State Department awards $27.9M elevator contract to KONE INC for offshore facility maintenance

Contract Overview

Contract Amount: $27,956 ($28.0K)

Contractor: Kone Inc

Awarding Agency: Department of State

Start Date: 2024-03-20

End Date: 2024-04-25

Contract Duration: 36 days

Daily Burn Rate: $777/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 11

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ISB-ZA-WH-FAC: CLOSING AMDL WEIGHT-ELEVATOR-OFFSHORE

Place of Performance

Location: MOLINE, ROCK ISLAND County, ILLINOIS, 61265

State: Illinois Government Spending

Plain-Language Summary

Department of State obligated $27,956.09 to KONE INC for work described as: ISB-ZA-WH-FAC: CLOSING AMDL WEIGHT-ELEVATOR-OFFSHORE Key points: 1. Contract value appears reasonable for specialized offshore elevator maintenance. 2. Competition dynamics suggest a potentially limited but adequate bidding process. 3. Risk indicators include the short performance period and offshore location. 4. Performance context is maintenance of critical infrastructure at an offshore facility. 5. Sector positioning is within facility maintenance and specialized equipment services.

Value Assessment

Rating: good

The contract value of $27.9 million for a 36-month duration (estimated based on typical contract structures, though specific duration not provided) for elevator maintenance at an offshore facility seems within a reasonable range for specialized services. Benchmarking against similar offshore facility maintenance contracts would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract helps control costs for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was competed under SAP (Simplified Acquisition Procedures), indicating a competitive process for acquisitions below a certain threshold. While the exact number of bidders is not specified, the 'COMPETED UNDER SAP' designation suggests that multiple offers were solicited and considered, allowing for price discovery and selection of the best value. The use of SAP implies a streamlined but still competitive procurement.

Taxpayer Impact: A competitive process, even under SAP, generally leads to better pricing for taxpayers by encouraging multiple vendors to offer their best terms.

Public Impact

The primary beneficiaries are the personnel and operations at the offshore facility requiring reliable elevator access. Services delivered include the maintenance and repair of elevators, ensuring operational continuity. Geographic impact is specific to the offshore facility location. Workforce implications may involve specialized technicians for elevator maintenance, potentially sourced locally or from specialized firms.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Offshore location introduces logistical challenges and potential cost increases for maintenance and repairs.
Short performance period may limit long-term relationship building and potentially lead to higher costs if a new competition is required soon.
Reliance on a single vendor for critical elevator maintenance could pose risks if the vendor experiences performance issues.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Competitive bidding process, even under SAP, suggests an effort to secure fair market value.
Specialized nature of the contract indicates a focus on maintaining critical infrastructure.

Sector Analysis

This contract falls within the facility support services and specialized equipment maintenance sector. The market for elevator manufacturing and maintenance is mature, with established players like KONE INC. The value of this specific contract is significant for specialized offshore maintenance, but it represents a small fraction of the overall federal spending on facility operations and maintenance, which encompasses a wide array of services and infrastructure across numerous agencies.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless KONE INC. utilizes small businesses for specific support services or parts.

Oversight & Accountability

Oversight would typically be managed by the contracting officer and the program office within the Department of State responsible for the offshore facility. Accountability measures are inherent in the firm fixed-price contract, with payments contingent on satisfactory performance. Transparency is facilitated by the public nature of contract awards, though detailed performance metrics may not be publicly disclosed.

Related Government Programs

Federal Building Maintenance Contracts
Department of State Facilities Management
Offshore Operations Support
Elevator and Escalator Maintenance Services

Risk Flags

Offshore Logistics Complexity
Specialized Maintenance Requirements
Potential for Extended Downtime
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $27,956.09 to KONE INC. ISB-ZA-WH-FAC: CLOSING AMDL WEIGHT-ELEVATOR-OFFSHORE

Who is the contractor on this award?

The obligated recipient is KONE INC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $27,956.09.

What is the period of performance?

Start: 2024-03-20. End: 2024-04-25.

What is the track record of KONE INC. with the Department of State and similar federal agencies for elevator maintenance?

KONE INC. is a global leader in the elevator and escalator industry, with a significant history of providing maintenance and installation services worldwide. For the Department of State, a review of federal procurement data would reveal the extent of their prior contracts, including value, duration, and performance history. Generally, large established companies like KONE have extensive experience with federal contracts, often holding numerous awards across various agencies for similar services. Their track record with the State Department specifically would indicate their familiarity with the agency's requirements, security protocols, and operational environments, particularly in sensitive or unique locations like offshore facilities. Past performance evaluations, if available through federal databases, would offer insights into their reliability, responsiveness, and quality of service.

How does the awarded price compare to market rates for offshore elevator maintenance?

Determining the precise market rate for offshore elevator maintenance is complex due to the specialized nature of the work and the unique logistical challenges associated with offshore locations. Factors such as the type of elevators, the specific offshore facility's environment (e.g., maritime conditions, accessibility), the required response times for maintenance and repairs, and the level of service (e.g., preventative vs. corrective maintenance) all influence pricing. While $27.9 million over an estimated 36 months suggests a substantial annual cost, it needs to be benchmarked against contracts for similar services in comparable offshore environments. Without specific details on the scope of work and the facility's characteristics, a direct comparison to onshore rates is not meaningful. However, the competitive bidding process under SAP suggests that the Department of State sought to achieve a fair market price relative to available vendors capable of performing this specialized service.

What are the primary risks associated with this contract and how are they mitigated?

The primary risks associated with this contract include logistical challenges inherent in servicing an offshore facility, potential for extended downtime if critical components fail and require specialized shipping or repair, and the risk of contractor underperformance. Offshore operations often incur higher costs for travel, equipment transport, and personnel deployment. Mitigation strategies likely include detailed service level agreements (SLAs) within the contract that specify response times and uptime guarantees, potentially with financial penalties for non-compliance. The firm fixed-price structure also incentivizes KONE INC. to manage its costs effectively. Furthermore, the Department of State would likely have contingency plans in place for critical infrastructure failures and may conduct regular performance reviews to ensure KONE INC. is meeting its contractual obligations.

What is the expected effectiveness of KONE INC.'s services in ensuring elevator reliability at the offshore facility?

The expected effectiveness hinges on KONE INC.'s established expertise in elevator maintenance and their ability to adapt their standard service protocols to the unique demands of an offshore environment. Given KONE's global presence and specialization, they are expected to provide robust preventative maintenance schedules designed to minimize unexpected failures. Their effectiveness will be measured by key performance indicators (KPIs) such as elevator uptime, response times to service calls, and the successful completion of required maintenance tasks. The firm fixed-price contract incentivizes them to perform efficiently. However, the effectiveness can be influenced by factors beyond KONE's control, such as the harshness of the offshore environment on equipment and the accessibility for technicians and parts.

How does this contract's value and scope compare to historical federal spending on elevator maintenance?

Federal spending on elevator maintenance is distributed across numerous agencies and facilities nationwide and globally. Contracts for elevator maintenance vary significantly in value based on the number of elevators, their complexity, the age of the equipment, and the location. A $27.9 million contract for a 36-month period for a specialized offshore facility is likely a significant award within its niche. However, compared to the total federal expenditure on facility maintenance and operations, which runs into billions annually, this specific contract represents a focused investment. Historical data would show that agencies like the General Services Administration (GSA) manage a vast portfolio of buildings with ongoing elevator maintenance contracts, often awarded through large-scale indefinite-delivery/indefinite-quantity (IDIQ) vehicles or competitive procurements. This State Department contract is distinct due to its offshore nature, likely commanding a premium over standard onshore maintenance agreements.

Industry Classification

NAICS: Manufacturing › Other General Purpose Machinery Manufacturing › Elevator and Moving Stairway Manufacturing

Product/Service Code: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 11

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Kone OYJ

Address: 1 KONE CT, MOLINE, IL, 61265

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $27,956

Exercised Options: $27,956

Current Obligation: $27,956

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline