HHS awards $15.4M construction contract for Rosebud, SD project, with 2 bids received

Contract Overview

Contract Amount: $15,415,428 ($15.4M)

Contractor: Lacreek Development Corp

Awarding Agency: Department of Health and Human Services

Start Date: 2024-09-27

End Date: 2026-10-20

Contract Duration: 753 days

Daily Burn Rate: $20.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ROSEBUD EXTERIOR CONSTRUCTION PROJECT BID PACK 1 ROSEBUD, SD

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 $15.4 million to LACREEK DEVELOPMENT CORP for work described as: ROSEBUD EXTERIOR CONSTRUCTION PROJECT BID PACK 1 ROSEBUD, SD Key points: 1. The contract value of $15.4 million for the Rosebud Exterior Construction Project appears to be a significant investment in infrastructure for the Indian Health Service. 2. Competition dynamics indicate a Full and Open Competition after Exclusion of Sources, with two bids submitted, suggesting a moderate level of market interest. 3. Risk indicators are moderate, given the definitive contract type and a duration of 753 days, which requires careful monitoring of project milestones and potential delays. 4. Performance context will be crucial, as the project's success hinges on the contractor's ability to deliver quality construction within the specified timeline and budget. 5. Sector positioning places this contract within the Commercial and Institutional Building Construction industry, a vital segment supporting public health facilities.

Value Assessment

Rating: fair

Benchmarking the $15.4 million contract value against similar institutional building projects in South Dakota is challenging without more specific project scope details. However, the contract type is a Firm Fixed Price, which typically aims to control costs for the government. The presence of two bids suggests that pricing may have been competitive, but a detailed cost breakdown would be needed to fully assess value for money. The bid range of $20,472 indicates the difference between the winning bid and the next highest, which is a relatively small difference in absolute terms but could represent significant cost savings or overpayment depending on the total contract value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition after Exclusion of Sources.' This solicitation method implies that while the competition was intended to be broad, certain sources were excluded, potentially limiting the pool of bidders. With two bids received, the level of competition was moderate. A higher number of bidders typically leads to more robust price discovery and potentially lower prices for the government. The exclusion of sources warrants further investigation to understand the rationale and its impact on competition.

Taxpayer Impact: The moderate competition level means taxpayers may not have benefited from the lowest possible price that could have been achieved with broader competition. The exclusion of sources could have led to a higher price than if all qualified contractors had been allowed to bid.

Public Impact

The primary beneficiaries of this project are likely the patients and staff of the Indian Health Service facility in Rosebud, South Dakota, who will receive improved exterior infrastructure. The services delivered include commercial and institutional building construction, specifically focusing on the exterior of a facility. The geographic impact is localized to Rosebud, South Dakota, and the surrounding tribal lands, potentially creating local employment opportunities during the construction phase. Workforce implications may include temporary job creation for construction laborers, tradespeople, and project management personnel in the South Dakota region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Exclusion of Sources' in the competition method raises concerns about potentially limiting competition and not achieving the best possible price for taxpayers.
The definitive contract type, while offering flexibility, can sometimes lead to cost overruns if not managed tightly.
The project duration of 753 days (over two years) increases the risk of unforeseen issues, material cost fluctuations, or contractor performance degradation over time.

Positive Signals

The contract is Firm Fixed Price, which provides cost certainty for the government and incentivizes the contractor to manage costs effectively.
The award is to a specific entity, LaCreek Development Corp, suggesting a focused effort on a particular contractor's capabilities.
The project is located in South Dakota, potentially supporting regional economic development and local employment.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a broad category encompassing the building of non-residential structures like healthcare facilities, schools, and government buildings. The Indian Health Service's need for infrastructure improvements highlights the critical role this sector plays in supporting public services. Comparable spending benchmarks for similar-sized construction projects in rural areas of the Midwest would provide further context, but generally, projects of this magnitude require significant planning and execution capabilities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. However, the prime contractor, LaCreek Development Corp, may choose to subcontract portions of the work to small businesses as part of their overall project management strategy, which could indirectly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Health and Human Services, specifically the Indian Health Service, which awarded the contract. Accountability measures will be embedded in the definitive contract terms, including performance milestones and payment schedules. Transparency regarding project progress and expenditures would typically be available through federal contract databases and agency reporting, though specific details might be limited. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Indian Health Service Infrastructure Projects
Federal Building and Construction Contracts
Department of Health and Human Services Capital Investments
Rural Infrastructure Development

Risk Flags

Limited Competition
Potential for Cost Overruns (Definitive Contract Type)
Long Project Duration Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $15.4 million to LACREEK DEVELOPMENT CORP. ROSEBUD EXTERIOR CONSTRUCTION PROJECT BID PACK 1 ROSEBUD, SD

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 $15.4 million.

What is the period of performance?

Start: 2024-09-27. End: 2026-10-20.

What is the track record of LaCreek Development Corp in completing similar federal construction projects on time and within budget?

Assessing the track record of LaCreek Development Corp requires a review of their past performance on federal contracts, particularly those involving institutional or healthcare facility construction. Data on past project completion rates, adherence to schedules, and final costs compared to initial awards would be crucial. Information from sources like the Federal Procurement Data System (FPDS) or contractor performance assessment reports (CPARS) would provide insights into their reliability and quality of work. Without this specific data, it's difficult to definitively assess their suitability for this $15.4 million project, though the award itself suggests they met initial qualification criteria.

How does the $15.4 million contract value compare to the estimated cost of similar exterior construction projects for healthcare facilities in South Dakota?

Directly comparing the $15.4 million contract value to similar projects is challenging without detailed specifications of the 'Rosebud Exterior Construction Project.' Factors such as the scope of work (e.g., facade repair, roofing, foundation work, landscaping), the size of the facility, and the specific materials used significantly influence costs. However, for institutional buildings in rural areas, a $15.4 million price tag for exterior work suggests a substantial undertaking. Benchmarking against publicly available data for similar-sized projects in the Midwest, adjusted for regional labor and material costs, would be necessary for a more precise value assessment. The bid range of $20,472 between the two offers provides a narrow window of competitive pricing for this specific project.

What are the primary risks associated with a definitive contract type for a construction project of this duration?

Definitive contracts, while offering flexibility, can introduce risks for construction projects, especially those with a long duration like the 753 days for the Rosebud project. Key risks include potential scope creep, where changes or additions to the original requirements can lead to cost increases and schedule delays if not managed meticulously. There's also a risk of contractor performance degradation over an extended period, potentially impacting quality or efficiency. Furthermore, long-term contracts are more susceptible to market fluctuations in material costs and labor availability, which could affect the contractor's profitability and, consequently, the project's final cost if not adequately addressed in the contract terms. Robust oversight and change management processes are critical to mitigate these risks.

What is the significance of the 'Full and Open Competition after Exclusion of Sources' method for this contract?

The 'Full and Open Competition after Exclusion of Sources' method is a nuanced approach to procurement. It signifies that the solicitation was intended to be open to all responsible sources, but specific entities or categories of sources were intentionally excluded. The rationale for exclusion could be based on factors like national security, specific technical requirements, or previous performance issues. For this $15.4 million construction project, receiving only two bids suggests that the exclusion may have significantly narrowed the competitive field. While the competition was 'full and open' among the remaining eligible bidders, the exclusion itself raises questions about whether the government received the maximum possible competition and potentially the best price. Understanding the justification for the exclusion is key to evaluating its impact on taxpayer value.

How does this contract fit into the broader spending patterns of the Indian Health Service for infrastructure and facility maintenance?

This $15.4 million contract for exterior construction at Rosebud, SD, represents a specific investment within the Indian Health Service's (IHS) broader capital improvement and maintenance budget. The IHS is responsible for providing healthcare services to federally recognized American Indian and Alaska Native tribes, often operating in remote areas with aging infrastructure. Spending on facility upkeep and modernization is critical to ensuring the quality and accessibility of these services. Analyzing this contract in the context of IHS's historical spending on construction and renovation projects, particularly in the Plains region, would reveal whether this award is part of a larger trend, a response to a specific need, or an isolated investment. It highlights the ongoing need for federal investment in healthcare infrastructure in underserved communities.

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: 75H70124R00052

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: $15,415,428

Exercised Options: $15,415,428

Current Obligation: $15,415,428

Actual Outlays: $10,167,972

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline