Department of Energy's $96.6M security services contract awarded to Covenant Security Services, Ltd. with no competition
Contract Overview
Contract Amount: $96,607,134 ($96.6M)
Contractor: Covenant Security Services, Ltd.
Awarding Agency: Department of Energy
Start Date: 2005-07-29
End Date: 2009-10-31
Contract Duration: 1,555 days
Daily Burn Rate: $62.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Other
Official Description: PERSONNEL, FACILITIES, EQUIPMENT, MATERIALS, AND SERVICES NECESSARY TO OPERATE, MANAGE, TRAIN AND MAINTAIN AN ARMED AND UNARMED, UNIFORMED SECURITY FORCE TO INCLUDE BADGING PERSONNEL; ADMINISTRATIVE SUPPORT PERSONNEL, RECEPTIONIST, CANINE EXPLOSIVE DETORTOR SERVICE, AND A QUALITY ASSURANCE PROGRAM REFERRED TO AS THE PROTECTIVE FORCE.
Place of Performance
Location: BOLINGBROOK, WILL County, ILLINOIS, 60440
State: Illinois Government Spending
Plain-Language Summary
Department of Energy obligated $96.6 million to COVENANT SECURITY SERVICES, LTD. for work described as: PERSONNEL, FACILITIES, EQUIPMENT, MATERIALS, AND SERVICES NECESSARY TO OPERATE, MANAGE, TRAIN AND MAINTAIN AN ARMED AND UNARMED, UNIFORMED SECURITY FORCE TO INCLUDE BADGING PERSONNEL; ADMINISTRATIVE SUPPORT PERSONNEL, RECEPTIONIST, CANINE EXPLOSIVE DETORTOR SERVICE, AND A QUALIT… Key points: 1. The contract's cost-plus award fee structure may incentivize contractor performance but requires robust oversight to ensure value. 2. The lack of competition raises concerns about potential overpricing and limited market testing for essential security services. 3. The contract duration of over four years suggests a long-term need for these security services. 4. The significant value of this contract indicates a substantial reliance on external providers for critical security functions. 5. The geographic location in Illinois (IL) suggests a focus on specific Department of Energy facilities within that state.
Value Assessment
Rating: questionable
The contract's total value of $96.6 million over its period of performance is substantial for security guard services. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus award fee (CPAF) structure, while intended to incentivize performance, can lead to higher costs if not managed carefully. The benchmark of $6.2 million annually (based on the total award and duration) is a significant investment, and the absence of competition makes a direct value-for-money assessment challenging.
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. This approach bypasses the standard procurement process designed to foster competition and identify the best value. The lack of competition means that the Department of Energy did not explore the market to determine if other qualified vendors could provide these services at a lower cost or with better performance. This raises questions about the justification for not seeking competitive proposals.
Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure to drive down costs. Without a competitive process, there is less assurance that the government secured the most economical option available.
Public Impact
The primary beneficiaries are the Department of Energy facilities requiring armed and unarmed security personnel, badging, and administrative support. Services delivered include maintaining a uniformed security force, providing administrative support, operating reception, and managing a canine explosive detection program. The geographic impact is concentrated in Illinois (IL), where the Department of Energy facilities requiring these services are located. The contract supports a workforce of security guards, administrative personnel, and specialized roles like canine handlers, contributing to employment in the security sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher costs for taxpayers.
- Sole-source award requires strong justification and oversight to ensure fair pricing.
- Cost-plus award fee structure necessitates diligent monitoring to prevent cost overruns.
- Limited transparency into the selection process due to sole-source nature.
Positive Signals
- Contract ensures continuous provision of critical security services for DOE facilities.
- Covenant Security Services, Ltd. is being entrusted with a significant security role.
- The contract specifies a comprehensive range of security services, indicating a thorough understanding of needs.
Sector Analysis
The security services industry is a significant sector within the broader professional services market. This contract falls under the Security Guards and Patrol Services (NAICS 561612) category. Government contracts for security services are substantial, driven by the need to protect federal facilities and assets. Benchmarking this contract's value against other federal security contracts would require access to detailed pricing and scope information for comparable services, which is limited by the sole-source nature of this award.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. The award to Covenant Security Services, Ltd., a specific company, does not inherently imply benefits or drawbacks for the broader small business ecosystem unless Covenant itself is a small business and has subcontracting plans, which are not detailed here.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's contracting officers and program managers. As a Cost Plus Award Fee (CPAF) contract, performance metrics and cost controls are crucial. The effectiveness of oversight depends on the rigor of the performance evaluations, audits, and the clarity of the award fee criteria. Transparency is limited by the sole-source nature of the award, but internal government oversight mechanisms should be in place to ensure accountability and proper use of funds.
Related Government Programs
- Department of Energy Protective Force Contracts
- Federal Security Guard Services
- Department of Energy Facility Operations and Maintenance
Risk Flags
- Sole-source award lacks competitive pricing pressure.
- Cost-plus contract type requires diligent oversight to manage costs.
- Potential for contractor lock-in due to long-term nature and lack of competition.
Tags
security-services, department-of-energy, sole-source, cost-plus-award-fee, illinois, security-guards, protective-force, federal-contract, large-contract, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $96.6 million to COVENANT SECURITY SERVICES, LTD.. PERSONNEL, FACILITIES, EQUIPMENT, MATERIALS, AND SERVICES NECESSARY TO OPERATE, MANAGE, TRAIN AND MAINTAIN AN ARMED AND UNARMED, UNIFORMED SECURITY FORCE TO INCLUDE BADGING PERSONNEL; ADMINISTRATIVE SUPPORT PERSONNEL, RECEPTIONIST, CANINE EXPLOSIVE DETORTOR SERVICE, AND A QUALITY ASSURANCE PROGRAM REFERRED TO AS THE PROTECTIVE FORCE.
Who is the contractor on this award?
The obligated recipient is COVENANT SECURITY SERVICES, LTD..
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $96.6 million.
What is the period of performance?
Start: 2005-07-29. End: 2009-10-31.
What is the historical spending pattern for security services at this specific Department of Energy facility or for similar services within the agency?
Analyzing historical spending for security services at this specific Department of Energy (DOE) facility or for comparable services across the agency is crucial for context. Without access to detailed historical contract data for this particular award or similar solicitations, a precise comparison is difficult. However, the total award of $96.6 million over approximately four years suggests a significant and consistent investment in security. If previous contracts for similar services were competitively procured, their pricing and performance metrics could serve as benchmarks. A trend of increasing costs or a lack of competitive bidding in past procurements might indicate systemic issues or a growing reliance on sole-source awards, potentially leading to higher overall expenditures for the DOE.
How does the cost-plus award fee (CPAF) structure in this contract compare to other federal security contracts, and what are the implications for contractor performance and cost control?
The Cost-Plus Award Fee (CPAF) structure is a common contract type used by the federal government when precise cost estimation is difficult, but performance outcomes can be defined. In CPAF contracts, the contractor is reimbursed for allowable costs plus a fee that is composed of a fixed base fee and an award amount that is earned based on performance against pre-defined criteria. Compared to fixed-price contracts, CPAF can offer more flexibility and incentivize higher performance. However, it also places a greater burden on the government to establish clear, measurable performance standards and to diligently monitor costs and performance to ensure that the award fee is earned appropriately and that overall costs remain reasonable. For security services, this means the DOE must have robust systems to evaluate guard performance, response times, and adherence to protocols to justify any award fee.
What specific justification was provided for awarding this significant security contract on a sole-source basis, bypassing the standard competitive procurement process?
The justification for a sole-source award typically stems from specific circumstances outlined in federal acquisition regulations, such as the existence of only one responsible source capable of providing the required services, or in rare cases, urgent and compelling needs. For a contract of this magnitude ($96.6 million for security services), the justification would need to be exceptionally strong. Common reasons might include unique capabilities, proprietary technology, or a critical need to maintain continuity of essential services where transitioning to a new contractor would pose an unacceptable risk or delay. Without the specific justification document (often referred to as a Justification and Approval or J&A), it is impossible to definitively state why competition was deemed impractical or impossible. However, the absence of competition inherently raises concerns about whether the government explored all viable options to secure the best value.
What are the key performance indicators (KPIs) used to evaluate Covenant Security Services, Ltd. under this contract, and how are they measured?
Key Performance Indicators (KPIs) for a security services contract like this typically focus on aspects such as response times to incidents, adherence to post orders, personnel reliability (e.g., attendance, background checks), effectiveness of access control and badging, and overall security posture. Under a Cost-Plus Award Fee (CPAF) contract, these KPIs are critical for determining the award portion of the contractor's fee. The Department of Energy would have established specific metrics and measurement methodologies, likely involving site inspections, incident reports, audits of personnel records, and potentially feedback from facility personnel. The clarity and objectivity of these KPIs, along with the rigor of the measurement process, directly impact the fairness of the award fee determination and the government's ability to ensure the contractor is meeting or exceeding expectations.
What is the potential impact of this sole-source contract on the broader market for security guard services, particularly for small and medium-sized businesses?
A sole-source award of this magnitude can have a mixed impact on the broader market for security guard services. On one hand, it removes a significant contract opportunity from the competitive landscape, potentially limiting growth prospects for other firms that might have bid. This is particularly relevant for small and medium-sized businesses (SMBs) that often rely on winning such contracts to scale their operations. If Covenant Security Services, Ltd. is a large incumbent, this award reinforces their position. Conversely, if Covenant is itself an SMB, this contract could be transformative for them. However, the lack of competition means that the market is not being tested, and it's harder to gauge the overall health and competitiveness of the sector serving the Department of Energy. It also means that other capable firms do not have the opportunity to demonstrate their value and potentially offer innovative or more cost-effective solutions.
Industry Classification
NAICS: Administrative and Support and Waste Management and Remediation Services › Investigation and Security Services › Security Guards and Patrol Services
Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 480 QUADRANGLE DRIVE, BOLINGBROOK, IL, 11
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $106,312,874
Exercised Options: $106,312,874
Current Obligation: $96,607,134
Contract Characteristics
Cost or Pricing Data: NOT OBTAINED - WAIVED
Timeline
Start Date: 2005-07-29
Current End Date: 2009-10-31
Potential End Date: 2009-10-31 00:00:00
Last Modified: 2012-02-06
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