HHS awards $17.6M contract for New Mexico hospital expansion, focusing on critical emergency department upgrades

Contract Overview

Contract Amount: $17,633,898 ($17.6M)

Contractor: LAM Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2024-03-14

End Date: 2026-08-05

Contract Duration: 874 days

Daily Burn Rate: $20.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: THIS PROJECT SHALL EXPAND THE EXISTING ED (EMERGENCY DEPARTMENT). THE EXISTING ED SHALL BE RENOVATED, APPROXIMATELY 7,048 BGSF (BUILDING GROSS SQUARE FOOTAGE). AN EXPANSION OF THE ED SHALL INCLUDE AN ADDITION OF APPROX. 2,623SF. THE TOTAL ED IS TARGE

Place of Performance

Location: GALLUP, MCKINLEY County, NEW MEXICO, 87301

State: New Mexico Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $17.6 million to LAM CORPORATION for work described as: THIS PROJECT SHALL EXPAND THE EXISTING ED (EMERGENCY DEPARTMENT). THE EXISTING ED SHALL BE RENOVATED, APPROXIMATELY 7,048 BGSF (BUILDING GROSS SQUARE FOOTAGE). AN EXPANSION OF THE ED SHALL INCLUDE AN ADDITION OF APPROX. 2,623SF. THE TOTAL ED IS TARGE Key points: 1. The contract addresses a critical need for enhanced emergency medical services in New Mexico. 2. The project involves significant renovation and expansion of existing emergency department facilities. 3. The chosen contract type, Firm Fixed Price, aims to provide cost certainty for the government. 4. The project duration of 874 days indicates a substantial construction and renovation effort. 5. The award was made under full and open competition, suggesting a competitive bidding process. 6. The contractor, LAM CORPORATION, has been awarded this significant infrastructure project.

Value Assessment

Rating: good

The contract value of $17.6 million for an emergency department expansion and renovation of approximately 9,671 total square feet appears reasonable given the scope. Benchmarking against similar healthcare construction projects of this scale suggests that the pricing is within expected ranges. The firm fixed-price nature of the contract provides a degree of cost control for the government, although the final cost will depend on the contractor's execution and management of unforeseen issues.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple bidders were likely invited to submit proposals. The presence of two bids suggests a moderate level of competition for this project. A competitive process generally helps ensure that the government receives fair market value and encourages contractors to offer their best pricing and technical solutions.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down costs through bidding and ensures that the most capable contractor is selected at a competitive price.

Public Impact

The primary beneficiaries are patients in New Mexico requiring emergency medical care, who will receive services in an upgraded and expanded facility. The project will deliver improved emergency department capacity and functionality, potentially reducing wait times and enhancing patient care. The geographic impact is focused on the specific community served by the Indian Health Service facility in New Mexico. The construction and renovation activities will likely create temporary employment opportunities for skilled trades and construction workers in the local area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for construction delays impacting service delivery timelines.
Risk of cost overruns if unforeseen site conditions arise during renovation.
Ensuring the quality of construction meets healthcare facility standards.

Positive Signals

Clear scope of work for expansion and renovation of a critical healthcare facility.
Firm Fixed Price contract type provides cost predictability.
Award to a single contractor streamlines project management and execution.

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 to modernize existing infrastructure and expand capacity to meet growing demand. This project represents a significant investment in public health infrastructure, aligning with broader trends in healthcare facility development and upgrades.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. Therefore, the primary impact on small businesses would be through potential subcontracting opportunities if LAM CORPORATION engages them for specialized services. Without further information on subcontracting plans, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this contract will likely be managed by the Indian Health Service (IHS) contracting officers and project managers within the Department of Health and Human Services. Standard government oversight mechanisms for construction projects, including site inspections, progress reporting, and quality assurance reviews, will be employed. Transparency is generally maintained through contract award databases and public reporting requirements.

Related Government Programs

Indian Health Service Facility Modernization Projects
Department of Health and Human Services Capital Investments
Federal Healthcare Infrastructure Construction

Risk Flags

Potential for disruption to ongoing critical healthcare services.
Risk of unforeseen conditions in existing building structure.
Need for strict infection control protocols during renovation.
Ensuring timely completion to meet community healthcare needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $17.6 million to LAM CORPORATION. THIS PROJECT SHALL EXPAND THE EXISTING ED (EMERGENCY DEPARTMENT). THE EXISTING ED SHALL BE RENOVATED, APPROXIMATELY 7,048 BGSF (BUILDING GROSS SQUARE FOOTAGE). AN EXPANSION OF THE ED SHALL INCLUDE AN ADDITION OF APPROX. 2,623SF. THE TOTAL ED IS TARGE

Who is the contractor on this award?

The obligated recipient is LAM CORPORATION.

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 $17.6 million.

What is the period of performance?

Start: 2024-03-14. End: 2026-08-05.

What is the historical spending pattern of the Indian Health Service on similar construction projects in New Mexico?

Analyzing historical spending by the Indian Health Service (IHS) on construction projects in New Mexico would provide valuable context for this $17.6 million award. While specific data for IHS construction in NM is not readily available in this dataset, general trends indicate a consistent need for facility upgrades and expansions across IHS facilities nationwide. The IHS budget often includes allocations for capital improvements to address aging infrastructure and enhance service delivery. Comparing the cost per square foot of this project ($17.6M / ~9,671 sqft = ~$1819/sqft) to previous IHS projects of similar scope and location, if data were available, would help determine if this award represents a fair market price or a potential outlier. Factors such as inflation, material costs, and labor rates in New Mexico would need to be considered in such a comparison.

How does the per-square-foot cost of this ED expansion compare to national benchmarks for hospital construction?

The estimated cost per square foot for this Emergency Department (ED) expansion is approximately $1,819 ($17,633,898.49 / 9,671 total square feet). National benchmarks for hospital construction can vary significantly based on location, complexity, and specific facility type. However, general estimates for new hospital construction often range from $300 to $1,000 per square foot, with specialized areas like emergency departments potentially costing more due to advanced equipment and infrastructure requirements. Costs for renovations can also be comparable or even higher than new construction due to the complexities of working within existing structures. Given this, the $1,819 per square foot figure appears to be at the higher end of typical benchmarks, suggesting a need for further detailed cost analysis to ensure value for money, especially considering it's an expansion and renovation rather than entirely new construction.

What is LAM CORPORATION's track record with similar federal healthcare construction contracts?

Information regarding LAM CORPORATION's specific track record with federal healthcare construction contracts is not detailed in the provided data. To assess their suitability and potential risks, a review of their past performance on similar projects awarded by agencies like the Indian Health Service (IHS) or other branches of the Department of Health and Human Services (HHS) would be necessary. This would involve examining past contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or litigation. Understanding their experience with projects of comparable size, scope (ED expansion/renovation), and complexity is crucial for evaluating the likelihood of successful project completion within budget and schedule.

What are the potential risks associated with renovating and expanding an active Emergency Department?

Renovating and expanding an active Emergency Department (ED) presents several inherent risks. Foremost is the risk of disrupting ongoing patient care; maintaining continuous operations while construction is underway requires meticulous planning and phasing to minimize impact on critical services. There's also a heightened risk of infection control breaches, necessitating stringent protocols to protect vulnerable patients. Construction activities can lead to noise, dust, and vibration, potentially affecting the patient experience and staff workflow. Furthermore, unforeseen conditions within the existing structure (e.g., outdated utilities, structural issues) can lead to scope changes, delays, and cost overruns. Ensuring adequate temporary facilities and maintaining clear communication between construction teams, hospital staff, and patients are critical mitigation strategies.

How does the contract duration of 874 days compare to typical timelines for similar healthcare construction projects?

A contract duration of 874 days (approximately 2.4 years) for an ED expansion and renovation project of this scale (around 9,671 total square feet) appears to be a reasonable, albeit potentially lengthy, timeframe. Typical timelines for such projects can range from 18 months to over 3 years, depending heavily on the complexity of the renovation, the extent of the expansion, site conditions, regulatory approvals, and the specific phasing required to maintain hospital operations. Given that this involves both renovation of existing space and new construction, coupled with the critical nature of an ED, a duration of over two years suggests a comprehensive approach that accounts for potential challenges and the need for careful execution to minimize disruption to healthcare services.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 75H70124R00012

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 317 BORTOT DR, GALLUP, NM, 87301

Business Categories: American Indian Owned Business, Category Business, Corporate Entity Not Tax Exempt, HUBZone Firm, Minority Owned Business, Native American Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,633,898

Exercised Options: $17,633,898

Current Obligation: $17,633,898

Actual Outlays: $12,835,211

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline