GSA's $20.7M facility management contract awarded to South Dade Air Conditioning & Refrigeration Inc. shows potential value concerns

Contract Overview

Contract Amount: $20,717,931 ($20.7M)

Contractor: South Dade AIR Conditioning & Refrigeration Inc

Awarding Agency: General Services Administration

Start Date: 2021-07-01

End Date: 2026-06-30

Contract Duration: 1,825 days

Daily Burn Rate: $11.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 1 BG FACILITY MANAGEMENT SERVICE (O&M, ELEVATOR AND JANITORIAL SERVICE) 7/1/2021 TO 6/30/2022

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10004

State: New York Government Spending

Plain-Language Summary

General Services Administration obligated $20.7 million to SOUTH DADE AIR CONDITIONING & REFRIGERATION INC for work described as: 1 BG FACILITY MANAGEMENT SERVICE (O&M, ELEVATOR AND JANITORIAL SERVICE) 7/1/2021 TO 6/30/2022 Key points: 1. The contract's value appears high relative to its duration, warranting further investigation into unit costs and service scope. 2. Full and open competition was utilized, suggesting a potentially competitive bidding process. 3. The firm fixed-price contract type offers cost certainty but may limit flexibility for unforeseen service needs. 4. Performance context is limited without specific metrics on service quality or efficiency. 5. The contract falls within Facilities Support Services, a broad category with diverse market dynamics. 6. The duration of the contract extends beyond the initial year, indicating a longer-term service commitment.

Value Assessment

Rating: fair

The total contract value of approximately $20.7 million over five years averages to roughly $4.14 million annually. Benchmarking this against similar facility management contracts for government buildings of comparable size and scope is crucial. Without specific details on the services provided (e.g., square footage, types of maintenance, frequency of janitorial services), it's difficult to definitively assess value for money. However, the annual average suggests a need to scrutinize the pricing of individual service components to ensure they align with market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically involves advertising the requirement broadly and allowing any responsible source to submit an offer. This method is generally preferred for maximizing competition and achieving the best possible prices. The number of bidders is not specified, but the use of this procurement method suggests that multiple entities had the opportunity to compete for the contract.

Taxpayer Impact: Full and open competition is favorable for taxpayers as it generally leads to more competitive pricing and a wider selection of qualified contractors, potentially reducing overall expenditure.

Public Impact

Federal employees and visitors benefit from well-maintained facilities, including operational elevators and clean environments. The contract supports essential building operations and maintenance services for a General Services Administration facility. The geographic impact is localized to the area served by the contract, likely within New York. The contract supports jobs in facility management, maintenance, and potentially specialized trades like HVAC and janitorial services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the firm fixed-price contract does not adequately account for all service requirements.
Lack of detailed performance metrics makes it challenging to assess the contractor's efficiency and effectiveness.
The broad nature of 'facility management' could lead to scope creep if not clearly defined and managed.

Positive Signals

Awarded through full and open competition, indicating a potentially robust selection process.
Firm fixed-price contract provides budget certainty for the agency.
The contract duration suggests a stable, long-term service provider for essential functions.

Sector Analysis

Facility management services, including operations, maintenance, elevator, and janitorial services, represent a significant segment of the government contracting market. This sector is characterized by a mix of large, established providers and smaller, specialized firms. Government contracts in this area often require adherence to strict performance standards and reporting. Benchmarking against similar contracts would involve comparing pricing structures and service level agreements for facilities of comparable size and complexity.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While the prime contractor is South Dade Air Conditioning & Refrigeration Inc., it is unclear from the provided data whether they are a small business themselves or if they have subcontracting plans that include small businesses. Further investigation into subcontracting opportunities would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the General Services Administration (GSA), specifically the Public Buildings Service (PBS). Mechanisms likely include regular performance reviews, site inspections, and invoice auditing. Accountability is driven by the contract terms and conditions, including service level agreements and payment schedules. Transparency is generally facilitated through contract award databases, though detailed performance reports may not always be publicly accessible.

Related Government Programs

General Services Administration (GSA) Facility Operations and Maintenance Contracts
Public Buildings Service (PBS) Service Contracts
Federal Building Maintenance and Repair Services
Government Janitorial and Custodial Services Contracts
Elevator Maintenance and Repair Contracts

Risk Flags

Potential for high unit costs given the overall contract value and duration.
Lack of detailed performance metrics requires careful monitoring.
Contract duration may expose fixed-price to market volatility.

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $20.7 million to SOUTH DADE AIR CONDITIONING & REFRIGERATION INC. 1 BG FACILITY MANAGEMENT SERVICE (O&M, ELEVATOR AND JANITORIAL SERVICE) 7/1/2021 TO 6/30/2022

Who is the contractor on this award?

The obligated recipient is SOUTH DADE AIR CONDITIONING & REFRIGERATION INC.

Which agency awarded this contract?

Awarding agency: General Services Administration (Public Buildings Service).

What is the total obligated amount?

The obligated amount is $20.7 million.

What is the period of performance?

Start: 2021-07-01. End: 2026-06-30.

What is the specific scope of services included in the "1 BG FACILITY MANAGEMENT SERVICE" and how are they measured?

The provided data abbreviates the contract description as "1 BG FACILITY MANAGEMENT SERVICE (O&M, ELEVATOR AND JANITORIAL SERVICE)". This suggests a comprehensive scope encompassing Operations & Maintenance (O&M), elevator servicing, and janitorial duties. However, the precise details of these services, such as the square footage of the facility, the frequency of maintenance tasks, the specific types of repairs covered under O&M, and the detailed requirements for janitorial services (e.g., cleaning standards, schedules), are not specified in the provided data. Without this granular detail, it is difficult to fully assess the value and appropriateness of the contract's pricing. Typically, such contracts would include detailed Service Level Agreements (SLAs) outlining performance metrics, response times, and quality standards for each service component.

How does the annual average cost of $4.14 million compare to similar GSA facility management contracts?

To benchmark the annual average cost of approximately $4.14 million, a comparison with similar contracts awarded by the GSA's Public Buildings Service (PBS) for facilities of comparable size, age, and geographic location would be necessary. Factors such as the type of building (e.g., office, courthouse), its condition, and the specific services required (e.g., LEED certification maintenance, advanced security systems) significantly influence costs. Without access to a database of comparable contracts and their specific service scopes and pricing, a definitive comparison is challenging. However, this annual figure represents a substantial investment, underscoring the importance of ensuring that the services rendered provide excellent value for money and meet all performance expectations.

What is the track record of South Dade Air Conditioning & Refrigeration Inc. in performing similar government contracts?

The provided data identifies South Dade Air Conditioning & Refrigeration Inc. as the contractor but does not offer details on their past performance history, particularly concerning government contracts. A thorough assessment of their track record would involve reviewing their performance on previous federal, state, or local contracts, looking for indicators of reliability, quality of service, and adherence to contract terms. Information regarding past contract awards, completion records, any disputes or terminations, and client feedback would be crucial in evaluating their capability to successfully execute this facility management contract. Agencies often maintain internal performance evaluations, and public databases may contain contract award histories.

What are the potential risks associated with a five-year firm fixed-price contract for facility management?

A five-year firm fixed-price (FFP) contract for facility management presents several potential risks. For the contractor, the primary risk is underestimating costs, especially for maintenance and repairs, which can fluctuate significantly over a five-year period due to unforeseen issues or inflation, potentially leading to reduced profit margins or even losses. For the government, the risk lies in the potential for the contractor to cut corners on service quality to maintain profitability if costs escalate unexpectedly. Additionally, if the fixed price was set too high initially due to a lack of competitive bids or inaccurate cost estimations, the government may overpay for services throughout the contract term. Flexibility can also be a concern, as significant changes to the scope of services might require costly contract modifications.

How does the contract's duration (5 years) impact its overall value and management?

The five-year duration of this contract (from 2021 to 2026) provides stability and continuity for essential facility management services, which is generally beneficial for maintaining consistent building operations. For the contractor, a longer duration offers a more predictable revenue stream and the opportunity to amortize startup costs over a longer period. However, it also increases the risk associated with fixed pricing, as market conditions, labor costs, and material prices can change significantly over five years. From a management perspective, a longer contract requires sustained oversight to ensure performance standards are met and that the fixed price remains fair value throughout its term. It also means that significant changes or upgrades to facility needs might necessitate contract modifications or a new procurement process.

What is the significance of the NAICS code 561210 (Facilities Support Services) in understanding this contract?

The North American Industry Classification System (NAICS) code 561210, Facilities Support Services, categorizes businesses primarily engaged in providing operating and maintaining facilities services for others. This broad category includes services such as building maintenance, cleaning services, janitorial services, and operation of building systems (e.g., HVAC, electrical, plumbing). Understanding this NAICS code helps contextualize the contract within the broader industry landscape, indicating that the procurement is for a comprehensive suite of services aimed at ensuring the smooth and efficient operation of a government facility. It suggests a market with numerous providers, ranging from large integrated facility management companies to smaller, specialized service firms.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 14510 SW 284TH ST, HOMESTEAD, FL, 33033

Business Categories: 8(a) Program Participant, Black American Owned Business, Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, HUBZone Firm, 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: $43,803,976

Exercised Options: $20,717,931

Current Obligation: $20,717,931

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $1,185,846

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47PC0621A0002

IDV Type: BPA

Timeline