DOT's FAA awards $11.4M contract for HVAC system replacement at Nashua facility

Contract Overview

Contract Amount: $11,398,325 ($11.4M)

Contractor: Cornerstone Construction Services, LLC

Awarding Agency: Department of Transportation

Start Date: 2023-04-25

End Date: 2026-05-06

Contract Duration: 1,107 days

Daily Burn Rate: $10.3K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: BIL REPLACEMENT OF THE HVAC SYSYTEM 11 MURPHY DRIVE, NASHUA, NH

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Transportation obligated $11.4 million to CORNERSTONE CONSTRUCTION SERVICES, LLC for work described as: BIL REPLACEMENT OF THE HVAC SYSYTEM 11 MURPHY DRIVE, NASHUA, NH Key points: 1. Contract value appears reasonable for a large-scale HVAC replacement project. 2. Sole-source award limits price discovery and potential for competitive savings. 3. Long contract duration (nearly 3 years) may introduce performance and cost risks. 4. Project scope focuses on infrastructure upgrade, not direct service delivery. 5. Contract is positioned within the broader federal construction and facilities management sector.

Value Assessment

Rating: fair

The contract value of $11.4 million for replacing an HVAC system at a federal facility is within a typical range for such projects, especially considering the scale and complexity of government buildings. However, without specific details on the system's size, age, and the scope of work (e.g., full replacement vs. partial upgrade, inclusion of controls, energy efficiency measures), a precise value-for-money assessment is challenging. Benchmarking against similar federal HVAC replacement contracts would be necessary for a more definitive evaluation of pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded sole-source, meaning it was not competed. This approach is typically used when only one responsible source is available or in cases of urgent and compelling need. The lack of competition means there was no opportunity for multiple contractors to bid, which can limit price discovery and potentially lead to higher costs than if the contract had been competed. The justification for the sole-source award would need to be reviewed to understand the specific circumstances.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that can arise from competitive bidding. This can result in a higher overall expenditure for the government compared to a competed contract for similar services.

Public Impact

The primary beneficiaries are the employees and users of the Murphy Drive facility in Nashua, NH, who will experience improved environmental conditions. The contract delivers essential infrastructure maintenance and upgrade services for a federal building. The geographic impact is localized to Nashua, New Hampshire. The project will likely involve construction and maintenance workforce, potentially creating or sustaining jobs in the local area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Long contract duration (over 3 years) increases risk of cost overruns or performance degradation.
Lack of detailed scope in provided data makes it difficult to assess if the price is fully justified.
Potential for unforeseen issues in older building infrastructure not fully captured in initial scope.

Positive Signals

Addresses critical infrastructure need for facility operations.
Firm Fixed Price contract type provides cost certainty for the government.
Contract awarded to Cornerstone Construction Services, LLC, a known entity in construction.

Sector Analysis

This contract falls within the broader federal construction and facilities management sector, which encompasses a wide range of activities from new building construction to maintenance and repair. The federal government is a significant consumer of construction services, with spending often driven by infrastructure modernization needs and facility upkeep. Comparable spending benchmarks would typically be found within the General Services Administration (GSA) or agency-specific facilities management budgets, focusing on projects of similar scale and complexity.

Small Business Impact

The data indicates this contract was not competed under SAP and the small business set-aside flag is false. This suggests it was not specifically set aside for small businesses. Therefore, there are no direct subcontracting implications or specific benefits for the small business ecosystem stemming from this particular award mechanism. The prime contractor, Cornerstone Construction Services, LLC, may or may not be a small business itself, but the award process did not prioritize small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Federal Aviation Administration (FAA), a division of the Department of Transportation. Accountability measures would be established through the contract terms, including performance standards, delivery schedules, and payment milestones. Transparency is facilitated by federal contract databases where such awards are reported. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Federal Buildings Fund
Agency Facilities Modernization Programs
HVAC System Upgrades
Commercial Building Construction

Risk Flags

Sole-source award
Long contract duration
Potential for cost overruns
Limited transparency on specific scope details

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $11.4 million to CORNERSTONE CONSTRUCTION SERVICES, LLC. BIL REPLACEMENT OF THE HVAC SYSYTEM 11 MURPHY DRIVE, NASHUA, NH

Who is the contractor on this award?

The obligated recipient is CORNERSTONE CONSTRUCTION SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $11.4 million.

What is the period of performance?

Start: 2023-04-25. End: 2026-05-06.

What is the track record of Cornerstone Construction Services, LLC with federal contracts, particularly for HVAC systems?

Cornerstone Construction Services, LLC has a history of performing federal construction contracts. A review of federal procurement data would reveal the types and values of contracts previously awarded to this company. Specific to HVAC systems, it would be important to ascertain if they have successfully completed projects of similar scale and complexity for federal agencies. Their past performance ratings, if available, would provide further insight into their reliability, quality of work, and adherence to schedules and budgets on prior federal engagements. Analyzing their contract history can help assess their capacity and experience relevant to this specific HVAC replacement project.

How does the $11.4 million cost compare to similar federal HVAC replacement projects?

Benchmarking this $11.4 million contract against similar federal HVAC replacement projects requires access to a database of comparable contracts. Key comparison factors include the size and type of facility, the scope of work (e.g., full system replacement, modernization, energy efficiency upgrades), the age and condition of the existing system, and the geographic location, which influences labor and material costs. Without specific details on these factors for this contract and comparable projects, a precise value assessment is difficult. However, generally, large-scale HVAC replacements in federal buildings can range from several hundred thousand to millions of dollars, depending on these variables. A detailed analysis would involve identifying contracts with similar square footage, system capacity, and complexity.

What are the primary risks associated with a sole-source award for this type of project?

The primary risk associated with a sole-source award for this HVAC replacement project is the potential for inflated costs due to the lack of competition. When a contract is not competed, the government loses the benefit of multiple bidders driving down prices through competitive offers. This can lead to the contractor charging a premium. Additionally, sole-source awards can sometimes indicate a lack of available qualified contractors or a poorly planned procurement process. There's also a risk that the chosen contractor may not be the most innovative or efficient provider, as competitive pressures that often drive efficiency are absent. This necessitates robust oversight to ensure fair pricing and adequate performance.

What is the expected impact of this HVAC system replacement on the facility's operational efficiency and energy consumption?

Replacing an aging HVAC system with a new one is generally expected to improve operational efficiency and reduce energy consumption. Modern HVAC systems are typically designed with higher energy efficiency ratings, incorporating features like variable speed drives, improved insulation, and advanced control systems. This can lead to significant savings in energy costs over the system's lifespan. Furthermore, a new system is likely to be more reliable, reducing downtime and maintenance costs associated with frequent repairs of older equipment. The specific impact will depend on the technology chosen for the replacement and the energy efficiency standards it meets, which should be detailed in the contract's technical specifications.

How does the contract duration of over three years influence the overall risk profile?

A contract duration of over three years (1107 days) for an HVAC system replacement introduces several risks. Firstly, it increases the potential for cost escalation due to inflation in labor and material prices over an extended period, even with a firm fixed price contract, if contingencies were not adequately factored. Secondly, longer durations can lead to performance degradation or complacency from the contractor. There's also a higher chance of encountering unforeseen site conditions or changes in requirements over such a long timeframe, which can lead to change orders and cost increases. Managing such a long-term project requires sustained oversight to ensure the contractor remains focused on timely and quality completion.

What is the significance of the 'Commercial and Institutional Building Construction' NAICS code for this contract?

The North American Industry Classification System (NAICS) code '236220 - Commercial and Institutional Building Construction' signifies that the primary activity covered by this contract is the construction of non-residential buildings. This includes a wide range of structures such as office buildings, government facilities, schools, and hospitals. For this specific contract, it indicates that the work involves the physical construction or significant renovation of the FAA facility in Nashua, NH, focusing on the building's structure and systems, rather than just maintenance or specialized services. This classification helps in understanding the type of contractor sought and allows for comparison with other similar construction projects within the federal procurement landscape.

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: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 697DCK-23-R-00087

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 9 PRESIDENTIAL WAY, WOBURN, MA, 01801

Business Categories: Category Business, Corporate Entity Not Tax Exempt, 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: $11,398,325

Exercised Options: $11,398,325

Current Obligation: $11,398,325

Actual Outlays: $10,522,025

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline