Northcon Inc. awarded $21.3M for new multifamily housing construction in Montana

Contract Overview

Contract Amount: $21,341,734 ($21.3M)

Contractor: Northcon Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2023-09-12

End Date: 2026-01-31

Contract Duration: 872 days

Daily Burn Rate: $24.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: THE CONTRACTOR SHALL BE RESPONSIBLE FOR ALL NECESSARY WORK TO ACHIEVE REQUIRED OUTCOMES, INCLUDING MATERIALS, LABOR, EQUIPMENT, TOOLS, PERSONAL PROTECTIVE EQUIPMENT (PPE), COORDINATION WITH AUTHORITIES HAVING JURISDICTION (AHJ), INTERNAL CONSTRUCTION

Place of Performance

Location: CROW AGENCY, BIG HORN County, MONTANA, 59022

State: Montana Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $21.3 million to NORTHCON INC for work described as: THE CONTRACTOR SHALL BE RESPONSIBLE FOR ALL NECESSARY WORK TO ACHIEVE REQUIRED OUTCOMES, INCLUDING MATERIALS, LABOR, EQUIPMENT, TOOLS, PERSONAL PROTECTIVE EQUIPMENT (PPE), COORDINATION WITH AUTHORITIES HAVING JURISDICTION (AHJ), INTERNAL CONSTRUCTION Key points: 1. Contract awarded for new multifamily housing construction, indicating a need for residential facilities. 2. The contract is a firm-fixed-price type, which shifts cost risk to the contractor. 3. The duration of 872 days suggests a substantial construction project. 4. The contract is not competed, raising questions about potential cost efficiencies. 5. The project is located in Montana, potentially impacting local labor and material markets. 6. The awarding agency is the Indian Health Service, suggesting a focus on tribal housing needs.

Value Assessment

Rating: fair

The contract value of $21.3 million for new multifamily housing construction appears to be within a reasonable range for a project of this scale and duration. However, without specific details on the scope of work, unit count, and quality of materials, a precise value-for-money assessment is challenging. Benchmarking against similar projects in Montana or for the Indian Health Service would provide better context. The firm-fixed-price structure means the contractor bears cost overruns, which can be a positive for the government if managed well, but could also lead to contractor attempts to cut corners if not adequately overseen.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple offerors. This approach is typically used when only one responsible source is available or when the agency determines it is in the government's best interest to award to a specific contractor. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to a higher price than if multiple bids were received. The justification for this sole-source award would need to be thoroughly reviewed to ensure it aligns with federal procurement regulations.

Taxpayer Impact: The absence of competition means taxpayers may not have benefited from the cost savings that can arise from a competitive bidding process. The government may have paid a premium due to the lack of alternative offers.

Public Impact

The primary beneficiaries are likely residents of the multifamily housing units to be constructed, potentially within an area served by the Indian Health Service. The services delivered include the complete construction of new multifamily housing, encompassing all necessary labor, materials, and equipment. The geographic impact is concentrated in Montana, where the construction will take place. Workforce implications include the creation of construction jobs in the local Montana area, benefiting skilled trades and related support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Lack of competition may reduce transparency in pricing and contractor selection.
Firm-fixed-price contract could incentivize cost-cutting by the contractor, potentially impacting quality if not closely monitored.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Contract duration of over two years suggests a commitment to project completion.
Award to Northcon Inc. indicates a specific contractor is deemed capable of meeting the requirements.

Sector Analysis

The construction sector, specifically new multifamily housing, is a significant part of the U.S. economy. This contract falls under the 'New Multifamily Housing Construction (except For-Sale Builders)' NAICS code. Federal spending in this area often supports infrastructure development, housing initiatives, and specific community needs, such as those addressed by the Indian Health Service. Comparable spending benchmarks would typically involve analyzing the cost per square foot or cost per unit for similar housing projects in the region or for federal agencies.

Small Business Impact

This contract was not competed and there is no indication of a small business set-aside (ss: false) or subcontracting goals (sb: false). Therefore, this specific award does not appear to directly benefit small businesses through set-aside provisions. The prime contractor, Northcon Inc., will be responsible for all aspects of the work, and any subcontracting would be at their discretion. This could mean missed opportunities for small businesses to participate in federal construction projects unless Northcon Inc. proactively engages them.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services and the Indian Health Service. As a definitive contract with a fixed end date, progress monitoring, quality control, and financial oversight are expected. The firm-fixed-price nature necessitates close monitoring of performance against the contract requirements to ensure the government receives the intended value. The Inspector General for HHS would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Federal Housing Programs
Indian Health Service Construction Projects
Multifamily Housing Development
Department of Health and Human Services Contracts

Risk Flags

Sole-source award raises concerns about potential lack of competition and price efficiency.
Lack of transparency regarding the justification for sole-source award.
Potential for quality compromises in a long-duration firm-fixed-price construction contract if not rigorously overseen.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $21.3 million to NORTHCON INC. THE CONTRACTOR SHALL BE RESPONSIBLE FOR ALL NECESSARY WORK TO ACHIEVE REQUIRED OUTCOMES, INCLUDING MATERIALS, LABOR, EQUIPMENT, TOOLS, PERSONAL PROTECTIVE EQUIPMENT (PPE), COORDINATION WITH AUTHORITIES HAVING JURISDICTION (AHJ), INTERNAL CONSTRUCTION

Who is the contractor on this award?

The obligated recipient is NORTHCON INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Indian Health Service).

What is the total obligated amount?

The obligated amount is $21.3 million.

What is the period of performance?

Start: 2023-09-12. End: 2026-01-31.

What is the specific scope of work and the number of housing units included in this contract?

The provided data indicates the contract is for 'New Multifamily Housing Construction (except For-Sale Builders)' with a value of $21,341,733.58 and a duration of 872 days (approximately 2.4 years). However, the specific number of housing units, the total square footage, the types of units (e.g., apartments, townhouses), and the detailed specifications for materials and amenities are not included in the provided data. This information is crucial for a comprehensive understanding of the project's scale and for accurate benchmarking against similar construction projects. Without these details, it's difficult to fully assess the value proposition or potential risks associated with the contractor's scope of responsibility.

How does the cost per unit or cost per square foot compare to similar multifamily housing projects in Montana or for the Indian Health Service?

A direct comparison of cost per unit or per square foot is not possible with the current data. The contract value is $21.3 million over an 872-day period. To perform a meaningful benchmark, we would need to know the total number of units being constructed and the total square footage. For example, if this contract builds 100 units, the average cost per unit would be approximately $213,417. If it builds 200 units, the average cost per unit would be around $106,708. These figures would then need to be compared against recent construction costs for similar multifamily projects in Montana, considering regional labor rates, material costs, and any specific requirements mandated by the Indian Health Service, such as building codes or cultural considerations.

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

The provided data explicitly states the contract type as 'NOT COMPETED' (ct: NOT COMPETED), which typically signifies a sole-source or limited competition award. Federal procurement regulations (like FAR Part 6) require full and open competition unless specific exceptions apply. Common justifications for sole-source awards include that only one responsible source can satisfy the agency's needs, or that the agency is a sole provider of a unique service or product. For this contract, the Indian Health Service would have had to document a specific justification, such as a unique capability of Northcon Inc., urgent need, or a prior relationship that makes competition impractical or not in the government's best interest. Without access to the official justification document (e.g., a Justification and Approval - J&A), the specific reasons remain unknown.

What are the potential risks associated with a firm-fixed-price contract for a long-duration construction project?

A firm-fixed-price (FFP) contract, while shifting cost risk to the contractor (Northcon Inc. in this case), can present risks for long-duration projects like this 872-day construction effort. Potential risks include: 1) Contractor underestimation: Northcon Inc. might have underestimated material costs, labor, or unforeseen site conditions, leading to financial distress or attempts to cut corners on quality to maintain profitability. 2) Scope creep: If the government requires changes or additions beyond the original scope, managing these within an FFP structure can be complex and may lead to disputes or costly change orders. 3) Contractor default: If the contractor faces significant financial hardship or management issues, there's a risk of project delays or abandonment. 4) Quality compromise: To protect their profit margin on an FFP contract, especially if costs escalate unexpectedly, the contractor might be tempted to use lower-quality materials or reduce labor intensity, impacting the final product's durability and safety.

What is Northcon Inc.'s track record with federal contracts, particularly with the Indian Health Service or similar construction projects?

The provided data identifies Northcon Inc. (co: NORTHCON INC) as the contractor for this $21.3 million multifamily housing construction project awarded by the Indian Health Service (sa: Indian Health Service). However, the data does not include information on Northcon Inc.'s past performance, contract history, or specific track record with federal agencies. To assess their reliability and experience, one would need to consult federal procurement databases (like SAM.gov or FPDS) for details on previous contracts awarded to Northcon Inc., their performance ratings, any past disputes or terminations, and their experience with projects of similar size, scope, and complexity, especially those undertaken for the IHS or other government entities involved in housing or infrastructure.

What are the historical spending patterns for new multifamily housing construction by the Indian Health Service?

The provided data focuses solely on this single contract award. To understand historical spending patterns for new multifamily housing construction by the Indian Health Service (IHS), a broader analysis of federal procurement data would be necessary. This would involve querying databases like FPDS or USAspending.gov for all contracts awarded by the IHS under relevant NAICS codes (e.g., 236116) over several fiscal years. Such an analysis would reveal the total annual or multi-year spending on housing construction, the number of contracts awarded, the average contract value, and potentially identify trends in project types, geographic distribution, and whether competition levels have varied over time. This context is essential for evaluating whether the current $21.3 million award is consistent with historical spending or represents a significant deviation.

Industry Classification

NAICS: Construction › Residential Building Construction › New Multifamily Housing Construction (except For-Sale Builders)

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75H70123R00020

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 10615 N GOVERNMENT WAY, HAYDEN, ID, 83835

Business Categories: American Indian Owned Business, Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $21,341,734

Exercised Options: $21,341,734

Current Obligation: $21,341,734

Actual Outlays: $20,820,731

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline