Transportation Department's $14.75M lab space lease to Transportation Research Center Inc. ran for 20 years

Contract Overview

Contract Amount: $14,750,286 ($14.8M)

Contractor: Transportation Research Center Inc

Awarding Agency: Department of Transportation

Start Date: 1998-09-28

End Date: 2017-09-30

Contract Duration: 6,942 days

Daily Burn Rate: $2.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: LEASE OF LABORATORY SPACE FOR VRTC

Place of Performance

Location: EAST LIBERTY, LOGAN County, OHIO, 43319

State: Ohio Government Spending

Plain-Language Summary

Department of Transportation obligated $14.8 million to TRANSPORTATION RESEARCH CENTER INC for work described as: LEASE OF LABORATORY SPACE FOR VRTC Key points: 1. The contract's long duration and lack of competition suggest potential for above-market rates. 2. Performance was tied to a fixed-price structure with economic price adjustments, potentially increasing costs over time. 3. The sole-source nature raises questions about whether the government secured the best possible value. 4. The contract spanned nearly two decades, indicating a long-term reliance on a single provider. 5. The geographic concentration in Ohio for this specialized testing facility limits broader accessibility. 6. The absence of small business participation is noted, with no set-aside or subcontracting requirements.

Value Assessment

Rating: questionable

The lease of laboratory space for $14.75 million over approximately 20 years to a single entity, Transportation Research Center Inc., raises concerns about value for money. Without competitive bidding, it is difficult to benchmark the pricing against market rates or alternative providers. The fixed-price structure with economic price adjustments could have led to cost escalations over the extended period, potentially exceeding what a competitive process might have yielded. The lack of comparison data makes a definitive value assessment challenging, but the prolonged sole-source nature is a red flag.

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. The data indicates that only one vendor, Transportation Research Center Inc., was considered for this requirement. This lack of competition limits the government's ability to explore alternative solutions or negotiate more favorable terms. It suggests that either there were unique circumstances justifying a sole-source award or that the opportunity for competition was missed.

Taxpayer Impact: Sole-source awards typically result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This contract's extended duration further amplifies the potential financial impact.

Public Impact

The primary beneficiary is Transportation Research Center Inc., which received substantial revenue over two decades. The National Highway Traffic Safety Administration (NHTSA) received laboratory space for its testing and research activities. The services delivered were critical for vehicle safety research and development. The geographic impact is concentrated in Ohio, where the laboratory space is located. The contract supported specialized technical roles within Transportation Research Center Inc.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Extended sole-source award for two decades limits price discovery and potential savings.
Fixed-price with economic price adjustment can lead to cost overruns over a long contract term.
Lack of competition may have prevented exploration of more innovative or cost-effective solutions.
Concentration of services in one location limits broader access and potential for regional economic benefits.

Positive Signals

The contract provided essential laboratory space for critical transportation safety research.
The long duration indicates a stable and consistent need for the services provided.
The fixed-price element, despite adjustments, offered some level of cost predictability.

Sector Analysis

The contract falls within the 'Testing Laboratories and Services' sector (NAICS 541380). This sector includes establishments primarily engaged in providing testing services. The market for specialized automotive testing facilities can be concentrated, with a few key players offering unique capabilities. The government's spending in this area is often driven by regulatory requirements and the need for independent validation of safety and performance standards. Benchmarking this specific lease against other government laboratory leases is difficult due to the specialized nature and long-term commitment.

Small Business Impact

This contract was not awarded as a small business set-aside, and there is no indication of subcontracting to small businesses. The sole-source nature further precluded any opportunities for small business participation through competitive bidding. This means that the potential economic benefits for the small business ecosystem related to this specific contract were likely minimal.

Oversight & Accountability

Oversight for this contract would have been managed by the National Highway Traffic Safety Administration (NHTSA). As a definitive contract, it would be subject to standard federal procurement regulations and oversight mechanisms. Transparency regarding the sole-source justification and any performance reviews would be key. However, the extended duration and lack of competition may limit the effectiveness of ongoing oversight in ensuring optimal value.

Related Government Programs

Vehicle Safety Research
Automotive Testing Services
Federal Laboratory Leases
Transportation Research and Development

Risk Flags

Sole-source award
Long contract duration
Economic price adjustments
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $14.8 million to TRANSPORTATION RESEARCH CENTER INC. LEASE OF LABORATORY SPACE FOR VRTC

Who is the contractor on this award?

The obligated recipient is TRANSPORTATION RESEARCH CENTER INC.

Which agency awarded this contract?

Awarding agency: Department of Transportation (National Highway Traffic Safety Administration).

What is the total obligated amount?

The obligated amount is $14.8 million.

What is the period of performance?

Start: 1998-09-28. End: 2017-09-30.

What was the justification for awarding this contract on a sole-source basis?

The provided data does not explicitly state the justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the government's needs. This could be due to unique capabilities, proprietary technology, or specific geographic requirements. Without further documentation from the agency (e.g., a Justification for Other Than Full and Open Competition - JOFOC), it is impossible to definitively determine the rationale. However, the long duration (nearly 20 years) suggests a potentially long-standing relationship or a highly specialized facility that was difficult to replicate or compete.

How does the annual cost of this lease compare to market rates for similar laboratory space?

Direct comparison to market rates is challenging without more specific information about the facility's size, specialized equipment, location within Ohio, and the exact nature of the laboratory services provided. The contract value of $14.75 million over approximately 20 years equates to roughly $737,500 per year. Given that this is a specialized laboratory space likely equipped for automotive testing, the annual cost might be within a reasonable range if it includes significant infrastructure and equipment. However, the lack of competition means there's no market validation to confirm if this represents the best possible price.

What were the primary risks associated with this long-term, sole-source contract?

The primary risks associated with this long-term, sole-source contract include: 1. **Cost Overruns:** The 'Fixed Price with Economic Price Adjustment' (FPPEA) contract type, while offering some cost certainty, allows for price increases tied to economic factors. Over a 20-year period, these adjustments could significantly inflate the total cost beyond initial projections. 2. **Lack of Innovation:** Without competition, there's less incentive for the contractor to innovate or offer more cost-effective solutions, as they have a guaranteed customer. 3. **Vendor Lock-in:** The government became heavily reliant on a single provider, making it difficult and potentially costly to switch vendors if performance issues arose or better alternatives became available. 4. **Potential for Complacency:** A long-term, sole-source relationship can sometimes lead to complacency in service delivery or cost management.

What was the historical spending pattern for this specific laboratory space requirement?

The provided data indicates a single contract for 'LEASE OF LABORATORY SPACE FOR VRTC' awarded on September 28, 1998, with an end date of September 30, 2017, totaling $14,750,286.14. This suggests that prior to this contract, the Department of Transportation may have had different arrangements for securing laboratory space, potentially through other contracts, leases, or government-owned facilities. However, the data does not provide details on spending patterns before or immediately after this specific contract period. The duration and value of this single contract imply a consistent and significant long-term need for this particular facility.

How did the economic price adjustments impact the total contract value over its lifespan?

The specific impact of economic price adjustments (EPAs) on the total contract value cannot be precisely calculated from the provided data. The contract type is 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPPEA). EPAs are designed to account for fluctuations in economic conditions, such as inflation, labor costs, or material prices. Over a contract duration of nearly 20 years (6942 days), these adjustments could have led to substantial increases in the final price paid compared to a simple fixed-price contract. The total value of $14.75 million reflects the base price plus any adjustments made over the contract's life.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Testing Laboratories and Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 10820 STATE ROUTE 347, EAST LIBERTY, OH, 43319

Business Categories: Nonprofit Organization

Financial Breakdown

Contract Ceiling: $14,750,286

Exercised Options: $14,750,286

Current Obligation: $14,750,286

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline