Transportation awards $2M for warehousing, citing sole-source justification for Discovery Energy, LLC

Contract Overview

Contract Amount: $2,034,636 ($2.0M)

Contractor: Discovery Energy, LLC

Awarding Agency: Department of Transportation

Start Date: 2023-04-17

End Date: 2025-04-11

Contract Duration: 725 days

Daily Burn Rate: $2.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: INCREMENTAL FUNDING FOR KOHLER CDLS MATERIALS

Place of Performance

Location: MILWAUKEE, MILWAUKEE County, WISCONSIN, 53206

State: Wisconsin Government Spending

Plain-Language Summary

Department of Transportation obligated $2.0 million to DISCOVERY ENERGY, LLC for work described as: INCREMENTAL FUNDING FOR KOHLER CDLS MATERIALS Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. Delivery order structure suggests this is part of a larger, potentially existing, contract. 3. The contract duration of 725 days (approx. 2 years) points to a medium-term need. 4. Awarded to Discovery Energy, LLC, a single vendor, raising questions about competition. 5. The North American Industry Classification System (NAICS) code 493110 points to general warehousing and storage services. 6. The contract is not competitively procured, suggesting potential limitations in price discovery. 7. The award is for incremental funding, implying the total contract value may exceed this amount.

Value Assessment

Rating: fair

The contract value of $2,034,636.21 for warehousing services over approximately two years appears to be within a reasonable range for general storage needs. However, without specific details on the volume of goods, storage duration, or specialized handling requirements, a precise value-for-money assessment is challenging. Benchmarking against similar sole-source warehousing contracts awarded by the FAA or other transportation agencies would be necessary for a more robust comparison. The firm-fixed-price structure provides cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. The data indicates the contract type as 'NOT COMPETED'. This approach bypasses the standard competitive bidding process, which typically involves soliciting proposals from various qualified suppliers and selecting the best value offer. The absence of competition means that the government did not benefit from the potential for lower prices or improved terms that could arise from a bidding war among interested parties.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not secure the most economically advantageous pricing available in the market. It also limits transparency in the procurement process.

Public Impact

The Federal Aviation Administration (FAA) benefits from this contract by securing necessary warehousing and storage services. This contract supports the logistical operations of the FAA, likely related to the storage of materials, equipment, or supplies. The geographic impact is centered in Wisconsin (WI), where the contractor is located. Workforce implications are likely limited to the contractor's personnel involved in warehousing operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing for taxpayers.
Sole-source awards can indicate potential issues with market research or vendor lock-in.
The 'incremental funding' suggests the total contract value could be significantly higher than the current award.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Awarded to a single vendor, potentially simplifying contract management.
Contract duration of approximately two years allows for stable service provision.

Sector Analysis

The warehousing and storage sector is a critical component of the supply chain for many government agencies, including the Department of Transportation's Federal Aviation Administration. This contract falls under the General Warehousing and Storage (NAICS 493110) industry. The market for these services is generally competitive, with numerous providers offering a range of solutions from basic storage to complex inventory management. Government contracts in this space often involve specific security, compliance, and logistical requirements that can influence pricing and vendor selection. Benchmarking would typically involve comparing rates for similar storage capacity, handling services, and duration with other government or commercial warehousing contracts.

Small Business Impact

This contract was not awarded to a small business, as indicated by 'sb': false. Furthermore, there is no indication of a small business set-aside ('ss': false). This suggests that the procurement process did not prioritize or specifically target small businesses for this particular award. Consequently, there are no direct subcontracting implications for small businesses stemming from this specific contract award, nor is there an immediate positive impact on the small business ecosystem through this procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Federal Aviation Administration (FAA), a sub-agency of the Department of Transportation. As a delivery order under a potentially larger contract, oversight would focus on ensuring the warehousing services meet the specified requirements, timelines, and quality standards. Accountability measures would be tied to the firm-fixed-price terms and the contract's performance clauses. Transparency is limited due to the sole-source nature of the award, but contract details should be publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Aviation Administration Logistics Support
Department of Transportation Warehousing Services
General Services Administration (GSA) Schedule Contracts (if applicable)
Department of Defense Warehousing and Storage Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for higher costs to taxpayers due to lack of competition.
Limited transparency in the procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $2.0 million to DISCOVERY ENERGY, LLC. INCREMENTAL FUNDING FOR KOHLER CDLS MATERIALS

Who is the contractor on this award?

The obligated recipient is DISCOVERY ENERGY, LLC.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $2.0 million.

What is the period of performance?

Start: 2023-04-17. End: 2025-04-11.

What is the specific nature of the 'INCREMENTAL FUNDING FOR KOHLER CDLS MATERIALS' and why was this contract sole-sourced?

The designation 'INCREMENTAL FUNDING FOR KOHLER CDLS MATERIALS' suggests that this contract is providing additional funds for materials related to Kohler CDLS (likely a specific system or project). The sole-source award indicates that the FAA determined, for reasons not fully detailed in the provided data, that only Discovery Energy, LLC could fulfill this requirement. Common justifications for sole-sourcing include unique capabilities, urgent and compelling needs where competition is impractical, or if the vendor is the only source capable of providing the required service or material. Without further documentation from the FAA, the precise rationale remains unclear, but it implies a specific dependency on Discovery Energy, LLC for these materials or their associated warehousing.

How does the $2.03 million award compare to typical FAA warehousing contracts?

Comparing this $2.03 million award to typical FAA warehousing contracts requires access to historical procurement data and specific contract details. General warehousing services can vary significantly in cost based on factors like storage volume, duration, location, security requirements, and handling services. A contract of this value, spanning approximately two years, suggests a substantial need for storage. To benchmark effectively, one would need to analyze similar contracts awarded by the FAA or other agencies for comparable services. For instance, if the FAA typically awards multi-year warehousing contracts in the low millions for similar material volumes, this award might be considered standard. However, if other agencies secure similar services at a lower cost per square foot or per item stored, this award could be flagged for further review.

What are the potential risks associated with a sole-source award for warehousing services?

The primary risk associated with a sole-source award for warehousing services is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may not achieve the most cost-effective solution. Another risk is vendor complacency; a sole-source provider might have less incentive to innovate or improve service quality compared to a vendor facing competitive pressure. There's also a risk of vendor lock-in, where the agency becomes dependent on a single provider, making it difficult or costly to switch vendors in the future. Furthermore, sole-sourcing can reduce transparency and public trust in the procurement process, raising concerns about fairness and potential favoritism.

What is the significance of this contract being a 'delivery order' and awarded on a 'firm fixed price' basis?

Being a 'delivery order' implies that this award is likely a task order or call against a previously established indefinite-delivery, indefinite-quantity (IDIQ) contract or a basic ordering agreement (BOA). This structure allows agencies to procure goods or services incrementally as needed, often with pre-negotiated terms and pricing. The 'firm fixed price' (FFP) contract type means that the price is set and not subject to adjustment based on the contractor's cost experience. This provides the government with significant cost certainty, as the total cost is known upfront, assuming the scope of work remains unchanged. For warehousing services, an FFP delivery order offers predictability in budgeting and financial planning.

What does the NAICS code 493110 (General Warehousing and Storage) imply about the services provided?

The North American Industry Classification System (NAICS) code 493110 signifies that the primary business activity covered by this contract is general warehousing and storage. This typically includes operating facilities for storing goods. Services may encompass receiving, storing, and dispatching goods, as well as activities like inventory control, order filling, and packaging for shipment. It generally does not include specialized services like cold storage (unless specified), bonded warehousing (unless specified), or freight forwarding. The 'general' nature suggests a broad scope, likely focused on maintaining physical inventory for the FAA.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › General Warehousing and Storage

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 200 TWIN OAKS RD, KOHLER, WI, 53044

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

Financial Breakdown

Contract Ceiling: $2,034,636

Exercised Options: $2,034,636

Current Obligation: $2,034,636

Actual Outlays: $2,034,636

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 693KA823D00012

IDV Type: IDC

Timeline