DOJ awards $18.7M contract for fire detection systems, raising value-for-money questions

Contract Overview

Contract Amount: $18,709,873 ($18.7M)

Contractor: Gustav Keoni

Awarding Agency: Department of Justice

Start Date: 2023-10-30

End Date: 2026-04-16

Contract Duration: 899 days

Daily Burn Rate: $20.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: FIRE DETECTION AND ALARM SYSTEM AT FCC LOMPOC

Place of Performance

Location: LOMPOC, SANTA BARBARA County, CALIFORNIA, 93436

State: California Government Spending

Plain-Language Summary

Department of Justice obligated $18.7 million to GUSTAV KEONI for work described as: FIRE DETECTION AND ALARM SYSTEM AT FCC LOMPOC Key points: 1. Contract value appears high relative to the scope of work. 2. Limited competition may have inflated pricing. 3. Potential for cost overruns due to contract type and duration. 4. Performance risks associated with a single awardee. 5. Sector positioning within electrical contracting is standard. 6. Geographic concentration in California. 7. No small business set-aside noted.

Value Assessment

Rating: questionable

The contract's total value of $18.7 million for a fire detection and alarm system seems disproportionately high when compared to similar installations. Benchmarking against industry standards for electrical contracting and alarm system deployment suggests that the per-unit cost or overall project cost may be inflated. The firm-fixed-price nature, while offering cost certainty, does not inherently guarantee value if the initial price was not competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which is an unusual designation suggesting that while competition was sought, certain sources were excluded. With only three bidders, the level of competition was limited, potentially hindering robust price discovery and allowing the awardee to command a higher price than in a more open bidding environment. This limited competition raises concerns about whether the government secured the best possible value.

Taxpayer Impact: Limited competition means taxpayers may have paid more than necessary for this essential safety system, as the reduced number of bidders likely led to less aggressive pricing.

Public Impact

Federal inmates and staff at FCC Lompoc will benefit from enhanced fire safety. The contract delivers critical fire detection and alarm system installation services. Geographic impact is localized to Lompoc, California. Workforce implications include employment for electricians and technicians involved in the installation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High contract value for a single system installation.
Limited competition may have resulted in suboptimal pricing.
Potential for cost escalation if scope changes or unforeseen issues arise.
Contract duration of nearly two years could introduce performance risks.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Awardee has a contract with the government, indicating some level of vetting.
Essential safety system installation addresses critical infrastructure needs.

Sector Analysis

This contract falls within the Electrical Contractors and Other Wiring Installation Contractors sector, a segment of the broader construction industry. The market for fire detection and alarm systems is specialized, with numerous providers ranging from small local installers to large national firms. The total federal spending in this category is substantial, supporting critical infrastructure across various agencies. This specific contract addresses a key safety requirement for a federal correctional facility.

Small Business Impact

The contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific project are likely limited to direct subcontracting by the prime contractor, if any. The absence of a set-aside or specific subcontracting goals may reduce the direct economic benefit to the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Justice's Bureau of Prisons contracting and facilities management divisions. Accountability measures are inherent in the firm-fixed-price contract type, which caps the government's financial liability. Transparency is facilitated by the contract award notice, but detailed performance monitoring and inspection reports are typically internal. The Inspector General's office may investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Federal Bureau of Prisons Facility Upgrades
Correctional Facility Safety Systems
Federal Fire Safety Contracts
Department of Justice Infrastructure Projects

Risk Flags

High contract value relative to scope.
Limited competition raises price concerns.
Long contract duration increases performance risk.
Unusual procurement method ('F&O CAES') warrants further investigation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $18.7 million to GUSTAV KEONI. FIRE DETECTION AND ALARM SYSTEM AT FCC LOMPOC

Who is the contractor on this award?

The obligated recipient is GUSTAV KEONI.

Which agency awarded this contract?

Awarding agency: Department of Justice (Federal Prison System / Bureau of Prisons).

What is the total obligated amount?

The obligated amount is $18.7 million.

What is the period of performance?

Start: 2023-10-30. End: 2026-04-16.

What is the typical cost range for fire detection and alarm system installations in federal correctional facilities of similar size and complexity?

Determining a precise cost range without detailed project specifications is challenging. However, industry benchmarks for fire alarm system installations in commercial and institutional buildings, including correctional facilities, can provide context. Factors influencing cost include the size of the facility, the number of devices (smoke detectors, pull stations, alarms), the complexity of the wiring infrastructure, integration with existing building management systems, and specific security requirements. For a facility of the size implied by a $18.7 million contract, costs could range significantly, but this figure appears on the higher end, especially if it solely covers the fire detection system and not broader facility renovations. Further analysis would require comparing the scope of work, square footage, and specific technological requirements against publicly available data for similar federal projects or private sector benchmarks.

How does the 'Full and Open Competition After Exclusion of Sources' procurement method impact pricing and competition?

The 'Full and Open Competition After Exclusion of Sources' (F&O CAES) method is a less common procurement strategy. It typically means that the agency initially intended to conduct full and open competition but later excluded certain sources for specific, documented reasons (e.g., national security, proprietary data, or unique capabilities). While it aims for broad competition initially, the subsequent exclusion can limit the pool of potential bidders. If the exclusion is not carefully justified or if it significantly reduces the number of capable offerors, it can lead to less robust competition than true full and open competition. This reduced competition can potentially result in higher prices for the government, as fewer bidders may mean less incentive for aggressive pricing. The specific rationale for excluding sources in this DOJ contract would be crucial to understanding the impact on price discovery and overall value.

What are the potential risks associated with a firm-fixed-price contract for a long-duration project like this?

Firm-fixed-price (FFP) contracts are generally preferred for their cost certainty, as the price is set and not subject to adjustment based on the contractor's cost experience. However, for long-duration projects (like this one with an 899-day duration), FFP contracts carry specific risks. If the initial price was not accurately estimated or if unforeseen technical challenges, material cost increases, or scope creep occur, the contractor may face financial losses, potentially leading to quality compromises or even contract termination. Conversely, if the contractor significantly overestimates costs, the government may end up paying a premium. For the government, the primary risk with FFP on long projects is that the contractor might cut corners on quality or service to protect their profit margin, especially if they underestimated the effort or if market conditions change unfavorably.

What is the track record of the awardee, GUSTAV KEONI, with federal contracts, particularly for similar systems?

Information regarding the track record of GUSTAV KEONI with federal contracts, especially for fire detection and alarm systems, is not detailed in the provided data. A thorough assessment would require examining historical contract awards, performance reviews (if publicly available), and any past issues or successes the company has had with government agencies. Without this data, it's difficult to gauge their experience, reliability, and past performance in delivering similar projects on time and within budget. Federal procurement databases and contract performance reporting systems would be the primary sources for this type of analysis.

How does the $18.7 million contract value compare to the total federal spending on fire detection and alarm systems?

The $18.7 million contract represents a significant investment for a single fire detection and alarm system installation. To contextualize this within total federal spending, one would need to analyze aggregate data for the 'Fire Detection and Alarm Systems' product service code (PSC) or related NAICS codes (like 238210 - Electrical Contractors and Other Wiring Installation Contractors) across all federal agencies over a specific period. Federal spending on such systems is likely in the hundreds of millions or even billions annually, considering the vast number of federal facilities. This single contract, while substantial, is likely a fraction of the total, but its value relative to its specific scope is the key area for detailed scrutiny.

Industry Classification

NAICS: Construction › Building Equipment Contractors › Electrical Contractors and Other Wiring Installation Contractors

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SEALED BID

Solicitation ID: 15BFA023B00000033

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 181 BONETTI DR, SAN LUIS OBISPO, CA, 93401

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $18,709,873

Exercised Options: $18,709,873

Current Obligation: $18,709,873

Actual Outlays: $18,000,326

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline