DoD's $85M Facilities Maintenance Contract Awarded to Nelson Refrigeration Inc. for Texas Facilities

Contract Overview

Contract Amount: $84,980,245 ($85.0M)

Contractor: Nelson Refrigeration Inc

Awarding Agency: Department of Defense

Start Date: 2020-07-01

End Date: 2026-12-31

Contract Duration: 2,374 days

Daily Burn Rate: $35.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: DECA WHOLE FACILITIES MAINTENANCE - MAINTENANCE GROUP 4

Place of Performance

Location: JBSA LACKLAND, BEXAR County, TEXAS, 78236

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $85.0 million to NELSON REFRIGERATION INC for work described as: DECA WHOLE FACILITIES MAINTENANCE - MAINTENANCE GROUP 4 Key points: 1. Value for money appears fair given the 6-year duration and scope of services. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators include the Time and Materials pricing structure, which can lead to cost overruns if not managed closely. 4. Performance context is tied to maintaining critical facilities for the Defense Commissary Agency. 5. Sector positioning is within facilities support services, a crucial but often overlooked area of government operations.

Value Assessment

Rating: fair

The contract's value of approximately $85 million over six years for facilities maintenance services is substantial. Benchmarking this against similar large-scale facilities maintenance contracts across the federal government is challenging without more granular data on the specific services provided and the square footage maintained. However, the duration suggests a potentially stable and predictable cost structure. The Time and Materials (T&M) pricing model, while common, warrants close monitoring to ensure costs remain within reasonable bounds and do not escalate due to inefficiencies or scope creep. Without specific performance metrics or comparisons to industry benchmarks for similar facilities, a definitive value assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit offers. The data shows 5 offers were received, suggesting a reasonable level of competition for this type of service. A competitive process generally helps in achieving fair market prices and encourages contractors to offer their best value propositions. The presence of multiple bidders implies that the market has capacity and interest in providing these services to the Defense Commissary Agency.

Taxpayer Impact: A full and open competition is beneficial for taxpayers as it increases the likelihood of securing services at a competitive price, preventing potential overpayment that could occur with less competitive procurement methods.

Public Impact

Military personnel and their families stationed in Texas will benefit from well-maintained commissary facilities. Essential services include maintenance for HVAC, plumbing, electrical systems, and general building upkeep. The geographic impact is concentrated in Texas, supporting commissary operations within the state. Workforce implications may include direct employment by Nelson Refrigeration Inc. and potential subcontracting opportunities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing can lead to unpredictable costs if not managed effectively.
The large contract value over a long duration presents a significant financial commitment.
Dependence on a single contractor for critical facility maintenance could pose a risk if performance falters.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Long-term contract duration provides stability for facility operations.
The contractor is responsible for a broad range of maintenance services, consolidating support.

Sector Analysis

The facilities support services sector is a critical component of government operations, encompassing a wide array of maintenance, repair, and operational activities for federal buildings and infrastructure. This contract falls within the broader facilities management industry, which is characterized by a mix of large, established players and smaller specialized firms. Government spending in this area is substantial, driven by the need to maintain aging infrastructure and ensure operational readiness across various agencies. Benchmarks for similar contracts are often difficult to establish due to the bespoke nature of facility needs and geographic variations in labor and material costs.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, there are no direct small business set-aside implications. However, the prime contractor, Nelson Refrigeration Inc., may engage small businesses as subcontractors to fulfill portions of the contract requirements. The extent of small business subcontracting would depend on the contractor's own policies and any specific subcontracting goals or requirements that may have been included in the contract solicitation or award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Commissary Agency (DECA) contracting officer and their representatives. Performance monitoring, invoice review, and compliance checks are standard oversight mechanisms. Accountability measures are embedded within the contract terms, including performance standards and potential remedies for non-compliance. Transparency is generally maintained through contract award databases and public reporting, although detailed operational oversight specifics are often internal.

Related Government Programs

Base Operations Support Services
General Services Administration (GSA) Facilities Management Contracts
Department of Defense Maintenance and Repair Contracts
Commissary Operations Support

Risk Flags

Time and Materials pricing structure carries inherent cost escalation risk.
Long contract duration requires sustained oversight to ensure continued value.
Potential for contractor performance issues over the extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.0 million to NELSON REFRIGERATION INC. DECA WHOLE FACILITIES MAINTENANCE - MAINTENANCE GROUP 4

Who is the contractor on this award?

The obligated recipient is NELSON REFRIGERATION INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $85.0 million.

What is the period of performance?

Start: 2020-07-01. End: 2026-12-31.

What is the track record of Nelson Refrigeration Inc. with federal contracts, particularly in facilities maintenance?

Nelson Refrigeration Inc. has a history of federal contract awards, primarily within the facilities maintenance and repair domain. Analyzing their past performance on similar contracts is crucial for assessing their capability and reliability. Key areas to examine would include their on-time delivery rates, quality of work, adherence to budget, and any past performance issues or disputes. A review of their contract history with agencies like the Department of Defense or other federal entities would provide insights into their experience with large-scale maintenance operations and their ability to meet government requirements. Without specific data on their past federal contract performance, it's difficult to definitively assess their track record.

How does the per-unit cost of services under this contract compare to industry benchmarks for similar facilities maintenance?

Determining a precise per-unit cost comparison is challenging without detailed breakdowns of the services provided (e.g., HVAC repair, plumbing, electrical, janitorial) and the specific types and sizes of facilities maintained. The contract's Time and Materials (T&M) pricing structure further complicates direct benchmarking, as costs are driven by actual labor hours and material expenses rather than fixed unit prices. To perform a robust comparison, one would need to identify comparable government or commercial facilities in Texas with similar square footage and service requirements, and then analyze their maintenance expenditures. Industry reports on facilities management costs could offer general benchmarks, but the unique nature of military commissary operations and the specific scope of this contract necessitate a tailored analysis.

What are the primary risks associated with the Time and Materials (T&M) pricing structure in this contract?

The primary risk associated with the Time and Materials (T&M) pricing structure is the potential for cost escalation and lack of cost certainty for the government. Unlike fixed-price contracts, T&M contracts reimburse the contractor for the actual cost of labor and materials, plus a fee or profit margin. This can lead to higher-than-anticipated costs if work is inefficiently performed, if labor rates are higher than expected, or if material costs increase significantly. Effective oversight, including detailed tracking of labor hours, verification of material costs, and robust performance management, is essential to mitigate these risks and ensure the government receives good value. Without stringent controls, T&M contracts can be susceptible to cost overruns.

How effective are the oversight mechanisms in place to ensure contractor performance and prevent cost overruns on this contract?

The effectiveness of oversight mechanisms hinges on the diligence and resources allocated by the Defense Commissary Agency (DECA). Standard oversight includes the appointment of a Contracting Officer's Representative (COR) responsible for monitoring day-to-day performance, reviewing invoices, and ensuring compliance with contract terms. Regular site inspections, performance reviews, and audits are critical components. For a T&M contract of this magnitude, robust oversight is paramount to scrutinize labor hours, material costs, and overall efficiency. The presence of an Inspector General (IG) within the Department of Defense provides an additional layer of accountability, with the potential for audits and investigations into contract performance and financial management. The actual effectiveness depends on the implementation and rigor of these processes.

What is the historical spending pattern for facilities maintenance by the Defense Commissary Agency, and how does this award compare?

Analyzing historical spending patterns for facilities maintenance by the Defense Commissary Agency (DECA) is crucial for contextualizing this $85 million award. DECA operates numerous commissary facilities worldwide, and their maintenance needs are substantial and ongoing. Historical data would reveal trends in contract values, types of services procured, and the number and duration of previous maintenance contracts. Comparing this new award to past spending would indicate whether DECA's investment in facilities maintenance is increasing, decreasing, or remaining stable. It would also highlight any shifts in procurement strategies, such as a move towards longer-term contracts or different pricing structures. Without access to DECA's specific historical spending data, it's difficult to provide a precise comparison.

What are the implications of awarding a long-term (6-year) contract for facilities maintenance?

Awarding a long-term contract, such as this 6-year agreement, offers several implications for both the government and the contractor. For the government, it provides budget stability and ensures continuity of essential services over an extended period, potentially reducing the administrative burden and costs associated with frequent re-procurement. It can also foster a stronger working relationship and encourage the contractor to invest in specialized equipment or training. For the contractor, a long-term commitment offers revenue predictability and the opportunity to optimize operations and resource allocation. However, it also carries risks, such as the potential for the government to be locked into a contract that becomes less competitive over time or if contractor performance declines. The T&M pricing structure, combined with a long duration, necessitates vigilant oversight to manage costs effectively throughout the contract life.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 12110 CARY CIR, LA VISTA, NE, 68128

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

Financial Breakdown

Contract Ceiling: $374,054,012

Exercised Options: $374,054,012

Current Obligation: $84,980,245

Actual Outlays: $18,998,070

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QSHA20D000F

IDV Type: FSS

Timeline