VA awards $19.6M for Battle Creek cogeneration system, Demaria Building Company wins contract

Contract Overview

Contract Amount: $19,637,389 ($19.6M)

Contractor: Demaria Building Company, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2011-03-04

End Date: 2014-06-19

Contract Duration: 1,203 days

Daily Burn Rate: $16.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: THIS PROJECT IS FOR CONSTRUCTION OF A RENEWABLY FUELED COGENERATION SYSTEM AT VAMC BATTLE CREEK, MI.

Place of Performance

Location: BATTLE CREEK, CALHOUN County, MICHIGAN, 49037

State: Michigan Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $19.6 million to DEMARIA BUILDING COMPANY, INC. for work described as: THIS PROJECT IS FOR CONSTRUCTION OF A RENEWABLY FUELED COGENERATION SYSTEM AT VAMC BATTLE CREEK, MI. Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is a definitive contract with a firm fixed price, indicating cost certainty for the government. 3. The project involves construction of a renewable cogeneration system, aligning with potential energy efficiency goals. 4. The duration of the contract was 1203 days, suggesting a significant construction timeline. 5. The award was made by the Department of Veterans Affairs, indicating a focus on facilities supporting veterans. 6. The North American Industry Classification System (NAICS) code 237130 points to power and communication line construction.

Value Assessment

Rating: fair

The contract value of $19.6 million for a cogeneration system construction project appears within a reasonable range for such infrastructure development. Benchmarking against similar renewable energy construction projects for federal facilities would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract offers cost predictability, but the final cost relative to the initial scope and market rates for construction services will determine the ultimate value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The data indicates there were 4 bids received. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The presence of multiple bidders suggests a healthy market for this type of construction service.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices through a competitive bidding process, leading to potentially lower overall project costs.

Public Impact

The primary beneficiary is the Department of Veterans Affairs, which will receive a new renewable energy system for its Battle Creek Medical Center. The project delivers essential infrastructure for power generation and heating, potentially improving operational efficiency and reducing energy costs for the facility. The geographic impact is localized to Battle Creek, Michigan, where the VAMC is located. The contract supports the construction workforce in Michigan, including skilled trades involved in building and installing the cogeneration system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen construction challenges arise, despite the firm fixed-price contract.
Delays in construction could impact the operational readiness and energy cost savings for the VAMC.
Ensuring the renewable energy system meets long-term performance and efficiency standards will be critical.
The complexity of cogeneration systems requires specialized maintenance, potentially leading to future operational costs.

Positive Signals

Awarded under full and open competition, indicating a competitive pricing environment.
Firm fixed-price contract provides cost certainty for the government.
Focus on renewable energy aligns with potential sustainability goals.
The contractor, Demaria Building Company, Inc., has experience in construction projects.

Sector Analysis

This contract falls within the construction sector, specifically related to power and communication infrastructure. The market for constructing renewable energy systems, including cogeneration, is growing as federal agencies and private entities seek to improve energy efficiency and reduce their carbon footprint. The value of this contract, approximately $19.6 million, is substantial for a single facility project, reflecting the complexity and scale of cogeneration system installation.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract, nor does it mention subcontracting goals for small businesses. As it was awarded under full and open competition, it is possible that small businesses participated in the bidding process or could be involved as subcontractors. Further analysis would be needed to determine the extent of small business participation and its impact.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Veterans Affairs contracting officers and project managers. Given it's a construction project, regular site inspections, progress reports, and adherence to contract specifications would be key oversight mechanisms. Transparency is generally maintained through contract award databases and public reporting, though specific day-to-day oversight details are not publicly detailed.

Related Government Programs

Department of Veterans Affairs Facilities Management
Federal Renewable Energy Initiatives
Government Construction Contracts
Cogeneration System Procurement

Risk Flags

Potential for construction delays
Risk of cost overruns (despite FFP)
Integration complexity with existing VAMC infrastructure
Long-term operational and maintenance costs
Ensuring renewable energy system performance meets expectations

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $19.6 million to DEMARIA BUILDING COMPANY, INC.. THIS PROJECT IS FOR CONSTRUCTION OF A RENEWABLY FUELED COGENERATION SYSTEM AT VAMC BATTLE CREEK, MI.

Who is the contractor on this award?

The obligated recipient is DEMARIA BUILDING COMPANY, INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $19.6 million.

What is the period of performance?

Start: 2011-03-04. End: 2014-06-19.

What is the track record of Demaria Building Company, Inc. with federal contracts, particularly in construction and energy systems?

Demaria Building Company, Inc. has a history of performing federal construction contracts. While specific details on their experience with cogeneration systems require deeper investigation into their past performance reports and project portfolio, their selection for this significant project suggests they met the qualifications set forth by the Department of Veterans Affairs. Analyzing their past federal contract awards, completion timeliness, and any reported disputes or performance issues would provide a clearer picture of their reliability and expertise in executing similar projects.

How does the $19.6 million cost compare to similar cogeneration system construction projects at federal facilities?

Benchmarking the $19.6 million cost against similar cogeneration system construction projects at federal facilities is crucial for assessing value for money. Factors such as system size (kW/MW capacity), technology type (e.g., combined heat and power), complexity of integration with existing infrastructure, and geographic location (which affects labor and material costs) significantly influence project expenses. Without specific comparable data points, it's challenging to definitively state if this contract represents excellent or fair value. However, for a facility-sized system, this figure appears within a plausible range, warranting further comparative analysis.

What are the primary risks associated with the construction of a cogeneration system at a VAMC?

Key risks in constructing a cogeneration system at a VAMC include technical challenges during installation and integration with existing utility systems, potential for construction delays impacting facility operations, and cost overruns if unforeseen site conditions or material price fluctuations occur, despite the firm fixed-price contract. Ensuring compliance with stringent healthcare facility regulations and environmental standards adds another layer of complexity. Furthermore, the long-term operational and maintenance costs, as well as the system's actual energy output and efficiency compared to projections, represent performance risks that need careful management post-construction.

How effective is the firm fixed-price contract in mitigating cost risks for this specific project?

The firm fixed-price (FFP) contract is designed to transfer most of the cost risk from the government to the contractor, Demaria Building Company, Inc. This means the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This structure provides significant cost certainty for the Department of Veterans Affairs. However, risks remain if the contract scope is not clearly defined, leading to change orders, or if the contractor encounters unforeseen difficulties that could lead to disputes or contractor default. The success of the FFP in mitigating risk is thus dependent on robust contract definition and diligent oversight.

What is the historical spending pattern for power and communication line construction (NAICS 237130) by the Department of Veterans Affairs?

Analyzing the Department of Veterans Affairs' historical spending on NAICS code 237130 (Power and Communication Line and Related Structures Construction) would reveal trends in their investment in utility infrastructure. This specific contract for a cogeneration system, while related, might also fall under broader construction or energy-related categories. Understanding the VA's typical investment levels in this area can provide context for the $19.6 million award, indicating whether it represents a significant or routine expenditure. Consistent spending in this category might suggest ongoing efforts to upgrade or maintain critical infrastructure across VA facilities.

What are the implications of the 1203-day contract duration on the VAMC's operations and energy goals?

A contract duration of 1203 days (approximately 3.3 years) for the construction of a cogeneration system indicates a substantial and complex project. This extended timeline implies potential disruptions to VAMC operations during the construction phase, requiring careful planning to minimize impact on patient care and facility services. It also means that the anticipated benefits of the renewable energy system, such as cost savings and improved energy resilience, will be deferred until completion. The long duration necessitates sustained project management and oversight to ensure progress and adherence to schedule.

Industry Classification

NAICS: Construction › Utility System Construction › Power and Communication Line and Related Structures Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCT NONBUILDING FACILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: VA-701-10-RP-0183

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3031 W GRAND BLVD STE 624, DETROIT, MI, 48202

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

Financial Breakdown

Contract Ceiling: $19,637,389

Exercised Options: $19,637,389

Current Obligation: $19,637,389

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline