Department of Labor awards $66.2M contract to Serrato Corporation for Job Corps Center services, with 7 bids received

Contract Overview

Contract Amount: $66,219,518 ($66.2M)

Contractor: Serrato Corporation

Awarding Agency: Department of Labor

Start Date: 2020-09-01

End Date: 2026-05-31

Contract Duration: 2,098 days

Daily Burn Rate: $31.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DETROIT JOB CORPS CENTER W/ OACTS

Place of Performance

Location: DETROIT, WAYNE County, MICHIGAN, 48206

State: Michigan Government Spending

Plain-Language Summary

Department of Labor obligated $66.2 million to SERRATO CORPORATION for work described as: DETROIT JOB CORPS CENTER W/ OACTS Key points: 1. The contract's value of $66.2 million over its duration suggests a significant investment in technical and trade education. 2. With 7 bids received, the competition level indicates a healthy market interest in providing these services. 3. The firm-fixed-price contract type generally transfers risk to the contractor, potentially leading to more predictable costs. 4. The duration of the contract (2098 days) allows for long-term planning and consistent service delivery. 5. The award to Serrato Corporation for operating the Detroit Job Corps Center highlights the importance of vocational training in urban areas. 6. The exclusion of sources in the competition type warrants further investigation into the specific reasons and implications for fairness.

Value Assessment

Rating: fair

Benchmarking the value-for-money for this specific contract is challenging without detailed cost breakdowns and performance metrics. However, the total award of $66.2 million over approximately 5.7 years (2098 days) averages to roughly $11.6 million annually. This figure needs to be compared against the operational costs of similar Job Corps centers or other vocational training programs to assess efficiency. The firm-fixed-price nature of the contract suggests that the contractor bears the risk of cost overruns, which can be a positive indicator if managed effectively, but it also means the government pays a set price regardless of actual costs incurred by the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This designation implies that while the competition was intended to be open, certain sources were excluded prior to the solicitation. The fact that 7 bids were received suggests that the exclusion did not unduly limit the pool of potential offerors to a significant degree. However, the 'exclusion of sources' aspect raises questions about the fairness and completeness of the competitive process. Understanding which sources were excluded and why is crucial for a full assessment of the competition's effectiveness.

Taxpayer Impact: While 7 bids indicate a degree of competition, the exclusion of specific sources could potentially limit price discovery and may mean taxpayers did not benefit from the lowest possible price if excluded bidders offered more competitive terms.

Public Impact

The primary beneficiaries are students seeking vocational training and employment opportunities at the Detroit Job Corps Center. The contract ensures the continued operation and delivery of essential technical and trade education services. The geographic impact is focused on Detroit, Michigan, providing local workforce development and economic uplift. The contract supports the creation and maintenance of jobs within the education and training sector, both directly with the contractor and indirectly through its operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition type requires clarification to ensure a fully equitable and competitive process.
Lack of detailed performance metrics in the provided data makes it difficult to assess the true value for money and effectiveness of the services.
The long contract duration could lead to complacency if not managed with rigorous oversight and performance reviews.

Positive Signals

The firm-fixed-price contract type generally provides cost certainty for the government.
Receiving 7 bids indicates significant interest and a reasonably competitive market for these services.
The contract supports a vital federal program aimed at workforce development and youth empowerment.

Sector Analysis

The contract falls within the 'Other Technical and Trade Schools' (NAICS 611519) sector, which is part of the broader educational services industry. This sector focuses on providing vocational, technical, and trade instruction. The market for operating Job Corps centers is specialized, often involving government contracts with educational service providers. Comparable spending benchmarks would involve analyzing the per-student operational costs of other Job Corps centers or similar government-funded vocational training initiatives to gauge efficiency and value.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a specific set-aside criterion for this contract. Therefore, there are no direct small business set-aside implications. However, the prime contractor, Serrato Corporation, may engage small businesses as subcontractors to fulfill certain aspects of the contract, which would be a positive indicator for the small business ecosystem. The extent of such subcontracting is not detailed in the provided information.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Labor's Office of the Assistant Secretary for Administration and Management (OASAM), which awarded the contract. Accountability measures are typically embedded within the contract terms, including performance standards, reporting requirements, and potential penalties for non-compliance. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would likely extend to investigating any allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Job Corps Program
Department of Labor Workforce Development Programs
Vocational Training Contracts
Federal Education Services Contracts

Risk Flags

Competition Type: 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' requires further scrutiny to ensure fairness.
Performance Data: Lack of specific performance metrics makes value-for-money assessment difficult.
Contractor Past Performance: Detailed review of Serrato Corporation's history is needed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Labor awarded $66.2 million to SERRATO CORPORATION. DETROIT JOB CORPS CENTER W/ OACTS

Who is the contractor on this award?

The obligated recipient is SERRATO CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Labor (Office of the Assistant Secretary for Administration and Management).

What is the total obligated amount?

The obligated amount is $66.2 million.

What is the period of performance?

Start: 2020-09-01. End: 2026-05-31.

What is the track record of Serrato Corporation in managing federal contracts, particularly those related to education or workforce development?

Assessing Serrato Corporation's track record requires a review of their past performance on federal contracts. Information on previous awards, contract values, performance evaluations, and any instances of disputes or terminations would be crucial. Specifically, their experience with operating educational facilities, managing large student populations, and delivering vocational training programs would be key indicators of their capability. A detailed analysis would involve searching contract databases for historical awards to Serrato Corporation, examining performance quality metrics, and looking for any red flags such as past performance issues or contract disputes. Without this specific historical data, it is difficult to definitively assess their suitability for this significant contract.

How does the per-student cost of this contract compare to other Job Corps centers or similar vocational training programs?

To compare the per-student cost, we first need to estimate the number of students served by the Detroit Job Corps Center under this contract. The total contract value is $66.2 million over approximately 2098 days (about 5.7 years). If we assume an average annual enrollment of, for example, 500 students, the annual cost would be roughly $11.6 million, translating to approximately $23,200 per student per year. This figure must then be benchmarked against data from other Job Corps centers, which can vary significantly based on location, program offerings, and student demographics. National averages or regional comparisons from the Department of Labor's own reports would provide the most relevant context. A higher per-student cost might be justified by specialized training or higher support services, while a lower cost could indicate greater efficiency.

What are the specific services Serrato Corporation is contracted to provide, and what are the key performance indicators (KPIs) for this contract?

The contract is for the operation of the Detroit Job Corps Center, which typically includes providing comprehensive vocational training, academic instruction, career counseling, job placement assistance, and residential support services for disadvantaged youth. Key performance indicators (KPIs) for such contracts usually focus on student outcomes, including graduation rates, attainment of industry-recognized credentials, successful job placements, and post-placement earnings. Other KPIs might include student retention rates, safety and security metrics within the center, and adherence to budget and administrative requirements. The specific KPIs and their weighting would be detailed in the contract's Statement of Work (SOW) and performance work statement (PWS), which are not fully available in the provided data.

What is the historical spending trend for the Detroit Job Corps Center or similar services provided by the Department of Labor?

Analyzing historical spending for the Detroit Job Corps Center requires accessing prior contract awards for its operation. If Serrato Corporation or other entities have operated the center previously, their contract values over preceding years would indicate spending trends. Additionally, examining the Department of Labor's overall budget allocation for Job Corps programs nationwide would provide broader context. Significant year-over-year increases or decreases in funding could signal changes in program priorities, operational scope, or inflationary pressures. Comparing the current $66.2 million award to previous awards for this specific center, adjusted for inflation, would reveal whether spending has increased, decreased, or remained relatively stable over time, helping to identify any anomalies or consistent investment patterns.

What are the potential risks associated with a firm-fixed-price contract of this magnitude and duration?

A firm-fixed-price (FFP) contract, while offering cost certainty, carries inherent risks, especially for a large, long-duration contract like this. One primary risk is that the contractor, Serrato Corporation, might cut corners on service quality or staffing to maximize profit if their initial cost estimates were too low or if unforeseen operational challenges arise. Conversely, if the contractor's cost estimates were too high, taxpayers may be overpaying for the services. The long duration (nearly 6 years) increases the risk of scope creep, changes in government requirements that are not adequately addressed through contract modifications, or contractor performance degradation over time. Effective oversight and robust performance management are critical to mitigate these risks and ensure the government receives the intended value.

Industry Classification

NAICS: Educational Services › Technical and Trade Schools › Other Technical and Trade Schools

Product/Service Code: EDUCATION AND TRAINING › EDUCATION AND TRAINING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 1630J5-19-R-00001

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 135 WEST COUNCIL ST, TUCSON, AZ, 85701

Business Categories: 8(a) Program Participant, Category Business, Community Developed Corporation Owned Firm, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Hispanic American Owned Business, HUBZone Firm, Minority Owned Business, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $72,837,533

Exercised Options: $72,340,811

Current Obligation: $66,219,518

Actual Outlays: $61,014,339

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $225,077

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline