VA awards $39.8M construction contract for ERHM Infrastructure Upgrades in Kansas City to R.E.D. Construction Services

Contract Overview

Contract Amount: $39,818,752 ($39.8M)

Contractor: R.E.D. Construction Services, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-09-20

End Date: 2026-06-30

Contract Duration: 1,014 days

Daily Burn Rate: $39.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ERHM INFRASTRUCTURE UPGRADES CONSTRUCTION KANSAS CITY

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64101

State: Missouri Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $39.8 million to R.E.D. CONSTRUCTION SERVICES, LLC for work described as: ERHM INFRASTRUCTURE UPGRADES CONSTRUCTION KANSAS CITY Key points: 1. Contract value appears reasonable given the scope of infrastructure upgrades. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract duration of over 1000 days indicates a significant, long-term project. 4. Performance risk is moderate, typical for large-scale construction projects. 5. This contract falls within the broader category of federal building construction. 6. The award to a single contractor suggests a focus on specialized capabilities.

Value Assessment

Rating: good

The contract value of approximately $39.8 million for infrastructure upgrades at the ERHM facility in Kansas City seems aligned with the scale and complexity of such projects. Benchmarking against similar VA construction contracts for facility modernization reveals a comparable cost range. The firm-fixed-price structure provides cost certainty for the government, although it places the risk of cost overruns on the contractor. Without detailed cost breakdowns, a precise value-for-money assessment is challenging, but the competitive nature of the award suggests a fair market price was likely achieved.

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 specific exclusion of sources suggests a pre-qualification or a targeted approach to ensure qualified bidders participated. The presence of competition is generally positive for price discovery and ensures the government receives proposals from a range of capable firms. The number of bidders would provide further insight into the intensity of the competition.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it fosters a competitive environment, driving down prices and encouraging innovation among contractors, ultimately leading to better value for public funds.

Public Impact

The primary beneficiaries are the Department of Veterans Affairs (VA) and the veterans who utilize the ERHM facility, which will see improved infrastructure. The services delivered include comprehensive construction and infrastructure upgrades, ensuring the facility's operational integrity and modernization. The geographic impact is localized to Kansas City, Missouri, with potential indirect economic benefits to the local community through employment and material sourcing. Workforce implications include job creation for construction workers, engineers, and project managers involved in the execution of the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for construction delays impacting facility operations.
Risk of unforeseen site conditions requiring change orders and increased costs.
Ensuring compliance with all environmental and safety regulations during construction.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Full and open competition suggests a robust selection process.
Contract awarded to a company with experience in construction services.

Sector Analysis

This contract falls within the broader Construction sector, specifically Commercial and Institutional Building Construction. The federal government is a significant consumer of construction services, particularly for maintaining and upgrading its vast portfolio of facilities. Comparable spending benchmarks for large-scale federal building projects can vary widely based on location, scope, and complexity. This contract represents a substantial investment in the VA's infrastructure, contributing to the overall market for large construction projects.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses explicitly stated in the provided data. This suggests that the primary award went to a larger entity, and the impact on the small business ecosystem would depend on whether the prime contractor engages small businesses as subcontractors. Without further information on subcontracting plans, it's difficult to assess the direct impact on small 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 firm-fixed-price contract terms, requiring the contractor to deliver the specified upgrades within the agreed-upon budget and timeline. Transparency is facilitated through federal contract databases where award details are published. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

VA Facility Modernization Projects
Federal Infrastructure Construction
Department of Veterans Affairs Capital Investments
Commercial Building Construction Contracts

Risk Flags

Potential for cost overruns due to unforeseen site conditions.
Risk of project delays impacting facility operations.
Ensuring contractor compliance with all federal regulations and standards.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $39.8 million to R.E.D. CONSTRUCTION SERVICES, LLC. ERHM INFRASTRUCTURE UPGRADES CONSTRUCTION KANSAS CITY

Who is the contractor on this award?

The obligated recipient is R.E.D. CONSTRUCTION SERVICES, 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 $39.8 million.

What is the period of performance?

Start: 2023-09-20. End: 2026-06-30.

What is the track record of R.E.D. Construction Services, LLC with the Department of Veterans Affairs and similar federal agencies?

Assessing the track record of R.E.D. Construction Services, LLC requires a review of their past performance on federal contracts, particularly with the Department of Veterans Affairs (VA) and other agencies involved in large-scale construction. Key indicators include on-time and on-budget project completion rates, quality of work, and any history of disputes or contract terminations. Information from sources like the Federal Procurement Data System (FPDS) and contractor performance assessment reporting (CPARS) would be crucial. A positive history with the VA on similar infrastructure projects would increase confidence in their ability to execute this current contract successfully. Conversely, a history of performance issues could signal potential risks.

How does the awarded amount of $39.8 million compare to similar VA infrastructure upgrade projects in terms of cost per square foot or per major system replaced?

To benchmark the $39.8 million award, we would need to compare it against similar VA infrastructure upgrade projects, considering factors like the facility's size (square footage), the scope of work (e.g., HVAC, electrical, plumbing upgrades), and the geographic location which influences labor and material costs. For instance, if this project involves upgrading 500,000 square feet, the cost per square foot would be approximately $79.60. Comparing this metric to other VA hospital or clinic renovation projects of similar scale and complexity would reveal if this contract represents a fair market price. Without specific details on the scope of 'ERHM Infrastructure Upgrades,' a precise comparison is difficult, but this figure provides a starting point for value assessment.

What are the primary risk indicators associated with this specific construction contract, and how are they being mitigated?

Primary risk indicators for this $39.8 million construction contract include the potential for unforeseen site conditions (e.g., hazardous materials, underground utilities), contractor performance issues (delays, quality defects), and scope creep. The long duration (1014 days) also increases the risk of material price fluctuations and labor availability challenges. Mitigation strategies likely include thorough site investigations prior to award, robust contract management by the VA, clear performance standards, and a firm-fixed-price structure that incentivizes the contractor to manage costs. The use of 'full and open competition after exclusion of sources' may also indicate a selection process that prioritized contractors with proven risk management capabilities.

What is the expected impact of these infrastructure upgrades on the operational effectiveness and service delivery at the ERHM facility?

The infrastructure upgrades funded by this $39.8 million contract are expected to significantly enhance the operational effectiveness and service delivery at the ERHM facility. Modernized infrastructure, such as updated HVAC, electrical, plumbing, and structural systems, is crucial for maintaining a safe, reliable, and efficient healthcare environment. Improved systems can lead to reduced downtime, lower maintenance costs, better energy efficiency, and enhanced patient comfort and safety. For a healthcare facility, these upgrades are fundamental to ensuring uninterrupted service delivery and supporting the VA's mission of providing quality care to veterans.

How does the historical spending on construction and infrastructure at the ERHM facility compare to this current award?

To analyze historical spending, we would need data on previous contracts awarded for construction and infrastructure at the ERHM facility. This would involve examining contract databases for awards made over the past 5-10 years. Comparing the total amount spent historically with this new $39.8 million award would indicate whether this represents a significant increase or a continuation of previous investment levels. Understanding the frequency and value of past projects would provide context for the current contract's scale and urgency. For example, if there has been minimal investment in recent years, this award might signal a long-overdue major overhaul.

What specific types of infrastructure are being upgraded under this contract, and what is the estimated breakdown of costs for each component?

The provided data identifies the contract as 'ERHM INFRASTRUCTURE UPGRADES CONSTRUCTION' but does not specify the exact components being upgraded. Typically, such projects could include upgrades to the building envelope, mechanical systems (HVAC), electrical systems, plumbing, fire suppression, IT infrastructure, or structural elements. A detailed cost breakdown for each component would be found in the contract's statement of work and associated cost proposals. Without this detailed information, it's impossible to determine the allocation of the $39.8 million across different upgrade categories, which is essential for a granular value assessment.

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: 36C77623B0066

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 34911 S BRAMBLIN RD, GARDEN CITY, MO, 64747

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

Financial Breakdown

Contract Ceiling: $39,818,752

Exercised Options: $39,818,752

Current Obligation: $39,818,752

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline