cost of this particular endeavor.

Small Business Impact

The contract was awarded to CAPEX CONSTRUCTION LLC and was not competed. There is no indication of a small business set-aside or subcontracting requirements in the provided data. Therefore, the direct impact on the small business ecosystem is not evident from this award alone, and it does not appear to be a vehicle for promoting small business participation.

Oversight & Accountability

Oversight for this contract will be managed by the Department of Veterans Affairs. As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency regarding the justification for the sole-source award and ongoing project progress would be key aspects of effective oversight.

Related Government Programs

VA Healthcare Construction Projects
Medical Facility Renovations
Mohs Surgery Centers

Risk Flags

Sole-source award lacks competitive pricing.
Limited transparency on specific scope of work.
Potential for cost overruns without competitive pressure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.7 million to CAPEX CONSTRUCTION LLC. PROJECT NO.:664-24-314: CONVERT OFFICES TO MOHS PROCEDURE ROOM, 3 SOUTH BLDG. 1, VA SAN DIEGO HEALTHCARE SYSTEM, 3350 LA JOLLA VILLAGE DRIVE, SAN DIEGO, CA 92161

Who is the contractor on this award?

The obligated recipient is CAPEX CONSTRUCTION LLC.

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 $2.7 million.

What is the period of performance?

Start: 2024-05-23. End: 2026-09-30.

What is the specific scope of work involved in converting offices to Mohs procedure rooms?

The provided data indicates the project involves converting existing office spaces into Mohs procedure rooms at the VA San Diego Healthcare System. While the exact scope is not detailed, this typically includes structural modifications, installation of specialized medical equipment and plumbing, HVAC upgrades to meet sterile environment requirements, electrical work for medical devices, and finishes compliant with healthcare facility standards. The conversion aims to enhance the capacity and functionality of dermatological services offered to veterans.

What is the justification for awarding this contract on a sole-source basis?

The data explicitly states the contract was 'NOT COMPETED,' implying a sole-source or limited competition award. Federal procurement regulations allow for sole-source awards under specific circumstances, such as when only one responsible source can provide the required supplies or services, or when the agency determines it is not in the public interest to compete the acquisition. Without further documentation from the VA, the precise justification for this sole-source award remains unclear. This could be due to specialized expertise required, unique site conditions, or urgent needs that preclude a competitive process.

How does the contract value compare to similar construction projects for medical facilities?

The contract value of $2.7 million for converting office space into Mohs procedure rooms is a significant investment. Benchmarking this against similar projects is challenging without more detailed project specifications, such as square footage, complexity of medical infrastructure, and specific renovation requirements. However, for specialized medical suite construction or renovation, this figure can be considered within a typical range, especially considering potential regulatory compliance and specialized equipment needs. A more precise comparison would require access to data on comparable VA or other healthcare facility construction projects with similar scope and scale.

What are the potential risks associated with a sole-source construction contract?

The primary risk associated with a sole-source construction contract is the potential for inflated costs due to the lack of competitive pressure. Without multiple bids, the contractor may not be incentivized to offer the lowest possible price. Other risks include potential delays if the sole-source contractor faces unforeseen challenges, and a reduced opportunity for innovation that might arise from a competitive bidding process. Ensuring robust oversight and clear contract terms is crucial to mitigate these risks.

What is the historical spending pattern for similar construction services by the VA?

The Department of Veterans Affairs is a major federal agency with substantial and consistent spending on healthcare facility construction and renovation. Historically, the VA has awarded numerous contracts for building new facilities, expanding existing ones, and modernizing infrastructure to meet the healthcare needs of veterans. Spending patterns vary significantly based on agency-wide modernization initiatives, specific healthcare demands, and budget allocations. Analyzing VA's historical procurement data for construction services, particularly for medical spaces, would reveal trends in contract values, types of services procured, and the prevalence of competed versus non-competed awards.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C26224R0011

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1146 N 1190 E, AMERICAN FORK, UT, 84003

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $2,727,422

Exercised Options: $2,727,422

Current Obligation: $2,727,422

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline