DoD's $98M armed guard contract with Diversified Protection Corp shows fair value despite limited competition

Contract Overview

Contract Amount: $98,252,545 ($98.3M)

Contractor: Diversified Protection Corp

Awarding Agency: Department of Defense

Start Date: 2016-11-01

End Date: 2022-04-30

Contract Duration: 2,006 days

Daily Burn Rate: $49.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::CT::IGF ARMED GUARD SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20301

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $98.3 million to DIVERSIFIED PROTECTION CORP for work described as: IGF::CT::IGF ARMED GUARD SERVICES Key points: 1. The contract represents a significant investment in security services for the Department of Defense. 2. While the contract was competed, the exclusion of sources suggests potential limitations in the competitive landscape. 3. The firm-fixed-price structure provides cost certainty but may limit flexibility. 4. Performance duration of over 5 years indicates a long-term need for these services. 5. The contract's value benchmarked against similar services warrants further scrutiny for optimal taxpayer value. 6. Geographic concentration in Washington D.C. highlights a specific operational focus.

Value Assessment

Rating: fair

The total award of $98.25 million over approximately 5.5 years for armed guard services appears to be within a reasonable range for large-scale federal security contracts. However, without specific details on the scope of services, number of guards, and hours provided, a precise value-for-money assessment is challenging. Benchmarking against other similar contracts for armed guard services at federal facilities, especially in high-cost areas like Washington D.C., would be necessary to confirm if the pricing is competitive and reflects efficient use of taxpayer funds. The firm-fixed-price nature of the contract provides budget predictability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was intended to be broad, certain potential bidders were excluded. This suggests that the initial solicitation may have had specific requirements or limitations that narrowed the field of eligible participants. The number of bidders is not explicitly stated, but the 'exclusion of sources' clause implies that the competition might not have been as robust as a purely full and open competition. This could potentially impact price discovery and the overall level of competition achieved.

Taxpayer Impact: The exclusion of sources, even if justified, means taxpayers may not have benefited from the lowest possible prices that a wider, unrestricted competition might have yielded. This approach can sometimes lead to higher costs if the remaining pool of bidders has less incentive to aggressively price their services.

Public Impact

The primary beneficiaries are the Department of Defense facilities and personnel requiring armed security. The contract ensures the provision of security guard services, contributing to the safety and operational continuity of critical government functions. The geographic impact is concentrated in Washington D.C., where the services are presumably rendered. The contract supports jobs within the private security industry, providing employment for armed guards and related personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for higher costs due to limited competition.
Lack of detailed performance metrics makes assessing effectiveness difficult.
Reliance on a single contractor for a prolonged period could lead to complacency.
Geographic concentration might not address broader security needs across different DoD locations.

Positive Signals

Firm-fixed-price contract provides cost certainty for the agency.
Long contract duration suggests a stable and reliable security presence.
Award to an established contractor may indicate a track record of meeting security requirements.
The contract falls under the 'Security Guards and Patrol Services' NAICS code, indicating a specialized service.

Sector Analysis

The federal security services market is substantial, encompassing a wide range of protective services for government facilities and assets. This contract for armed guard services falls within the broader 'Security and Investigation Services' sector, which is characterized by numerous private sector providers ranging from small businesses to large corporations. The market is driven by government needs for physical security, access control, and personnel protection. Comparable spending benchmarks for armed guard services can vary significantly based on location, threat level, and specific service requirements, but contracts of this magnitude are typical for supporting major federal installations or agencies.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, Diversified Protection Corp, is likely a larger entity. While there's no direct information on subcontracting plans, large federal contracts often include provisions for small business participation. The absence of a small business set-aside suggests that the competition was open to all eligible sources, and the primary award went to a non-small business. This means the direct impact on the small business ecosystem for this specific contract is likely minimal unless subcontracting opportunities arise.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program office within the Department of Defense's Washington Headquarters Services. Performance monitoring, quality assurance, and compliance checks are standard oversight mechanisms. Accountability is ensured through contract terms, performance standards, and potential remedies for non-performance. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise concerning the contract's execution.

Related Government Programs

Department of Defense Security Contracts
Federal Protective Service Contracts
Armed Guard Services
Physical Security Services
Government Facility Security

Risk Flags

Limited competition may impact price.
Geographic concentration increases specific risk.
Performance metrics not detailed.
Contract duration is lengthy.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $98.3 million to DIVERSIFIED PROTECTION CORP. IGF::CT::IGF ARMED GUARD SERVICES

Who is the contractor on this award?

The obligated recipient is DIVERSIFIED PROTECTION CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Washington Headquarters Services).

What is the total obligated amount?

The obligated amount is $98.3 million.

What is the period of performance?

Start: 2016-11-01. End: 2022-04-30.

What is the historical spending trend for armed guard services by the Department of Defense, and how does this contract compare?

Analyzing historical spending on armed guard services by the Department of Defense (DoD) reveals a consistent and significant investment in physical security. Over the past decade, the DoD has awarded billions of dollars for various security services, including armed guards, to protect its vast network of installations, personnel, and sensitive assets worldwide. This specific $98.25 million contract with Diversified Protection Corp, spanning from November 2016 to April 2022, represents a substantial, but not unprecedented, portion of the DoD's annual security budget. Compared to other large-scale armed guard contracts awarded by the DoD during similar periods, this contract's value appears aligned with the scale and duration typical for supporting major headquarters or high-security facilities. However, year-over-year spending fluctuations within the DoD's security budget can occur due to evolving threat assessments, policy changes, and budgetary allocations, making direct comparisons require careful consideration of the specific fiscal years and operational contexts.

How does the pricing structure (firm-fixed-price) impact the value proposition for the government in this armed guard services contract?

The firm-fixed-price (FFP) contract structure for this $98.25 million armed guard services agreement offers the Department of Defense significant advantages in terms of cost predictability and risk transfer. Under an FFP contract, the contractor, Diversified Protection Corp, assumes most of the financial risk associated with cost overruns. This means the government knows the total cost upfront, simplifying budgeting and financial planning. For services like armed guards, where labor hours and basic operational costs are relatively stable, an FFP contract can incentivize efficiency from the contractor. However, the value proposition hinges on the initial price being competitive. If the FFP was set too high during negotiation, the government might end up paying a premium, potentially missing out on savings that could have been achieved with a cost-reimbursable contract (if risks were managed differently) or a more aggressively priced FFP contract resulting from broader competition. The 'fair value' assessment is thus tied to whether the negotiated FFP accurately reflects the market rate for the specified services and performance levels.

What are the potential risks associated with 'Full and Open Competition After Exclusion of Sources' for this contract?

The 'Full and Open Competition After Exclusion of Sources' (FOCAES) designation for this $98.25 million armed guard contract introduces specific risks. While intended to allow broad competition, the exclusion clause means that certain potential offerors were deliberately prevented from bidding. The primary risk is that this exclusion may have artificially limited the number of qualified bidders, potentially reducing the intensity of competition. This reduced competition could lead to less favorable pricing for the government, as the remaining bidders might face less pressure to offer their most competitive rates. Furthermore, it raises questions about the justification for excluding sources; if the exclusions were not based on objective, necessary criteria, it could indicate a less than optimal procurement strategy. There's also a risk that innovative solutions or more cost-effective approaches from excluded vendors were not considered, potentially impacting the overall value and effectiveness of the security services procured.

How does the geographic concentration in Washington D.C. affect the overall risk and performance of this armed guard contract?

The concentration of this $98.25 million armed guard contract within Washington D.C. presents both specific advantages and potential risks. On the positive side, focusing services within a defined, high-security geographic area like the nation's capital allows for potentially streamlined logistics, easier supervision, and a deeper understanding of the local operational environment and security landscape by the contractor. This can lead to more consistent performance and quicker response times. However, the risks include a higher cost of living and operating expenses in D.C., which could translate into higher labor costs and potentially higher contract prices compared to less expensive regions. Furthermore, concentrating services in one area makes the Department of Defense's security highly dependent on the performance and stability of a single contractor in a critical location. Any disruption affecting the contractor's ability to operate in D.C. (e.g., labor disputes, financial instability) could have immediate and significant security implications for multiple high-profile federal facilities.

What does the contract award value of approximately $98 million suggest about the scale and importance of the security services provided?

An award value of approximately $98.25 million for armed guard services strongly indicates that these services are critical and provided on a large scale, likely supporting significant Department of Defense operations or facilities. Such a substantial contract suggests the need for a considerable number of security personnel operating over an extended period (the contract duration is over 5 years). This scale implies the protection of high-value assets, sensitive information, or critical infrastructure where robust, armed security is deemed essential. The importance is further underscored by the fact that the DoD, a major federal agency with extensive security requirements, is the contracting entity. This level of investment signifies that armed guard services are not merely a supplementary measure but a core component of the agency's overall security posture and operational continuity strategy in a key location like Washington D.C.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Investigation and Security Services › Security Guards and Patrol Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ003416R0204

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 7455 ARROYO CROSSING STE 220, LAS VEGAS, NV, 89113

Business Categories: 8(a) Program Participant, Black American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $98,264,633

Exercised Options: $98,264,633

Current Obligation: $98,252,545

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline