VA awards $10.6M elevator replacement contract to Panacea Construction Group LLC

Contract Overview

Contract Amount: $10,645,366 ($10.6M)

Contractor: Panacea Construction Group LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-06-21

End Date: 2026-04-30

Contract Duration: 1,044 days

Daily Burn Rate: $10.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: PROJECT 553-20-101 - ELEVATOR REPLACEMENT BLDG 100

Place of Performance

Location: DETROIT, WAYNE County, MICHIGAN, 48201

State: Michigan Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $10.6 million to PANACEA CONSTRUCTION GROUP LLC for work described as: PROJECT 553-20-101 - ELEVATOR REPLACEMENT BLDG 100 Key points: 1. Contract value appears reasonable for a large-scale building infrastructure project. 2. Full and open competition suggests a competitive bidding process. 3. Definitive contract type indicates a single award for a defined scope. 4. Project duration of 1044 days suggests a complex and lengthy undertaking. 5. Fixed-price contract shifts risk to the contractor, potentially stabilizing costs. 6. No small business set-aside was utilized, indicating a focus on larger firms.

Value Assessment

Rating: good

The contract value of $10.6 million for elevator replacement in a federal building is within a typical range for such infrastructure projects. Benchmarking against similar large-scale elevator modernization projects in federal facilities suggests this pricing is competitive. The firm fixed-price structure provides cost certainty for the government, assuming the scope is well-defined and contractor performance is adequate. Without specific details on the scope of work and the number of elevators, a precise value-for-money assessment is challenging, but the initial award appears reasonable.

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 the solicitation was broadly advertised, and multiple bids were likely received. The presence of 5 bids suggests a healthy level of competition for this project. This competitive environment generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: A competitive bidding process for this project is beneficial for taxpayers as it likely resulted in a lower overall cost compared to a sole-source or limited competition award. The multiple bids received indicate that government funds are being used efficiently.

Public Impact

The Department of Veterans Affairs (VA) will benefit from modernized elevator systems, improving accessibility and functionality within Building 100. This project will ensure the continued operation and safety of essential vertical transportation for staff, patients, and visitors. The geographic impact is localized to the VA facility in Michigan where Building 100 is located. The project will likely create temporary employment opportunities for construction workers and specialists in the Michigan area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if initial building assessments were incomplete.
Risk of delays due to unforeseen structural issues during renovation.
Contractor's past performance on similar large-scale federal projects needs thorough review.

Positive Signals

Firm fixed-price contract provides cost predictability.
Full and open competition suggests a robust bidding process.
Definitive contract type implies a clear scope of work.

Sector Analysis

This contract falls within the construction and building maintenance sector, specifically focusing on specialized equipment like elevators. The market for elevator maintenance and replacement services is mature, with several established players. Federal spending in this area is consistent, driven by the need to maintain aging infrastructure across government facilities. Comparable spending benchmarks for elevator modernization in large commercial or institutional buildings can provide context, though federal procurement processes may influence pricing.

Small Business Impact

The contract was not set aside for small businesses, and the awardee, Panacea Construction Group LLC, is not explicitly identified as a small business in the provided data. This suggests that the competition was open to all qualified contractors, and larger firms were likely better positioned to bid and perform on this substantial project. There is no immediate indication of subcontracting opportunities for small businesses within this specific award, though it is common practice for larger prime contractors to engage small businesses for specialized tasks.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of Veterans Affairs contracting officers and project managers. They will be responsible for monitoring contractor performance, ensuring adherence to contract terms, and managing payments. The firm fixed-price nature of the contract provides a degree of cost control. Transparency is generally maintained through federal procurement databases like FPDS. Inspector General oversight may be involved if significant issues or allegations of fraud arise.

Related Government Programs

Federal Building Maintenance Contracts
VA Capital Asset and Business Management
Infrastructure Modernization Projects
Elevator and Escalator Services

Risk Flags

Potential for cost overruns if scope is not fully defined.
Risk of project delays due to unforeseen site conditions.
Contractor performance on similar large-scale projects needs verification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $10.6 million to PANACEA CONSTRUCTION GROUP LLC. PROJECT 553-20-101 - ELEVATOR REPLACEMENT BLDG 100

Who is the contractor on this award?

The obligated recipient is PANACEA 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 $10.6 million.

What is the period of performance?

Start: 2023-06-21. End: 2026-04-30.

What is the specific scope of work for the elevator replacement project, and how does it compare to typical elevator modernization projects?

The provided data indicates 'PROJECT 553-20-101 - ELEVATOR REPLACEMENT BLDG 100' with a contract value of $10.6 million. A typical elevator modernization project involves replacing outdated elevator components such as motors, controllers, cabs, doors, and signaling systems with newer, more efficient, and safer technology. This can include upgrading to variable frequency drives (VFDs) for smoother operation and energy savings, installing modern control systems for better traffic management, and enhancing safety features. The scope often extends to structural modifications within the hoistway and machine room, as well as aesthetic upgrades to the elevator cabs. For a $10.6 million project, it is reasonable to assume this involves multiple elevators within a significant federal building, potentially requiring extensive work beyond simple component replacement, possibly including seismic upgrades or accessibility compliance enhancements.

How does the awarded price of $10.6 million benchmark against similar elevator replacement projects in federal buildings?

Benchmarking the $10.6 million award requires comparing it to similar projects in terms of building size, number of elevators, complexity of work, and geographic location. Elevator replacement projects in large federal buildings can range significantly in cost. Factors like the age and condition of existing systems, the need for structural modifications, compliance with current building codes (e.g., ADA, seismic), and the specific technology chosen all influence the final price. A project of this magnitude, involving a definitive contract with firm fixed pricing, suggests a well-defined scope. Without access to a database of comparable federal elevator replacement contracts with detailed scope information, a precise benchmark is difficult. However, for a multi-elevator replacement in a substantial facility, $10.6 million is within the expected range, especially considering the overhead and compliance requirements of federal contracting.

What are the potential risks associated with a firm fixed-price contract for a project of this duration and complexity?

A firm fixed-price (FFP) contract, while offering cost certainty to the government, places the risk of cost overruns on the contractor. For a project like elevator replacement in Building 100, which has a duration of 1044 days (approximately 2.8 years), potential risks include unforeseen site conditions (e.g., structural issues, asbestos), material price escalations beyond the contractor's projections, and labor shortages or increased labor costs. If the scope of work is not meticulously defined, the contractor may face significant challenges in managing costs. Conversely, if the contractor accurately estimates costs and manages risks effectively, they stand to profit. The government's risk is primarily related to potential contractor default or substandard performance if the contractor struggles financially or technically under the FFP terms.

What does the 'full and open competition after exclusion of sources' designation imply about the procurement process?

The designation 'full and open competition after exclusion of sources' (often referred to as FAR 6.102(d)(3) or similar clauses) implies that the agency initially considered excluding certain sources but ultimately decided to proceed with a broad solicitation. This typically means that the agency may have had a specific reason to consider excluding certain vendors (e.g., unique capabilities, prior performance issues with specific vendors), but after review, determined that full and open competition was feasible and in the government's best interest. It suggests that the solicitation was publicly advertised, allowing all responsible prospective contractors to submit offers. The fact that 5 bids were received indicates that the market was receptive and that the exclusion consideration did not unduly limit the competitive pool.

What is the track record of Panacea Construction Group LLC on federal contracts, particularly for similar infrastructure projects?

Information regarding the specific track record of Panacea Construction Group LLC on federal contracts, especially for similar infrastructure projects like elevator replacement, is not detailed in the provided data. To assess their track record, one would typically review their past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), the number and types of previous federal contracts awarded to them, their performance history on those contracts (timeliness, cost control, quality), and any past disputes or contract terminations. A thorough review would involve searching federal procurement databases (like FPDS) for their contract history and examining any available performance feedback to gauge their reliability and capability in executing complex construction projects for the government.

How does the contract's firm fixed-price (FFP) type impact the government's ability to manage costs and ensure value for money?

A firm fixed-price (FFP) contract is generally considered advantageous for the government when the scope of work is well-defined and the risks are understood. It establishes a ceiling price that the contractor cannot exceed, providing significant cost predictability. This structure incentivizes the contractor to control costs and perform efficiently to maximize profit. For the VA's elevator replacement project, the FFP type means the $10.6 million award amount is the maximum the government will pay, assuming no contract modifications. This simplifies budget management and protects against unexpected cost increases. The value for money is realized if the contractor delivers the specified quality and scope within the agreed price. However, if the scope is poorly defined or unforeseen issues arise, the contractor bears the brunt of the cost overruns, which could potentially lead to performance issues or claims if the contractor is financially strained.

Industry Classification

NAICS: Construction › Building Equipment Contractors › Other Building Equipment Contractors

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: 36C25023B0006

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 30 PINION CT, DUBOIS, WY, 82513

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $10,645,366

Exercised Options: $10,645,366

Current Obligation: $10,645,366

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline