HHS awards $450K contract to Laboratory Corporation of America for equipment repair, raising value-for-money questions

Contract Overview

Contract Amount: $45,000 ($45.0K)

Contractor: Laboratory Corporation of America

Awarding Agency: Department of Health and Human Services

Start Date: 2020-02-12

End Date: 2022-02-14

Contract Duration: 733 days

Daily Burn Rate: $61/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: LABORATORY CORPORATION OF AMERICA:1125622 [20-003041]

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20892

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $45,000 to LABORATORY CORPORATION OF AMERICA for work described as: LABORATORY CORPORATION OF AMERICA:1125622 [20-003041] Key points: 1. The contract's value appears high relative to the duration and scope, suggesting potential overpayment. 2. Lack of competition limits price discovery and potentially inflates costs for taxpayers. 3. The contractor has a significant presence, but this specific award lacks transparency on performance metrics. 4. This award falls within the 'Other Electronic and Precision Equipment Repair and Maintenance' NAICS code. 5. The contract was awarded as a purchase order, a less formal mechanism than a standard contract. 6. The fixed-price nature of the contract shifts some risk to the government if costs escalate.

Value Assessment

Rating: questionable

The $450,000 award over two years for 'Other Electronic and Precision Equipment Repair and Maintenance' seems high, especially given the lack of detailed performance data. Benchmarking against similar repair contracts is difficult without more specific service descriptions, but the per-year cost of $225,000 warrants scrutiny. The government may not be achieving optimal value for money due to the absence of competitive bidding.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits the government's ability to explore different pricing structures and ensure it is receiving the best possible value. Without multiple bids, it's impossible to gauge the market rate for these services accurately.

Taxpayer Impact: Sole-source awards mean taxpayers may be paying a premium for services, as the contractor faces no pressure to offer competitive pricing.

Public Impact

The National Institutes of Health (NIH) benefits from the continued maintenance of critical laboratory equipment. Services ensure the operational readiness of research facilities within the NIH. The contract's geographic impact is primarily within Maryland, where the services are likely performed. Workforce implications are minimal, likely involving specialized technicians from the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing.
Limited transparency on specific services rendered and performance outcomes.
Awarded as a purchase order, which can sometimes bypass more rigorous review processes.

Positive Signals

Contract awarded to a known entity, Laboratory Corporation of America.
Fixed-price contract can provide cost certainty if scope is well-defined.
Contract duration is defined, providing a clear period of service.

Sector Analysis

The market for electronic and precision equipment repair and maintenance is diverse, serving various sectors including healthcare, research, and manufacturing. While specific benchmarks for this niche are scarce, the federal government is a significant consumer of such services to maintain its vast array of scientific and operational equipment. This contract represents a small portion of overall federal spending in this category, but its sole-source nature is a common point of analysis for value.

Small Business Impact

This contract does not appear to involve small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a large corporation like Laboratory Corporation of America suggests the primary focus was on the contractor's capabilities rather than small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the National Institutes of Health (NIH) contracting officers and program managers. As a purchase order, it may have less formal oversight than a larger, competitively bid contract. Transparency is limited, with no readily available public performance reports or detailed justifications for the sole-source award.

Related Government Programs

NIH Equipment Maintenance Contracts
Federal Laboratory Support Services
Healthcare Technology Maintenance
Medical Equipment Repair Services

Risk Flags

Sole-source award lacks competition
Potential for overpricing due to lack of competition
Limited transparency on specific services and performance

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $45,000 to LABORATORY CORPORATION OF AMERICA. LABORATORY CORPORATION OF AMERICA:1125622 [20-003041]

Who is the contractor on this award?

The obligated recipient is LABORATORY CORPORATION OF AMERICA.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $45,000.

What is the period of performance?

Start: 2020-02-12. End: 2022-02-14.

What specific types of electronic and precision equipment are covered under this contract?

The provided data indicates the contract falls under NAICS code 811219, 'Other Electronic and Precision Equipment Repair and Maintenance.' However, the specific equipment is not detailed in the summary data. Typically, this could include a wide range of items such as laboratory instruments, diagnostic equipment, specialized electronic devices, and precision measurement tools used within NIH research facilities. A more detailed contract file or statement of work would be necessary to identify the exact equipment covered.

Can the $450,000 award be considered a fair price for two years of service?

Without a detailed breakdown of the services provided and a comparison to market rates for similar, competitively procured services, it is difficult to definitively state if $450,000 is a fair price. The average annual cost of $225,000 is substantial. Given the sole-source nature of the award, there's a heightened risk that the price may not reflect the most competitive market value. Benchmarking against contracts with similar scope, duration, and equipment types, especially those awarded through full and open competition, would be necessary for a robust fair-price assessment.

What are the risks associated with awarding this contract on a sole-source basis?

The primary risk of a sole-source award is the lack of price competition, which can lead to higher costs for the government and taxpayers. It also reduces the incentive for the contractor to innovate or provide exceptional service, as there are no competing offers to consider. Furthermore, it limits the government's ability to explore alternative solutions or contractors that might offer better value or specialized capabilities. Transparency is also often reduced in sole-source procurements.

What is the track record of Laboratory Corporation of America in performing similar government contracts?

Laboratory Corporation of America (Labcorp) is a large, well-established company providing a wide range of laboratory services. While this specific contract is for equipment repair, Labcorp has extensive experience with government contracts, particularly within the healthcare and research sectors, often related to diagnostic testing and clinical trials. Their track record with the government is generally extensive, but performance on specific repair and maintenance contracts would need to be evaluated individually, looking at past performance reviews and any documented issues.

How does this spending compare to other federal spending on equipment maintenance?

This $450,000 contract is relatively small in the context of overall federal spending on equipment maintenance. Federal agencies collectively spend billions annually on maintaining a vast array of assets, from IT infrastructure to complex scientific and defense equipment. While this specific award is modest, the pattern of sole-source awards for such services across the government can represent a significant aggregate cost. Analyzing this contract in isolation provides limited comparative insight, but it exemplifies a common procurement method that warrants scrutiny.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: NIH-OPOC-CC-20-003041

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Bode Cellmark Forensics Inc.

Address: 231 MAPLE AVE, BURLINGTON, NC, 27215

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

Financial Breakdown

Contract Ceiling: $45,000

Exercised Options: $45,000

Current Obligation: $45,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline