Treasury's $194M warehousing contract with VSE Corp. shows mixed value and limited competition

Contract Overview

Contract Amount: $194,331,346 ($194.3M)

Contractor: VSE Corporation

Awarding Agency: Department of the Treasury

Start Date: 2006-11-01

End Date: 2010-09-30

Contract Duration: 1,429 days

Daily Burn Rate: $136.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE

Sector: Other

Official Description: SIEZED AND FORFETITED ASSETS

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20220

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $194.3 million to VSE CORPORATION for work described as: SIEZED AND FORFETITED ASSETS Key points: 1. The contract's cost-plus-incentive structure may lead to cost overruns if not managed tightly. 2. Limited competition suggests potential for higher pricing than a fully open market. 3. The long duration of the contract (over 3 years) increases exposure to market fluctuations. 4. Performance context is difficult to assess without specific metrics on warehousing efficiency. 5. This contract falls within the broader 'General Warehousing and Storage' sector, a common government need. 6. The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating a specific reason for limiting bidders.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed performance data and comparable warehousing contracts. The cost-plus-incentive fee structure, while allowing for flexibility, can sometimes lead to higher final costs if cost controls are not rigorously enforced. The base award amount of $13.6 million suggests a significant initial investment, with the total potential reaching over $194 million, indicating substantial scope. Without specific metrics on efficiency, inventory accuracy, or delivery times, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while the competition was intended to be open, specific criteria or circumstances led to the exclusion of certain potential bidders. The presence of 3 bidders indicates some level of competition, but the 'exclusion of sources' clause suggests it was not a completely unfettered open competition. This limited competition might have influenced price discovery, potentially leading to less aggressive bidding compared to a truly full and open process.

Taxpayer Impact: The limited competition may have resulted in taxpayers paying a premium compared to what might have been achieved in a fully open market with maximum bidder participation. This underscores the importance of understanding the rationale behind source exclusions to ensure fair pricing.

Public Impact

Federal agencies requiring warehousing and storage services benefit from this contract. The contract supports the logistical needs of various government departments, ensuring efficient storage of seized and forfeited assets. The primary geographic impact is likely within the District of Columbia, where the contract is managed. The contract supports jobs within the warehousing and logistics sector, particularly at VSE Corporation and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the cost-plus-incentive fee structure.
Limited competition may have led to suboptimal pricing for taxpayers.
Lack of specific performance metrics makes value assessment difficult.
The 'exclusion of sources' clause warrants further investigation into its justification.

Positive Signals

VSE Corporation has a track record of performing government contracts.
The contract addresses a critical government need for asset warehousing.
The incentive fee structure, if managed well, can drive performance.

Sector Analysis

The General Warehousing and Storage sector is a critical component of the supply chain for many industries, including government logistics. This contract, valued at up to $194 million, represents a significant portion of spending within this niche for the Department of the Treasury. Comparable spending benchmarks would typically involve analyzing other large-scale government warehousing contracts or private sector logistics providers handling similar volumes and types of assets. The NAICS code 493110 confirms its placement within the public warehousing and storage industry.

Small Business Impact

There is no indication that this contract included small business set-asides. The contract was awarded to VSE Corporation, a large business. Subcontracting opportunities for small businesses may exist, but they are not explicitly detailed in the provided data. The impact on the small business ecosystem is likely minimal unless VSE actively engages small businesses for specialized warehousing or logistics support.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Treasury's contracting officers and program managers. Accountability measures would be tied to the contract's performance clauses and the cost-plus-incentive fee structure. Transparency is facilitated by contract databases, but detailed operational oversight reports are not publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

General Services Administration (GSA) Warehousing Contracts
Department of Defense (DoD) Logistics and Warehousing
Asset Forfeiture and Seizure Management
Government Supply Chain Management

Risk Flags

Limited competition may impact price.
Cost-plus-incentive fee structure carries inherent cost risk.
Lack of detailed performance metrics hinders value assessment.
Justification for 'exclusion of sources' requires further review.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $194.3 million to VSE CORPORATION. SIEZED AND FORFETITED ASSETS

Who is the contractor on this award?

The obligated recipient is VSE CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Departmental Offices).

What is the total obligated amount?

The obligated amount is $194.3 million.

What is the period of performance?

Start: 2006-11-01. End: 2010-09-30.

What is VSE Corporation's track record with similar government warehousing contracts?

VSE Corporation has a history of performing various government contracts, including those related to logistics and support services. While specific details on their warehousing performance for the Treasury are not fully elaborated here, their broader experience suggests a capacity to manage complex government requirements. A deeper dive into their past performance ratings, any past performance issues, and the scale of previous warehousing contracts would provide a more robust assessment. Their ability to successfully manage the duration and financial scope of this $194 million contract is a key indicator of their capability.

How does the pricing of this contract compare to market rates for similar warehousing services?

Directly comparing the pricing is difficult without granular data on the specific services provided (e.g., per square foot, per item stored, per transaction) and the exact terms of the incentive fee. However, the 'Full and Open Competition After Exclusion of Sources' award type suggests that the competition may not have been as robust as a truly open bid, potentially impacting price competitiveness. Cost-plus-incentive fee contracts can sometimes lead to higher final costs than fixed-price contracts if not managed meticulously. Benchmarking against private sector logistics providers for comparable services and volumes would be necessary for a thorough price analysis.

What are the primary risks associated with this warehousing contract?

Key risks include potential cost overruns due to the cost-plus-incentive fee structure, where contractor profits are tied to meeting cost targets, but the government bears the cost risk. Inadequate performance by VSE Corporation, leading to delays or issues in managing seized assets, is another significant risk. Market fluctuations in warehousing costs over the contract's duration could also impact the final price. Furthermore, the limited competition raises concerns about whether the government secured the best possible value. Finally, the long duration increases the risk of obsolescence of services or technology if not managed proactively.

How effective has VSE Corporation been in managing seized and forfeited assets under this contract?

The provided data does not contain specific performance metrics to assess the effectiveness of VSE Corporation in managing seized and forfeited assets. Effectiveness would typically be measured by factors such as inventory accuracy, timeliness of asset processing, security of stored assets, and cost-efficiency of operations. Without access to performance reports, quality assurance reviews, or key performance indicators (KPIs) stipulated in the contract, a definitive judgment on their effectiveness cannot be made. The total award amount suggests a substantial volume of assets being managed, making performance critical.

What has been the historical spending pattern for warehousing and storage services by the Department of the Treasury?

The provided data focuses on a single contract and does not offer a historical spending pattern for the Department of the Treasury's warehousing and storage services. To understand historical spending, one would need to analyze contract awards over several fiscal years for similar services, potentially across different agencies or bureaus within Treasury. This would involve looking at the number of contracts, their values, the contractors involved, and the types of services rendered. Such an analysis would reveal trends, identify major spending periods, and highlight any shifts in contracting strategies or service providers over time.

What is the justification for excluding certain sources in this 'Full and Open Competition After Exclusion of Sources' award?

The specific justification for excluding certain sources in this contract award is not detailed in the provided summary data. This award type typically means that while the competition was intended to be open, specific requirements, technical capabilities, or other pre-defined criteria led to the disqualification or non-consideration of certain potential bidders. Reasons could range from unique technical expertise required, specific security clearances, geographic limitations, or prior performance issues with certain contractors. Understanding this justification is crucial for assessing whether the exclusion was reasonable and did not unduly limit competition.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › General Warehousing and Storage

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: ALTERNATIVE SOURCES

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Address: 2550 HUNTINGTON AVE, ALEXANDRIA, VA, 08

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $254,400,915

Exercised Options: $194,835,143

Current Obligation: $194,331,346

Timeline