DoD's $539M Facilities Support Services Contract Awarded to KBR Services, LLC Shows Mixed Value and Competition

Contract Overview

Contract Amount: $539,008,552 ($539.0M)

Contractor: KBR Services, LLC

Awarding Agency: Department of Defense

Start Date: 2006-02-10

End Date: 2012-09-30

Contract Duration: 2,424 days

Daily Burn Rate: $222.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Plain-Language Summary

Department of Defense obligated $539.0 million to KBR SERVICES, LLC for work described as: Key points: 1. The contract's value proposition appears fair, with a significant portion of the total award value potentially tied to performance incentives. 2. Competition dynamics were robust, indicating a healthy market for facilities support services. 3. Risk indicators are moderate, with the Cost Plus Award Fee structure potentially leading to cost overruns if not managed closely. 4. Performance context suggests a long-term engagement, allowing for potential economies of scale and contractor expertise development. 5. This contract positions KBR Services, LLC as a key provider within the defense sector's facilities management landscape. 6. The duration of the contract (2424 days) suggests a need for stable, long-term service provision.

Value Assessment

Rating: fair

Benchmarking the value of this $539 million contract is challenging without detailed performance metrics and cost breakdowns. However, the Cost Plus Award Fee (CPAF) structure suggests that a base fee is augmented by award fees based on performance. This can incentivize good performance but also carries the risk of higher-than-expected costs if award criteria are met broadly. Compared to similar large-scale facilities support contracts, the pricing structure appears within a typical range for long-term, comprehensive service agreements, though specific cost-per-unit analysis would be needed for a definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of 3 bidders suggests a competitive environment, which generally benefits the government by driving down prices and improving service quality. The specific details of the bidding process, such as the number of proposals received and the evaluation criteria, would provide further insight into the strength of the competition and its impact on the final award price.

Taxpayer Impact: Full and open competition generally leads to better price discovery and ensures that taxpayer funds are used efficiently by leveraging market forces to secure the best value.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, who receive essential facilities support services. Services delivered include a broad range of facility operations, maintenance, and management, ensuring operational readiness. The geographic impact is likely concentrated at the specific military installations covered by the contract, supporting base operations. Workforce implications include the creation and sustainment of jobs in facilities management and related trades, both directly by the contractor and indirectly through subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep due to the Cost Plus Award Fee structure if performance metrics are not rigorously managed.
Long contract duration could lead to complacency or reduced incentive for innovation if not actively managed.
Dependence on a single contractor for critical facilities support could pose a risk if performance degrades significantly.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that likely secured favorable terms.
The Cost Plus Award Fee structure, if managed effectively, can incentivize high levels of contractor performance.
The significant award value indicates a comprehensive scope of services, potentially leading to economies of scale and streamlined operations.

Sector Analysis

Facilities Support Services fall under the broader professional, scientific, and technical services sector. This sector is characterized by a mix of large, established firms and smaller specialized companies. The market size for government facilities management is substantial, driven by the extensive real estate holdings of federal agencies. This contract represents a significant portion of spending within this niche, highlighting the importance of reliable and efficient facility operations for national security and government functions. Comparable spending benchmarks would involve analyzing other large-scale, multi-service facility contracts awarded by DoD and other federal agencies.

Small Business Impact

While this contract was awarded to KBR Services, LLC, a large business, the analysis of small business impact requires further investigation into subcontracting plans and performance. Large federal contracts often include provisions for small business participation. It is crucial to determine if KBR Services, LLC met or exceeded any small business subcontracting goals. The success of small businesses in securing subcontracts on such large awards significantly impacts the broader small business ecosystem within the facilities support industry.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer's representative (COR) and the relevant contracting activity within the Department of the Army. Accountability measures are embedded within the Cost Plus Award Fee structure, linking payment to performance. Transparency is generally facilitated through contract award databases and reporting requirements, though detailed performance data may be considered sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Base Operations Support (BOS)
Logistics and Supply Chain Management Services
Information Technology Support Services for Facilities
Construction and Maintenance Services
Environmental Services for Federal Facilities

Risk Flags

Cost Plus Award Fee structure requires diligent oversight to manage potential cost overruns.
Long contract duration necessitates continuous performance monitoring to ensure sustained value.
Dependence on a single contractor for critical services poses a risk if performance falters.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $539.0 million to KBR SERVICES, LLC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is KBR SERVICES, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $539.0 million.

What is the period of performance?

Start: 2006-02-10. End: 2012-09-30.

What is the historical spending trend for Facilities Support Services by the Department of the Army over the last five years?

Analyzing the historical spending trend for Facilities Support Services by the Department of the Army over the last five years reveals a consistent and substantial investment in maintaining its vast infrastructure. While specific figures fluctuate annually based on evolving needs, budget allocations, and contract renewals, the overall trend indicates a sustained demand for these services. Agencies like the Army rely heavily on contractors for a wide array of support, including maintenance, repair, operations, and management of facilities across numerous installations. This sustained spending reflects the critical role these services play in ensuring operational readiness, personnel welfare, and the security of military installations. Factors influencing these trends include geopolitical events, modernization initiatives, and shifts in defense spending priorities. Without access to precise historical data for this specific contract category, a general observation points to a robust and ongoing market for facilities support within the DoD.

How does the per-unit cost of services under this contract compare to industry benchmarks for similar facilities support contracts?

Determining the precise per-unit cost for services under this $539 million contract and comparing it to industry benchmarks is complex without granular data on the specific services provided and their associated costs. Facilities support encompasses a wide range of activities, from janitorial services and grounds maintenance to complex HVAC repair and infrastructure management. Each service has its own market rate. The contract's Cost Plus Award Fee (CPAF) structure further complicates direct per-unit cost comparisons, as the final price is influenced by performance incentives. Generally, large, long-term contracts like this can achieve economies of scale, potentially leading to lower per-unit costs than smaller, shorter-term agreements. However, the overhead and profit margins inherent in such large awards must also be considered. A thorough benchmark analysis would require access to detailed cost breakdowns and comparisons with publicly available data for similar-sized contracts awarded by other federal agencies or large private sector organizations.

What are the key performance indicators (KPIs) used to evaluate KBR Services, LLC under this contract, and what are the typical award fee ranges?

The key performance indicators (KPIs) for a contract like this, awarded under a Cost Plus Award Fee (CPAF) structure, are designed to measure the contractor's effectiveness in delivering a wide range of facilities support services. While the specific KPIs are not detailed in the provided data, they commonly include metrics related to response times for maintenance requests, quality of repairs, adherence to safety standards, efficiency in energy management, customer satisfaction (e.g., from base personnel), and compliance with environmental regulations. The award fee ranges are typically tiered, with different percentages of the base fee awarded based on performance levels (e.g., exceptional, good, satisfactory, marginal, unacceptable). For instance, exceptional performance might earn a higher percentage of the potential award fee, while satisfactory performance might earn a lower percentage. The exact ranges and the weight given to each KPI are defined in the contract's Performance Work Statement (PWS) and are crucial for understanding how contractor performance directly impacts the total contract value.

What is KBR Services, LLC's track record with similar large-scale facilities support contracts awarded by the federal government?

KBR Services, LLC has a substantial and well-documented track record of performing large-scale facilities support and logistics contracts for the federal government, particularly for the Department of Defense. Historically, the company has been a significant player in providing base operations support, maintenance, and management services at military installations worldwide. Their experience often spans complex, multi-faceted requirements similar to this contract. Reviews of past performance, often available through federal procurement data systems or past performance questionnaires, generally indicate a capacity to handle extensive operations. However, like any large contractor, there may be instances of performance challenges or contract disputes on specific projects. A comprehensive assessment of their track record would involve examining contract close-out data, any reported performance issues, and client feedback on previous engagements of comparable scope and complexity.

What is the potential impact of the Cost Plus Award Fee (CPAF) structure on the final cost to taxpayers compared to a fixed-price contract?

The Cost Plus Award Fee (CPAF) structure has a different potential impact on the final cost to taxpayers compared to a fixed-price contract. In a fixed-price contract, the contractor assumes most of the risk for cost overruns, and the government pays a predetermined amount, providing cost certainty. With CPAF, the government reimburses the contractor's allowable costs plus a fee that is composed of a base amount and an award amount. The award amount is contingent upon the contractor meeting or exceeding specific performance objectives. This structure incentivizes high performance but also means the final cost can be higher than initially anticipated if the contractor performs exceptionally well and earns the maximum award fee. Conversely, if performance is subpar, the award fee may be reduced, potentially lowering the total cost. The risk for taxpayers is that CPAF can lead to higher total costs than a fixed-price contract if performance is consistently high, as the government is essentially paying a premium for that performance. However, it also allows for flexibility in complex service contracts where defining all costs and performance metrics upfront in a fixed-price manner is difficult.

How does the duration of this contract (2424 days) influence the overall value and risk for the government?

The extended duration of this contract, approximately 6.7 years (2424 days), significantly influences its overall value and risk profile for the government. On the value side, a longer contract term can lead to economies of scale, allowing the contractor to optimize operations, invest in specialized equipment, and potentially offer lower per-unit costs over time. It also provides stability and continuity of essential services, reducing disruption and the costs associated with frequent contract transitions. Furthermore, a longer engagement allows the contractor to develop deeper expertise specific to the government's needs and facilities. However, this extended duration also introduces risks. The government is locked into a single provider for an extended period, which could reduce leverage for negotiating better terms mid-contract. There's also the risk of contractor performance degradation over time, or the possibility that technological advancements or changing requirements might make the contracted services less optimal. Robust oversight and performance management are therefore critical to mitigate these risks and ensure continued value throughout the contract's life.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Brown & Root Industrial Services Holdings, LLC

Address: 601 JEFFERSON ST, HOUSTON, TX, 77002

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAA0902D0007

IDV Type: IDC

Timeline