DOJ's $114M contract for correctional facility operations awarded to The GEO Group, Inc. shows fair value

Contract Overview

Contract Amount: $114,168,149 ($114.2M)

Contractor: THE GEO Group, Inc.

Awarding Agency: Department of Justice

Start Date: 2017-05-25

End Date: 2021-11-30

Contract Duration: 1,650 days

Daily Burn Rate: $69.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 14

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::CL::IGF CAR 16 - RFP-PCC-0023 OPERATION AND MANAGEMENT OF A CORRECTIONAL FACILITY.

Place of Performance

Location: BIG SPRING, HOWARD County, TEXAS, 79720

State: Texas Government Spending

Plain-Language Summary

Department of Justice obligated $114.2 million to THE GEO GROUP, INC. for work described as: IGF::CL::IGF CAR 16 - RFP-PCC-0023 OPERATION AND MANAGEMENT OF A CORRECTIONAL FACILITY. Key points: 1. The contract represents a significant investment in correctional facility management, with a total value of over $114 million. 2. Competition dynamics indicate a full and open process, suggesting a robust market for these services. 3. Performance context is crucial, as the successful operation of correctional facilities directly impacts public safety and rehabilitation efforts. 4. Sector positioning places this contract within the broader facilities support services industry, a critical component of government operations. 5. Risk indicators may include contractor performance, security protocols, and adherence to operational standards within the facility.

Value Assessment

Rating: good

The contract's value of approximately $114 million over its duration appears reasonable when benchmarked against similar large-scale correctional facility management contracts. While specific per-unit cost comparisons are not readily available without detailed operational data, the firm-fixed-price structure suggests that the government has a predictable cost for the services rendered. The GEO Group, Inc. is a major player in this sector, and their pricing is likely competitive within the industry standards for managing complex correctional environments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that multiple bidders were likely considered. The presence of a competitive bidding process generally leads to better price discovery and potentially more favorable terms for the government. The number of bidders (14) suggests a healthy level of interest and competition in providing these essential services.

Taxpayer Impact: A full and open competition ensures that taxpayer dollars are used efficiently by fostering a competitive environment that drives down costs and improves service quality.

Public Impact

The primary beneficiaries are the Federal Prison System / Bureau of Prisons, ensuring the secure and efficient operation of correctional facilities. Services delivered include the comprehensive management and operation of a correctional facility, encompassing security, inmate services, and facility maintenance. The geographic impact is localized to the specific facility managed under this contract, likely within Texas given the 'TX' and 'TEXAS' indicators. Workforce implications include the creation and sustainment of jobs related to correctional officer roles, administrative staff, and support personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if operational complexities are underestimated.
Ensuring consistent adherence to high security and safety standards is paramount.
Managing inmate populations effectively requires robust protocols and experienced personnel.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Full and open competition suggests a competitive market and potentially better value.
The GEO Group, Inc. is an experienced provider in this sector.

Sector Analysis

The correctional facility management sector is a specialized segment within the broader facilities support services industry. This contract falls under the operational management of government infrastructure, requiring expertise in security, logistics, and human services. The market size for such services is substantial, driven by government needs for secure detention and rehabilitation facilities. Comparable spending benchmarks would involve analyzing other contracts for similar facility operations across different federal agencies.

Small Business Impact

The data indicates that small business participation was not a primary focus for this contract, as the 'sb' field is false. There is no explicit mention of small business set-asides or subcontracting requirements. This suggests that the primary award went to a large corporation, and the impact on the small business ecosystem would depend on whether The GEO Group, Inc. engages small businesses as subcontractors for specialized services.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting agency, the Department of Justice's Federal Prison System / Bureau of Prisons. Accountability measures are embedded within the contract terms, requiring adherence to operational standards and performance metrics. Transparency is facilitated through contract awards databases, though detailed operational reports may not be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Bureau of Prisons Operations
Correctional Facility Management Services
Government Contract Operations
Secure Facility Management
Inmate Services Contracts

Risk Flags

Potential for cost overruns
Security incident management
Contractor performance monitoring
Compliance with federal regulations

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $114.2 million to THE GEO GROUP, INC.. IGF::CL::IGF CAR 16 - RFP-PCC-0023 OPERATION AND MANAGEMENT OF A CORRECTIONAL FACILITY.

Who is the contractor on this award?

The obligated recipient is THE GEO GROUP, INC..

Which agency awarded this contract?

Awarding agency: Department of Justice (Federal Prison System / Bureau of Prisons).

What is the total obligated amount?

The obligated amount is $114.2 million.

What is the period of performance?

Start: 2017-05-25. End: 2021-11-30.

What is the historical spending pattern for correctional facility operations by the Federal Prison System?

The Federal Prison System (FPS) has a long history of contracting out the operation and management of correctional facilities to private entities. Historical spending patterns reveal a consistent reliance on such contracts to supplement government-run facilities, particularly for specific security levels or geographic locations. Over the past decade, spending in this area has fluctuated based on inmate population trends, legislative changes, and administration priorities. While specific aggregate figures require detailed analysis of budget appropriations and contract awards over time, the FPS consistently allocates significant portions of its budget to contract services for facility operations, inmate healthcare, and transportation. This particular contract, valued at over $114 million, represents a substantial, but not unprecedented, investment within this category of spending.

How does the performance of The GEO Group, Inc. on similar contracts compare to industry benchmarks?

The GEO Group, Inc. is one of the largest private operators of correctional and detention facilities globally. Benchmarking their performance requires access to detailed performance metrics and potentially independent audits, which are not always publicly available. However, industry analyses and news reports often highlight both successes and challenges faced by major private prison operators, including The GEO Group. Common performance indicators include inmate-to-staff ratios, security incident rates, healthcare provision quality, and recidivism reduction programs. While The GEO Group has a track record of managing large-scale facilities, they have also faced scrutiny regarding staffing levels, use of force incidents, and contract compliance in various jurisdictions. A comprehensive comparison would necessitate a deep dive into specific contract performance data and any associated corrective actions or penalties.

What are the primary risks associated with managing a federal correctional facility under contract?

Managing a federal correctional facility under contract presents several significant risks. Foremost among these is the risk to public safety and security, which includes potential escapes, inmate violence, and staff safety. Operational risks involve maintaining facility infrastructure, managing complex logistics for inmate care and services, and ensuring compliance with a myriad of federal regulations and standards. Financial risks can arise from unforeseen cost increases, such as healthcare expenses or security upgrades, especially under fixed-price contracts. Reputational risk is also substantial, as incidents within a facility can lead to intense public and media scrutiny. Furthermore, there's the risk of contractor non-compliance with contract terms, potentially leading to penalties or contract termination. Effective risk mitigation requires robust management systems, experienced personnel, and strong oversight.

What is the typical profit margin for companies operating federal correctional facilities?

Profit margins for companies operating federal correctional facilities can vary significantly based on contract structure, operational efficiency, facility size, and the specific services required. Generally, the private corrections industry operates on relatively thin margins compared to some other government contracting sectors. Profitability is often driven by economies of scale and efficient cost management. While exact figures are proprietary and fluctuate, industry analysts have suggested that net profit margins for major private prison operators typically range from the low single digits to around 10-15% of revenue. Factors such as the level of services mandated (e.g., healthcare, educational programs), the security classification of inmates, and the duration of the contract can all influence the potential for profit. The firm-fixed-price nature of this contract suggests that the contractor assumes more of the financial risk, but also aims to achieve a predetermined profit based on efficient operations.

How does the competition level (14 bidders) impact the cost-effectiveness of this contract?

A competition level of 14 bidders for this correctional facility operation contract is a strong indicator of a healthy and competitive market. When numerous qualified entities vie for a contract, it typically drives down prices as bidders strive to offer the most competitive proposals to win the award. This increased competition enhances the government's ability to secure services at a cost-effective rate, as bidders are incentivized to optimize their operational plans and pricing strategies. Furthermore, a higher number of bidders can lead to greater innovation in service delivery and operational approaches. For taxpayers, this translates to a more efficient use of public funds, as the government is likely to achieve better value for money compared to a situation with limited or no competition, where a single or few providers might command higher prices due to market power.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: RFP-PCC-0023

Offers Received: 14

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 621 NW 53RD ST STE 700, BOCA RATON, FL, 33487

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

Financial Breakdown

Contract Ceiling: $1,771,762,336

Exercised Options: $381,802,065

Current Obligation: $114,168,149

Actual Outlays: $5,085,210

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline