VA awards $12.6M for EHR infrastructure upgrades, highlighting construction needs for modernization

Contract Overview

Contract Amount: $12,596,469 ($12.6M)

Contractor: Spees-Hernandez JV LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-07-18

End Date: 2026-06-29

Contract Duration: 1,442 days

Daily Burn Rate: $8.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ELECTRONIC HEALTH RECORD MODERNIZATION - INFRASTRUCTURE UPGRADES - DESIGN-BUILD

Place of Performance

Location: HONOLULU, HONOLULU County, HAWAII, 96819

State: Hawaii Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $12.6 million to SPEES-HERNANDEZ JV LLC for work described as: ELECTRONIC HEALTH RECORD MODERNIZATION - INFRASTRUCTURE UPGRADES - DESIGN-BUILD Key points: 1. Contract addresses critical infrastructure for electronic health record system. 2. Focus on design-build approach suggests integrated project delivery. 3. Competition was full and open, indicating a robust bidding process. 4. Contract duration of nearly four years points to a significant project scope. 5. Fixed-price contract type aims to control costs for the government. 6. Awardee is a joint venture, potentially bringing specialized expertise.

Value Assessment

Rating: good

The contract value of $12.6 million for electronic health record (EHR) infrastructure modernization appears reasonable given the scope of design-build services required. While direct comparisons are difficult without specific project details, infrastructure upgrades for large-scale IT systems often involve substantial costs. The firm-fixed-price structure suggests an effort to establish clear cost expectations upfront. Benchmarking against similar large-scale federal construction projects for IT infrastructure would provide further insight into value for money.

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 all responsible sources were permitted to submit a bid. The specific mention of 'exclusion of sources' might imply a prior limited competition or a specific set of pre-qualified vendors, but the final award was open. The level of competition is generally positive for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it maximizes the pool of potential bidders, driving down prices through market forces and ensuring the most cost-effective solution is selected.

Public Impact

Veterans will benefit from improved access to and reliability of their electronic health records. The project will enhance the IT infrastructure supporting critical healthcare services. Geographic impact is focused on facilities where the EHR system is deployed, likely nationwide. The construction and design services will support a specialized workforce in the Hawaii region. Modernized infrastructure is essential for the long-term success and security of the VA's digital health initiatives.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise during design-build.
Dependency on the joint venture's ability to deliver integrated design and construction services.
Risk of schedule delays impacting the broader EHR modernization timeline.

Positive Signals

Firm-fixed-price contract mitigates cost escalation risks for the government.
Joint venture structure may bring specialized expertise in both design and construction.
Full and open competition suggests a competitive award process likely yielding good value.

Sector Analysis

The healthcare IT sector is undergoing significant modernization, with a strong emphasis on interoperability and data security. Electronic Health Record (EHR) systems are central to this transformation. Infrastructure upgrades, including design-build services, are crucial for supporting these advanced systems. The market for healthcare IT infrastructure is substantial, driven by government mandates and the need for efficient patient care delivery. This contract fits within the broader trend of federal agencies investing in upgrading legacy systems to modern, secure platforms.

Small Business Impact

The contract was awarded to SPEES-HERNANDEZ JV LLC, a joint venture. While the data does not specify if this joint venture includes small business participation or if there are subcontracting requirements for small businesses, the award itself was not a small business set-aside. Further investigation into the joint venture's composition and subcontracting plan would be needed to assess the direct impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs program and contracting officials. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency is typically maintained through contract award databases and reporting requirements. The VA's Office of Inspector General may conduct audits or investigations if performance issues or potential fraud are identified.

Related Government Programs

Veterans Health Administration EHR Modernization Program
Department of Defense EHR Modernization (MHS GENESIS)
Federal IT Infrastructure Modernization Initiatives
Healthcare Construction and Renovation Projects

Risk Flags

Potential for schedule delays impacting broader EHR modernization.
Risk of unforeseen site conditions impacting cost and timeline.
Dependency on joint venture's integrated expertise.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $12.6 million to SPEES-HERNANDEZ JV LLC. ELECTRONIC HEALTH RECORD MODERNIZATION - INFRASTRUCTURE UPGRADES - DESIGN-BUILD

Who is the contractor on this award?

The obligated recipient is SPEES-HERNANDEZ JV 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 $12.6 million.

What is the period of performance?

Start: 2022-07-18. End: 2026-06-29.

What is the specific scope of 'infrastructure upgrades' included in this design-build contract for the EHR system?

The contract data indicates 'ELECTRONIC HEALTH RECORD MODERNIZATION - INFRASTRUCTURE UPGRADES - DESIGN-BUILD'. This suggests the scope encompasses both the design of necessary infrastructure improvements and the subsequent construction to implement them. These upgrades are likely related to the physical and network infrastructure required to support the VA's electronic health record system, such as data centers, server rooms, network cabling, power, and cooling systems. The 'design-build' nature implies a single point of responsibility for both design and construction, aiming for efficiency and integration. Specific details on the exact nature of the upgrades (e.g., server capacity, network bandwidth, cybersecurity enhancements, physical facility modifications) would typically be found in the detailed Performance Work Statement (PWS) or Statement of Work (SOW) associated with the contract.

How does the $12.6 million cost compare to similar EHR infrastructure projects within the federal government?

Benchmarking the $12.6 million cost requires comparing it to similar-scale infrastructure projects supporting EHR systems across federal agencies. While direct comparisons are challenging due to variations in scope, location, and specific technological requirements, this figure represents a significant investment. For context, large federal IT infrastructure projects can range from millions to hundreds of millions of dollars. The VA's own EHR modernization efforts have been extensive and costly. This particular contract focuses on infrastructure upgrades, which are a foundational element. A more precise comparison would involve analyzing the square footage, complexity of the IT systems being supported, and the duration of the project relative to other federal design-build contracts for similar purposes.

What are the key risks associated with a design-build contract for critical IT infrastructure like EHR systems?

Design-build contracts, while offering potential efficiencies, carry specific risks. A primary risk is the integration of design and construction; if the design is flawed or incomplete, it can lead to significant cost overruns and schedule delays during the construction phase. For critical IT infrastructure like EHR systems, any disruption or delay can impact patient care. Another risk is ensuring the contractor possesses the necessary specialized expertise in both advanced IT infrastructure design and construction, especially in a joint venture context. Ensuring the final design meets all current and future technological requirements for the EHR system is also crucial. Furthermore, unforeseen site conditions during construction can necessitate design changes, potentially leading to disputes and increased costs if not managed effectively.

What is the track record of SPEES-HERNANDEZ JV LLC in performing similar federal contracts?

Information regarding the specific track record of SPEES-HERNANDEZ JV LLC requires accessing federal procurement databases like SAM.gov or FPDS. As a joint venture, its performance history might be a composite of its individual member companies or specific to projects undertaken as a JV. Key aspects to investigate would include past performance ratings on similar federal construction or IT infrastructure projects, any history of contract disputes or terminations, and the successful completion of projects within budget and schedule. Without direct access to this detailed performance data, it's difficult to definitively assess their track record for this specific type of critical EHR infrastructure work.

How will this contract contribute to the overall success and security of the VA's Electronic Health Record Modernization?

This contract is crucial for the foundational success and security of the VA's EHR modernization by addressing the underlying infrastructure. A robust, reliable, and secure physical and network infrastructure is essential for the performance, availability, and data integrity of any EHR system. Upgrades to power, cooling, network connectivity, and server environments directly support the operational demands of the EHR software. By ensuring this infrastructure is modernized and capable, the contract helps prevent performance bottlenecks, system outages, and potential security vulnerabilities that could compromise sensitive patient data. It lays the groundwork for the EHR system to function effectively and securely, ultimately supporting better patient care delivery.

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: TWO STEP

Solicitation ID: 36C77621R0149

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 625 1ST AVE STE 301, SEATTLE, WA, 98104

Business Categories: Category Business, Limited Liability Corporation, 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: $12,596,469

Exercised Options: $12,596,469

Current Obligation: $12,596,469

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline