Fort Thompson Health Center expansion awarded to Red Lake Construction for $9.04M, highlighting infrastructure needs in Native American healthcare

Contract Overview

Contract Amount: $9,039,073 ($9.0M)

Contractor: RED Lake Construction, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2024-09-19

End Date: 2026-12-24

Contract Duration: 826 days

Daily Burn Rate: $10.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: FORT THOMPSON HEALTH CENTER DENTAL & OPTOMETRY ADDITION

Place of Performance

Location: FORT THOMPSON, BUFFALO County, SOUTH DAKOTA, 57339

State: South Dakota Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $9.0 million to RED LAKE CONSTRUCTION, LLC for work described as: FORT THOMPSON HEALTH CENTER DENTAL & OPTOMETRY ADDITION Key points: 1. Contract value represents a significant investment in critical healthcare infrastructure for the IHS. 2. The award to a single entity suggests potential limitations in market competition or specialized capabilities. 3. Fixed-price contract type aims to control costs, but requires careful scope management. 4. Project duration of over two years indicates a substantial construction undertaking. 5. Geographic focus on South Dakota points to specific regional healthcare development priorities. 6. The absence of small business set-aside flags potential missed opportunities for smaller enterprises.

Value Assessment

Rating: fair

The contract value of $9.04 million for a dental and optometry addition at the Fort Thompson Health Center appears substantial for a single facility expansion. Benchmarking against similar healthcare construction projects of this scale would be necessary to definitively assess value for money. The firm fixed-price structure suggests an attempt to cap costs, but the ultimate value will depend on the contractor's efficiency and the accuracy of the initial cost estimates. Without comparable project data, it's difficult to ascertain if this represents a competitive price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor is capable of meeting the requirement, or in specific circumstances like emergency procurements or when a particular entity has unique qualifications. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, as the government did not have multiple offers to choose from. This could result in a higher overall expenditure for this project compared to a competed procurement.

Public Impact

The primary beneficiaries are the Native American communities served by the Fort Thompson Health Center, who will gain improved access to dental and optometry services. The project will deliver expanded and modernized healthcare facilities, enhancing the quality and capacity of care. The geographic impact is concentrated in the Fort Thompson area of South Dakota, addressing specific local healthcare needs. The construction phase will likely create temporary employment opportunities for skilled trades and laborers in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Firm fixed-price contracts can lead to cost overruns if scope creep occurs without proper change order management.
Long project duration increases exposure to potential material cost fluctuations and labor availability issues.

Positive Signals

Investment in critical healthcare infrastructure addresses a clear need.
Firm fixed-price contract provides cost certainty if managed effectively.
Focus on a specific health center suggests targeted resource allocation.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically for healthcare facilities. The Indian Health Service (IHS) frequently awards contracts for the construction and renovation of clinics and hospitals to meet the healthcare needs of Native American populations. The market for healthcare construction is specialized, requiring adherence to stringent regulations and often involving complex building systems. Spending in this sector is driven by the need to modernize aging facilities, expand capacity, and improve access to care, particularly in underserved areas.

Small Business Impact

The contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This suggests that the primary award went to a larger entity, and opportunities for small businesses to participate in this project may be limited to direct subcontracting by the prime contractor, if any. Further investigation into the prime contractor's subcontracting plan would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Indian Health Service (IHS) and the Department of Health and Human Services (HHS). Mechanisms likely include contract performance monitoring, site inspections, and financial reviews. Transparency is generally facilitated through contract databases like FPDS. Accountability measures would involve adherence to the contract terms, quality standards, and delivery schedules. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Indian Health Service Facilities Construction
Rural Healthcare Infrastructure Projects
Healthcare Facility Modernization
Tribal Health Services Support

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for cost overruns in long-duration fixed-price contracts.
Limited visibility into contractor's specific federal healthcare construction experience.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $9.0 million to RED LAKE CONSTRUCTION, LLC. FORT THOMPSON HEALTH CENTER DENTAL & OPTOMETRY ADDITION

Who is the contractor on this award?

The obligated recipient is RED LAKE CONSTRUCTION, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Indian Health Service).

What is the total obligated amount?

The obligated amount is $9.0 million.

What is the period of performance?

Start: 2024-09-19. End: 2026-12-24.

What is the track record of Red Lake Construction, LLC in completing federal construction projects, particularly healthcare facilities?

Information regarding Red Lake Construction, LLC's specific track record with federal projects, especially healthcare facilities, is not detailed in the provided data. A thorough review of their past performance, including project history, client satisfaction, and any past performance evaluations or disputes, would be necessary to assess their capability and reliability for this significant health center expansion. Examining their experience with similar-sized projects and their adherence to timelines and budgets on previous federal contracts would provide crucial insights into their suitability for the Fort Thompson Health Center project.

How does the awarded price of $9.04 million compare to similar healthcare construction projects in South Dakota or the surrounding region?

Benchmarking the $9.04 million contract value against similar healthcare construction projects in South Dakota or the surrounding region is essential for assessing value for money. Without access to a database of comparable projects, including their scope, size, and final costs, it is difficult to determine if this price is competitive or inflated. Factors such as the specific medical services being added (dental and optometry), the complexity of the facility, and local construction market conditions would need to be considered in any comparative analysis. A detailed cost breakdown from the contractor would also aid in this assessment.

What are the primary risks associated with a sole-source award for a project of this magnitude?

The primary risks associated with a sole-source award for a project of this magnitude include a lack of competitive pricing, potentially leading to higher costs for taxpayers. Without multiple bids, there is less incentive for the awarded contractor to offer the most competitive price. Additionally, the government may have limited leverage in negotiations. There's also a risk that the sole-source justification might not be fully robust, or that alternative solutions or contractors were overlooked. This procurement method bypasses the market's natural price discovery mechanisms, which can be a significant drawback.

What is the expected impact of this facility expansion on the delivery of dental and optometry services to the local community?

This facility expansion is expected to significantly improve the delivery of dental and optometry services by increasing capacity, modernizing equipment, and potentially offering a wider range of specialized treatments. By adding dedicated space for these services, the Fort Thompson Health Center can likely reduce patient wait times, accommodate more appointments, and enhance the overall patient experience. This investment addresses a critical need for accessible and quality healthcare services, particularly in potentially underserved rural areas, contributing to better health outcomes for the community.

What historical spending patterns exist for healthcare facility construction by the Indian Health Service in South Dakota?

Analyzing historical spending patterns for healthcare facility construction by the Indian Health Service (IHS) in South Dakota would provide context for the $9.04 million award. Understanding the frequency, scale, and average costs of previous IHS construction projects in the state can help determine if this contract is an outlier or part of a consistent investment strategy. It would also reveal trends in the types of facilities being built or renovated and the typical procurement methods used. This historical data is crucial for assessing the current contract's alignment with past IHS infrastructure development efforts in the region.

Are there any specific performance metrics or quality standards outlined in the contract for the construction work?

The provided data does not specify the performance metrics or quality standards detailed within the contract. However, federal construction contracts typically include rigorous specifications, building codes, and quality assurance requirements that the contractor must meet. These often involve adherence to architectural plans, material standards, safety regulations, and industry best practices. The Indian Health Service would likely have oversight to ensure the construction meets all necessary health and safety standards and is completed to a high-quality finish, with final acceptance contingent upon meeting these criteria.

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: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 23884 HWY 1 E SUITE 101, RED LAKE, MN, 56671

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Tax Exempt, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $9,039,073

Exercised Options: $9,039,073

Current Obligation: $9,039,073

Actual Outlays: $5,734,853

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline