DoD's $23.2M contract for communication equipment repair awarded to GSTEK, INC. shows potential value concerns

Contract Overview

Contract Amount: $23,257,155 ($23.3M)

Contractor: Gstek, Inc.

Awarding Agency: Department of Defense

Start Date: 2005-11-29

End Date: 2010-03-31

Contract Duration: 1,583 days

Daily Burn Rate: $14.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $23.3 million to GSTEK, INC. for work described as: Key points: 1. Contract value of $23.2M over 5 years suggests a significant investment in communication equipment maintenance. 2. Awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES', the competition dynamics warrant closer examination. 3. The contract duration of 1583 days (approx. 4.3 years) is substantial, indicating a long-term need for these services. 4. The fixed-price contract type aims to control costs, but performance and potential scope creep are key risk indicators. 5. GSTEK, INC. is the sole awardee, highlighting the importance of understanding their performance history and market position. 6. The North American Industry Classification System (NAICS) code 811213 points to a specialized repair and maintenance service sector.

Value Assessment

Rating: fair

The contract value of $23.2 million for communication equipment repair and maintenance over approximately 4.3 years averages to roughly $5.4 million annually. Benchmarking this against similar contracts is challenging without more specific details on the types of communication equipment and the scope of repair services. However, the fixed-price nature suggests an expectation of predictable costs. Further analysis would require comparing GSTEK's pricing to industry standards for comparable services and equipment.

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, certain sources were excluded. This could be due to specific technical requirements or other justifications. The number of bidders is not explicitly stated, but the 'exclusion of sources' phrasing suggests a potentially narrower competitive pool than a truly open competition. This limited competition might impact price discovery and potentially lead to less competitive pricing.

Taxpayer Impact: Taxpayers may have received less competitive pricing due to the exclusion of certain sources, potentially increasing the overall cost of the services compared to a fully open and unrestricted competition.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the operational readiness of communication equipment. Services delivered include the repair and maintenance of communication equipment, critical for military operations. The geographic impact is likely focused on the locations where the Department of the Army operates and requires these services. Workforce implications include potential employment opportunities for skilled technicians specializing in communication equipment repair.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the scope of 'repair and maintenance' is not clearly defined and managed.
Risk of vendor lock-in if GSTEK, INC. becomes the sole provider of specialized repair services for specific equipment.
Dependence on a single contractor for critical communication equipment maintenance could pose a risk to operational continuity.
The 'exclusion of sources' clause warrants scrutiny to ensure it was justified and did not unduly limit competition.

Positive Signals

The fixed-price contract type provides a degree of cost certainty for the government.
Awarding to a single entity (GSTEK, INC.) can streamline management and communication for the contracting agency.
The contract duration suggests a stable, long-term need, allowing for potential relationship building and efficiency gains.
The NAICS code indicates a specialized service, suggesting GSTEK, INC. likely possesses specific expertise.

Sector Analysis

The communication equipment repair and maintenance sector is a vital component of the broader IT and defense industries. This contract falls within the specialized services segment, focusing on ensuring the functionality of critical hardware. Market size for such services can be substantial, driven by the extensive and often complex communication systems used by government agencies. Comparable spending benchmarks would typically involve analyzing other contracts for similar repair and maintenance services across different defense branches or federal agencies.

Small Business Impact

The data indicates that small business participation was not a primary focus for this contract, as the 'ss' (small business set-aside) field is false. There is no explicit information on subcontracting plans for small businesses. This suggests that the primary award went to a larger entity, and the impact on the small business ecosystem would depend on whether GSTEK, INC. engages small businesses as subcontractors for specialized components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver services within the agreed-upon price. Transparency is generally facilitated through contract databases like FPDS, where award details are published. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Communications Systems
Information Technology Services
Equipment Maintenance Contracts
Federal IT Procurement
Military Logistics Support

Risk Flags

Limited Competition
Potential for Cost Overruns
Vendor Dependency
Justification for Source Exclusion

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.3 million to GSTEK, INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is GSTEK, 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 $23.3 million.

What is the period of performance?

Start: 2005-11-29. End: 2010-03-31.

What is GSTEK, INC.'s track record with similar Department of Defense contracts, particularly in communication equipment repair?

A detailed review of GSTEK, INC.'s contract history with the Department of Defense is necessary to assess their track record. Specifically, one would look for past performance evaluations on similar communication equipment repair and maintenance contracts. Key indicators include on-time delivery, adherence to specifications, and customer satisfaction ratings. Analyzing the value and duration of previous contracts can also provide context for their capabilities and experience. Without specific past performance data, it is difficult to definitively assess their reliability for this $23.2 million award.

How does the awarded price of $23.2 million compare to market rates for similar communication equipment repair and maintenance services?

Benchmarking the $23.2 million contract value against market rates requires a detailed understanding of the specific communication equipment covered, the scope of repair and maintenance services, and the geographic locations involved. Industry standard pricing models for IT hardware maintenance and repair, often expressed as a percentage of equipment value or on a time-and-materials basis, could be used for comparison. Given the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type, it is possible that the competitive landscape was limited, potentially influencing the final price. A thorough market analysis comparing GSTEK's proposed rates to those of other established service providers in the defense sector would be needed to determine if the price is competitive.

What are the primary risks associated with a firm fixed-price contract for communication equipment repair and maintenance over a 4.3-year period?

The primary risks with a firm fixed-price contract for long-term repair and maintenance services revolve around scope definition and potential for unforeseen issues. If the scope of 'repair and maintenance' is not meticulously defined, the contractor may face unexpected costs for services not originally anticipated, potentially leading to requests for contract modifications or disputes. Conversely, the government risks paying for services that may not be fully utilized if equipment proves more reliable than expected. For the contractor, underestimating the complexity or frequency of repairs could lead to reduced profit margins or even losses. Effective contract management and clear performance metrics are crucial to mitigate these risks.

What does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type imply about the competition level and its impact on taxpayers?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type suggests that the solicitation was initially intended to be open to all responsible sources, but specific sources were subsequently excluded. The reasons for exclusion could range from unique technical capabilities required to national security concerns. This exclusion inherently limits the competitive pool compared to a truly unrestricted full and open competition. Consequently, the number of bidders may have been reduced, potentially leading to less aggressive pricing and a higher cost for taxpayers than might have been achieved in a broader competitive environment. The justification for excluding sources is critical to understanding the impact on value for money.

How does the contract duration of 1583 days (approximately 4.3 years) influence the assessment of value for money?

A contract duration of approximately 4.3 years for communication equipment repair and maintenance suggests a long-term commitment by the Department of Defense. This extended period can offer potential value for money through economies of scale, predictable budgeting, and the development of specialized expertise by the contractor. It allows for a stable relationship, potentially leading to improved service quality and efficiency over time. However, it also carries risks, such as the potential for technological obsolescence of the equipment being serviced or a decline in contractor performance over the contract's life. Continuous monitoring and performance evaluations are essential to ensure value is realized throughout the duration.

What are the potential implications of awarding this contract to a single entity, GSTEK, INC., for the Department of the Army's communication systems?

Awarding this significant contract to a single entity, GSTEK, INC., can streamline management and foster a strong working relationship between the contractor and the Department of the Army. It allows for specialized knowledge to be concentrated within one provider, potentially leading to more efficient and effective repair services. However, it also introduces risks such as vendor dependency and potential complacency. The Army must ensure robust oversight mechanisms are in place to monitor GSTEK's performance, pricing, and adherence to contract terms throughout the 4.3-year duration. Contingency planning for potential contractor failure or performance degradation is also advisable.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Communication Equipment Repair and Maintenance

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1100 MADISON PLZ A, CHESAPEAKE, VA, 90

Business Categories: Category Business, Small Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $1,789,146

Exercised Options: $608,109

Current Obligation: $23,257,155

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W91RUS05D0003

IDV Type: IDC

Timeline