Commerce awarded $2M for FEI microscope services, raising questions on competition and value

Contract Overview

Contract Amount: $1,999,105 ($2.0M)

Contractor: FEI Company

Awarding Agency: Department of Commerce

Start Date: 2018-09-24

End Date: 2024-01-31

Contract Duration: 1,955 days

Daily Burn Rate: $1.0K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FEI MICROSCOPE PREVENTATIVE MAINTENANCE AND REPAIR SERVICES

Place of Performance

Location: HILLSBORO, WASHINGTON County, OREGON, 97124

State: Oregon Government Spending

Plain-Language Summary

Department of Commerce obligated $2.0 million to FEI COMPANY for work described as: FEI MICROSCOPE PREVENTATIVE MAINTENANCE AND REPAIR SERVICES Key points: 1. The contract's value appears reasonable given the duration and specialized nature of the services. 2. Lack of competition suggests potential for higher pricing than a fully competed contract. 3. The firm-fixed-price structure shifts performance risk to the contractor. 4. Services are critical for NIST's advanced materials research capabilities. 5. This contract represents a small portion of NIST's overall operational spending. 6. The sole-source nature warrants scrutiny regarding justification and market alternatives.

Value Assessment

Rating: fair

The contract value of approximately $2 million over nearly six years for preventative maintenance and repair of specialized FEI microscopes appears within a reasonable range for such niche services. Benchmarking against similar contracts is difficult due to the limited public data on highly specialized equipment maintenance. However, the firm-fixed-price (FFP) award type suggests that the pricing was determined upfront, and the contractor bears the risk of cost overruns. Without competitive bids, it's challenging to definitively assess if this represents the best possible value for taxpayers.

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. The data indicates it was 'NOT COMPETED UNDER SAP' (Small Acquisition Procedures), suggesting it may have been justified under specific circumstances or exceptions to full and open competition. The lack of multiple bidders means there was no direct price comparison or incentive for vendors to offer their most competitive rates. This approach limits the government's ability to explore the full range of market solutions and potentially secure lower prices.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price discovery mechanisms inherent in competitive bidding processes. This can result in paying a premium for goods or services.

Public Impact

The National Institute of Standards and Technology (NIST) benefits directly through the continued operation of critical scientific instrumentation. Essential services include preventative maintenance and repair for advanced microscopy equipment, ensuring research continuity. The geographic impact is localized to NIST facilities in Oregon. Workforce implications are minimal, primarily involving specialized technicians for equipment servicing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Lack of transparency in the justification for sole-source procurement.
Potential for vendor lock-in with specialized equipment maintenance.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Services are essential for maintaining critical research infrastructure.
Long-term contract provides stability for NIST's operational planning.

Sector Analysis

The market for specialized scientific equipment maintenance, such as for advanced microscopes, is often characterized by a limited number of qualified providers, sometimes dominated by the original equipment manufacturers (OEMs). This contract falls within the broader 'Other Electronic and Precision Equipment Repair and Maintenance' sector (NAICS 811219). While the overall market size for this specific niche is not readily available, it is a critical component supporting research and development activities across various government agencies and private institutions.

Small Business Impact

This contract was not awarded to a small business, and there is no indication of small business subcontracting requirements. The sole-source nature of the award further limits opportunities for small businesses to participate in this specific procurement. The primary contractor, FEI COMPANY, is a large entity, and the focus of this award is on specialized technical services rather than broad service delivery where small businesses typically find more opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Commerce's internal procurement regulations and the National Institute of Standards and Technology's program management. As a sole-source award, the justification and approval process would be subject to specific federal acquisition regulations. Transparency is limited due to the lack of a competitive bidding process. There is no specific mention of an Inspector General's direct involvement in this particular award, but IG oversight is a general function for departmental spending.

Related Government Programs

NIST Research Equipment Maintenance
Scientific Instrument Repair Services
Federal Laboratory Support Services

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $2.0 million to FEI COMPANY. FEI MICROSCOPE PREVENTATIVE MAINTENANCE AND REPAIR SERVICES

Who is the contractor on this award?

The obligated recipient is FEI COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Commerce (National Institute of Standards and Technology).

What is the total obligated amount?

The obligated amount is $2.0 million.

What is the period of performance?

Start: 2018-09-24. End: 2024-01-31.

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

The provided data indicates the contract was 'NOT COMPETED UNDER SAP' and awarded to 'FEI COMPANY'. While the specific justification for the sole-source award is not detailed in the provided data, common reasons for sole-source procurements include unique capabilities, proprietary technology, urgent and compelling needs, or when only one responsible source is available. For specialized equipment like FEI microscopes, the original equipment manufacturer (OEM) often possesses unique knowledge, parts, and diagnostic tools essential for maintenance and repair, which could form the basis of a sole-source justification. Further investigation into the contract file or agency procurement records would be necessary to confirm the exact rationale.

How does the contract value compare to similar services for advanced microscopy equipment?

Directly comparing the contract value of $1,999,105.15 over approximately 1955 days (roughly 5.35 years) for FEI microscope maintenance is challenging without access to a broader dataset of similar sole-source or competitively bid contracts for specialized scientific equipment. The nature of advanced microscopy equipment often involves proprietary technology and requires highly specialized technicians, typically leading to higher maintenance costs compared to more common equipment. The firm-fixed-price structure suggests the price was negotiated upfront. While the annual cost averages around $373,000, this figure needs to be contextualized by the specific models of microscopes, the scope of services (preventative vs. on-demand repair), and the geographic location. Without competitive bids, it's difficult to ascertain if this represents optimal market value.

What are the potential risks associated with a sole-source award for critical equipment maintenance?

The primary risk of a sole-source award for critical equipment maintenance is the potential for inflated pricing due to the lack of competitive pressure. Without competing vendors, the government may pay more than necessary. Another risk is reduced innovation and service quality, as the incumbent contractor may have less incentive to improve services or offer cost-saving solutions. Furthermore, sole-source awards can lead to vendor lock-in, making it difficult and potentially more expensive to switch providers in the future, especially if the equipment is proprietary. There's also a risk that the justification for sole-sourcing might not be robust, potentially indicating a missed opportunity for better value through competition.

What is the historical spending pattern for FEI microscope maintenance at NIST?

The provided data covers a single definitive contract awarded on September 24, 2018, with an end date of January 31, 2024, totaling $1,999,105.15. This represents a significant, long-term commitment for maintenance and repair services for FEI microscopes. To understand the historical spending pattern, one would need to examine prior contracts awarded by NIST (or the relevant sub-agency) for similar services, potentially including contracts with FEI COMPANY or other vendors for microscope maintenance. Analyzing trends in contract values, durations, and competition levels over several years would reveal whether spending has increased, decreased, or remained consistent, and whether the reliance on sole-source awards has been a recurring practice for this type of service.

How does the firm-fixed-price (FFP) contract type impact the government's financial exposure?

The firm-fixed-price (FFP) contract type is generally favored by the government when the scope of work is well-defined and risks can be reasonably predicted. Under an FFP contract, the contractor agrees to a set price for the specified goods or services, regardless of the actual costs incurred. This shifts the financial risk of cost overruns from the government to the contractor. For the government, this provides cost certainty and predictability, making budgeting easier. However, if the contractor significantly underestimates costs, they may cut corners on quality or service to maintain profitability. Conversely, if the price was negotiated without strong competition, the government might be paying a premium that benefits the contractor's profit margin.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 1333ND18QNB630592

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Thermo Fisher Scientific Inc.

Address: 5350 NE DAWSON CREEK DR, HILLSBORO, OR, 97124

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

Financial Breakdown

Contract Ceiling: $1,999,105

Exercised Options: $1,999,105

Current Obligation: $1,999,105

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline