DoD awards $954M construction contract for VA Louisville Medical Center, a firm-fixed-price definitive contract

Contract Overview

Contract Amount: $954,230,876 ($954.2M)

Contractor: Walsh - Turner JV II

Awarding Agency: Department of Defense

Start Date: 2021-09-10

End Date: 2026-04-16

Contract Duration: 1,679 days

Daily Burn Rate: $568.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: AWARD OF THE VA LOUISVILLE MEDICAL CENTER - LOUISVILLE, KY

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40222

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $954.2 million to WALSH - TURNER JV II for work described as: AWARD OF THE VA LOUISVILLE MEDICAL CENTER - LOUISVILLE, KY Key points: 1. The contract's firm-fixed-price structure aims to control costs, but the large scale presents inherent execution risks. 2. Awarded under full and open competition, this suggests a competitive bidding process likely influenced pricing. 3. The contract duration of nearly 1700 days indicates a significant, long-term construction project. 4. The project's focus on a major medical center implies critical infrastructure development for veteran healthcare. 5. The absence of small business set-aside flags suggests the primary contractor is likely a large entity.

Value Assessment

Rating: good

The award of over $954 million for the VA Louisville Medical Center construction is substantial. Benchmarking against similar large-scale healthcare facility construction projects is crucial for a precise value assessment. However, the firm-fixed-price nature of the contract provides cost certainty for the government, which is a positive indicator for value, assuming the initial bid was competitive and realistic.

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 a bid. This typically leads to a more robust price discovery process as multiple contractors vie for the work. The presence of two bidders, as indicated by 'no': 2, suggests a degree of competition, though the exact number of proposals received would provide a clearer picture of the competitive landscape.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation from bidders.

Public Impact

Veterans in the Louisville, KY area will benefit from improved healthcare facilities. The contract will facilitate the construction of a new medical center, enhancing healthcare service delivery. The project's geographic impact is concentrated in Louisville, Kentucky. Significant workforce implications are expected, including construction jobs and long-term employment at the medical center.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if initial bids underestimated the complexity of a large medical facility.
Execution risks associated with managing a multi-year, high-value construction project.
Dependence on the primary contractor's ability to manage subcontractors effectively.
Potential for delays impacting the timely delivery of critical healthcare services.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Awarded through full and open competition, suggesting a competitive bidding process.
Focus on essential healthcare infrastructure development for veterans.
Long-term contract duration allows for comprehensive project planning and execution.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically for a large-scale healthcare facility. The construction market for medical centers is highly specialized, requiring significant expertise in building codes, specialized equipment installation, and long-term operational considerations. Comparable spending benchmarks would involve analyzing other major hospital or medical complex construction projects undertaken by federal agencies or large private healthcare systems.

Small Business Impact

The contract data indicates that small business set-asides were not utilized ('sb': false). This suggests that the primary contract was not specifically reserved for small businesses. While there is no direct indication of subcontracting plans for small businesses, large construction projects often involve significant subcontracting opportunities. The extent to which the prime contractor engages small businesses for specialized services will determine the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this definitive contract would typically be managed by the contracting agency (Department of the Army, within DoD) and potentially involve the VA's own oversight bodies given the facility's purpose. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

VA Medical Facility Construction
Department of Defense Construction Contracts
Large-Scale Infrastructure Projects
Firm-Fixed-Price Construction Awards

Risk Flags

Large contract value may increase risk of cost overruns.
Long contract duration increases exposure to market volatility and changing requirements.
Complexity of medical facility construction presents technical challenges.
Dependence on prime contractor's management of subcontractors.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $954.2 million to WALSH - TURNER JV II. AWARD OF THE VA LOUISVILLE MEDICAL CENTER - LOUISVILLE, KY

Who is the contractor on this award?

The obligated recipient is WALSH - TURNER JV II.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $954.2 million.

What is the period of performance?

Start: 2021-09-10. End: 2026-04-16.

What is the track record of Walsh - Turner JV II in executing large-scale federal construction projects, particularly healthcare facilities?

Assessing the track record of Walsh - Turner JV II is crucial for understanding their capacity to deliver on this significant $954 million contract. A review of their past performance on similar federal projects, especially those involving complex healthcare infrastructure, would reveal their experience with project scale, budget adherence, and timely completion. Data on their history with firm-fixed-price contracts and their success rate in managing such agreements would also be informative. Examining any past performance issues, such as disputes, delays, or cost overruns on comparable projects, would provide a clearer picture of potential risks associated with this award.

How does the awarded price of $954 million compare to similar VA medical center construction projects in terms of cost per square foot or per bed?

To benchmark the value of this $954 million contract, a comparative analysis of similar VA medical center construction projects is necessary. This would involve identifying projects of comparable size, scope, and complexity, ideally within the last 3-5 years, to account for inflation and market fluctuations. Key metrics for comparison include cost per square foot, cost per bed, and specific costs for specialized medical equipment installation. Without access to detailed project specifications and final costs of comparable projects, a precise value-for-money assessment is challenging. However, the firm-fixed-price nature suggests an attempt to lock in costs, which is a positive sign if the initial bid was competitive.

What are the primary risk indicators associated with a definitive contract of this magnitude and duration for a medical facility?

The primary risk indicators for this $954 million definitive contract revolve around its substantial value and long duration (nearly 1700 days). These include potential for scope creep if project requirements evolve significantly over time, leading to change orders that could increase costs despite the firm-fixed-price structure. Execution risks are also high, encompassing potential construction delays due to unforeseen site conditions, labor shortages, or material supply chain disruptions. Furthermore, the complexity of constructing a modern medical facility, with its specialized systems and stringent regulatory requirements, presents inherent technical risks. The contractor's financial stability and management capacity to oversee such a large undertaking are also critical risk factors.

How effective is the 'full and open competition' approach likely to be in ensuring competitive pricing for this large construction project?

The 'full and open competition' approach is generally considered the most effective method for ensuring competitive pricing on large federal contracts. By allowing all responsible sources to submit bids, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive proposals. In this case, with two bidders identified, the level of competition is moderate. The effectiveness hinges on whether these two bidders were highly qualified and capable of executing the project, and if their proposals represented a significant difference in price and technical approach. A more robust competition, with a larger number of bidders, would typically exert stronger downward pressure on prices.

What are the potential long-term implications for veteran healthcare services in the Louisville area resulting from this contract award?

The long-term implications for veteran healthcare services in the Louisville area are expected to be significantly positive. This contract facilitates the construction of a new, modern medical center, which should enhance the capacity and quality of care available to veterans. Improved facilities can lead to better patient outcomes, reduced wait times, and the potential to offer a wider range of specialized medical services. The successful and timely completion of this project is critical to realizing these benefits, ensuring that veterans have access to state-of-the-art healthcare infrastructure designed to meet their needs for years to come.

Given the contract's size and nature, what oversight mechanisms are in place to ensure accountability and prevent waste, fraud, or abuse?

Oversight for this $954 million construction contract is multifaceted. The contracting agency, the Department of the Army, will have primary oversight responsibility, likely through dedicated contracting officers and project managers. The VA, as the ultimate beneficiary of the facility, will also have significant oversight, ensuring the construction aligns with their healthcare delivery standards and requirements. Transparency is typically achieved through contract reporting in federal databases. Accountability measures include performance metrics, milestone reviews, and potential penalties for non-compliance. The Inspector General's office for both the DoD and VA would have jurisdiction to investigate any allegations of waste, fraud, or abuse throughout the contract lifecycle.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912QR21R0008

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $955,435,876

Exercised Options: $954,330,876

Current Obligation: $954,230,876

Actual Outlays: $246,344,332

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline