Naval Medical Center HVAC Repairs Awarded to Stronghold Engineering for $51.8M Under Full and Open Competition

Contract Overview

Contract Amount: $51,775,334 ($51.8M)

Contractor: Stronghold Engineering Inc

Awarding Agency: Department of Defense

Start Date: 2013-09-26

End Date: 2019-03-29

Contract Duration: 2,010 days

Daily Burn Rate: $25.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF HVAC AND DUCTWORK REPAIRS (PHASES 2&3) AT NAVAL MEDICAL CENTER, SAN DIEGO, CA

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92134

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $51.8 million to STRONGHOLD ENGINEERING INC for work described as: IGF::OT::IGF HVAC AND DUCTWORK REPAIRS (PHASES 2&3) AT NAVAL MEDICAL CENTER, SAN DIEGO, CA Key points: 1. Contract value of $51.8 million for HVAC and ductwork repairs at a major medical facility. 2. Full and open competition suggests a potentially competitive bidding process. 3. The contract duration spans over five years, indicating a significant, long-term project. 4. Fixed-price contract type may offer cost certainty but could limit contractor flexibility. 5. The project is located in San Diego, California, a region with substantial defense and healthcare infrastructure. 6. The North American Industry Classification System (NAICS) code 238220 points to specialized mechanical contracting services.

Value Assessment

Rating: fair

The contract value of $51.8 million for HVAC and ductwork repairs at the Naval Medical Center in San Diego appears substantial. Benchmarking against similar large-scale facility maintenance contracts within the Department of Defense or other federal agencies would be necessary for a precise value-for-money assessment. The firm fixed-price nature of the contract suggests that the government has a clear understanding of the scope and associated costs, aiming for predictable expenditures. However, without detailed cost breakdowns or comparisons to industry standards for similar repair work, it is difficult to definitively assess if the pricing represents excellent value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of five bidders suggests a moderate level of competition for this significant project. While five bidders is a reasonable number, a higher number could potentially drive prices down further. The competition level here likely provided the government with a range of options and pricing, contributing to a fair market price discovery process.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and a wider selection of qualified contractors.

Public Impact

The primary beneficiaries are the patients and staff of the Naval Medical Center, San Diego, who will receive improved environmental conditions and reliable HVAC services. The contract delivers essential repair and maintenance services for critical infrastructure at a key military healthcare facility. The geographic impact is localized to San Diego, California, supporting the operational readiness of a significant naval installation. The contract supports the skilled workforce within the HVAC and mechanical contracting sector in Southern California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 5 years) could lead to potential cost overruns if not managed effectively.
Firm fixed-price contracts can sometimes lead to contractors cutting corners on quality if not closely monitored.
Reliance on a single contractor for extensive repairs over an extended period may limit flexibility for future upgrades or unforeseen issues.

Positive Signals

Full and open competition suggests a robust selection process, likely resulting in a qualified and capable contractor.
The firm fixed-price contract provides budget certainty for the government, minimizing the risk of cost escalation.
The contract addresses critical infrastructure needs for a vital medical facility, ensuring operational continuity and patient care.

Sector Analysis

The contract falls within the construction and facilities maintenance sector, specifically focusing on mechanical systems. The market for HVAC services, particularly for large government facilities, is substantial, with numerous specialized contractors. This contract represents a significant investment in maintaining critical infrastructure for a major federal healthcare provider. Comparable spending benchmarks would involve looking at other large-scale HVAC repair and maintenance contracts awarded by agencies like the General Services Administration (GSA) or other branches of the Department of Defense for similar facilities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and there is no explicit mention of subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless the prime contractor voluntarily engages small businesses for subcontracting opportunities. Further investigation into subcontracting plans would be needed to fully assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Navy's contracting officers and potentially the Naval Facilities Engineering Command (NAVFAC). Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency is generally maintained through contract award databases, though detailed performance metrics may not always be publicly accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Facilities and Infrastructure Modernization Programs
Department of Defense Healthcare Facility Maintenance
Federal Building HVAC System Upgrades
Military Construction Projects

Risk Flags

Potential for cost overruns if scope is not tightly managed.
Risk of quality compromise in fixed-price contracts if oversight is insufficient.
Dependency on a single contractor for an extended period may limit future flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.8 million to STRONGHOLD ENGINEERING INC. IGF::OT::IGF HVAC AND DUCTWORK REPAIRS (PHASES 2&3) AT NAVAL MEDICAL CENTER, SAN DIEGO, CA

Who is the contractor on this award?

The obligated recipient is STRONGHOLD ENGINEERING INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $51.8 million.

What is the period of performance?

Start: 2013-09-26. End: 2019-03-29.

What is the track record of Stronghold Engineering Inc. with federal contracts, particularly in HVAC and large-scale facility repairs?

Stronghold Engineering Inc. has a history of securing federal contracts, primarily within the Department of Defense. Their portfolio includes various construction and repair projects, with a notable focus on mechanical systems like HVAC. Analyzing their past performance on similar-sized contracts, especially those involving critical infrastructure or healthcare facilities, would provide insight into their capacity, reliability, and adherence to project timelines and budgets. A review of past contract awards and any associated performance evaluations or disputes would be crucial to assessing their suitability and risk profile for this significant project.

How does the awarded price of $51.8 million compare to industry benchmarks for similar HVAC repair projects at large medical facilities?

Directly comparing the $51.8 million contract value to industry benchmarks requires detailed cost data specific to the scope of work, the age and condition of the existing HVAC systems, and the specific requirements of a medical facility. General benchmarks for large-scale HVAC overhauls can range significantly based on square footage, complexity, and materials. For a facility of the size and importance of the Naval Medical Center, San Diego, this figure could represent a fair market price if it encompasses extensive system replacements, ductwork modifications, and integration with modern controls. However, without a detailed cost breakdown or comparison to similar projects in comparable geographic regions, it's challenging to definitively state if it represents excellent or questionable value.

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

The primary risks associated with a firm fixed-price contract of this magnitude and duration include potential scope creep if not meticulously managed, contractor underestimation of costs leading to quality compromises, and unforeseen site conditions that could strain the fixed budget. For a long-term project, there's also the risk of material price fluctuations or labor availability issues impacting the contractor's ability to maintain profitability without sacrificing quality. The government's risk is primarily related to ensuring the contractor has the capacity and incentive to deliver high-quality work throughout the contract's lifespan, as the fixed price may disincentivize additional efforts beyond the defined scope.

How effective are the oversight mechanisms in place to ensure the quality and timely completion of these critical HVAC repairs?

Oversight for this contract is managed by the Department of the Navy, likely through contracting officers and project managers responsible for monitoring progress, quality, and adherence to specifications. The effectiveness of these mechanisms depends on the rigor of inspections, the clarity of performance metrics, and the responsiveness of the oversight team to any issues that arise. Firm fixed-price contracts inherently place the cost risk on the contractor, but government oversight remains crucial to ensure that cost savings are not achieved at the expense of quality or safety, especially in a sensitive environment like a medical center.

What is the historical spending pattern for HVAC maintenance and repair at the Naval Medical Center, San Diego?

Analyzing historical spending patterns for HVAC maintenance and repair at the Naval Medical Center, San Diego, would provide crucial context for the $51.8 million award. This would involve examining previous contracts for similar services, their values, durations, and whether they were for repairs, upgrades, or routine maintenance. Understanding the historical investment in HVAC systems can reveal trends in system aging, the frequency of major repairs versus replacements, and the overall lifecycle cost of maintaining these critical systems. Significant increases or decreases in spending over time could indicate changes in infrastructure condition, technological upgrades, or shifts in maintenance strategies.

What are the implications of awarding a large HVAC contract to a single entity for over five years on future technological adoption or system upgrades?

Awarding a large HVAC contract to a single entity for over five years can have implications for future technological adoption and system upgrades. While it provides continuity and potentially deepens the contractor's understanding of the facility's systems, it could also create a dependency that makes it harder to integrate newer, more efficient technologies introduced by other vendors during the contract period. The government might need to negotiate specific provisions for incorporating upgrades or face potential challenges and additional costs if major system overhauls are required before the contract concludes. This long-term commitment necessitates careful planning to ensure the facility remains technologically current.

Industry Classification

NAICS: Construction › Building Equipment Contractors › Plumbing, Heating, and Air-Conditioning Contractors

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: TWO STEP

Solicitation ID: N6247313R4204

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2000 MARKET ST, RIVERSIDE, CA, 92501

Business Categories: Asian Pacific American Owned Business, Category Business, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $51,775,334

Exercised Options: $51,775,334

Current Obligation: $51,775,334

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline