NIH awards $2.48M for medical air and vacuum systems replacement, with 6 bidders indicating strong competition

Contract Overview

Contract Amount: $2,478,577 ($2.5M)

Contractor: HSU Development, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2024-07-26

End Date: 2026-10-07

Contract Duration: 803 days

Daily Burn Rate: $3.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: C115667 AND C116491 MEDICAL AIR (CRC) AND MEDICAL VACUUM (CRC AND ACRF) SYSTEMS REPLACEMENT WITH ALTERNATE I

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20892

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $2.5 million to HSU DEVELOPMENT, INC. for work described as: C115667 AND C116491 MEDICAL AIR (CRC) AND MEDICAL VACUUM (CRC AND ACRF) SYSTEMS REPLACEMENT WITH ALTERNATE I Key points: 1. The contract value of $2.48 million appears reasonable for specialized medical infrastructure upgrades. 2. Full and open competition suggests a healthy market for these services, potentially driving competitive pricing. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. The project duration of over two years indicates a significant scope of work. 5. The award to HSU DEVELOPMENT, INC. warrants review of their past performance in similar projects. 6. The geographic focus on Maryland may limit broader market participation but ensures local expertise.

Value Assessment

Rating: good

The contract value of $2.48 million for replacing medical air and vacuum systems is within a typical range for such specialized healthcare infrastructure projects. Benchmarking against similar NIH or other federal agency contracts for medical gas system upgrades would provide a more precise value-for-money assessment. The firm-fixed-price structure is advantageous, shifting cost risk to the contractor and promoting budget certainty. However, without detailed cost breakdowns or comparisons to commercial market rates for comparable installations, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with six bidders participating. This level of competition is a positive indicator, suggesting that multiple qualified firms were aware of and interested in the requirement. A higher number of bidders generally leads to more competitive pricing and a wider selection of qualified contractors. The agency's approach to soliciting bids under this broad category likely facilitated a robust price discovery process.

Taxpayer Impact: The strong competition ensures that taxpayer dollars are likely being used efficiently, as contractors are incentivized to offer their best pricing to win the award. This reduces the risk of overpayment compared to sole-source or limited competition scenarios.

Public Impact

The primary beneficiaries are patients and healthcare providers at the NIH facility in Maryland, who will receive upgraded, reliable medical air and vacuum systems. The services delivered include the replacement of critical medical gas infrastructure, ensuring the safe and effective operation of medical equipment. The geographic impact is concentrated within Maryland, specifically at the NIH campus. The project will likely involve skilled construction and engineering labor, potentially creating or sustaining jobs in the local Maryland workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if unforeseen issues arise during the replacement of existing infrastructure.
Dependence on HSU DEVELOPMENT, INC.'s ability to manage project timelines effectively over the 803-day duration.
Ensuring compliance with all relevant healthcare facility codes and standards during the upgrade process.

Positive Signals

Awarded under full and open competition with six bidders, indicating a competitive market.
Firm-fixed-price contract type provides cost certainty for the government.
The project addresses essential medical infrastructure, ensuring patient safety and operational continuity.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on specialized mechanical systems for healthcare facilities. The market for medical gas systems is a niche within construction, requiring specific expertise and adherence to stringent regulations. Comparable spending benchmarks would involve looking at other federal or large private healthcare construction projects involving similar system upgrades. The total federal spending on construction services is substantial, and this contract represents a small but critical investment in maintaining healthcare infrastructure.

Small Business Impact

The contract was not set aside for small businesses, and the data does not indicate any specific subcontracting requirements for small businesses. This suggests that the primary award went to a larger entity capable of handling the full scope of work. The lack of a small business set-aside means that opportunities for small businesses in this specific contract are likely limited to potential subcontracting roles, if any are offered by the prime contractor.

Oversight & Accountability

Oversight for this contract will likely be managed by the National Institutes of Health (NIH) contracting officers and project managers. Accountability measures are inherent in the firm-fixed-price contract, requiring the contractor to deliver specified work within the agreed-upon price. Transparency is generally maintained through contract award databases and public reporting, although detailed project-specific oversight activities are typically internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

NIH Facilities Maintenance and Repair
Medical Equipment Infrastructure Upgrades
Federal Healthcare Construction Projects
Building Systems Modernization

Risk Flags

Potential for unforeseen site conditions impacting schedule and cost.
Contractor performance risk on a multi-year project.
Ensuring compliance with stringent healthcare facility regulations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $2.5 million to HSU DEVELOPMENT, INC.. C115667 AND C116491 MEDICAL AIR (CRC) AND MEDICAL VACUUM (CRC AND ACRF) SYSTEMS REPLACEMENT WITH ALTERNATE I

Who is the contractor on this award?

The obligated recipient is HSU DEVELOPMENT, INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $2.5 million.

What is the period of performance?

Start: 2024-07-26. End: 2026-10-07.

What is HSU DEVELOPMENT, INC.'s track record with the federal government, particularly on similar medical infrastructure projects?

A review of federal procurement data indicates that HSU DEVELOPMENT, INC. has received federal contracts primarily within the construction and facilities maintenance domain. While specific details on past performance for medical air and vacuum system replacements are not immediately apparent from the summary data, their award on this NIH contract suggests they possess the necessary qualifications. Further investigation into their contract history, including past performance evaluations and any reported issues on previous projects, would be necessary to fully assess their reliability and expertise for this critical infrastructure upgrade. Examining awards for similar NAICS codes (e.g., 236220) and contract types would provide a more comprehensive picture of their capabilities and experience.

How does the $2.48 million contract value compare to similar medical gas system replacement projects at other federal facilities?

Benchmarking the $2.48 million contract value requires comparing it to similar projects in terms of scope, complexity, and location. Projects involving the replacement of entire medical air and vacuum systems in large healthcare facilities can vary significantly in cost due to factors like facility size, existing infrastructure challenges, and specific system requirements (e.g., redundancy, purity standards). Without access to a database of comparable federal contracts for medical gas system replacements, a precise comparison is difficult. However, the presence of six bidders suggests the contract value was perceived as adequate by the market to attract competitive offers, implying it is likely within a reasonable range for the described scope of work.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include potential construction delays, unforeseen site conditions requiring additional work, and ensuring the new systems meet stringent medical gas standards. The firm-fixed-price contract type mitigates financial risk for the government by capping the total cost. Mitigation for technical and schedule risks relies heavily on the contractor's project management capabilities and the government's oversight. The NIH will likely employ regular site inspections, progress reviews, and adherence to detailed specifications to ensure the project stays on track and meets all performance requirements. The contractor's experience and the competitive bidding process also serve as risk-reduction factors.

How effective is the firm-fixed-price contract type in ensuring value for money for this specific project?

The firm-fixed-price (FFP) contract type is generally considered effective in ensuring value for money for projects with well-defined scopes, such as the replacement of medical air and vacuum systems. It provides cost certainty for the government, as the contractor assumes the risk of cost overruns. This incentivizes the contractor to manage costs efficiently and complete the work within the agreed budget. For this project, the FFP structure helps prevent unexpected increases in the $2.48 million award amount, allowing for predictable budgeting. The effectiveness is maximized when the scope is clearly delineated in the contract to minimize change orders.

What is the historical spending pattern for medical infrastructure upgrades at the NIH, and how does this award fit in?

Analyzing historical spending patterns for medical infrastructure upgrades at the NIH would require a detailed review of past contract awards related to facilities maintenance, construction, and specialized medical equipment systems. This $2.48 million award for medical air and vacuum systems represents a specific investment in critical life-support infrastructure. Without historical data, it's difficult to definitively state how this award fits into broader spending trends. However, such upgrades are typically part of a long-term capital improvement plan to maintain the operational integrity and safety of healthcare facilities. The frequency and scale of such awards would indicate the NIH's ongoing commitment to modernizing its infrastructure.

Given the 'full and open competition' and six bidders, what does this imply about the market capacity for specialized medical construction services?

The fact that this contract was awarded under full and open competition with six bidders suggests a healthy and competitive market for specialized medical construction services, at least within the geographic region or for the specific scope of work required by the NIH. A robust number of bidders indicates that multiple firms possess the necessary technical expertise, certifications, and capacity to undertake such projects. This competitive environment is beneficial for the government, as it typically leads to better pricing, higher quality services, and a wider pool of potential contractors for future requirements. It implies that the NIH requirement was well-defined and accessible to a broad range of qualified vendors.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 507 N FREDERICK AVE, GAITHERSBURG, MD, 20877

Business Categories: Asian Pacific American Owned Business, Category Business, Corporate Entity Not Tax Exempt, HUBZone Firm, Minority Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,478,577

Exercised Options: $2,478,577

Current Obligation: $2,478,577

Actual Outlays: $697,293

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $662,632

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 75N99019D00025

IDV Type: IDC

Timeline