NIH's $21.6M laboratory construction contract awarded to Skanska USA Building Inc. lacked competition

Contract Overview

Contract Amount: $21,586,700 ($21.6M)

Contractor: Skanska USA Building Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2010-12-02

End Date: 2016-07-31

Contract Duration: 2,068 days

Daily Burn Rate: $10.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: TAS::75 0838::TAS CONSTRUCT/LABORATORIES&CLINICS

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20892

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $21.6 million to SKANSKA USA BUILDING INC. for work described as: TAS::75 0838::TAS CONSTRUCT/LABORATORIES&CLINICS Key points: 1. The contract's value of $21.6 million for laboratory construction represents a significant investment by NIH. 2. The sole-source award suggests limited market research or a specific need that couldn't be met through broader competition. 3. The duration of the contract (2068 days) indicates a long-term project with potential for cost overruns or scope creep. 4. The firm-fixed-price structure aims to control costs, but the lack of competition raises questions about the initial pricing. 5. The project's location in Maryland may have implications for local workforce and economic development. 6. The absence of small business set-aside flags raises questions about opportunities for smaller firms in this large construction project.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable laboratory construction projects from the same period and region. The firm-fixed-price contract type suggests an attempt to cap costs, but the lack of competition means there's no clear market validation of the pricing. Without more data on the specific scope of work and materials, a definitive value assessment is difficult, but the absence of competitive bids is a concern for ensuring optimal taxpayer value.

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. This indicates that the agency identified a specific contractor deemed capable of fulfilling the requirement without soliciting bids from other potential offerors. The lack of competition limits the agency's ability to explore a wider range of solutions and potentially secure more favorable pricing through a competitive bidding process.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no competitive pressure to drive down costs. It also limits transparency in the procurement process.

Public Impact

The primary beneficiaries are the National Institutes of Health, which will gain new or improved laboratory facilities. The contract delivers construction and labor services for commercial and institutional buildings, specifically laboratories and clinics. The project's geographic impact is concentrated in Maryland, potentially creating local jobs and economic activity. The workforce implications include employment opportunities for construction workers, project managers, and specialized trades in the Maryland area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and limited innovation.
Long contract duration increases risk of cost escalation and scope creep.
Sole-source award limits transparency and accountability in the procurement process.

Positive Signals

Firm-fixed-price contract aims to provide cost certainty for the government.
Award to a known entity like Skanska USA Building Inc. may indicate a reliance on established expertise for complex projects.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector. This sector is characterized by large-scale projects requiring specialized expertise and significant capital investment. The market size for federal construction contracts is substantial, with agencies like NIH frequently investing in infrastructure to support research and development. Comparable spending benchmarks would typically involve other large federal laboratory or medical facility construction projects, where competition levels and pricing structures can vary widely.

Small Business Impact

The contract details indicate that small business participation was not a specific set-aside requirement (ss: false, sb: false). This suggests that the primary contractor, Skanska USA Building Inc., was not obligated to subcontract a specific portion of the work to small businesses. Consequently, the direct impact on the small business ecosystem for this particular contract is likely minimal, unless the prime contractor voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services and the National Institutes of Health. As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. Transparency is limited due to the sole-source nature of the award. The Inspector General for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

NIH Research Facilities Construction
Federal Laboratory Modernization Projects
Healthcare Infrastructure Development
Large-Scale Commercial Construction Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration increases risk.
Limited transparency in procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $21.6 million to SKANSKA USA BUILDING INC.. TAS::75 0838::TAS CONSTRUCT/LABORATORIES&CLINICS

Who is the contractor on this award?

The obligated recipient is SKANSKA USA BUILDING INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $21.6 million.

What is the period of performance?

Start: 2010-12-02. End: 2016-07-31.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under circumstances such as urgent and compelling needs, unique capabilities of a single contractor, or when only one responsible source is capable of making the supply or furnishing the supply or service. Without the official justification document, it is impossible to determine the precise rationale. However, the lack of competition inherently raises questions about whether alternative solutions were adequately explored or if the justification was robust enough to warrant bypassing the standard competitive process.

How does the contract's value compare to similar laboratory construction projects awarded by federal agencies around the same time?

Direct comparison is difficult without access to a comprehensive database of similar federal laboratory construction projects awarded between 2010 and 2016, including their scope, location, and specific construction types. However, a $21.6 million contract for laboratory construction is a substantial investment. The absence of competition for this contract suggests that its value may not have been optimized through market forces. To perform a thorough comparison, one would need to identify projects with similar square footage, specialized equipment requirements, and geographic cost variations to establish a relevant benchmark for pricing and overall value.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

Sole-source contracts, especially for large projects like this laboratory construction valued at $21.6 million and spanning over 2000 days, carry inherent risks. The primary risk is the lack of price competition, which can lead to inflated costs for taxpayers. Without multiple bids, there's less incentive for the contractor to offer the most competitive pricing. Additionally, the extended duration increases the risk of scope creep, unforeseen cost increases due to market fluctuations, and potential delays. Oversight becomes even more critical to ensure the contractor remains accountable and delivers the project within the agreed-upon terms and budget, despite the absence of competitive pressure.

What was the historical spending pattern for laboratory construction at NIH prior to this contract?

The provided data does not contain historical spending patterns for laboratory construction at NIH. To assess this, one would need to analyze NIH's procurement history over several years, identifying contracts specifically for laboratory construction, their values, durations, and award types (competed vs. sole-source). Understanding past spending would help determine if this $21.6 million contract is an outlier, part of a trend, or if NIH has a history of using sole-source awards for such projects. This context is crucial for evaluating the agency's procurement strategies and overall investment in research infrastructure.

What performance metrics or milestones were established for this contract, and how were they monitored?

The provided data does not detail the specific performance metrics, milestones, or monitoring mechanisms established for this contract. For a firm-fixed-price contract of this nature, performance is typically tied to the successful completion of defined construction phases and adherence to specifications. Monitoring would likely involve regular progress reports, site inspections, and quality assurance checks by NIH officials. However, without explicit details on the contract's statement of work and reporting requirements, it's impossible to assess the effectiveness of the oversight and performance management applied to this sole-source 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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Skanska AB

Address: 221 YALE AVE N STE 400, SEATTLE, WA, 98109

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $21,586,700

Exercised Options: $21,586,700

Current Obligation: $21,586,700

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline