State Department's $57.6M security installation contract awarded to Chenega Management LLC shows fair value with 6 bidders

Contract Overview

Contract Amount: $57,635,221 ($57.6M)

Contractor: Chenega Management LLC

Awarding Agency: Department of State

Start Date: 2013-03-28

End Date: 2020-11-14

Contract Duration: 2,788 days

Daily Burn Rate: $20.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: DOMESTIC TECHNICAL SECURITY INSTALLATION SERVICES IGF::OT::IGF

Place of Performance

Location: SPRINGFIELD, FAIRFAX County, VIRGINIA, 22150

State: Virginia Government Spending

Plain-Language Summary

Department of State obligated $57.6 million to CHENEGA MANAGEMENT LLC for work described as: DOMESTIC TECHNICAL SECURITY INSTALLATION SERVICES IGF::OT::IGF Key points: 1. Contract value of $57.6 million over its period of performance suggests a significant investment in security infrastructure. 2. The award to Chenega Management LLC indicates a reliance on established contractors for critical security services. 3. A definitive contract type suggests a long-term relationship for ongoing security needs. 4. The contract's duration of 2788 days points to a sustained requirement for these services. 5. The North American Industry Classification System (NAICS) code 561621 places this contract within the security systems services sector. 6. The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES', indicating a specific but competitive procurement process.

Value Assessment

Rating: fair

The contract's total value of $57.6 million over approximately 7.6 years averages to about $7.5 million annually. Benchmarking this against similar large-scale security installation contracts is challenging without more granular data on the specific services rendered and their complexity. However, the presence of 6 bidders suggests a degree of market interest and potential for competitive pricing. The cost-plus-fixed-fee (CPFF) structure means the government pays the contractor's actual costs plus a fixed fee, which can lead to cost overruns if not managed tightly. Without specific cost breakdowns or comparisons to industry standards for similar security systems, a definitive value-for-money assessment is difficult, but the competition level provides some assurance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was procured under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES', with 6 bidders participating. This indicates that while the competition was open, there were specific criteria or exclusions that narrowed the field from a completely unrestricted open competition. The presence of 6 bidders suggests a reasonably competitive environment, which should have contributed to price discovery and prevented excessive pricing. However, the 'exclusion of sources' aspect warrants further investigation to understand if it limited the pool of potential offerors unnecessarily.

Taxpayer Impact: The level of competition, while not fully open, likely resulted in a fair price for taxpayers. The exclusion of certain sources, if justified, ensures that the most capable and cost-effective providers are considered, while still allowing for multiple bids to drive down costs.

Public Impact

The Department of State benefits from enhanced physical security and operational continuity through the installation and maintenance of security systems. This contract supports the delivery of critical security services essential for protecting government personnel, facilities, and sensitive information. The geographic impact is likely concentrated around Department of State facilities, potentially both domestic and overseas, depending on the scope. The contract supports jobs within the security systems installation and management industry, contributing to the workforce in this sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the procurement process could limit competition and potentially increase costs if not well-justified.
Cost-plus-fixed-fee contracts can incentivize contractors to incur costs, as their fee is fixed regardless of the actual cost incurred, requiring robust oversight.
The long duration of the contract (2788 days) may lead to scope creep or outdated technology if not actively managed and reviewed.

Positive Signals

The award to Chenega Management LLC, a known entity, suggests a level of confidence in their past performance and capability.
The participation of 6 bidders indicates a healthy level of interest and competition within the market for these services.
The definitive contract type implies a stable, long-term need for these security services, allowing for strategic planning and resource allocation.

Sector Analysis

This contract falls within the broader security services industry, specifically focusing on the installation and maintenance of security systems. The market for such services is substantial, driven by government and private sector needs for physical security, access control, surveillance, and alarm systems. The NAICS code 561621 covers establishments primarily engaged in providing security systems services, excluding locksmiths. Comparable spending benchmarks would depend on the specific technologies and scale of installations, but government contracts for security infrastructure are typically large due to the critical nature of the assets being protected.

Small Business Impact

The data indicates that small business participation was not a primary focus, as the contract was not set aside for small businesses (ss: false, sb: false). This suggests that the primary award went to a larger entity, Chenega Management LLC. There is no explicit information on subcontracting plans for small businesses within this data. The impact on the small business ecosystem would depend on whether Chenega Management LLC actively engages small businesses for subcontracting opportunities, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting officers and program managers. Given the nature of the services and the contract value, it is likely subject to regular performance reviews, financial audits, and potentially oversight from the Department of State's Inspector General. The Inspector General's office would be responsible for investigating fraud, waste, and abuse related to the contract. Transparency would be enhanced through regular reporting requirements stipulated in the contract terms.

Related Government Programs

Department of State Facilities Management Contracts
Federal Security Systems Procurement
Government Physical Security Services
Department of State IT and Infrastructure Contracts
Chenega Management LLC Federal Contracts

Risk Flags

Potential for cost overruns due to CPFF structure
Limited competition due to 'exclusion of sources'
Long contract duration may lead to technology obsolescence if not managed
Lack of explicit small business subcontracting data

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $57.6 million to CHENEGA MANAGEMENT LLC. DOMESTIC TECHNICAL SECURITY INSTALLATION SERVICES IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is CHENEGA MANAGEMENT LLC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $57.6 million.

What is the period of performance?

Start: 2013-03-28. End: 2020-11-14.

What is the specific nature of the security systems being installed and maintained under this contract?

The contract, identified by NAICS code 561621, pertains to 'Security Systems Services (except Locksmiths)'. This typically encompasses a range of services including the installation, maintenance, and integration of electronic security systems such as access control systems, video surveillance (CCTV), intrusion detection systems, alarm systems, and potentially related network infrastructure. The specific systems deployed would depend on the Department of State's evolving security requirements for its facilities, which could range from standard office buildings to high-security embassies and consulates. Detailed specifications for the systems would be outlined in the contract's statement of work, which is not provided in the summary data.

How does the pricing structure (Cost Plus Fixed Fee) compare to industry standards for similar security installation contracts?

Cost Plus Fixed Fee (CPFF) contracts are common in government contracting, especially for services where the scope of work might evolve or is difficult to define precisely upfront. In a CPFF contract, the government reimburses the contractor for all allowable costs incurred and pays a predetermined fixed fee representing profit. While this structure offers flexibility, it can incentivize cost overruns if not managed diligently, as the contractor's profit is fixed. Industry standards for CPFF fee percentages vary but often fall within a range of 7-15% of the estimated cost. Without knowing the total estimated cost and the fixed fee amount for this specific contract, a direct comparison to industry benchmarks is difficult. However, the presence of 6 bidders suggests that the proposed fee structure was competitive enough to attract multiple qualified offerors.

What are the key performance indicators (KPIs) used to measure the success of Chenega Management LLC's performance under this contract?

Key Performance Indicators (KPIs) for a contract like this would typically focus on the reliability, effectiveness, and timeliness of the security systems and services provided. Examples of KPIs could include system uptime percentages, response times to service calls or system alerts, successful completion rates of scheduled maintenance, adherence to installation timelines, and compliance with security standards and regulations. The Department of State would likely have established specific metrics within the contract's Performance Work Statement (PWS) to evaluate Chenega Management LLC's performance. Failure to meet these KPIs could result in contractual remedies, such as reduced payment or termination.

What historical spending patterns exist for similar security installation services at the Department of State?

The Department of State has consistently invested in security infrastructure due to the nature of its global operations and the protection of personnel and facilities. Historical spending on security systems installation and maintenance would likely show a steady or increasing trend, reflecting evolving threats and technological advancements. Prior to this $57.6 million contract, the Department would have had other contracts for similar services, potentially with different contractors or through different procurement vehicles. Analyzing past spending on NAICS code 561621 or related security service codes would reveal the scale and frequency of such investments. This contract represents a significant, long-term commitment, suggesting a strategic approach to managing security needs over an extended period.

What is the potential impact of the 'exclusion of sources' clause on the overall cost-effectiveness of this contract?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause indicates that while the competition was open to all responsible sources, certain categories or types of sources were specifically excluded from consideration. The impact on cost-effectiveness hinges entirely on the justification for these exclusions. If the exclusions were based on necessary security clearances, specialized technical capabilities, or specific past performance requirements essential for the mission, then they might be justified and could lead to a more effective, albeit potentially less broadly competitive, outcome. However, if the exclusions were arbitrary or overly restrictive, they could limit the pool of bidders, reduce competitive pressure, and potentially lead to higher prices than a truly open competition might yield. A thorough review of the justification for exclusion is necessary for a definitive assessment.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Investigation and Security Services › Security Systems Services (except Locksmiths)

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SAQMMA11R0187

Offers Received: 6

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Chenega Corporation

Address: 5911 KINGSTOWNE VILLAGE PARK STE 300, ALEXANDRIA, VA, 22315

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $63,951,445

Exercised Options: $63,951,445

Current Obligation: $57,635,221

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline