HHS awards $4.3M contract for Rosebud Heating Plant Replacement to Lacreek Development Corp

Contract Overview

Contract Amount: $4,328,863 ($4.3M)

Contractor: Lacreek Development Corp

Awarding Agency: Department of Health and Human Services

Start Date: 2024-09-26

End Date: 2026-08-31

Contract Duration: 704 days

Daily Burn Rate: $6.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: PROJECT GP22RB400H10 ROSEBUD HEATING PLANT REPLACEMENT

Place of Performance

Location: ROSEBUD, TODD County, SOUTH DAKOTA, 57570

State: South Dakota Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $4.3 million to LACREEK DEVELOPMENT CORP for work described as: PROJECT GP22RB400H10 ROSEBUD HEATING PLANT REPLACEMENT Key points: 1. Contract awarded for a critical infrastructure project at the Rosebud Indian Health Service facility. 2. The project aims to replace the existing heating plant, ensuring reliable services. 3. The contract is a firm fixed-price definitive contract, indicating defined scope and cost. 4. Awarded to Lacreek Development Corp, a company with a presence in the region. 5. The duration of the contract is 704 days, spanning over two years. 6. The project falls under commercial and institutional building construction.

Value Assessment

Rating: fair

The contract value of $4.3 million for a heating plant replacement appears within a reasonable range for such infrastructure projects, though specific benchmarks are difficult to ascertain without more detailed project scope. The firm fixed-price nature suggests a defined cost expectation. However, the lack of detailed cost breakdowns or comparisons to similar IHS projects makes a precise value-for-money assessment challenging. Further analysis would require understanding the scope of work, materials, and labor involved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The fact that there were two bidders suggests a moderate level of competition for this specific project. While two bidders are better than one, a higher number of competitors could potentially drive prices down further and offer a wider range of solutions.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages competitive pricing and can lead to more cost-effective solutions. The presence of two bidders suggests a reasonable effort to secure competitive pricing for this essential infrastructure replacement.

Public Impact

The primary beneficiaries are the patients and staff of the Rosebud Indian Health Service facility, who will receive improved heating services. The project delivers essential infrastructure replacement, ensuring the continued operation of critical healthcare facilities. The geographic impact is localized to the Rosebud Reservation in South Dakota. The project will likely involve local construction workforce, providing employment opportunities in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bidders could potentially lead to higher costs than if more firms had participated.
The firm fixed-price contract, while offering cost certainty, could pose risks if unforeseen issues arise during construction that were not adequately accounted for in the initial bid.

Positive Signals

Awarded under full and open competition, ensuring a fair process.
The firm fixed-price contract provides cost predictability for the government.
The project addresses a critical infrastructure need for a healthcare facility.

Sector Analysis

The contract falls within the Commercial and Institutional Building Construction sector, a broad category encompassing the building and renovation of non-residential structures. This sector is vital for public infrastructure, including healthcare facilities. Spending in this area is often driven by the need to maintain and upgrade aging government buildings and ensure operational continuity. Comparable spending benchmarks would depend on the specific size and complexity of the heating plant replacement.

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 mentioned. Therefore, the direct impact on the small business ecosystem is likely minimal unless the prime contractor voluntarily engages small businesses for specialized services or materials.

Oversight & Accountability

Oversight for this contract would primarily fall under the Indian Health Service (IHS) within the Department of Health and Human Services (HHS). The firm fixed-price nature of the contract provides a degree of accountability regarding cost. Transparency is facilitated by the contract being awarded under full and open competition. Further oversight could be provided by the HHS Office of Inspector General if any concerns or issues arise during the contract's performance.

Related Government Programs

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

Risk Flags

Potential for cost overruns if unforeseen site conditions arise.
Risk of quality compromises if contractor faces financial pressure.
Limited competition may have resulted in a less competitive price.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $4.3 million to LACREEK DEVELOPMENT CORP. PROJECT GP22RB400H10 ROSEBUD HEATING PLANT REPLACEMENT

Who is the contractor on this award?

The obligated recipient is LACREEK DEVELOPMENT CORP.

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 $4.3 million.

What is the period of performance?

Start: 2024-09-26. End: 2026-08-31.

What is the track record of Lacreek Development Corp. with federal contracts, particularly with the Indian Health Service?

A review of federal contract databases would be necessary to fully assess Lacreek Development Corp.'s track record. Information regarding past performance, contract history, and any past performance issues or awards would provide insight into their reliability and experience. Specifically, their history with the Indian Health Service (IHS) and similar construction projects would be highly relevant. Without access to this specific data, it is difficult to provide a detailed assessment of their contractor performance. However, the award of this contract suggests they met the minimum qualifications and requirements set forth by the IHS for this project.

How does the awarded amount of $4.3 million compare to similar heating plant replacement projects within the IHS or other federal agencies?

Benchmarking the $4.3 million contract value against similar projects is crucial for assessing value for money. A comprehensive comparison would involve analyzing contracts for heating plant replacements at other federal healthcare facilities, particularly those managed by the IHS or other agencies like the Department of Veterans Affairs. Factors such as facility size, age, complexity of the existing infrastructure, scope of work (e.g., full replacement vs. upgrade), and geographic location all influence cost. Without access to a database of comparable IHS or federal construction projects with detailed cost breakdowns, it is challenging to definitively state whether $4.3 million is high, low, or average. However, the firm fixed-price nature suggests the government sought cost certainty.

What are the primary risks associated with this firm fixed-price contract for a heating plant replacement project?

The primary risk associated with a firm fixed-price (FFP) contract for a project like a heating plant replacement lies with the contractor. If Lacreek Development Corp. underestimated the costs of labor, materials, or encountered unforeseen site conditions (e.g., hazardous materials, difficult excavation), they would be responsible for absorbing those additional costs, potentially impacting their profitability or even leading to project delays if they struggle financially. For the government, the risk is that the contractor might cut corners on quality to maintain profitability, or that the initial price, while fixed, might have been inflated due to the contractor anticipating potential risks. The government's primary mitigation is thorough pre-award evaluation and clear contract specifications.

What is the expected effectiveness of the new heating plant in improving services at the Rosebud IHS facility?

The effectiveness of the new heating plant is expected to be high, given that it is a replacement of an existing system. The primary goal of such a project is to ensure reliable, efficient, and safe heating for the Rosebud Indian Health Service facility. An aging heating plant can lead to frequent breakdowns, inconsistent temperatures, and higher energy consumption. A new plant should mitigate these issues, leading to improved comfort for patients and staff, reduced risk of service disruptions during critical periods (like winter), and potentially lower operational and energy costs for the facility. The success will depend on the quality of installation and the chosen technology.

How has federal spending on commercial and institutional building construction, particularly for healthcare facilities, trended in recent years?

Federal spending on commercial and institutional building construction, especially for healthcare facilities, has generally seen consistent investment, driven by the need to maintain and modernize aging infrastructure across various agencies, including the Indian Health Service (IHS) and the Department of Veterans Affairs (VA). Factors such as increased healthcare demand, the need for energy efficiency upgrades, and the replacement of outdated systems contribute to this spending. While specific year-over-year trends can fluctuate based on budget allocations and major project initiatives, there is a sustained focus on ensuring the operational integrity and modernization of federal healthcare infrastructure. This particular contract represents a component of that broader federal investment strategy.

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: 75H70124R00024

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 21617 US HWY 18, MARTIN, SD, 57551

Business Categories: American Indian Owned Business, Category Business, Corporate Entity Not Tax Exempt, HUBZone Firm, 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: $4,328,863

Exercised Options: $4,328,863

Current Obligation: $4,328,863

Actual Outlays: $3,458,310

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline