FEMA awarded $33.2M for hurricane relief meals, exceeding initial estimates by $8.7M

Contract Overview

Contract Amount: $33,238,938 ($33.2M)

Contractor: Ameriqual Group LLC

Awarding Agency: Department of Homeland Security

Start Date: 2017-09-28

End Date: 2017-11-05

Contract Duration: 38 days

Daily Burn Rate: $874.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MEALS FOR HURRICANE MARIA

Place of Performance

Location: EVANSVILLE, VANDERBURGH County, INDIANA, 47725

State: Indiana Government Spending

Plain-Language Summary

Department of Homeland Security obligated $33.2 million to AMERIQUAL GROUP LLC for work described as: MEALS FOR HURRICANE MARIA Key points: 1. Contract value significantly surpassed the estimated $24.5M, indicating potential overspending or unforeseen needs. 2. AmeriQual Group LLC secured the award through full and open competition. 3. The contract was awarded as a definitive contract with a firm fixed price. 4. Performance period was exceptionally short, spanning just 38 days. 5. The perishable food manufacturing sector saw substantial federal investment during this emergency. 6. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: questionable

The final award of $33.2M was approximately 34% higher than the initial estimate of $24.5M. While emergency procurements can incur premiums, this significant difference warrants scrutiny. Benchmarking against similar emergency food supply contracts is difficult due to the unique circumstances of Hurricane Maria, but the deviation from the estimate suggests potential issues with initial cost projections or the urgency premium applied.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting multiple vendors had the opportunity to bid. The presence of 4 bids indicates a competitive process, which should theoretically lead to better pricing. However, the substantial cost overrun from the estimate raises questions about whether the competitive process fully mitigated price escalation under emergency conditions.

Taxpayer Impact: Taxpayers may have paid a premium due to the urgent nature of the requirement, even with competition. The significant difference between the estimate and the final award suggests that the competitive bids may have reflected higher costs than initially anticipated.

Public Impact

Provides essential food supplies to disaster victims and relief workers in affected areas. Supports the Federal Emergency Management Agency's (FEMA) disaster response operations. Impacts residents and communities in Puerto Rico affected by Hurricane Maria. Potentially supports jobs within the food manufacturing and logistics sectors involved in fulfilling the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost overrun compared to initial estimates.
Short performance period may have limited competition or increased costs.
Emergency procurement processes can be susceptible to price inflation.

Positive Signals

Awarded through full and open competition.
Multiple bids received, indicating vendor interest.
Firm fixed price contract provides cost certainty once awarded.

Sector Analysis

The federal government frequently procures food services and supplies, particularly during disaster relief operations. The perishable prepared food manufacturing sector is critical for providing immediate sustenance in emergency situations. This contract falls within the broader category of logistics and support services for disaster response, a recurring need for agencies like FEMA. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of emergency response and specific disaster requirements.

Small Business Impact

This contract did not include a small business set-aside. Given the scale and urgency of the requirement, it is possible that larger, more established companies were better positioned to meet the demand. Further analysis would be needed to determine if subcontracting opportunities were made available to small businesses.

Oversight & Accountability

The contract was awarded by the Department of Homeland Security's Federal Emergency Management Agency (FEMA). Oversight would typically involve contract administration by FEMA officials to ensure timely delivery and quality of meals. Transparency is generally high for disaster relief contracts, with data often made public. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Disaster Relief Funding
Emergency Food Procurement
Hurricane Response Operations
FEMA Contracts

Risk Flags

Cost Overrun
Short Performance Period
Emergency Procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $33.2 million to AMERIQUAL GROUP LLC. MEALS FOR HURRICANE MARIA

Who is the contractor on this award?

The obligated recipient is AMERIQUAL GROUP LLC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Federal Emergency Management Agency).

What is the total obligated amount?

The obligated amount is $33.2 million.

What is the period of performance?

Start: 2017-09-28. End: 2017-11-05.

What was the basis for the significant cost difference between the initial estimate and the final award amount?

The substantial difference between the initial estimate ($24.5M) and the final award ($33.2M) for meals during Hurricane Maria relief likely stems from several factors inherent in emergency procurements. The urgency of the situation often necessitates expedited production and delivery, which can command premium pricing. Furthermore, initial estimates in rapidly evolving disaster scenarios may not fully capture the true scope of needs, logistical complexities, or the fluctuating market costs for raw materials and labor under high demand. The number of bids received (4) suggests competition, but the bids themselves may have reflected these higher anticipated costs. Without detailed documentation from the procurement process, it's difficult to pinpoint the exact drivers, but a combination of urgency, logistical challenges, and market conditions likely contributed to the cost escalation.

How does the firm fixed price (FFP) structure impact value for money in an emergency context?

A Firm Fixed Price (FFP) contract, like the one awarded to AmeriQual Group LLC, establishes a set price for the goods or services, transferring most of the risk to the contractor. In an emergency context, this can provide cost certainty for the government once the contract is awarded, preventing cost overruns due to contractor inefficiencies. However, the initial price negotiated under FFP is critical. If the initial price is too high due to rushed negotiations or inflated emergency premiums, the government may overpay. Conversely, if the FFP is set too low, the contractor might cut corners on quality or delivery, which is highly undesirable in a disaster scenario. The value for money is thus heavily dependent on the accuracy and reasonableness of the initial FFP negotiation, which can be challenging under extreme time pressure.

What are the potential risks associated with a very short contract performance period (38 days)?

A short performance period of 38 days for a contract of this magnitude ($33.2M) presents several risks. It can limit the pool of potential bidders, as fewer companies may have the immediate capacity to mobilize resources and fulfill such a large order within a tight timeframe. This reduced competition could lead to higher prices. For the awarded contractor, the compressed schedule increases the risk of production delays, logistical challenges, and potential quality control issues if corners are cut to meet the deadline. It also implies a very specific, immediate need, potentially indicating a reactive rather than proactive planning approach to disaster preparedness, which carries its own set of systemic risks.

Were there alternative vendors or contract vehicles that could have been used for emergency meal provision?

During major disasters, agencies like FEMA often have pre-existing contract vehicles or indefinite-delivery/indefinite-quantity (IDIQ) contracts specifically designed for rapid deployment of essential services, including food. They may also utilize streamlined emergency procurement procedures that allow for quicker awards than standard full and open competition. The fact that this was awarded under 'full and open competition' suggests that either existing vehicles were not suitable, or a new competition was deemed necessary or faster. However, agencies also maintain lists of pre-qualified vendors and can leverage other government contracts (e.g., GSA schedules) if applicable. The choice of procurement method impacts speed, competition, and potentially cost, and the specific rationale for choosing a new full and open competition over other options would be key to understanding the process.

What is the typical cost range for providing emergency meals per person or per meal?

Establishing a precise 'typical' cost per meal or per person for emergency response is challenging due to significant variability based on factors like meal type (hot, cold, shelf-stable), dietary restrictions, location, delivery logistics, and the scale of the disaster. However, general benchmarks can be inferred. For large-scale feeding operations, costs can range from $10-$30 per person per day, encompassing multiple meals. Individual meal costs might range from $5-$15, depending on complexity and components. Given the $33.2M award and the short duration, the number of meals provided would need to be substantial. If we assume a rough estimate of 1 million meals provided over the period, the cost per meal would be around $33.20, which appears high compared to standard catering or even some emergency meal kits, suggesting the premium for rapid, large-scale, disaster-zone delivery was significant.

Industry Classification

NAICS: Manufacturing › Other Food Manufacturing › Perishable Prepared Food Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HSFE70-17-R-MARIAMEALS

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ameriqual Group Holdings LLC (UEI: 080315108)

Address: 225 W MORGAN AVE STE C, EVANSVILLE, IN, 47710

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $33,238,938

Exercised Options: $33,238,938

Current Obligation: $33,238,938

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline