VA awards $20.6M construction contract for sterile processing services at Sioux Falls VAMC

Contract Overview

Contract Amount: $20,574,450 ($20.6M)

Contractor: Koah-Haugan Joint Venture LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-09-23

End Date: 2027-05-24

Contract Duration: 608 days

Daily Burn Rate: $33.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CONSTRUCTION PROJECT #438-460 STERILE PROCESSING SERVICES - ROYAL C. JOHNSON VAMC SIOUX FALLS, SD

Place of Performance

Location: SIOUX FALLS, MINNEHAHA County, SOUTH DAKOTA, 57105

State: South Dakota Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $20.6 million to KOAH-HAUGAN JOINT VENTURE LLC for work described as: CONSTRUCTION PROJECT #438-460 STERILE PROCESSING SERVICES - ROYAL C. JOHNSON VAMC SIOUX FALLS, SD Key points: 1. Contract awarded to KOAH-HAUGAN JOINT VENTURE LLC for building construction. 2. Project duration is approximately 608 days, indicating a significant construction timeline. 3. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 4. Competition was full and open after exclusion of sources, suggesting a competitive process. 5. The contract is a definitive contract, often used for ongoing or uncertain requirements. 6. The project is located in Sioux Falls, South Dakota, impacting local construction workforce.

Value Assessment

Rating: good

The contract value of $20.6 million for a sterile processing services construction project appears within a reasonable range for a facility of this nature. Benchmarking against similar VAMC construction projects would provide a more precise value-for-money assessment. The firm fixed price structure is generally favorable for the government in managing cost overruns, assuming the scope is well-defined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was broad, specific sources may have been excluded based on pre-defined criteria. With 5 bidders, the level of competition suggests a reasonable opportunity for price discovery and selection of a qualified contractor.

Taxpayer Impact: A competitive process, even with exclusions, generally benefits taxpayers by driving down prices and ensuring a qualified contractor is selected, leading to better project outcomes.

Public Impact

Veterans in the Sioux Falls, South Dakota region will benefit from improved sterile processing services at the Royal C. Johnson VAMC. The construction project will create temporary jobs in the local South Dakota construction sector. Enhanced sterile processing capabilities are critical for patient safety and the efficient operation of medical facilities. The project directly supports the Department of Veterans Affairs' mission to provide healthcare services to veterans.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in construction projects can lead to cost increases if not managed tightly.
Ensuring timely completion within the 608-day duration is crucial to avoid impacting VAMC operations.
Quality control during construction is paramount to ensure the sterile processing facility meets all regulatory and functional requirements.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Multiple bidders (5) indicate a healthy level of interest and competition for the project.
The project directly supports the VA's healthcare mission, indicating strategic alignment.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically for healthcare facilities. The market for healthcare construction is substantial, driven by the need for modern, specialized medical infrastructure. This project represents a specific investment in upgrading critical patient care support services within the VA's network.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, KOAH-HAUGAN JOINT VENTURE LLC, is likely a larger entity. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to engage the small business ecosystem.

Oversight & Accountability

Oversight will likely be managed by the Department of Veterans Affairs contracting officers and project managers. The firm fixed price nature of the contract provides a degree of accountability for the contractor to deliver within budget. Transparency would be enhanced by public reporting of project milestones and any change orders.

Related Government Programs

VA Medical Facility Construction
Healthcare Infrastructure Projects
Sterile Processing Department Upgrades
Commercial Building Contracts
Definitive Contracts

Risk Flags

Potential for construction delays
Risk of cost overruns if scope is not managed
Ensuring quality standards for sterile processing facilities
Minimizing disruption to VAMC operations during construction

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $20.6 million to KOAH-HAUGAN JOINT VENTURE LLC. CONSTRUCTION PROJECT #438-460 STERILE PROCESSING SERVICES - ROYAL C. JOHNSON VAMC SIOUX FALLS, SD

Who is the contractor on this award?

The obligated recipient is KOAH-HAUGAN JOINT VENTURE 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 $20.6 million.

What is the period of performance?

Start: 2025-09-23. End: 2027-05-24.

What is the track record of KOAH-HAUGAN JOINT VENTURE LLC with the Department of Veterans Affairs?

A review of federal procurement data would be necessary to fully assess KOAH-HAUGAN JOINT VENTURE LLC's track record with the Department of Veterans Affairs. This would involve examining past contracts awarded to the company, their performance history on those contracts (including any awards or penalties), and their experience with similar construction projects, particularly within healthcare settings. Understanding their past performance is crucial for evaluating their capability to successfully execute this $20.6 million sterile processing services construction project within the specified timeline and budget.

How does the awarded price compare to similar VAMC sterile processing construction projects?

To benchmark the $20.6 million award, we would need to compare it against the costs of similar sterile processing construction or renovation projects at other VA Medical Centers or comparable healthcare facilities. Factors such as project scope, square footage, specific equipment requirements, and geographic location significantly influence construction costs. Without access to a database of comparable projects and their associated costs, it is difficult to definitively state whether this contract represents excellent, good, or fair value for money. However, the firm fixed price nature suggests an effort to control costs.

What are the primary risks associated with this construction contract?

Key risks for this construction contract include potential delays due to unforeseen site conditions, weather disruptions, or supply chain issues impacting materials and labor. There's also a risk of scope creep if the project requirements are not rigidly defined and managed, which could lead to cost overruns despite the firm fixed price. Ensuring the contractor maintains high-quality workmanship to meet the stringent requirements of sterile processing is another critical risk area. Finally, the contractor's financial stability and capacity to manage a project of this magnitude are inherent risks.

How effective is the 'Full and Open Competition After Exclusion of Sources' method for this type of project?

The 'Full and Open Competition After Exclusion of Sources' method aims to balance broad competition with the need to potentially exclude certain vendors based on specific criteria (e.g., past performance, security, or specialized capabilities). For a specialized construction project like sterile processing facilities, this method can be effective if the exclusions are justified and do not unduly limit the pool of qualified bidders. With five bidders, it suggests sufficient competition was maintained. However, the effectiveness hinges on whether the excluded sources were genuinely unsuitable or if their exclusion unnecessarily restricted competition, potentially impacting price.

What is the historical spending trend for sterile processing construction at the VA?

Analyzing historical spending trends for sterile processing construction at the VA would require accessing and aggregating data on similar projects over several fiscal years. This would reveal whether spending in this area is increasing, decreasing, or remaining stable, and identify any significant fluctuations. Such analysis could indicate the VA's strategic priorities regarding facility upgrades and investments in critical support services like sterile processing. It could also highlight periods of heightened activity or budget constraints impacting such projects.

What are the implications of the 608-day duration for the VAMC's operations?

A duration of approximately 608 days (around 20 months) for a construction project of this nature implies a significant undertaking that will likely require careful phasing and management to minimize disruption to the Royal C. Johnson VAMC's ongoing operations. The VAMC will need to ensure that patient care, particularly services reliant on sterile processing, is maintained throughout the construction period, potentially through temporary measures or relocation of services. Effective communication and coordination between the construction team and hospital administration are paramount to ensure patient safety and operational continuity.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 36C77624R0115

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 807 E ELDER ST, CANTON, SD, 57013

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: $20,574,450

Exercised Options: $20,574,450

Current Obligation: $20,574,450

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline