DHS awarded $19.1M for 975 park model units, exceeding benchmark by 71% for manufactured housing

Contract Overview

Contract Amount: $19,131,980 ($19.1M)

Contractor: TL Industries, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2008-11-19

End Date: 2009-08-12

Contract Duration: 266 days

Daily Burn Rate: $71.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: 975 PARK MODEL UNITS - MANUFACTORED, DELIVERED AND AIR QUALITY TESTED

Place of Performance

Location: ELKHART, ELKHART County, INDIANA, 46514

State: Indiana Government Spending

Plain-Language Summary

Department of Homeland Security obligated $19.1 million to TL INDUSTRIES, INC. for work described as: 975 PARK MODEL UNITS - MANUFACTORED, DELIVERED AND AIR QUALITY TESTED Key points: 1. The contract value of $19.1 million for 975 units suggests a per-unit cost of approximately $19,622. 2. The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating a specific justification for limiting the bidding pool. 3. The duration of 266 days for manufacturing, delivery, and testing is a key performance indicator. 4. The contract was awarded by the Federal Emergency Management Agency (FEMA), suggesting a potential link to disaster relief or emergency preparedness. 5. The fixed-price contract type aims to control costs, but the benchmark comparison raises questions about overall value. 6. The absence of small business set-aside provisions warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

The benchmark of $7,192 per unit is significantly lower than the awarded price of approximately $19,622 per unit, representing a 172% difference. This substantial deviation suggests that the government may have overpaid for these manufactured housing units. Without further context on the specific requirements, quality standards, or market conditions at the time of award, it is difficult to definitively assess the value, but the large discrepancy is a significant concern.

Cost Per Unit: $19,622 per unit (estimated)

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This solicitation method implies that while the competition was intended to be open, specific criteria or circumstances led to the exclusion of certain potential sources. The exact reasons for this exclusion are not detailed, but it suggests that the pool of eligible bidders was intentionally narrowed, potentially impacting the level of competition and price discovery.

Taxpayer Impact: Limiting the competition may have resulted in higher prices for taxpayers compared to a truly open bidding process with a wider range of participants.

Public Impact

The primary beneficiaries are likely individuals or communities requiring temporary or transitional housing, potentially in the aftermath of disasters. The contract delivers 975 manufactured housing units, including manufacturing, delivery, and air quality testing. The geographic impact is not specified but would be determined by the deployment locations of the housing units. Workforce implications could include jobs in manufacturing, logistics, and quality assurance related to the production of these units.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost premium over benchmark pricing.
Limited competition due to exclusion of sources.
Lack of transparency regarding the reasons for excluding certain sources.
Potential for overpayment given the benchmark discrepancy.

Positive Signals

Contract awarded for a tangible asset (housing units).
Fixed-price contract type can provide cost certainty if managed effectively.
Air quality testing included, suggesting a focus on habitability standards.

Sector Analysis

The manufactured housing sector involves the production of factory-built homes. This contract falls within the broader construction and manufacturing industries. Comparable spending benchmarks in this sector can vary widely based on size, features, and customization. The significant deviation from the provided benchmark suggests potential market inefficiencies or unique contract requirements.

Small Business Impact

The contract details indicate that small business set-aside provisions were not utilized (ss: false, sb: false). This means the contract was not specifically targeted to encourage participation from small businesses. Consequently, there may be limited direct subcontracting opportunities for small businesses unless the prime contractor voluntarily engages them. The impact on the small business ecosystem is neutral to negative if small businesses were capable of fulfilling the contract requirements.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract officers, program managers within FEMA, and potentially the Department of Homeland Security's Office of Inspector General. Accountability measures would be tied to the delivery of the housing units according to specifications and timelines. Transparency is assessed based on the availability of contract details and justifications for procurement decisions, which appear limited in this case.

Related Government Programs

Disaster Housing Assistance Programs
Emergency Management Support Services
Manufactured Home Construction Contracts
Federal Acquisition Regulations (FAR) for Procurement

Risk Flags

High cost variance from benchmark
Limited competition justification unclear
No small business participation explicitly mandated

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $19.1 million to TL INDUSTRIES, INC.. 975 PARK MODEL UNITS - MANUFACTORED, DELIVERED AND AIR QUALITY TESTED

Who is the contractor on this award?

The obligated recipient is TL INDUSTRIES, INC..

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 $19.1 million.

What is the period of performance?

Start: 2008-11-19. End: 2009-08-12.

What specific factors contributed to the 172% cost difference between the awarded contract price and the provided benchmark for manufactured housing units?

The substantial 172% cost difference between the awarded contract price ($19.1 million for 975 units, averaging ~$19,622 per unit) and the benchmark ($7,192 per unit) could stem from several factors. These might include unique or stringent specifications for the housing units (e.g., enhanced durability, specific materials, advanced insulation, or specialized features not captured by the benchmark). The timing of the contract award in 2008, preceding the major economic downturn, might have influenced material and labor costs. Furthermore, the 'Full and Open Competition After Exclusion of Sources' clause suggests that the bidding pool was restricted, potentially limiting competitive pressure. The specific needs of FEMA, possibly related to rapid deployment or specialized environmental conditions, could also justify a higher cost. Without detailed specifications and market analysis from the time of procurement, pinpointing the exact cause remains speculative, but the discrepancy warrants a thorough review of the justification for the price.

What were the specific reasons for excluding certain sources in the 'Full and Open Competition After Exclusion of Sources' procurement method?

The 'Full and Open Competition After Exclusion of Sources' (FACOES) method is typically employed when specific circumstances necessitate limiting the field of potential offerors, even while aiming for broad competition within that limited scope. Common justifications for excluding sources include requirements for highly specialized technology or expertise not widely available, the need to protect classified information, or situations where only a few contractors possess the necessary security clearances or infrastructure. For this contract, awarded by FEMA, the exclusion might have been related to the urgent need for specific types of manufactured housing units that only a subset of manufacturers could produce within the required timeframe and quality standards. Alternatively, it could be linked to pre-existing relationships or unique capabilities identified during market research that made certain sources uniquely qualified. The specific justification for excluding sources in this instance would be documented in the contract's Justification for Other Than Full and Open Competition (JOFOC) or similar procurement documentation.

How did the fixed-price contract type influence the risk allocation between the government and the contractor for this manufactured housing procurement?

A Firm Fixed Price (FFP) contract, as used in this case, places the primary risk of cost overruns on the contractor. The contractor is obligated to deliver the specified goods or services for the agreed-upon price, regardless of their actual costs incurred. This structure incentivizes the contractor to manage their costs efficiently and to perform the work within budget. For the government, the FFP contract provides cost certainty, meaning the total expenditure is known upfront, which is beneficial for budgeting and financial planning. However, if the contractor underestimated costs or encountered unforeseen issues, they might cut corners on quality or performance to maintain profitability, potentially leading to disputes or subpar deliverables. In this specific contract, the significant deviation from the benchmark suggests that either the initial price was set too high, or the contractor successfully navigated cost challenges within the FFP framework, potentially at the expense of optimal value for the government.

What is the typical performance timeline for manufacturing, delivering, and testing manufactured housing units of this scale, and how does this contract's 266-day duration compare?

The typical performance timeline for manufacturing, delivering, and testing a large batch of manufactured housing units can vary significantly based on factors such as the complexity of the units, the manufacturer's production capacity, supply chain logistics, and the specific testing requirements. For 975 units, a 266-day duration (approximately 8.7 months) might be considered reasonable, especially if it includes a phased delivery schedule and rigorous quality control processes like air quality testing. However, without knowing the specific lead times for materials, the production rate per day, and the logistical challenges of delivering to potentially dispersed locations, a definitive comparison is difficult. If the units were relatively standard and the manufacturer had ample capacity, a shorter timeline might have been achievable. Conversely, if the units required specialized customization or faced supply chain disruptions, the 266-day period could represent efficient execution. The key is whether this timeline met the government's urgent needs, particularly if related to disaster response.

What are the potential implications of the absence of small business participation or set-asides on the overall economic impact and competition within the manufactured housing sector?

The absence of small business set-asides in this $19.1 million contract means that opportunities for smaller firms to directly compete for or be guaranteed a portion of the work were not explicitly created through the contract's structure. This can have several implications. Firstly, it may favor larger, established manufacturers with greater capacity and resources, potentially limiting market entry or expansion for smaller businesses. Secondly, while the prime contractor (TL INDUSTRIES, INC.) might engage small businesses as subcontractors, this is not guaranteed and depends on their subcontracting plan and business relationships. If small businesses possess the capability to produce such housing units, the lack of set-asides could represent a missed opportunity to foster their growth and distribute economic benefits more broadly within the sector. It could also indicate that the specific requirements of the contract were better suited to larger firms, or that the government did not prioritize small business participation for this particular procurement.

Industry Classification

NAICS: Manufacturing › Other Wood Product Manufacturing › Manufactured Home (Mobile Home) Manufacturing

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - CONSTRUCTION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HSFEHQ-08-R-0068

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 25876 MINER RD, ELKHART, IN, 02

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Labor Surplus Area Firm, Manufacturer of Goods, Small Business, Special Designations, Subchapter S Corporation

Financial Breakdown

Contract Ceiling: $26,030,230

Exercised Options: $26,030,230

Current Obligation: $19,131,980

Parent Contract

Parent Award PIID: HSFEHQ08D1145

IDV Type: IDC

Timeline