DoD's $244M construction contract for VA San Diego awarded to Archer Western Federal JV

Contract Overview

Contract Amount: $244,488,748 ($244.5M)

Contractor: Archer Western Federal JV

Awarding Agency: Department of Defense

Start Date: 2021-02-11

End Date: 2025-12-23

Contract Duration: 1,776 days

Daily Burn Rate: $137.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: FY21 VA SAN DIEGO 664-401 BASE BID

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92161

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $244.5 million to ARCHER WESTERN FEDERAL JV for work described as: FY21 VA SAN DIEGO 664-401 BASE BID Key points: 1. Contract value represents a significant investment in healthcare infrastructure. 2. Full and open competition suggests a potentially competitive bidding process. 3. The contract duration of over 4 years indicates a large-scale, long-term project. 4. Fixed-price contract type shifts risk to the contractor, potentially stabilizing costs. 5. The project's location in California places it within a high-cost construction market. 6. The awarding agency, Department of the Army, suggests a focus on military construction standards applied to civilian facilities.

Value Assessment

Rating: good

The base bid of $244.5 million for this large-scale construction project appears reasonable given the scope and duration. Benchmarking against similar large-scale healthcare facility construction projects would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract helps control costs, but the initial bid is the primary data point for value assessment without further cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With two bids received, the level of competition was limited but still present. This suggests that while multiple firms were aware of and considered the opportunity, the final number of bidders may have been influenced by project complexity, bonding requirements, or market conditions.

Taxpayer Impact: A competitive bidding process, even with two bidders, generally leads to better price discovery and potentially lower costs for taxpayers compared to sole-source or limited competition scenarios.

Public Impact

Veterans in the San Diego area will benefit from improved healthcare facilities. The project will deliver new or renovated hospital and medical center infrastructure. The geographic impact is concentrated in San Diego, California. The construction project will likely create numerous jobs for skilled trades and laborers in the region. The project supports the Department of Veterans Affairs' mission to provide healthcare services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen site conditions arise, despite fixed-price contract.
Risk of schedule delays impacting the delivery of critical healthcare services.
Dependence on the contractor's ability to manage a complex, multi-year project effectively.
Potential for disputes over contract scope or change orders given the project's scale.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established joint venture (Archer Western Federal JV) suggests experience.
Long contract duration allows for phased construction and integration of new facilities.
Full and open competition indicates a commitment to leveraging market capabilities.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, a significant segment of the construction industry. Large-scale federal projects like this often involve specialized requirements and stringent oversight. The market for federal construction is competitive, with many firms vying for these opportunities. The value of this single contract is substantial, representing a notable portion of annual spending in this specific sub-sector for the region.

Small Business Impact

While this contract was awarded under full and open competition and does not appear to have a specific small business set-aside, large federal construction projects often have subcontracting requirements. It is probable that Archer Western Federal JV will engage small businesses for various specialized trades and services, contributing to the small business ecosystem. Further analysis of the subcontracting plan would clarify the direct impact on small businesses.

Oversight & Accountability

Oversight for this project will likely be managed by the Department of the Army's contracting and engineering divisions, potentially with support from the VA's own project management teams. Accountability measures are typically embedded in the contract terms, including performance standards, payment schedules tied to milestones, and dispute resolution processes. Transparency is generally maintained through contract award databases and public reporting, though detailed project progress reports may be internal.

Related Government Programs

Department of Veterans Affairs Medical Facility Construction
Department of Defense Military Construction Projects
General Services Administration (GSA) Public Buildings Service Contracts
Federal Buildings Fund Projects

Risk Flags

Potential for cost escalation over the long contract duration.
Risk of quality compromises if contractor faces financial pressure.
Dependence on contractor's long-term performance and stability.
Limited competition may reduce price pressure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $244.5 million to ARCHER WESTERN FEDERAL JV. FY21 VA SAN DIEGO 664-401 BASE BID

Who is the contractor on this award?

The obligated recipient is ARCHER WESTERN FEDERAL JV.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $244.5 million.

What is the period of performance?

Start: 2021-02-11. End: 2025-12-23.

What is the track record of Archer Western Federal JV on similar large-scale federal construction projects?

Archer Western Federal JV is a joint venture that has likely been formed for specific large projects, combining the resources and expertise of its parent companies. To assess their track record, one would need to examine past performance on comparable federal contracts, particularly those involving healthcare facilities or large institutional buildings. Key indicators include on-time and on-budget completion rates, quality of work, safety records, and any history of contract disputes or claims. Information on their past performance can often be found in federal procurement databases like SAM.gov or through agency performance evaluations. A review of their project portfolio would reveal their experience with the specific challenges and requirements inherent in building for government clients, especially within the healthcare sector.

How does the $244.5 million base bid compare to similar VA hospital construction projects in terms of cost per square foot or per bed?

Benchmarking the $244.5 million base bid against similar VA hospital construction projects requires access to detailed project specifications, including square footage, number of beds, and specific facility types (e.g., outpatient clinics, acute care hospitals). Without these specifics, a direct cost-per-square-foot or cost-per-bed comparison is difficult. However, general industry data suggests that large-scale healthcare construction is among the most expensive building types due to complex systems (HVAC, medical gas, electrical), specialized finishes, and stringent regulatory requirements. The San Diego location also implies higher labor and material costs compared to national averages. A preliminary assessment suggests the bid is substantial, as expected for a major medical facility, but a definitive value judgment requires more granular data on the project's scope and comparable projects.

What are the primary risk indicators associated with a firm fixed-price contract for a project of this magnitude and duration?

For a firm fixed-price contract of this magnitude ($244.5 million) and duration (over 4 years), the primary risk indicator for the government is the potential for the contractor to cut corners on quality or scope to maintain profitability if costs escalate unexpectedly. While the fixed price shifts cost risk to the contractor, unforeseen site conditions, material price volatility, or labor shortages could strain the contractor's ability to deliver as specified. The government's risk lies in ensuring robust oversight and quality assurance to prevent substandard work. Conversely, the contractor bears the risk of cost overruns due to poor estimating, inefficient execution, or market fluctuations. The long duration increases the likelihood of encountering unforeseen issues that could lead to change orders or disputes, even under a fixed-price agreement.

What does the fact that the Department of the Army is the awarding agency, rather than the VA directly, imply for this project?

The Department of the Army acting as the awarding agency for a VA facility construction project suggests a potential reliance on the Army Corps of Engineers (USACE) or other Army construction management expertise. USACE has extensive experience in designing and constructing large-scale infrastructure, including medical facilities, often adhering to rigorous military construction standards. This could imply that the project benefits from established processes, experienced personnel, and potentially advanced construction techniques. It may also indicate a strategic decision to leverage existing federal construction capabilities rather than solely relying on VA resources. The standards and oversight applied might reflect military requirements, which are generally high, potentially leading to a very durable and well-built facility.

How might the limited competition (2 bidders) impact the final price and overall value for taxpayers?

Limited competition, such as the two bids received for this contract, can potentially lead to higher prices for taxpayers compared to a scenario with numerous bidders. When fewer companies compete, the pressure to offer the lowest possible price may be reduced. Each bidder might have a clearer understanding of their main competitor(s) and could price accordingly, potentially leading to a price that is more aligned with the second-lowest bidder's expectations rather than the absolute lowest achievable. However, if the two bidders were highly competitive and had significantly different approaches or cost structures, the resulting price could still represent good value. The key is whether the competition was robust enough to drive innovation and efficiency, or if it resulted in a less aggressive pricing environment.

What are the potential implications of the 1776-day duration (approx. 4.8 years) on project management and cost control?

A project duration of approximately 4.8 years presents unique challenges and opportunities for cost control and management. On the one hand, the extended timeline allows for more detailed planning, phased construction, and potentially the integration of new technologies or design changes as the project progresses. It can also spread the financial outlay over a longer period, easing immediate budget impacts. However, a longer duration significantly increases the risk of cost escalation due to inflation in labor and materials, potential changes in regulatory requirements, and the contractor's overhead costs accumulating over time. Effective project management, including rigorous schedule adherence, proactive risk mitigation, and vigilant oversight of change orders, becomes critical to prevent cost overruns and ensure the project remains within budget and delivers value.

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: TWO STEP

Solicitation ID: W912PL20R0004

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 929 W ADAMS ST, CHICAGO, IL, 60607

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $244,488,748

Exercised Options: $244,488,748

Current Obligation: $244,488,748

Actual Outlays: $43,270,948

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline