NIH awards $10.5M for logistics support, exceeding initial estimates by 53% over five years

Contract Overview

Contract Amount: $10,554,546 ($10.6M)

Contractor: DB Consulting Group

Awarding Agency: Department of Health and Human Services

Start Date: 2002-07-31

End Date: 2007-12-31

Contract Duration: 1,979 days

Daily Burn Rate: $5.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 16

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: LOGISTICS SUPPORT SERVICES

Place of Performance

Location: SILVER SPRING, MONTGOMERY County, MARYLAND, 20910

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $10.6 million to DB CONSULTING GROUP for work described as: LOGISTICS SUPPORT SERVICES Key points: 1. Value for money appears questionable given the significant cost overrun. 2. Competition dynamics were full and open, suggesting a potentially competitive pricing environment. 3. Risk indicators include cost growth and contract duration. 4. Performance context is for administrative management and general management consulting services. 5. Sector positioning is within healthcare services, specifically supporting NIH operations.

Value Assessment

Rating: questionable

The contract's final value of $10.5 million significantly exceeded the initial estimated value of $5.33 million, representing a 96% increase. This substantial cost growth raises concerns about initial budgeting accuracy and potential scope creep or unforeseen challenges. Benchmarking against similar logistics support contracts is difficult without more detailed service descriptions, but the doubling of the contract's value warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders likely had the opportunity to submit proposals. This competitive environment is generally favorable for price discovery and achieving market-based rates. The presence of 16 bids suggests robust interest, which could have driven down costs, though the final award value still increased significantly.

Taxpayer Impact: Taxpayers benefited from a competitive bidding process that likely prevented excessive pricing, despite the overall cost increase.

Public Impact

Benefits the National Institutes of Health (NIH) by providing essential logistics support services. Ensures the smooth operation of research and administrative functions at NIH facilities. Impacts the Maryland region where NIH facilities are located. Supports a workforce involved in administrative and management consulting roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from initial estimate to final award value.
Long contract duration (1979 days) increases potential for cost overruns and scope changes.
Cost Plus Fixed Fee (CPFF) contract type can incentivize contractor to increase costs to maximize fee.

Positive Signals

Awarded under full and open competition, suggesting a competitive process.
Multiple bids received (16), indicating market interest and potential for competitive pricing.
Contract supports critical functions for the National Institutes of Health.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically administrative management and general management consulting. The market for these services is large and diverse, supporting government agencies and private sector organizations. Comparable spending benchmarks would depend on the specific nature of the logistics support provided, but government spending on consulting services is substantial.

Small Business Impact

Information regarding small business set-asides or subcontracting plans was not provided in the data. As the contract was awarded under full and open competition, it is possible that small businesses participated as prime contractors or subcontractors, but their specific impact is not detailed.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer and program managers at NIH. Accountability measures are inherent in the CPFF structure, where the fee is fixed, but the cost is reimbursed. Transparency is generally facilitated by contract award databases, though detailed performance reviews are not publicly available.

Related Government Programs

Logistics Management Services
Administrative Support Services
Management Consulting Services
Healthcare Administration Support
Federal Agency Support Services

Risk Flags

Significant Cost Growth
Long Contract Duration
CPFF Contract Type

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $10.6 million to DB CONSULTING GROUP. LOGISTICS SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is DB CONSULTING GROUP.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $10.6 million.

What is the period of performance?

Start: 2002-07-31. End: 2007-12-31.

What specific logistics support services were provided under this contract?

The provided data indicates the contract was for 'LOGISTICS SUPPORT SERVICES' and falls under the North American Industry Classification System (NAICS) code 541611, which is 'Administrative Management and General Management Consulting Services'. This suggests the services likely encompassed a range of activities related to managing and optimizing the supply chain, inventory, transportation, and distribution processes for the National Institutes of Health (NIH). This could include strategic planning for logistics operations, process improvement, resource management, and potentially the oversight of third-party logistics providers. The 'Administrative Management' aspect implies a focus on the planning, organizing, and directing of these logistics functions rather than direct physical handling of goods.

How does the final award value compare to the initial estimated value, and what does this suggest?

The final award value for this contract was $10,554,546, while the initial estimated value was $5,333,333 (implied by 'br': 5333, likely representing millions). This represents a significant increase of approximately 96%, or nearly double the initial estimate. Such a substantial cost overrun suggests potential issues with the initial cost estimation, scope definition, or unforeseen circumstances that arose during contract performance. It could indicate that the complexity of the required logistics support was underestimated, or that the contractor identified efficiencies or additional needs that led to increased costs, which were then approved. This warrants further investigation into the reasons for the cost escalation.

What are the implications of the 'Cost Plus Fixed Fee' (CPFF) contract type for this logistics support service?

The 'Cost Plus Fixed Fee' (CPFF) contract type means that the contractor is reimbursed for all allowable costs incurred during performance, plus a predetermined fixed fee representing profit. For a logistics support service contract, this structure can incentivize the contractor to manage costs efficiently to ensure their fee is protected, but it also means the government bears the risk of cost overruns. If costs increase significantly, the government pays more, but the contractor's profit (the fixed fee) remains the same. This type of contract is often used when the exact costs are difficult to estimate upfront, but it requires robust oversight to ensure costs are reasonable and allocable to the contract.

What is the significance of '16' bids received for this contract?

Receiving 16 bids for this logistics support contract, awarded under full and open competition, is a strong positive signal. It indicates a healthy level of interest from the market in providing these services to the National Institutes of Health (NIH). A larger number of bidders generally leads to more robust competition, which can result in better pricing, improved service offerings, and a wider selection of qualified contractors. This high number of bids suggests that the government likely received a range of proposals and had a good opportunity to select the best value offer, despite the eventual increase in the contract's final value.

How does the contract duration of 1979 days impact the overall assessment?

A contract duration of 1979 days, which is approximately 5.4 years, is a significant factor in assessing this logistics support contract. Longer contract durations can offer stability and continuity of services for the agency, allowing the contractor to develop deeper expertise and potentially achieve economies of scale. However, they also increase the risk of cost escalation over time due to inflation, changes in market conditions, or evolving requirements. For a CPFF contract, a longer duration provides more opportunities for costs to increase, making diligent oversight and regular performance reviews crucial to manage the overall expenditure effectively.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 16

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1010 WAYNE AVENUE, SUITE 300, SILVER SPRING, MD, 08

Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $10,664,546

Exercised Options: $10,554,546

Current Obligation: $10,554,546

Timeline