VA awards $3.28M for utility building renovation, highlighting construction sector activity

Contract Overview

Contract Amount: $3,280,183 ($3.3M)

Contractor: J & J Mechanical and Construction Group LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-09-03

End Date: 2031-09-30

Contract Duration: 2,583 days

Daily Burn Rate: $1.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: 632-23-109 RENOVATE UTILITIES BUILDING 13

Place of Performance

Location: NORTHPORT, SUFFOLK County, NEW YORK, 11768

State: New York Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $3.3 million to J & J MECHANICAL AND CONSTRUCTION GROUP LLC for work described as: 632-23-109 RENOVATE UTILITIES BUILDING 13 Key points: 1. Contract value appears reasonable for a multi-year building renovation project. 2. Full and open competition suggests a competitive bidding environment. 3. Project duration of over 7 years warrants close monitoring for cost overruns. 4. Fixed-price contract type shifts performance risk to the contractor. 5. Geographic concentration in New York may indicate regional construction market focus. 6. The project falls within the broad commercial and institutional building construction sector.

Value Assessment

Rating: good

The contract value of $3.28 million for renovating a utilities building seems within a reasonable range for a project of this scope and duration. Benchmarking against similar federal construction contracts for building renovations would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract suggests that the contractor bears the primary risk for cost overruns, which can be beneficial for the government if managed effectively. However, the extended performance period requires diligent oversight to ensure the price remains competitive throughout its life.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while initial solicitations might have had some limitations, the final award was made after a broad competitive process. The presence of 6 bidders suggests a healthy level of competition for this construction project. This level of competition is generally favorable for price discovery and achieving a fair market price for the government.

Taxpayer Impact: A competitive bidding process with multiple bidders helps ensure that taxpayer funds are used efficiently by driving down costs and encouraging contractors to offer their best pricing.

Public Impact

The primary beneficiaries are the Department of Veterans Affairs, which will receive an updated and potentially more efficient utilities building. The services delivered include comprehensive renovation of building utilities, likely encompassing electrical, plumbing, HVAC, and potentially structural or facade improvements. The geographic impact is localized to New York, where the facility is located. The project will likely involve a workforce of construction laborers, electricians, plumbers, and project managers, contributing to employment in the skilled trades sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Extended contract duration (over 7 years) increases the risk of scope creep and potential cost increases if not managed meticulously.
The 'after exclusion of sources' clause in the competition type warrants a review to ensure no viable sources were unduly excluded.
Lack of specific performance metrics in the provided data makes it difficult to assess the contractor's performance trajectory.
Firm Fixed Price contracts can sometimes lead to contractors cutting corners on quality if not properly overseen, especially over a long duration.

Positive Signals

Full and open competition with 6 bidders indicates a robust market response and potential for competitive pricing.
The firm fixed-price contract structure transfers cost overrun risk to the contractor.
Awarding to J & J MECHANICAL AND CONSTRUCTION GROUP LLC suggests they met the technical and cost requirements of the VA.
The project addresses essential infrastructure needs for a VA facility, ensuring continued operational capability.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the broader construction industry. This sector encompasses the building and renovation of non-residential structures like government facilities, hospitals, schools, and commercial properties. Federal spending in this area is crucial for maintaining and upgrading public infrastructure. Comparable spending benchmarks would involve analyzing the average cost per square foot for similar renovation projects across federal agencies and private sector equivalents.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside requirement. However, the prime contractor, J & J MECHANICAL AND CONSTRUCTION GROUP LLC, may choose to subcontract portions of the work to small businesses as part of their overall project management strategy, which could indirectly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Department of Veterans Affairs contracting officers and project managers. Accountability measures are inherent in the firm fixed-price contract type, which penalizes the contractor for cost overruns. Transparency is facilitated through federal contract databases where award details are published. While specific Inspector General (IG) jurisdiction isn't detailed here, the VA OIG typically has oversight over VA contracts to investigate fraud, waste, and abuse.

Related Government Programs

Federal Building Renovations
VA Facilities Management
Utilities Infrastructure Upgrades
Commercial Construction Contracts
Public Works Projects

Risk Flags

Long contract duration
Potential for cost escalation
Need for sustained oversight
Scope creep risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $3.3 million to J & J MECHANICAL AND CONSTRUCTION GROUP LLC. 632-23-109 RENOVATE UTILITIES BUILDING 13

Who is the contractor on this award?

The obligated recipient is J & J MECHANICAL AND CONSTRUCTION GROUP LLC.

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 $3.3 million.

What is the period of performance?

Start: 2024-09-03. End: 2031-09-30.

What is the track record of J & J MECHANICAL AND CONSTRUCTION GROUP LLC with the Department of Veterans Affairs and similar federal agencies?

A thorough review of the contractor's past performance database (e.g., Contractor Performance Assessment Reporting System - CPARS) would be necessary to assess J & J MECHANICAL AND CONSTRUCTION GROUP LLC's track record. This would involve examining past contract performance, including on-time delivery, quality of work, cost control, and overall customer satisfaction, particularly on projects with the VA or similar federal entities. Analyzing their history on firm fixed-price contracts would be especially relevant given the current award type. Without access to this specific performance data, it's difficult to definitively gauge their reliability and past success on comparable projects.

How does the awarded price compare to industry benchmarks for similar utility building renovations?

To benchmark the $3.28 million award, one would need to compare it against the cost per square foot or cost per major system (e.g., HVAC, electrical) for similar utility building renovations undertaken by other federal agencies or in the private sector. Factors such as the building's age, complexity of existing systems, scope of renovation (e.g., modernization vs. basic repair), and geographic location (which influences labor and material costs) are critical. Given the 7-year duration, the annual average cost would be approximately $468,600, which needs to be evaluated against the specific scope of work and market conditions in New York.

What are the primary risks associated with the long duration of this contract?

The 2583-day (approximately 7-year) duration presents several risks. Firstly, the risk of inflation impacting material and labor costs, even with a fixed price, can strain the contractor's margins or lead to disputes if escalation clauses are not carefully managed or if unforeseen market shifts occur. Secondly, technological advancements in utilities management could render the renovated systems partially obsolete before the contract's end, requiring potential change orders. Thirdly, maintaining consistent oversight and contract management over such an extended period can be challenging for agency personnel, increasing the risk of scope creep or performance degradation if vigilance wanes. Finally, the contractor's financial stability and operational capacity over seven years are also factors to consider.

What specific performance metrics will be used to evaluate the success of this renovation?

The provided data does not specify the performance metrics for this contract. Typically, for a building renovation, success would be measured against criteria such as adherence to the project schedule, completion within the fixed price, quality of workmanship (e.g., meeting building codes and specifications), functionality of the new or upgraded utility systems (e.g., energy efficiency improvements, reliability), and minimal disruption to ongoing facility operations. A robust contract management plan would detail these metrics, including inspection protocols and acceptance criteria, to ensure the VA receives the intended value and operational improvements.

How does this contract fit into the VA's broader strategy for facilities maintenance and modernization?

This contract appears to be a component of the VA's ongoing efforts to maintain and modernize its extensive portfolio of healthcare facilities and supporting infrastructure. Renovating utility systems is critical for ensuring the reliable operation of hospitals and clinics, which often have high energy demands and require robust life-support systems. Such projects contribute to operational efficiency, reduce long-term maintenance costs, enhance patient safety, and ensure compliance with current environmental and safety regulations. It reflects a commitment to investing in the physical infrastructure necessary to support veteran healthcare services.

What is the potential impact of the 'after exclusion of sources' clause on the final price?

The 'after exclusion of sources' clause in the contract type ('FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES') suggests that while the competition was ultimately broad, certain potential sources may have been excluded prior to the main solicitation phase. The impact on the final price depends heavily on the justification for these exclusions and the number of bidders that remained. If legitimate reasons existed for exclusion (e.g., specific technical capabilities, past performance issues), and a sufficient number of qualified bidders still competed, the price could still be competitive. However, if the exclusion significantly limited the pool of capable contractors, it might have reduced competitive pressure, potentially leading to a higher price than if all qualified sources had been included.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SEALED BID

Solicitation ID: 36C24224B0039

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 329 SIP AVE, JERSEY CITY, NJ, 07306

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $3,280,183

Exercised Options: $3,280,183

Current Obligation: $3,280,183

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline