Labor Department awards $156.7M contract for technical schools, exceeding benchmark by $64.9M

Contract Overview

Contract Amount: $156,667,551 ($156.7M)

Contractor: Adams and Associates Inc

Awarding Agency: Department of Labor

Start Date: 2017-10-30

End Date: 2024-06-10

Contract Duration: 2,415 days

Daily Burn Rate: $64.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Other

Official Description: IGF::OT::IGF GARY JCC

Place of Performance

Location: SAN MARCOS, HAYS County, TEXAS, 78667

State: Texas Government Spending

Plain-Language Summary

Department of Labor obligated $156.7 million to ADAMS AND ASSOCIATES INC for work described as: IGF::OT::IGF GARY JCC Key points: 1. Contract value significantly exceeds the benchmark, raising concerns about cost-effectiveness. 2. Competition was full and open, suggesting potential for better price discovery. 3. The contract type (Cost Plus Incentive Fee) can incentivize cost overruns. 4. Spending is within the 'Other Technical and Trade Schools' sector.

Value Assessment

Rating: concerning

The awarded amount of $156.7M is substantially higher than the benchmark of $64.9M, indicating a significant cost overrun. This suggests the pricing may not be competitive or efficient compared to similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically allows for a wide range of bidders and can lead to better price discovery. However, the final price still significantly exceeded the benchmark.

Taxpayer Impact: The substantial difference between the awarded amount and the benchmark suggests taxpayers may have overpaid for the services rendered.

Public Impact

Taxpayers may be overpaying due to the significant cost difference from the benchmark. The contract duration of 2415 days (over 6 years) represents a long-term commitment of federal funds. The specific services provided by 'Other Technical and Trade Schools' are broad and could encompass various training programs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High cost overrun compared to benchmark
Cost Plus Incentive Fee contract type
Long contract duration

Positive Signals

Full and open competition utilized

Sector Analysis

This contract falls within the 'Other Technical and Trade Schools' sector, which involves federal spending on vocational and specialized training. Benchmarks for this sector can vary widely based on the specific skills taught.

Small Business Impact

The provided data does not indicate whether small businesses participated in or benefited from this contract. Further analysis would be needed to assess small business involvement.

Oversight & Accountability

The significant cost overrun warrants further oversight to understand the drivers of the increased price and ensure accountability for federal spending.

Related Government Programs

Other Technical and Trade Schools
Department of Labor Contracting
Office of the Assistant Secretary for Administration and Management Programs

Risk Flags

Cost overrun
Potential for inefficient spending
Long-term financial commitment
Lack of small business participation data

Frequently Asked Questions

What is this federal contract paying for?

Department of Labor awarded $156.7 million to ADAMS AND ASSOCIATES INC. IGF::OT::IGF GARY JCC

Who is the contractor on this award?

The obligated recipient is ADAMS AND ASSOCIATES INC.

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 $156.7 million.

What is the period of performance?

Start: 2017-10-30. End: 2024-06-10.

What factors contributed to the awarded amount exceeding the benchmark by over $64.9 million?

The significant cost overrun could be attributed to several factors, including underestimation in the initial benchmark, unforeseen scope changes, increased labor or material costs during the contract period, or potentially less aggressive bidding due to the contract type. The Cost Plus Incentive Fee structure might also play a role if incentives were not effectively structured to control costs.

Given the full and open competition, why did the final price significantly exceed the benchmark?

Despite full and open competition, the benchmark may have been set too low, or the market conditions at the time of bidding may have led to higher-than-expected prices. The specific requirements of the contract and the availability of qualified contractors could also influence pricing. The incentive fee structure might also have allowed for higher costs if performance targets were met.

How effectively does the Cost Plus Incentive Fee structure ensure value for taxpayer money in this contract?

The Cost Plus Incentive Fee (CPIF) structure aims to balance cost control with performance incentives. However, its effectiveness depends heavily on how the target costs, incentive formulas, and sharing arrangements are defined. If the target cost was too high or the incentives poorly aligned with cost savings, it could lead to outcomes like this, where costs exceed benchmarks despite competition.

Industry Classification

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

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: DOL-ETA-16-R-00059

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 10395 DOUBLE R BLVD, RENO, NV, 89521

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

Financial Breakdown

Contract Ceiling: $243,257,293

Exercised Options: $223,278,851

Current Obligation: $156,667,551

Actual Outlays: $127,733,081

Subaward Activity

Number of Subawards: 181

Total Subaward Amount: $19,247,394

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline