DHS awarded $51.3M for security services, with a significant portion potentially going to a single large contractor

Contract Overview

Contract Amount: $51,287,563 ($51.3M)

Contractor: THE GEO Group, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2010-12-22

End Date: 2011-12-25

Contract Duration: 368 days

Daily Burn Rate: $139.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PEARSALL FY 11 TO

Place of Performance

Location: PEARSALL, FRIO County, TEXAS, 78061

State: Texas Government Spending

Plain-Language Summary

Department of Homeland Security obligated $51.3 million to THE GEO GROUP, INC. for work described as: PEARSALL FY 11 TO Key points: 1. The contract value of $51.3M over one year suggests a high per-unit cost for security services. 2. Awarded under full and open competition, the contract's structure may still favor large incumbents. 3. The fixed-price nature of the contract shifts performance risk to the contractor. 4. The geographic focus on Texas for security services indicates a localized operational need. 5. The NAICS code 561612 points to a standard service industry with established market rates. 6. The contract duration of 368 days is slightly over a year, impacting annual spending comparisons.

Value Assessment

Rating: fair

The contract value of $51.3M for a 368-day period for security guard services appears high when considering the number of bids received. Without more detailed performance metrics or a breakdown of services provided, it is difficult to definitively benchmark the value. However, the relatively low number of bids in a full and open competition could indicate that the pricing may not have been aggressively driven down by market forces.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors were eligible to bid. However, the fact that only one bid was received raises concerns about the effectiveness of the competition. This could be due to various factors, such as the specialized nature of the services, the geographic location, or the contract's specific requirements, which may have inadvertently limited the pool of qualified bidders.

Taxpayer Impact: A single bid in a full and open competition may mean taxpayers did not benefit from the most competitive pricing possible, potentially leading to overpayment for the services rendered.

Public Impact

The primary beneficiaries are U.S. Immigration and Customs Enforcement (ICE) and the Department of Homeland Security (DHS), receiving essential security services. The services delivered include security guards and patrol, crucial for maintaining safety and order. The geographic impact is concentrated in Texas, indicating a specific operational requirement for DHS in that state. The contract supports jobs within the private security sector in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition despite full and open solicitation, leading to higher costs.
Lack of multiple bids may indicate barriers to entry for smaller or less established security firms.
The high contract value could be concentrated with a single large provider, limiting broader economic impact.

Positive Signals

Awarded through full and open competition, theoretically allowing for broad market participation.
The fixed-price contract structure incentivizes contractor efficiency and cost control.
The contract addresses a critical government need for security services.

Sector Analysis

The security services industry is a significant sector within the broader professional, scientific, and technical services market. This contract falls under the Security Guards and Patrol Services (NAICS 561612) sub-sector. The market is characterized by a mix of large, established providers and numerous smaller regional players. Government contracts for security services are substantial, driven by the need for protection across various federal agencies and facilities. Benchmarking this contract's value would require comparison with similar large-scale security service contracts awarded by federal agencies, considering factors like personnel hours, skill levels, and geographic scope.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the primary award went to a large business. Without specific subcontracting plans, the direct impact on the small business ecosystem for this particular contract is likely minimal, though it represents a missed opportunity for small businesses to participate in a significant federal contract.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. As a firm-fixed-price contract, performance is monitored to ensure compliance with the statement of work. The Department of Homeland Security's internal oversight bodies and potentially the Government Accountability Office (GAO) would be responsible for reviewing contract performance and addressing any disputes or concerns. Transparency is generally maintained through contract databases, though detailed operational performance data may not be publicly available.

Related Government Programs

Federal Protective Service contracts
Department of Homeland Security security contracts
Immigration and Customs Enforcement support services
Private security services procurement

Risk Flags

Single bid received in full and open competition
High contract value for security services
Concentration of spending with one contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $51.3 million to THE GEO GROUP, INC.. PEARSALL FY 11 TO

Who is the contractor on this award?

The obligated recipient is THE GEO GROUP, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Immigration and Customs Enforcement).

What is the total obligated amount?

The obligated amount is $51.3 million.

What is the period of performance?

Start: 2010-12-22. End: 2011-12-25.

What is the typical cost per hour for security guards under similar federal contracts in Texas?

Determining the precise per-hour cost for security guards under this $51.3M contract for 368 days is complex without a detailed breakdown of guard hours, skill levels, and specific duties. However, federal contracts for security guards can range significantly. For instance, contracts for unarmed guards in similar regions might range from $30 to $60 per hour, including labor, overhead, and profit. Armed guards or those with specialized training would command higher rates. Given the total contract value and duration, the implied average hourly rate would need to account for all personnel, management, and operational costs. Without more granular data on the number of guards and their hours, a direct comparison to market rates is challenging, but the overall contract value suggests a substantial deployment of security personnel.

What factors might have contributed to only one bid being submitted for this contract?

Several factors could explain the submission of only one bid despite the contract being competed under 'full and open' procedures. The specialized nature of security services required by U.S. Immigration and Customs Enforcement (ICE) might necessitate specific clearances, training, or equipment that only a limited number of contractors possess. Geographic concentration in Texas could also be a limiting factor if few large security firms have a significant operational presence or established infrastructure in the specific areas required. Furthermore, the contract's value and duration, while substantial, might not have been attractive enough to warrant the significant bidding costs for multiple companies if they perceived high risks or low profit margins. Finally, the solicitation documents themselves, including the statement of work and evaluation criteria, might have inadvertently favored a particular incumbent or type of provider, discouraging other potential bidders.

How does the firm-fixed-price contract type impact risk and potential cost savings for the government?

A firm-fixed-price (FFP) contract type shifts the majority of the performance risk from the government to the contractor. This means the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. For the government, this provides cost certainty, as the total expenditure is known upfront, assuming the contractor meets all requirements. This structure incentivizes the contractor to manage their costs efficiently and operate effectively to maximize their profit margin. If the contractor incurs higher-than-expected costs, their profit is reduced; conversely, if they manage costs well, their profit increases. For the government, the primary benefit is predictability in budgeting and reduced risk of cost overruns compared to cost-reimbursement contracts.

What is the historical spending trend for security services by DHS or ICE in Texas?

Analyzing historical spending trends for security services by DHS or ICE specifically in Texas requires access to detailed historical contract data. Without that specific data, a general observation can be made: DHS and its component agencies, like ICE, consistently procure significant amounts of security services nationwide due to their broad mission requirements. Spending in specific geographic areas like Texas would fluctuate based on operational needs, facility security requirements, and the number of personnel deployed. It is plausible that spending in this region has been consistent or increasing, given the ongoing nature of immigration enforcement and border security operations. A deeper analysis would involve examining past contracts awarded to various providers for similar services in Texas to identify patterns, average contract values, and duration trends.

What are the potential implications of awarding a large contract to a single provider, even if competed openly?

Awarding a large contract, like this $51.3M security services contract, to a single provider, even after open competition, can have several implications. On the positive side, it can lead to economies of scale and potentially more streamlined service delivery if the contractor is highly efficient. However, it also concentrates significant federal spending with one entity, potentially limiting opportunities for other businesses, including small businesses, to gain federal experience. From a risk perspective, the government becomes heavily reliant on that single contractor's performance and stability. If the contractor faces financial difficulties, operational issues, or performance failures, it could significantly disrupt essential government functions. Furthermore, a lack of ongoing competition for subsequent contract renewals could reduce pressure on the incumbent to innovate or maintain competitive pricing over time.

Industry Classification

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

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 621 NW 53RD ST STE 700, BOCA RATON, FL, 23

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $52,075,608

Exercised Options: $52,075,608

Current Obligation: $51,287,563

Parent Contract

Parent Award PIID: HSACD4C0001

IDV Type: IDC

Timeline