VA awards $5.37M contract for security services, highlighting potential value in fixed-price arrangements

Contract Overview

Contract Amount: $5,374,417 ($5.4M)

Contractor: Servexo

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-09-01

End Date: 2026-08-31

Contract Duration: 1,095 days

Daily Burn Rate: $4.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CONTRACT SECURITY VASDHS

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92161

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $5.4 million to SERVEXO for work described as: CONTRACT SECURITY VASDHS Key points: 1. The contract utilizes a firm-fixed-price structure, which shifts cost risk to the contractor and can promote cost control. 2. Competition was full and open, suggesting a potentially competitive bidding process that could lead to favorable pricing. 3. The contract duration of 1095 days (3 years) provides a stable period for service delivery. 4. The award was made by the Department of Veterans Affairs, indicating a focus on supporting veteran services. 5. The North American Industry Classification System (NAICS) code 561612 points to specialized security guard services. 6. The contract's value is moderate, suggesting it is not a large-scale procurement but a focused service need.

Value Assessment

Rating: good

The contract's firm-fixed-price nature is a positive indicator for value, as it caps costs for the government. Benchmarking against similar security guard contracts would be necessary for a definitive value assessment. However, the moderate contract value relative to the 3-year duration suggests a potentially reasonable per-year cost for the services provided. The absence of raw dollar amounts in the provided data prevents a direct comparison to market rates, but the fixed-price model inherently aims for predictable spending.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of two bids (no) indicates that while competition occurred, the number of bidders was limited. A higher number of bidders typically correlates with more robust price discovery and potentially lower prices for the government. The limited number of bids here warrants further investigation into the specific market dynamics for these security services in the relevant geographic area.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it aims to secure the best possible price through a wide range of offers. However, with only two bids received, the potential for significant cost savings may have been constrained compared to a more robustly competed contract.

Public Impact

Veterans and VA facilities benefit from enhanced security and safety measures. The contract ensures the provision of security guard and patrol services. Services are geographically focused within California. The contract supports the workforce employed by the contractor, likely including security personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (2) may indicate potential market concentration or barriers to entry for other security firms.
The specific performance metrics and quality assurance mechanisms are not detailed, posing a potential risk if not adequately managed.
Geographic concentration in California might limit opportunities for small businesses outside this region.

Positive Signals

Firm-fixed-price contract structure transfers cost overrun risk to the contractor.
Full and open competition, despite limited bidders, provides a baseline for market fairness.
The contract duration offers stability for service provision and contractor planning.

Sector Analysis

The security services industry is a significant sector within the broader professional, scientific, and technical services market. This contract falls under the Security Guards and Patrol Services sub-sector. The market is characterized by a mix of large, established providers and numerous smaller, regional companies. Government contracts for security services are common across various agencies, driven by the need to protect federal facilities and personnel. Benchmarking would involve comparing the contract's value and terms to other federal or state contracts for similar security guard services in California.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses (sb=false). There is no explicit information regarding subcontracting plans for small businesses. Without this information, it is difficult to assess the direct impact on the small business ecosystem. However, the limited competition could potentially reduce subcontracting opportunities for small businesses if the primary contractor is a larger entity.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, requiring the contractor to deliver services as specified to receive payment. Transparency is generally facilitated through federal contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Federal Protective Service Contracts
Department of Defense Security Contracts
General Services Administration (GSA) Schedule Contracts for Security Services

Risk Flags

Limited competition
Potential for underperformance if oversight is weak
Contractor's performance history unknown

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $5.4 million to SERVEXO. CONTRACT SECURITY VASDHS

Who is the contractor on this award?

The obligated recipient is SERVEXO.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $5.4 million.

What is the period of performance?

Start: 2023-09-01. End: 2026-08-31.

What is the contractor's track record with the federal government, particularly with the Department of Veterans Affairs?

Information regarding the contractor 'SERVEXO's' specific track record with the federal government, and particularly the Department of Veterans Affairs, is not detailed in the provided data. A comprehensive analysis would require accessing federal procurement databases (e.g., FPDS, SAM.gov) to review past performance evaluations, contract history, and any documented issues or successes. Understanding their history with similar firm-fixed-price contracts and security guard services would provide crucial context for assessing their reliability and performance on this current award.

How does the contract value compare to similar security guard services procured by the VA or other federal agencies in California?

Direct comparison of the $5.37 million contract value for 1095 days (3 years) is challenging without specific market data for comparable security guard services in California. However, the average annual value is approximately $1.79 million. To assess value, one would need to benchmark this against contracts for similar scope, guard levels, hours, and geographic coverage. Factors like the specific security requirements (e.g., armed vs. unarmed guards, specialized equipment) significantly influence pricing. A preliminary assessment suggests the value is moderate, but a definitive conclusion requires detailed market analysis and comparison with peer contracts.

What are the primary risks associated with this firm-fixed-price contract for security services?

The primary risks for the government in a firm-fixed-price contract are typically related to potential contractor underperformance or non-compliance. While the contractor assumes cost overrun risk, the government bears the risk of receiving substandard services if performance is not rigorously monitored. Specific risks include inadequate guard staffing, insufficient training, failure to respond effectively to incidents, and potential security breaches if protocols are not followed. The limited number of bidders (2) also presents a risk, as it might indicate a lack of robust competition, potentially leading to less optimal pricing or fewer choices if the incumbent contractor fails to perform.

How effective are firm-fixed-price contracts in ensuring the quality of security guard services?

Firm-fixed-price contracts can be effective in ensuring the quality of security guard services when coupled with strong performance management and oversight. The fixed price incentivizes the contractor to control costs, but it does not inherently guarantee quality. The government must clearly define performance standards, service level agreements, and key performance indicators (KPIs) in the contract. Regular monitoring, site inspections, and performance reviews are crucial to ensure that the contractor meets these standards. Without diligent oversight, a contractor might cut corners on training or staffing to maximize profit under a fixed-price arrangement, potentially compromising service quality.

What are the historical spending patterns for security guard services by the Department of Veterans Affairs?

Historical spending patterns for security guard services by the Department of Veterans Affairs (VA) are substantial, reflecting the agency's extensive network of healthcare facilities and administrative buildings requiring robust security. The VA consistently procures a wide range of security services, from unarmed guards to specialized security personnel and technology. Annual spending can fluctuate based on facility needs, new construction projects, and shifts in security requirements. Analyzing past VA spending data would reveal trends in contract values, types of services procured, and the prevalence of different contract types (e.g., fixed-price vs. cost-reimbursement) for security.

What is the significance of the NAICS code 561612 in understanding this contract's scope?

The North American Industry Classification System (NAICS) code 561612, 'Security Guards and Patrol Services,' is significant as it precisely defines the core service being procured. This classification indicates that the contract is for personnel providing on-site security, such as guarding property, controlling access, and patrolling premises. It distinguishes this contract from broader security services like investigation, alarm system installation, or security consulting. Understanding this code helps in benchmarking against similar contracts and identifying the specific market segment the contractor operates within.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Investigation and Security Services › Security Guards and Patrol Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1411 W 190TH ST STE 475, GARDENA, CA, 90248

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

Financial Breakdown

Contract Ceiling: $7,225,242

Exercised Options: $5,374,417

Current Obligation: $5,374,417

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS07F168GA

IDV Type: FSS

Timeline