DoD's $238M Facilities Support Contract to Chugach Industries raises value and competition concerns

Contract Overview

Contract Amount: $237,988,018 ($238.0M)

Contractor: Chugach Industries, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-01-13

End Date: 2021-03-31

Contract Duration: 1,904 days

Daily Burn Rate: $125.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Other

Official Description: IGF::OT::IGF BASE OPERATIONS AND MAINTAINENCE

Place of Performance

Location: PICATINNY ARSENAL, MORRIS County, NEW JERSEY, 07806

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $238.0 million to CHUGACH INDUSTRIES, INC. for work described as: IGF::OT::IGF BASE OPERATIONS AND MAINTAINENCE Key points: 1. The contract's value proposition is questionable given the lack of competitive bidding and the cost-plus contract type. 2. Limited competition for this large-scale facilities support contract may have led to suboptimal pricing. 3. The contract's duration and cost-plus nature present potential risks for cost overruns and performance inefficiencies. 4. Performance context is limited due to the 'NOT AVAILABLE FOR COMPETITION' status, hindering direct comparison. 5. This contract falls within the broad Facilities Support Services sector, a common area for large government contracts. 6. The absence of small business set-aside provisions warrants scrutiny regarding broader economic impact.

Value Assessment

Rating: questionable

The $238 million contract awarded to Chugach Industries, Inc. for facilities support services lacks clear value for money indicators. Awarded as a 'Cost No Fee' contract, it offers limited incentive for cost control by the contractor. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The absence of performance-based metrics or clear value-for-money assessments in the provided data makes a definitive evaluation challenging, but the non-competitive nature raises red flags.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This means that only one contractor, Chugach Industries, Inc., was solicited or considered for this award. The lack of competition significantly limits price discovery and may prevent the government from securing the most cost-effective solution. It suggests that either no other capable vendors were identified or specific circumstances justified bypassing the competitive process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government missed an opportunity to leverage market forces to drive down costs and potentially improve service quality through innovation from multiple bidders.

Public Impact

The primary beneficiary is Chugach Industries, Inc., a contractor specializing in facilities support. Services delivered include base operations and maintenance, crucial for the functioning of military installations. The geographic impact is concentrated in New Jersey, where the contract was awarded. Workforce implications include job creation and maintenance for personnel involved in facilities management and support roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost-plus contract type offers limited incentive for contractor efficiency.
Absence of performance metrics makes oversight difficult.
Sole-source award bypasses market forces for price discovery.
Potential for cost overruns due to contract structure.

Positive Signals

Contract provides essential facilities support services.
Long-term contract offers stability for the contractor and workforce.
Chugach Industries has a track record in government contracting.

Sector Analysis

The Facilities Support Services sector encompasses a wide range of services essential for the operation and maintenance of government and commercial facilities. This includes everything from janitorial services and grounds maintenance to complex building operations and infrastructure management. Government spending in this sector is substantial, driven by the need to maintain extensive real property assets. Contracts like this one represent a significant portion of the federal government's operational budget, often awarded through large, long-term agreements to ensure continuity of essential services.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the scale and nature of the services required were likely beyond the capacity of many small businesses, or that the procurement strategy did not prioritize small business participation. Consequently, there are no direct subcontracting implications for small businesses stemming from this specific award, and the impact on the small business ecosystem is minimal in this instance.

Oversight & Accountability

Oversight mechanisms for this contract are not detailed in the provided data. However, as a large federal contract, it would typically be subject to oversight by the contracting agency (Department of the Army) and potentially the Inspector General. Transparency is limited by the sole-source nature of the award and the lack of publicly available performance metrics. Accountability would primarily rest on the contractor's adherence to the cost-plus terms and the agency's monitoring of expenditures.

Related Government Programs

Base Operations Support (BOS)
Facilities Maintenance Contracts
Government Facilities Management
Logistics and Support Services

Risk Flags

Lack of Competition
Cost-Plus Contract Type
Potential for Cost Overruns
Limited Transparency
Absence of Performance Incentives

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $238.0 million to CHUGACH INDUSTRIES, INC.. IGF::OT::IGF BASE OPERATIONS AND MAINTAINENCE

Who is the contractor on this award?

The obligated recipient is CHUGACH INDUSTRIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $238.0 million.

What is the period of performance?

Start: 2016-01-13. End: 2021-03-31.

What is Chugach Industries, Inc.'s track record with federal contracts, particularly in facilities support?

Chugach Industries, Inc. has a significant history of federal contracting, particularly within the Department of Defense and other agencies requiring facilities support and base operations services. Their portfolio often includes maintenance, repair, operations, and logistical support. While specific performance details for this particular $238 million contract are not detailed here, their longevity in the federal contracting space suggests a capacity to manage large-scale operations. However, like many large contractors, they may have faced scrutiny or audits on specific contracts regarding cost management or performance, which is typical for the industry. A deeper dive into their contract history, including past performance evaluations and any disputes or corrective actions, would be necessary for a comprehensive assessment.

How does the 'Cost No Fee' (Cost) contract type compare to other contract types in terms of value for money?

The 'Cost No Fee' (Cost) contract type is generally considered less favorable for value for money compared to fixed-price contracts. In a Cost contract, the government reimburses the contractor for all allowable costs incurred, plus a predetermined fee. The 'No Fee' aspect means the contractor does not earn a profit margin, which might seem beneficial. However, it removes the primary incentive for the contractor to control costs, as they are guaranteed to be reimbursed. This can lead to higher overall spending compared to fixed-price contracts where the contractor bears the risk of cost overruns. Value for money is further diminished when such contracts are awarded non-competitively, as seen here, preventing market forces from driving efficiency.

What are the primary risks associated with a sole-source, cost-plus contract for facilities support?

The primary risks associated with a sole-source, cost-plus contract for facilities support are significant. Firstly, the lack of competition means the government likely pays a higher price than if the contract were competed, as there's no market pressure to offer competitive rates. Secondly, the cost-plus structure, even without a fee, removes the contractor's incentive to minimize expenses. They are reimbursed for costs incurred, potentially leading to less stringent cost controls and budget overruns. Thirdly, without competitive performance benchmarks, it's harder to assess if the services provided are truly efficient or effective. Finally, sole-source awards can indicate potential market failures or agency reliance on a single provider, which can create long-term dependencies and reduce flexibility.

What does the duration of this contract (1904 days) imply about the nature of facilities support services?

The contract duration of 1904 days (approximately 5.2 years) implies that the facilities support services required are long-term, essential, and require a stable provider. Facilities maintenance, base operations, and infrastructure management are not typically short-term or project-based needs; they are ongoing requirements for government installations. A longer contract duration allows the contractor to invest in personnel, equipment, and processes necessary for sustained performance. It also provides continuity for the government agency, ensuring uninterrupted essential services. However, such long durations, especially when combined with non-competitive awards and cost-reimbursement structures, can also lock the government into potentially suboptimal arrangements for extended periods.

How does the Facilities Support Services (NAICS 561210) sector typically perform in terms of contract competition and pricing?

The Facilities Support Services sector (NAICS 561210) is a large and diverse market with varying levels of competition and pricing. While many smaller, specialized services within this sector are highly competitive, large-scale, comprehensive base operations and maintenance contracts often see fewer bidders, sometimes leading to limited competition or sole-source awards, particularly for unique or geographically isolated installations. Pricing can vary widely depending on the scope of services, location, security requirements, and contract type. Cost-plus contracts, while less common for routine services, may be used in complex or uncertain environments. Generally, competitive bidding in this sector tends to drive prices down and encourage innovation, whereas sole-source or limited competition can lead to higher costs for the government.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Chugach Alaska Corporation

Address: 3800 CENTERPOINT DR STE1200, ANCHORAGE, AK, 99503

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Native American Owned Business, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $240,471,950

Exercised Options: $240,471,950

Current Obligation: $237,988,018

Subaward Activity

Number of Subawards: 370

Total Subaward Amount: $53,328,640

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline