Army awards $12.2M for equipment maintenance, highlighting potential value concerns with a sole-source contract

Contract Overview

Contract Amount: $12,212,903 ($12.2M)

Contractor: Energy Systems Group LLC

Awarding Agency: Department of Defense

Start Date: 2001-06-27

End Date: 2024-07-31

Contract Duration: 8,435 days

Daily Burn Rate: $1.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: 200110!000776!2100!AE30 !TACOM - PICATINNY !DAAE3097D1002 !A!N!*!N!000302 !20010627!20011127!808548846!036908242!848381245!N!ENERGY MASTERS INTERNATIONAL, !1385 MENDOTA HEIGHTS ROAD !SAINT PAUL !MN!55120!58410!027!34!PICATINNY ARSENAL !MORRIS !NEW JERSEY!+000000090207!N!N!000000000000!J099!MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !541620!*!*!5!B!S!C!*!*!*!B!*!*!N!Z!D !N!Y!1!001!N!1F!Z!N!Z! ! !N!B!N!N! ! !A! !A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: PICATINNY ARSENAL, MORRIS County, NEW JERSEY, 07806

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $12.2 million to ENERGY SYSTEMS GROUP LLC for work described as: 200110!000776!2100!AE30 !TACOM - PICATINNY !DAAE3097D1002 !A!N!*!N!000302 !20010627!20011127!808548846!036908242!848381245!N!ENERGY MASTERS INTERNATIONAL, !1385 MENDOTA HEIGHTS ROAD !SAINT PAUL !MN!55120!58410!027!34!PICATINNY ARSENAL !MORRI… Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract type (Time and Materials) can lead to cost overruns if not closely managed. 3. A long duration of over 7 years suggests a need for ongoing, critical support. 4. The specific services, 'MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT', are essential but broad. 5. Geographic location of the contractor in Minnesota for work at Picatinny Arsenal, NJ, may indicate logistical considerations. 6. The contract's value is moderate, but the lack of competition is a key risk indicator.

Value Assessment

Rating: fair

The contract value of $12.2 million over its duration is moderate. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or other similar contracts. The Time and Materials (T&M) pricing structure, while flexible, carries inherent risks of cost escalation if not meticulously monitored by the government. The absence of a clear per-unit cost benchmark makes a precise value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly limits the opportunity for price discovery and potentially leads to higher costs for the government compared to a fully competed contract. The rationale for the sole-source award is not detailed in the provided data, but it typically implies a unique capability or urgent need that only one contractor could fulfill.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without multiple bids, there's less incentive for the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of the Army units relying on maintained equipment at Picatinny Arsenal. Services include maintenance and repair of miscellaneous equipment, ensuring operational readiness. The geographic impact is focused on Picatinny Arsenal in New Jersey. Workforce implications are likely for the contractor's employees in Minnesota and potentially on-site personnel at the arsenal.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price transparency.
Time and Materials contract type poses a risk of cost overruns.
Long contract duration requires sustained oversight.
Lack of detailed service descriptions makes performance assessment difficult.

Positive Signals

Essential maintenance and repair services are being provided.
Contract supports critical military equipment readiness.
Contractor is located in the US.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on equipment maintenance and repair. The market for such services is broad, encompassing numerous small and large businesses. However, the sole-source nature of this award suggests a specialized niche or a specific justification for not pursuing broader competition. Comparable spending benchmarks are difficult to establish without knowing the exact type of equipment being serviced.

Small Business Impact

The data indicates this contract was not set aside for small businesses and the primary contractor is listed as ENERGY SYSTEMS GROUP LLC. There is no information provided regarding subcontracting plans or opportunities for small businesses within this award. Therefore, the direct impact on the small business ecosystem appears minimal based on the available data.

Oversight & Accountability

Oversight mechanisms for this contract are not explicitly detailed in the provided data. However, as a Department of the Army contract, it would fall under the purview of the Army's contracting command and potentially the Department of Defense's Inspector General for audits and investigations. Transparency is limited due to the sole-source nature and lack of detailed service descriptions.

Related Government Programs

Department of Defense Maintenance and Repair Contracts
Army Equipment Sustainment Programs
Sole-Source Service Contracts
Time and Materials Contracts

Risk Flags

Sole-source award
Time and Materials pricing
Lack of detailed service scope
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.2 million to ENERGY SYSTEMS GROUP LLC. 200110!000776!2100!AE30 !TACOM - PICATINNY !DAAE3097D1002 !A!N!*!N!000302 !20010627!20011127!808548846!036908242!848381245!N!ENERGY MASTERS INTERNATIONAL, !1385 MENDOTA HEIGHTS ROAD !SAINT PAUL !MN!55120!58410!027!34!PICATINNY ARSENAL !MORRIS !NEW JERSEY!+000000090207!N!N!000000000000!J099!MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !541620!*!*!5!B!S!C!*!*!*!B!*!*!N!

Who is the contractor on this award?

The obligated recipient is ENERGY SYSTEMS GROUP LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $12.2 million.

What is the period of performance?

Start: 2001-06-27. End: 2024-07-31.

What is the specific type of 'miscellaneous equipment' being maintained and repaired under this contract?

The provided data does not specify the exact nature of the 'miscellaneous equipment' requiring maintenance and repair. The contract description 'MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT' is broad. Understanding the specific equipment would allow for a more accurate assessment of the contractor's capabilities, the criticality of the services, and potential comparisons to industry standards for similar maintenance tasks. Without this detail, it's challenging to evaluate the technical scope and associated risks.

What was the justification for awarding this contract on a sole-source basis?

The data indicates this contract was awarded as 'NOT COMPETED,' which typically signifies a sole-source or limited-source justification. Common reasons for sole-source awards include urgent and compelling needs, unique capabilities possessed by only one contractor, or situations where only one responsible source is available. The specific justification for this ENERGY SYSTEMS GROUP LLC contract is not provided in the data. A thorough review would require accessing the contract file to understand the rationale, which is crucial for assessing whether the government received fair value and if competition was appropriately bypassed.

How does the contractor's performance history on similar contracts compare to expectations?

The provided data does not include specific performance history details for ENERGY SYSTEMS GROUP LLC on this or prior contracts. To assess performance, one would typically review past performance evaluations, contract administration records, and any documented issues or successes. Given this is a sole-source award, historical performance might have been a key factor in the initial selection, but without access to those records, it's impossible to make a direct comparison or gauge the contractor's reliability and effectiveness in fulfilling the requirements.

What are the potential risks associated with the Time and Materials (T&M) contract type for this service?

The Time and Materials (T&M) contract type, used here, obligates the government to pay the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. The primary risk for the government is cost overrun, as there is no ceiling on the total cost. This necessitates robust government oversight to ensure labor hours are reasonable and necessary, and material costs are fair. Without stringent monitoring and management, T&M contracts can become significantly more expensive than fixed-price alternatives, especially for services where the scope is not precisely defined upfront.

How does the contract's duration (over 7 years) impact the overall value proposition?

A contract duration exceeding seven years (8435 days) suggests a long-term, potentially critical need for the maintenance and repair services. While long durations can offer stability and reduce the frequency of re-competition, they also increase the risk of price escalation over time if not properly managed. For the government, it means sustained funding commitments and the need for continuous oversight to ensure the services remain necessary and cost-effective throughout the contract's life. It also implies that finding alternative solutions or contractors might be complex.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Energy Systems Group, LLC

Address: 4655 ROSEBUD LN, NEWBURGH, IN, 47630

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

Financial Breakdown

Contract Ceiling: $3,540,459

Exercised Options: $3,540,459

Current Obligation: $12,212,903

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAE3097D1002

IDV Type: IDC

Timeline