DoD's $74.8M contract for facility support services awarded to IAP World Services, Inc. shows potential value concerns

Contract Overview

Contract Amount: $74,792,351 ($74.8M)

Contractor: IAP World Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2001-05-01

End Date: 2012-05-04

Contract Duration: 4,021 days

Daily Burn Rate: $18.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: 200112!001151!2100!BT60 !TRADOC CONTRACTING ACTIVITY !DABT6001C0006 !A!N!*!Y! !20010501!20061001!010816486!010816486!006092860!N!JOHNSON CONTROLS WORLD SERVICE!7315 N ATLANTIC AVE !CAPE CANAVERAL !FL!32920!61832!730!51!PETERSBURG !PETERSBURG (CITY) !VIRGINIA !+000000292158!N!N!000000000000!M199!OPERATION/OTHER MISCELLANEOUS BUILDINGS !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !561990!*!*!3! ! ! !*!*!*!B!*!*!A! !A !N!R!2!005!A! !C!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001!

Place of Performance

Location: FORT LEE, PRINCE GEORGE County, VIRGINIA, 23801, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $74.8 million to IAP WORLD SERVICES, INC. for work described as: 200112!001151!2100!BT60 !TRADOC CONTRACTING ACTIVITY !DABT6001C0006 !A!N!*!Y! !20010501!20061001!010816486!010816486!006092860!N!JOHNSON CONTROLS WORLD SERVICE!7315 N ATLANTIC AVE !CAPE CANAVERAL !FL!32920!61832!730!51!PETERSBURG !PETER… Key points: 1. The contract's cost-plus award fee structure may incentivize spending without strict cost controls. 2. A single awardee suggests limited competition, potentially leading to higher prices than a more competitive environment. 3. The contract duration of over 11 years (including options) presents long-term financial exposure. 4. The significant value of this contract warrants close scrutiny of performance and cost efficiency. 5. The services provided are broad, encompassing facility operations and maintenance, making performance assessment complex. 6. The contract's geographic focus on Virginia could indicate localized service delivery, but the scope is broad.

Value Assessment

Rating: questionable

This contract's total value of $74.8 million over more than 11 years is substantial for facility support services. While specific benchmarks for this exact scope are difficult to ascertain without more granular detail, the cost-plus award fee (CPAF) pricing structure, combined with a long performance period, raises questions about cost control and value for money. CPAF contracts can sometimes lead to higher costs if not managed rigorously, as the contractor is reimbursed for allowable costs plus a fee that is adjusted based on performance. Without detailed performance metrics and cost breakdowns, it's challenging to definitively benchmark its value against similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive indicator for price discovery. However, the data indicates only 5 bids were received for this substantial contract. While 'full and open' implies broad solicitation, a limited number of bidders for a contract of this magnitude could suggest barriers to entry or a specialized market. The level of competition achieved is moderate, and further analysis would be needed to determine if it was sufficient to drive optimal pricing.

Taxpayer Impact: A full and open competition, even with a moderate number of bidders, is generally favorable for taxpayers as it aims to secure the best value through market forces. However, the specific number of bids received warrants attention to ensure that the competition was robust enough to prevent inflated pricing.

Public Impact

The primary beneficiaries are likely military personnel and civilian employees at the facilities managed under this contract, ensuring operational readiness and a functional working environment. Services delivered include operation and maintenance of buildings, facility support, and potentially other miscellaneous support functions, contributing to the smooth functioning of military installations. The contract has a geographic impact primarily within Virginia, where the services are performed, potentially supporting local economies through employment and subcontracting. Workforce implications include the direct employment of personnel by IAP World Services, Inc. and potentially by subcontractors, contributing to job creation in the service sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Award Fee (CPAF) structure can lead to cost overruns if performance incentives are not tightly aligned with cost efficiency.
A long contract duration (over 11 years) increases the risk of cost escalation and potential misalignment with evolving needs.
Limited number of bidders (5) in a full and open competition might indicate a specialized market or high barriers to entry, potentially impacting price competitiveness.
The broad scope of 'All Other Support Services' makes it difficult to precisely benchmark costs and performance without more specific task orders.
The contract's significant total value necessitates robust oversight to ensure taxpayer funds are used efficiently.

Positive Signals

Awarded under 'Full and Open Competition,' indicating an effort to leverage market forces for best value.
The contractor, IAP World Services, Inc., has a significant presence and experience in government contracting, suggesting operational capability.
The contract includes performance incentives (CPAF), which, if well-structured, can drive high-quality service delivery.
The contract is associated with TRADOC (Training and Doctrine Command), implying support for critical military training functions.
The contract is located in Virginia, potentially benefiting the local economy through job creation and business opportunities.

Sector Analysis

This contract falls within the broader 'Support Services' sector, specifically under the North American Industry Classification System (NAICS) code 561990 for 'All Other Support Services.' This category encompasses a wide range of non-manufacturing services, including facility management, operations, and maintenance. The federal government is a major consumer of such services, particularly for its extensive real estate holdings and operational infrastructure. Comparable spending benchmarks are difficult to establish precisely due to the varied nature of 'other support services,' but facility operations and maintenance contracts for large government installations can run into tens or hundreds of millions of dollars over their lifecycles.

Small Business Impact

The contract data indicates that small business participation was not a primary set-aside goal, as the 'SB' (Small Business) flag is 'N'. This suggests that the primary award was not specifically targeted towards small businesses. While the contract does not appear to have a small business set-aside, the prime contractor, IAP World Services, Inc., may still engage small businesses as subcontractors to fulfill portions of the contract requirements. The extent of subcontracting to small businesses would need further investigation to assess its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the relevant contracting activity (TRADOC Contracting Activity). As a Cost Plus Award Fee (CPAF) contract, performance monitoring and fee determination are critical oversight functions. The contract's long duration suggests that ongoing oversight mechanisms, including regular performance reviews, audits, and potentially Inspector General (IG) involvement, are essential to ensure accountability and transparency. The specific terms of the contract, including reporting requirements and the process for determining award fees, would dictate the detailed oversight procedures.

Related Government Programs

Base Operations Support (BOS)
Facilities Engineering and Maintenance Services
Logistics and Support Services
Government Property Management
Construction and Facilities Management

Risk Flags

Long contract duration
Cost-plus award fee structure
Limited number of bidders
Broad service category (NAICS 561990)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.8 million to IAP WORLD SERVICES, INC.. 200112!001151!2100!BT60 !TRADOC CONTRACTING ACTIVITY !DABT6001C0006 !A!N!*!Y! !20010501!20061001!010816486!010816486!006092860!N!JOHNSON CONTROLS WORLD SERVICE!7315 N ATLANTIC AVE !CAPE CANAVERAL !FL!32920!61832!730!51!PETERSBURG !PETERSBURG (CITY) !VIRGINIA !+000000292158!N!N!000000000000!M199!OPERATION/OTHER MISCELLANEOUS BUILDINGS !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !561990!*!*!3! ! ! !*!*!*!B!*!*!A!

Who is the contractor on this award?

The obligated recipient is IAP WORLD SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $74.8 million.

What is the period of performance?

Start: 2001-05-01. End: 2012-05-04.

What is the historical spending trend for facility support services by the Department of the Army, particularly related to TRADOC?

Analyzing historical spending trends for facility support services by the Department of the Army, especially within TRADOC, is crucial for context. While specific data for TRADOC's facility support spending over the entire period of this contract (2001-2012) is not provided, the Army, as a whole, consistently allocates significant portions of its budget to maintaining its vast infrastructure. Factors influencing these trends include military readiness requirements, base realignments and closures (BRAC), modernization efforts, and shifts in contracting strategies. Contracts like this one, valued at nearly $75 million over its life, represent a substantial investment. Understanding whether spending in this category has increased or decreased over time, and the reasons behind such shifts (e.g., increased outsourcing, new facility requirements, or efficiency drives), would provide valuable insight into the budgetary environment in which this contract was awarded and managed.

How does the performance of IAP World Services, Inc. on similar government contracts compare to the award fee structure of this contract?

Assessing the performance of IAP World Services, Inc. on similar government contracts is key to understanding the appropriateness of the award fee structure for this $74.8 million facility support contract. While specific performance ratings for IAP on past contracts are not detailed here, government contractors are typically evaluated on various performance metrics. For a Cost Plus Award Fee (CPAF) contract, the award fee is contingent upon meeting or exceeding performance standards. If IAP has a history of strong performance on comparable facility management or support service contracts, the CPAF structure might be justified as a mechanism to incentivize continued high quality. Conversely, a history of performance issues or cost overruns on similar contracts would raise concerns about the suitability of CPAF and the potential for taxpayer funds to be spent inefficiently. A thorough review would involve examining past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) for IAP on relevant contracts.

What are the specific risks associated with the 'All Other Support Services' NAICS code (561990) in terms of cost control and performance measurement?

The 'All Other Support Services' (NAICS 561990) category presents inherent risks for cost control and performance measurement due to its broad and often undefined scope. Unlike more specialized service codes, 561990 can encompass a vast array of activities, making it challenging to establish clear, measurable performance standards and to benchmark costs effectively. For this $74.8 million Department of Defense contract, the risk is that the 'other' services could expand beyond initial expectations, leading to scope creep and cost overruns without commensurate increases in value. Performance measurement becomes difficult when the deliverables are not precisely defined or easily quantifiable. This ambiguity necessitates robust contract management, clear task order definitions, and vigilant oversight to ensure that the contractor is delivering necessary services at a fair price and meeting defined performance objectives, rather than simply incurring costs under a vague service umbrella.

Given the contract's duration of over 11 years, what are the potential long-term financial implications and risks for the Department of the Army?

A contract duration exceeding 11 years, like this $74.8 million facility support services agreement, carries significant long-term financial implications and risks for the Department of the Army. Firstly, it locks in a specific contractor and service model for an extended period, potentially limiting the agency's flexibility to adapt to changing needs, technological advancements, or more cost-effective solutions that may emerge over time. Secondly, the total financial commitment is substantial, requiring consistent budgetary allocation over many fiscal years. Inflationary pressures, potential for cost increases within the CPAF structure, and the risk of contractor performance degradation over such a long period are all factors that could inflate the ultimate cost to the government. Furthermore, the long duration increases the exposure to unforeseen events, such as changes in military strategy or operational requirements, which might render the contracted services less relevant or necessitate costly modifications.

How does the awarded amount of $74.8 million compare to the initial estimated value or ceiling of the contract, if available?

The provided data indicates a total value of $74,792,351.24 for this contract. However, the data does not explicitly state the initial estimated value or the contract ceiling. Contracts, especially those with flexible pricing structures like Cost Plus Award Fee (CPAF), often have an initial estimate and a maximum ceiling amount. The awarded value represents the total amount obligated or spent over the contract's life. Without knowing the initial ceiling or estimate, it's difficult to definitively say if the contract was significantly under or over its projected cost. If the awarded amount is close to or at the ceiling, it suggests the government fully utilized the contract's potential value. If the ceiling was much higher, it might indicate underspending or a reduced need for services. A comparison would require access to the original contract solicitation and award documents detailing these figures.

What is the significance of the contract being awarded to 'IAP WORLD SERVICES, INC.' in the context of federal facility support services?

IAP World Services, Inc. is a well-established government contractor with extensive experience in providing facility support, logistics, and aviation services, particularly in challenging or remote environments. Their award for this $74.8 million Department of Defense contract signifies their capability and competitiveness in securing large-scale service agreements. In the federal facility support services market, companies like IAP often compete for significant contracts due to the specialized knowledge, personnel, and infrastructure required. Their presence suggests a mature market where a few large players dominate, capable of managing complex operations across multiple sites. The award to IAP indicates they met the government's requirements, likely demonstrating a strong track record, competitive pricing, and a robust operational plan, positioning them as a key provider within this sector.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Cerberus Capital Management, L.P. (UEI: 014784388)

Address: 7315 N. ATLANTIC AVE, CAPE CANAVERAL, FL, 32920

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

Financial Breakdown

Contract Ceiling: $255,434

Exercised Options: $255,434

Current Obligation: $74,792,351

Contract Characteristics

Cost or Pricing Data: NO

Timeline