DOE's $901.6M security contract awarded to Wackenhut Services Inc. shows long duration and cost-plus structure
Contract Overview
Contract Amount: $901,619,943 ($901.6M)
Contractor: Wackenhut Services Inc
Awarding Agency: Department of Energy
Start Date: 1999-10-15
End Date: 2009-12-31
Contract Duration: 3,730 days
Daily Burn Rate: $241.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE
Sector: Other
Place of Performance
Location: AIKEN, AIKEN County, SOUTH CAROLINA, 29802
Plain-Language Summary
Department of Energy obligated $901.6 million to WACKENHUT SERVICES INC for work described as: Key points: 1. Contract awarded under full and open competition, suggesting a broad market search. 2. The cost-plus incentive fee structure may incentivize cost control but also carries inherent risk. 3. A long contract duration of over 10 years could indicate a stable, long-term need for services. 4. The contract's value is substantial, representing a significant investment in security services. 5. The primary service category is security guards and patrol, a critical function for government facilities. 6. The contract was awarded by the Department of Energy, highlighting its importance for national security and energy infrastructure.
Value Assessment
Rating: fair
The contract's value of over $900 million over a decade is substantial. Without specific benchmarks for security services at similar Department of Energy facilities, a precise value-for-money assessment is difficult. The cost-plus incentive fee (CPIF) structure, while common for complex services, can lead to higher costs than fixed-price contracts if not managed tightly. The significant duration suggests a consistent need, but the pricing mechanism warrants scrutiny to ensure efficiency and prevent cost overruns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded through full and open competition, indicating that multiple bidders were likely considered. This approach generally fosters competitive pricing and allows the government to select the best value. The fact that it was competed broadly suggests that the market for these services is robust and that Wackenhut Services Inc. was deemed the most advantageous offer.
Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is expected to drive down prices through market forces and encourage innovation among bidders.
Public Impact
The Department of Energy benefits from consistent and comprehensive security services across its facilities. The contract ensures the protection of sensitive government assets, infrastructure, and personnel. The services provided include security guards and patrol, contributing to the safety and operational continuity of DOE sites. The contract's geographic impact is likely concentrated in areas where the Department of Energy operates facilities, potentially including South Carolina. The workforce implications involve the employment of security personnel managed by Wackenhut Services Inc.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The cost-plus incentive fee structure can lead to higher final costs if cost controls are not rigorously enforced.
- The long contract duration (over 10 years) may reduce flexibility to adapt to changing security needs or market innovations.
- Lack of specific performance metrics or benchmarks makes it difficult to assess the efficiency of the awarded price.
- The sheer scale of the contract value raises questions about potential for cost overruns without stringent oversight.
Positive Signals
- Awarded through full and open competition, suggesting a competitive bidding process.
- The contract duration indicates a stable and predictable security environment for the Department of Energy.
- The cost-plus incentive fee structure, if managed well, can align contractor and government interests in achieving cost efficiencies.
- Wackenhut Services Inc. is a known entity in the security services sector, potentially bringing established expertise.
Sector Analysis
The security services industry is a significant sector supporting government operations, encompassing guard services, patrol, and facility protection. This contract falls within the broader professional, scientific, and technical services category. The market for government security contracts is competitive, with numerous large and small firms vying for these essential services. Benchmarking this contract's value against similar large-scale federal security contracts would provide further context on its cost-effectiveness.
Small Business Impact
The contract details indicate that small business participation was not a primary set-aside consideration (ss: false, sb: false). This suggests that the primary award was made to a large business, Wackenhut Services Inc. While there may be subcontracting opportunities for small businesses within this large contract, the initial award does not appear to have been specifically structured to maximize small business prime contracting. Further analysis of subcontracting plans would be needed to assess the impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of Energy's contracting officers and program managers. The cost-plus incentive fee structure necessitates close monitoring of costs and performance to ensure value for money. Inspector General (IG) jurisdiction would likely extend to investigating potential fraud, waste, or abuse related to the contract. Transparency would depend on the DOE's reporting practices regarding contract performance and expenditures.
Related Government Programs
- Federal Protective Service Contracts
- Department of Energy Facility Security
- Guard and Patrol Services
- Cost-Plus Incentive Fee Contracts
- Long-Term Government Service Contracts
Risk Flags
- Long contract duration may reduce flexibility.
- Cost-plus incentive fee structure requires diligent oversight.
- Potential for cost overruns without strict management.
- Assessing value for money requires detailed performance benchmarks.
Tags
department-of-energy, security-services, guard-services, patrol-services, full-and-open-competition, cost-plus-incentive, long-term-contract, south-carolina, large-contract, wackenhut-services-inc
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $901.6 million to WACKENHUT SERVICES INC. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is WACKENHUT SERVICES INC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $901.6 million.
What is the period of performance?
Start: 1999-10-15. End: 2009-12-31.
What is the historical spending trend for security services at the Department of Energy, and how does this contract compare?
Analyzing historical spending for security services at the Department of Energy (DOE) is crucial for context. While this specific contract represents a significant $901.6 million commitment over its lifespan, understanding the DOE's overall security budget and spending patterns over time is key. Without access to comprehensive historical data for all DOE security contracts, it's challenging to provide a precise comparison. However, a contract of this magnitude suggests a substantial and ongoing requirement for security services, potentially indicating a stable or increasing need. Comparing this contract's value to the average annual security spending across all DOE facilities or to similar large-scale contracts awarded to other agencies could reveal whether this represents a typical investment or an outlier.
How effectively has Wackenhut Services Inc. managed cost-plus incentive fee contracts in the past, particularly with federal agencies?
Assessing Wackenhut Services Inc.'s track record with cost-plus incentive fee (CPIF) contracts is vital for understanding the potential risks and benefits of this award. CPIF contracts are designed to incentivize cost savings and performance targets, but their success hinges on effective contractor management and government oversight. Information on Wackenhut's past performance, including any instances of cost overruns, missed targets, or disputes on similar contracts, would be invaluable. Reviewing past performance evaluations, contract close-out data, and any available audit reports related to their federal contracts could shed light on their ability to deliver value under this type of pricing structure. A history of successful CPIF contract management would increase confidence in this award, while a pattern of issues would raise concerns.
What are the specific performance metrics and incentive structures within this contract, and how are they monitored?
The effectiveness of a cost-plus incentive fee (CPIF) contract is heavily dependent on the clarity and measurability of its performance metrics and incentive structures. For this Department of Energy contract, understanding what specific outcomes or service levels trigger incentives or penalties is critical. Key questions include: What are the defined performance standards for security personnel and operations? What are the thresholds for cost savings or efficiency gains that lead to incentive payments? How does the DOE monitor and verify performance against these metrics? Without detailed insight into these contractual clauses and the associated oversight mechanisms, it's difficult to fully evaluate the potential for value for money and to ensure that taxpayer funds are being used efficiently. Robust monitoring and transparent reporting are essential for CPIF contracts.
What is the risk profile associated with providing security guard services over a 10-year period, and how is it mitigated?
Providing security guard services over a decade presents several inherent risks, including evolving security threats, changes in technology, personnel turnover, and potential for service degradation. For this $901.6 million Department of Energy contract, the long duration (over 10 years) amplifies these risks. Mitigating these requires proactive contract management. This includes mechanisms for adapting to new threats, incorporating technological advancements, ensuring consistent training and retention of qualified personnel, and maintaining rigorous performance standards. The cost-plus incentive fee structure, while offering some flexibility, also requires careful oversight to prevent complacency or cost escalation. The Department of Energy's risk mitigation strategies likely involve regular performance reviews, site inspections, and clear protocols for addressing any security breaches or service deficiencies.
How does the geographic location (South Carolina) influence the cost and delivery of these security services?
The geographic location of contract performance, noted as South Carolina (SN: SOUTH CAROLINA), can influence both the cost and the operational dynamics of security guard services. Factors such as local labor costs, cost of living, availability of qualified personnel, and proximity to relevant training facilities can impact the overall expense. For a large-scale contract like this, the DOE likely considered these regional economic factors during the bidding process. The presence of significant DOE facilities in South Carolina may have also influenced the decision to award a long-term contract in that area, ensuring continuity of essential security operations. Understanding the specific labor market conditions and any unique logistical challenges in South Carolina would provide further insight into the contract's pricing and operational efficiency.
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: FULL AND OPEN COMPETITION
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE (V)
Contractor Details
Address: 708-1B SVANNAH RIVER SITE, AIKEN, SC, 02
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $954,576,242
Exercised Options: $954,576,242
Current Obligation: $901,619,943
Timeline
Start Date: 1999-10-15
Current End Date: 2009-12-31
Potential End Date: 2010-11-30 00:00:00
Last Modified: 2013-11-22
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