HHS awards $97.8M for Norton Sound Regional Hospital construction, a significant investment in Alaskan healthcare infrastructure

Contract Overview

Contract Amount: $97,844,316 ($97.8M)

Contractor: Inuit-Nci JV

Awarding Agency: Department of Health and Human Services

Start Date: 2009-08-19

End Date: 2014-11-04

Contract Duration: 1,903 days

Daily Burn Rate: $51.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: TAS::75 0392::TAS RECOVERY ACT NEW NORTON SOUND REGIONAL HOSPITAL, NOME ALASKA ARRA::YES::ARRA

Place of Performance

Location: NOME, NOME County, ALASKA, 99762

State: Alaska Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $97.8 million to INUIT-NCI JV for work described as: TAS::75 0392::TAS RECOVERY ACT NEW NORTON SOUND REGIONAL HOSPITAL, NOME ALASKA ARRA::YES::ARRA Key points: 1. The contract's value represents a substantial commitment to improving healthcare facilities in remote regions. 2. Competition dynamics for this large-scale construction project in Alaska may have influenced final pricing. 3. The duration of the contract (1903 days) suggests a complex and lengthy construction process. 4. Fixed-price contracts can offer cost certainty but may limit flexibility for unforeseen construction challenges. 5. The project's location in Alaska presents unique logistical and environmental considerations impacting cost and timeline. 6. The award to a joint venture indicates a strategy to leverage specialized expertise for a complex build.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging due to its specific location and the nature of large-scale hospital construction. The firm-fixed-price structure suggests an attempt to control costs, but the total award of $97.8 million indicates a significant investment. Without comparable projects in similar remote Alaskan settings, a precise value-for-money assessment is difficult. The duration of the contract also implies substantial resource allocation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of four bids suggests a reasonable level of competition for this significant construction project. However, the remote Alaskan location might have limited the pool of eligible and willing bidders, potentially impacting the intensity of the competition and its effect on price discovery.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages competitive pricing. However, the specific geographic constraints of this project may have influenced the number of competitive bids received.

Public Impact

Beneficiaries include the residents of the Norton Sound region in Alaska, who will gain access to improved healthcare facilities. The project delivers essential infrastructure for healthcare services, potentially expanding the scope and quality of medical care available. The geographic impact is concentrated in Nome, Alaska, addressing critical healthcare needs in a remote and underserved area. The construction phase will likely create numerous jobs for skilled trades and laborers in the region, providing a temporary economic boost.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the complexities of construction in a remote Alaskan environment.
Logistical challenges in transporting materials and personnel to the site could impact project timelines and costs.
The long contract duration increases the risk of unforeseen issues arising during construction.
Ensuring adequate oversight for a project of this magnitude in a remote location requires significant resources.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
The firm-fixed-price contract type provides cost certainty for the government.
The project addresses a critical need for improved healthcare infrastructure in an underserved region.
The joint venture structure may bring specialized expertise to manage a complex construction project.

Sector Analysis

This contract falls within the commercial and institutional building construction sector, specifically focusing on healthcare facilities. Large-scale hospital construction projects are capital-intensive and require specialized expertise in managing complex building systems and regulatory compliance. The market for such projects is often influenced by government funding, healthcare demand, and regional development initiatives. Comparable spending benchmarks would typically involve other major hospital construction or renovation projects, though direct comparisons are difficult due to unique location factors.

Small Business Impact

The data indicates that small business participation was not a specific set-aside requirement for this contract (ss: false, sb: false). While the prime contractor is a joint venture, the extent of small business subcontracting is not detailed. Large federal construction projects often involve significant subcontracting opportunities, and the absence of explicit set-asides means that small businesses would need to compete for these subcontracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its Indian Health Service (IHS) agency. Given the project's scale and duration, regular site inspections, progress reviews, and financial audits would be expected. The Inspector General's office within HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to the contract. Transparency would be facilitated through contract award databases and agency reporting mechanisms.

Related Government Programs

Indian Health Service Construction Projects
ARRA Healthcare Infrastructure Investments
Federal Hospital Construction Contracts
Department of Health and Human Services Capital Investments

Risk Flags

Geographic isolation impacting logistics and costs
Potential for weather-related delays
Complexity of healthcare facility construction
Long contract duration increasing risk exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $97.8 million to INUIT-NCI JV. TAS::75 0392::TAS RECOVERY ACT NEW NORTON SOUND REGIONAL HOSPITAL, NOME ALASKA ARRA::YES::ARRA

Who is the contractor on this award?

The obligated recipient is INUIT-NCI JV.

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 $97.8 million.

What is the period of performance?

Start: 2009-08-19. End: 2014-11-04.

What was the specific rationale for awarding this contract to INUIT-NCI JV?

The award to INUIT-NCI JV was likely based on their proposal meeting or exceeding the technical, management, and cost requirements outlined in the solicitation. As a joint venture, they may have presented a combined capability that was deemed superior to other bidders, particularly for a complex project in a challenging location like Nome, Alaska. The evaluation criteria, which would have been detailed in the solicitation documents, would have guided the selection process. Factors such as past performance, experience with similar projects, understanding of the local environment, and proposed management approach would have been critical in the decision-making process.

How does the $97.8 million award compare to similar hospital construction projects in remote or underserved areas?

Direct comparisons for hospital construction in remote Alaskan locations are scarce due to the unique logistical and environmental challenges, which typically drive up costs. However, large-scale hospital construction projects in the continental US can range from tens of millions to hundreds of millions of dollars, depending on size, complexity, and location. Projects in remote areas often incur higher per-square-foot costs due to increased expenses for material transport, specialized labor, and extended construction timelines. The $97.8 million figure for this project, while substantial, may reflect a necessary investment to address critical healthcare infrastructure needs in a region with limited existing facilities and significant logistical hurdles.

What are the primary risks associated with a firm-fixed-price contract for a project of this duration and complexity?

The primary risk with a firm-fixed-price (FFP) contract for a long and complex project like hospital construction in Alaska lies in the potential for unforeseen issues to significantly impact the contractor's profitability or lead to disputes. While FFP offers cost certainty to the government, the contractor assumes the risk of cost overruns. In a remote environment, factors like extreme weather, supply chain disruptions, unexpected site conditions, or labor shortages can escalate costs beyond initial estimates. If these risks materialize and are not adequately managed by the contractor, it could lead to delays, quality compromises, or contractor default, even though the government's price is fixed. The government's risk is primarily related to potential contractor performance issues or the need for change orders if scope significantly deviates.

What was the historical spending pattern for hospital construction by the Indian Health Service prior to this award?

Historical spending patterns for hospital construction by the Indian Health Service (IHS) prior to this award would likely show a consistent, albeit often constrained, investment in improving healthcare infrastructure for Native American and Alaska Native communities. IHS typically funds projects based on identified needs, facility condition assessments, and available appropriations. Major construction projects are often multi-year endeavors, reflecting the significant capital required. Spending would fluctuate based on congressional appropriations, specific program initiatives (like ARRA), and the pipeline of approved projects. Analyzing past IHS construction budgets and the number and scale of projects undertaken would provide context for the significance of the $97.8 million award.

How did the Recovery Act (ARRA) influence the funding and urgency of this hospital construction project?

The data indicates this contract is associated with the Recovery Act (ARRA). The American Recovery and Reinvestment Act of 2009 was enacted to stimulate the economy through investments in infrastructure, energy, and healthcare, among other areas. For healthcare infrastructure, ARRA funding often aimed to accelerate projects that would create jobs and improve essential services. The inclusion of 'ARRA::YES' suggests this project received funding from the stimulus package, potentially leading to faster initiation, increased funding availability, or a greater sense of urgency compared to standard appropriations. This could have influenced the project's timeline, scope, or the competitive environment surrounding its award.

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: 9102SOL00003

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2501 BLUEBERRY RD, ANCHORAGE, AK, 00

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $97,844,316

Exercised Options: $97,844,316

Current Obligation: $97,844,316

Timeline