NIH awards $25.4M for temporary staffing, exceeding benchmark by 71% for a 356-day duration

Contract Overview

Contract Amount: $25,413,850 ($25.4M)

Contractor: Kelly Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2011-03-24

End Date: 2012-03-14

Contract Duration: 356 days

Daily Burn Rate: $71.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 2010-00005I -- DELIVERY ORDER # 55

Place of Performance

Location: TROY, OAKLAND County, MICHIGAN, 48084, UNITED STATES OF AMERICA

State: Michigan Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $25.4 million to KELLY SERVICES, INC. for work described as: 2010-00005I -- DELIVERY ORDER # 55 Key points: 1. The contract's value significantly surpassed the benchmark, indicating potential overspending or a need for revised cost estimations. 2. Full and open competition was utilized, suggesting a broad market search, but the high cost raises questions about price discovery. 3. The duration of 356 days for temporary help services is substantial, implying a long-term reliance on external staffing. 4. The fixed-price contract type offers cost certainty but does not mitigate the risk of paying a premium for services. 5. The National Institutes of Health (NIH) is the primary agency, focusing on critical research support needs. 6. The use of temporary help services suggests a need for flexible staffing solutions to manage fluctuating workloads or specialized skill gaps.

Value Assessment

Rating: questionable

The contract's award price of $25.4 million for 356 days of temporary help services is notably high, especially when compared to the benchmark of $7.1 million. This represents a significant deviation, suggesting that either the benchmark was set too low, the services procured were exceptionally specialized or in high demand, or the pricing achieved was not cost-effective. Further analysis is needed to understand the specific services rendered and the market rates for comparable staffing solutions during the contract period to determine if the value received justifies the expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. While this generally promotes competitive pricing, the significant difference between the award amount and the benchmark raises concerns about the effectiveness of the competition in driving down costs for this specific requirement. The presence of 6 offers suggests a degree of market interest, but the final price indicates that the lowest offer was still substantially above the government's initial expectation.

Taxpayer Impact: Taxpayers may have paid a premium for these temporary staffing services, as the final award price significantly exceeded the established benchmark. The competitive process did not appear to yield a price that aligned with the government's cost expectations.

Public Impact

The primary beneficiaries are the National Institutes of Health (NIH) research programs, which receive essential support staff. Services delivered include temporary staffing to fill critical roles, potentially in administrative, technical, or scientific support. The geographic impact is primarily within the locations where NIH operates, likely concentrated in Maryland and other research facilities. Workforce implications include supplementing the existing federal workforce, providing flexibility, and potentially filling specialized skill gaps without long-term commitments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High cost relative to benchmark suggests potential for overpayment.
Long duration for temporary services may indicate a reliance that could be addressed by permanent hires.
Lack of specific detail on services rendered makes it difficult to assess true value for money.
The benchmark may be outdated or inaccurate, leading to a misinterpretation of cost-effectiveness.

Positive Signals

Full and open competition was utilized, ensuring a broad range of potential providers could compete.
The contract was awarded to a reputable provider (KELLY SERVICES, INC.) with experience in temporary staffing.
The firm fixed-price contract type provides budget certainty for the agency.
Multiple offers were received, indicating market interest and a competitive landscape.

Sector Analysis

The temporary help services sector is a significant component of the broader professional, scientific, and technical services industry. Federal agencies frequently utilize these services to manage fluctuating workforce needs, access specialized skills, and control labor costs associated with permanent hiring. The market is characterized by numerous providers ranging from large global staffing firms to smaller niche agencies. Federal spending in this category is often driven by the need for administrative, IT, healthcare, and scientific support staff across various departments and agencies.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses within the provided data. The award to a large, established firm like Kelly Services, Inc. suggests that small businesses may not have been the primary focus for this particular procurement, potentially limiting their direct participation in this specific contract's value.

Oversight & Accountability

Oversight for this contract would typically fall under the contracting officer and the National Institutes of Health's procurement and program management offices. The firm fixed-price nature of the contract provides a degree of accountability by fixing the cost. However, the significant variance from the benchmark warrants close monitoring of performance and expenditures to ensure value for money. Transparency is facilitated by contract databases, but detailed performance reports are often internal.

Related Government Programs

Temporary Staffing Services
Professional and Technical Services
Federal Workforce Augmentation
Healthcare Support Services
Administrative Support Services

Risk Flags

Cost significantly exceeds benchmark
High value for temporary services
Long duration for temporary staffing

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $25.4 million to KELLY SERVICES, INC.. 2010-00005I -- DELIVERY ORDER # 55

Who is the contractor on this award?

The obligated recipient is KELLY SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $25.4 million.

What is the period of performance?

Start: 2011-03-24. End: 2012-03-14.

What specific types of temporary positions were filled under this contract, and what were their average durations?

The provided data does not specify the exact types of temporary positions filled under this contract (Delivery Order #55). However, given the agency (National Institutes of Health - NIH) and the North American Industry Classification System (NAICS) code 561320 for Temporary Help Services, these roles likely encompassed a range of support functions. This could include administrative assistants, laboratory technicians, research support staff, IT support personnel, or other specialized roles needed to supplement NIH's permanent workforce. The contract duration of 356 days suggests that many of these positions were intended for long-term or continuous support rather than short-term, acute needs. Without more granular data, it's impossible to determine the average duration per position, but the overall contract length implies sustained staffing requirements.

How does the awarded price of $25.4 million compare to the benchmark of $7.1 million, and what factors might explain this discrepancy?

The awarded price of $25.4 million is approximately 3.5 times higher than the benchmark of $7.1 million. This substantial difference is a significant indicator of potential cost inefficiency or a misaligned benchmark. Several factors could explain this discrepancy. Firstly, the benchmark might be outdated, not reflecting current market rates for temporary staffing, especially if there was high demand or inflation during the contract period. Secondly, the specific skills or qualifications required for the temporary positions might have been highly specialized or in short supply, commanding premium rates. Thirdly, the scope of services or the level of support provided might have exceeded what was anticipated in the benchmark. Lastly, the competitive bidding process, despite being full and open, may not have yielded sufficiently competitive offers relative to the government's initial cost estimate, or the evaluation criteria may have prioritized factors other than the lowest price.

What is the track record of Kelly Services, Inc. in fulfilling federal contracts for temporary staffing?

Kelly Services, Inc. is a large, well-established global staffing company with extensive experience in providing temporary, contract, and permanent staffing solutions across various industries, including government. While this specific contract's value and benchmark comparison raise questions, Kelly Services generally has a broad track record with federal agencies. Their ability to secure this contract, especially under full and open competition, suggests they met the technical and performance requirements set forth by the NIH. However, a comprehensive assessment of their track record would require examining past performance evaluations, any past disputes or contract terminations, and their history of delivering services within budget and schedule across multiple federal engagements. The sheer volume of their operations means performance can vary across individual contracts.

What are the potential risks associated with a firm fixed-price contract for temporary staffing services, particularly given the high cost?

Firm fixed-price (FFP) contracts are generally preferred for their cost certainty, as the price is set regardless of the contractor's actual costs. For temporary staffing, an FFP contract means the agency knows the total cost upfront. However, a key risk, especially when the price is high relative to benchmarks, is that the government might overpay if the contractor's actual costs are significantly lower than the fixed price. This contract's high value suggests that if the contractor's labor and overhead costs were substantially less than $25.4 million, the government did not achieve optimal value for money. Another risk is that the contractor might be incentivized to cut corners on quality or candidate screening to maximize profit margins, although performance standards should mitigate this. The primary risk here is the potential for paying a premium for services that could have been procured at a lower cost.

How does this contract's spending compare to historical federal spending on temporary help services?

This contract represents a significant single award for temporary help services. While $25.4 million is a substantial amount for a single delivery order, it needs to be viewed within the broader context of federal spending on temporary staffing. Agencies like NIH frequently use temporary services to manage workforce fluctuations, support research projects, and fill critical gaps. Historically, federal spending on temporary and contract staffing services across all agencies can amount to billions of dollars annually. This specific contract, while large, is likely one of many such awards made by various federal entities. To assess its historical significance, one would need to compare it against the average contract size, the total annual spending on temporary help services by NIH, and the overall federal expenditure trends in this category over several fiscal years.

What are the implications of awarding a contract of this size and duration for the NIH's long-term workforce strategy?

Awarding a $25.4 million contract for temporary help services with a duration of 356 days suggests that the NIH is facing significant, ongoing needs for external staffing support. This could indicate challenges in recruiting and retaining permanent federal employees, a need for specialized skills not readily available internally, or a strategy to maintain workforce flexibility. From a long-term perspective, a heavy reliance on temporary staff can be costly and may not foster the same level of institutional knowledge or commitment as permanent employees. It might also signal that the agency is struggling to forecast its long-term staffing needs accurately or is hesitant to commit to permanent positions due to budget uncertainties. The agency should evaluate whether these temporary roles could be converted to permanent positions or if more strategic workforce planning is required.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Employment Services › Temporary Help Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 999 W BIG BEAVER RD, TROY, MI, 48084

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

Financial Breakdown

Contract Ceiling: $25,413,850

Exercised Options: $25,413,850

Current Obligation: $25,413,850

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSN271201000005I

IDV Type: IDC

Timeline