DoD's $161.7M Mental Health Building Construction Contract Awarded to Walsh Construction
Contract Overview
Contract Amount: $161,754,948 ($161.8M)
Contractor: Walsh Construction Company
Awarding Agency: Department of Defense
Start Date: 2018-08-16
End Date: 2023-05-31
Contract Duration: 1,749 days
Daily Burn Rate: $92.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Construction
Official Description: CONSTRUCT MENTAL HEALTH INPATIENT BLDG 1
Place of Performance
Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90822
Plain-Language Summary
Department of Defense obligated $161.8 million to WALSH CONSTRUCTION COMPANY for work described as: CONSTRUCT MENTAL HEALTH INPATIENT BLDG 1 Key points: 1. The contract represents a significant investment in military healthcare infrastructure. 2. Competition was robust, suggesting a potentially competitive pricing environment. 3. The firm-fixed-price structure shifts cost risk to the contractor. 4. The project duration of nearly five years indicates a complex undertaking. 5. The contract is for a definitive contract type, suggesting a well-defined scope. 6. The project is located in California, a high-cost construction market.
Value Assessment
Rating: good
The contract value of $161.7 million for constructing a mental health inpatient building appears to be within a reasonable range for a project of this scale and complexity, especially considering its location in California. Benchmarking against similar large-scale healthcare facility constructions by the Department of Defense or other federal agencies would provide a more precise value-for-money assessment. The firm-fixed-price contract type suggests that the initial bid was considered competitive and that the contractor assumes cost overruns, which is generally favorable for the government.
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 two bidders suggests a moderate level of competition for this significant construction project. While two bidders are better than one, a higher number of bidders could potentially drive prices down further and offer a wider range of technical solutions. The contracting agency's decision to proceed with two offers implies that the competition met the agency's requirements for price and technical merit.
Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple companies to vie for the contract, potentially leading to lower prices and better value. Even with two bidders, the competitive process helps ensure the government is not overpaying.
Public Impact
The primary beneficiaries are service members and their families in California who will gain access to enhanced mental health care facilities. The contract will result in the construction of a new, specialized inpatient building designed for mental health services. The geographic impact is concentrated in California, likely serving a significant military population in the region. The project will create numerous jobs in the construction sector, including skilled trades, project management, and support staff in California.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if unforeseen site conditions or material price escalations occur, despite the firm-fixed-price structure.
- Long project duration (1749 days) increases exposure to market volatility and potential delays.
- Dependence on a single contractor for a critical infrastructure project carries inherent performance risks.
Positive Signals
- Firm-fixed-price contract shifts cost risk to the contractor, promoting budget certainty.
- Awarded under full and open competition, suggesting a competitive bidding process.
- The contractor, Walsh Construction Company, is a large, established firm with experience in major construction projects.
Sector Analysis
The construction of specialized healthcare facilities, such as this mental health inpatient building, falls within the broader commercial and institutional building construction sector. This sector is characterized by large-scale projects requiring significant capital investment, specialized labor, and adherence to stringent building codes and regulations. Federal spending in this area often supports critical infrastructure needs for government agencies, including military branches. Comparable spending benchmarks would involve analyzing the cost per square foot or per bed for similar healthcare construction projects undertaken by the Department of Defense or the Department of Veterans Affairs.
Small Business Impact
This contract was not set aside for small businesses, and the data indicates no specific subcontracting requirements for small businesses were mandated. The award to a large prime contractor like Walsh Construction Company suggests that small businesses are unlikely to be directly involved as prime contractors on this specific project. However, opportunities may exist for small businesses to participate as subcontractors to Walsh Construction, depending on the prime contractor's subcontracting plan and the availability of specialized services required for the project.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Army contracting office and potentially the Defense Contract Management Agency (DCMA). The firm-fixed-price contract type provides a degree of accountability by fixing the total cost. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.
Related Government Programs
- Department of Defense Military Construction
- Department of Veterans Affairs Healthcare Construction
- Federal Buildings Fund
- General Services Administration Public Buildings Service
Risk Flags
- Long project duration increases risk of market volatility.
- Potential for unforeseen site conditions in construction.
- Dependence on contractor performance over extended period.
Tags
construction, department-of-defense, department-of-the-army, california, definitive-contract, firm-fixed-price, full-and-open-competition, healthcare-infrastructure, mental-health-facility, large-contract, walsh-construction-company
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $161.8 million to WALSH CONSTRUCTION COMPANY. CONSTRUCT MENTAL HEALTH INPATIENT BLDG 1
Who is the contractor on this award?
The obligated recipient is WALSH CONSTRUCTION COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $161.8 million.
What is the period of performance?
Start: 2018-08-16. End: 2023-05-31.
What is Walsh Construction Company's track record with large federal construction projects, particularly healthcare facilities?
Walsh Construction Company is a large, established general contractor with a significant history of undertaking major construction projects across various sectors, including healthcare, transportation, and infrastructure. They have experience with federal contracts, though specific details on their past performance with Department of Defense mental health facilities would require a deeper dive into contract databases and performance reviews. Their size and experience suggest a capacity to manage complex projects of this magnitude. However, a thorough assessment would involve reviewing past project delivery timelines, budget adherence, and client satisfaction feedback from previous government contracts to gauge their reliability and expertise in this specific niche.
How does the cost per square foot for this mental health building compare to similar federal healthcare construction projects?
Without the specific square footage of the mental health inpatient building, a direct cost per square foot comparison is not possible. However, the total contract value of $161.7 million for a specialized inpatient facility suggests a substantial investment. Federal healthcare construction projects, especially those requiring specialized medical equipment, advanced HVAC systems, and specific patient care environments, tend to have higher per-square-foot costs than standard commercial buildings. To benchmark effectively, one would need to identify comparable DoD or VA inpatient mental health facilities constructed around the same period, ascertain their square footage, and then calculate their respective cost per square foot. This would reveal if the $161.7 million award represents a competitive price point for the scope and quality of the facility being built.
What are the primary risks associated with a nearly five-year construction timeline for a federal facility?
A construction timeline of 1749 days (approximately 4.8 years) for a federal facility introduces several significant risks. Firstly, there is an increased exposure to market fluctuations in material costs and labor rates, which could impact the contractor's profitability or lead to change orders if not adequately managed within the firm-fixed-price contract. Secondly, extended project durations heighten the risk of design obsolescence, especially in rapidly evolving fields like healthcare technology. Thirdly, prolonged timelines increase the likelihood of encountering unforeseen site conditions or regulatory changes that could cause delays and cost increases. Finally, the longer the project, the greater the potential for shifts in agency priorities or funding availability, although a definitive contract award mitigates some of this risk.
What is the expected impact of this facility on the delivery of mental health services to military personnel in California?
The construction of this new mental health inpatient building is expected to significantly enhance the delivery of mental health services to military personnel and their families in California. It will likely increase the capacity for inpatient care, reducing wait times and improving access to specialized treatment. The facility's design will cater specifically to mental health needs, potentially offering a more therapeutic and effective healing environment compared to general medical facilities. This investment signals a commitment to addressing the mental well-being of the military community in the region, providing state-of-the-art resources to support recovery and resilience.
How does the 'definitive contract' type influence the government's flexibility and the contractor's obligations?
A definitive contract, in this context, typically refers to a contract that is fixed in price and scope, often awarded after a period of negotiation or competition. For this project, it implies that the scope of work, specifications, and the total price ($161.7 million) were clearly defined and agreed upon before the contract was finalized. This provides the government with budget certainty and limits the potential for scope creep. For the contractor, it means they have a clear understanding of their obligations and are responsible for delivering the specified building within the agreed-upon price. While it's a firm-fixed-price contract, there might be provisions for adjustments due to unforeseen circumstances or changes initiated by the government, but these would typically be subject to formal modification procedures.
What are the implications of awarding this contract in a high-cost construction market like California?
Awarding a $161.7 million construction contract in California, a known high-cost market for labor and materials, has several implications. It suggests that the $161.7 million figure is likely reflective of elevated regional costs. The government may have factored these higher costs into its budget and evaluation of bids. For the contractor, managing costs effectively will be crucial to maintaining profitability. The competitive bidding process under full and open competition is vital here; it ensures that even in an expensive market, the government receives competitive pricing relative to the local conditions and the project's complexity. The long duration also means the contractor must carefully manage potential cost escalations specific to the California market over the project's lifespan.
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: W912PL18R0001
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Walsh Group Ltd., the
Address: 929 W ADAMS ST, CHICAGO, IL, 60607
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $161,754,948
Exercised Options: $161,754,948
Current Obligation: $161,754,948
Actual Outlays: $3,389,354
Subaward Activity
Number of Subawards: 145
Total Subaward Amount: $218,749,529
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2018-08-16
Current End Date: 2023-05-31
Potential End Date: 2023-05-31 00:00:00
Last Modified: 2023-05-25
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