State Department awards $31.5M contract for hotel services in New York

Contract Overview

Contract Amount: $31,453 ($31.5K)

Contractor: Sonesta Fifty Hotel, LLC

Awarding Agency: Department of State

Start Date: 2025-07-22

End Date: 2025-11-30

Contract Duration: 131 days

Daily Burn Rate: $240/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: HOTEL

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10022

State: New York Government Spending

Plain-Language Summary

Department of State obligated $31,453 to SONESTA FIFTY HOTEL, LLC for work described as: HOTEL Key points: 1. Contract awarded to Sonesta Fifty Hotel, LLC for lodging services. 2. The contract has a firm fixed price structure. 3. Services are required for a duration of 131 days. 4. The contract was competed under simplified acquisition procedures. 5. This award represents a significant expenditure for temporary lodging. 6. The geographic location for services is New York, NY.

Value Assessment

Rating: fair

The contract value of $31.5 million for approximately 4.3 months of hotel services suggests a daily rate of roughly $240,000. Benchmarking this against typical hotel operational costs and room rates is challenging without more specific service details. However, for a large-scale, potentially multi-unit or extended-stay requirement, this figure may be within a reasonable range. Further analysis would require understanding the scope of services beyond just room provision, such as conference facilities, catering, or long-term block bookings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was competed under Simplified Acquisition Procedures (SAP), indicating that the award was made through a process designed for smaller purchases, typically under $250,000. However, the award amount of $31.5 million significantly exceeds this threshold. This suggests a potential misclassification or a specific justification for using SAP for a large award. The number of bidders is not specified, but SAP generally aims for broad competition within its scope. The use of SAP for such a large value raises questions about the extent of competition achieved.

Taxpayer Impact: The use of Simplified Acquisition Procedures for a contract of this magnitude may limit the potential for achieving the best possible pricing for taxpayers, as it typically involves fewer bidders and less extensive market research compared to full and open competition for larger contracts.

Public Impact

Government personnel requiring temporary lodging in New York. Facilitates official government business and operations in the specified location. Supports the Department of State's mission by ensuring accommodation for its staff. Potential indirect economic impact on the local New York economy through hotel services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for overpayment due to the large contract value and unclear competition details.
Risk of inadequate service delivery if the scope of services is not clearly defined within the contract.
Concerns regarding the appropriateness of using Simplified Acquisition Procedures for an award of this size.

Positive Signals

Contract awarded to a specific entity, Sonesta Fifty Hotel, LLC, indicating a clear provider.
Firm Fixed Price contract type provides cost certainty for the government.
Defined period of performance ensures services are delivered within a specific timeframe.

Sector Analysis

The hospitality sector, specifically hotels and motels, is a critical service industry that governments frequently utilize for temporary accommodation of personnel. This contract falls within the broader category of government services procurement. The market for hotel services is generally competitive, with numerous providers available. The size of this contract suggests a significant, potentially long-term or large-volume need for lodging, possibly related to a specific government initiative, event, or sustained operational requirement in New York.

Small Business Impact

The provided data indicates that small business set-aside was not utilized (ss: false) and there is no specific mention of subcontracting plans. Therefore, this contract does not appear to directly benefit small businesses through a set-aside. The impact on the broader small business ecosystem is likely minimal unless Sonesta Fifty Hotel, LLC engages small businesses as subcontractors, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting and financial management divisions. The Inspector General's office for the Department of State would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is facilitated through contract award databases, but the specific details of service delivery and performance monitoring would be internal to the agency.

Related Government Programs

Government Lodging Services
Temporary Accommodation Contracts
Department of State Procurement
Hotel and Motel Services

Risk Flags

Potential competition issues due to SAP usage for large award.
Lack of detailed service scope hinders value assessment.
High contract value requires diligent performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $31,453 to SONESTA FIFTY HOTEL, LLC. HOTEL

Who is the contractor on this award?

The obligated recipient is SONESTA FIFTY HOTEL, LLC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $31,453.

What is the period of performance?

Start: 2025-07-22. End: 2025-11-30.

What specific services are included in this $31.5 million hotel contract beyond standard room accommodation?

The provided data does not specify the exact services included beyond the general classification of 'Hotels (except Casino Hotels) and Motels'. A contract of this magnitude ($31.5 million) for a duration of 131 days (approximately 4.3 months) suggests that it likely encompasses more than just basic room bookings. Potential additional services could include conference facilities, meeting rooms, catering, food and beverage services, laundry, transportation coordination, or dedicated support staff for government personnel. Understanding these specifics is crucial for a comprehensive value-for-money assessment, as the cost per unit or per day would vary significantly based on the scope of services provided. Without this detail, it is difficult to benchmark effectively against market rates for comparable government service packages.

How does the pricing of this contract compare to similar government hotel contracts in New York City?

Benchmarking this contract's pricing is challenging without detailed service scope. The implied daily rate of approximately $240,000 for the entire contract value ($31.5M / 131 days) is exceptionally high if it represents a per-day cost for a single hotel or a small block of rooms. However, it is more plausible if it represents the total cost for a large number of rooms, extensive event spaces, catering, and other bundled services over the contract period. To perform a true comparison, one would need to identify similar large-scale government lodging contracts in New York City, analyze their specific deliverables (e.g., number of rooms, duration, included amenities, event support), and then compare the unit costs (e.g., cost per room-night, cost per person per day for services). Given the limited data, a direct price comparison is not feasible, but the overall value warrants scrutiny.

What are the primary risks associated with this contract award?

Several risks are associated with this contract. Firstly, the use of Simplified Acquisition Procedures (SAP) for an award significantly exceeding the typical SAP threshold ($250,000) raises concerns about the adequacy of competition and potentially suboptimal pricing for the government. Secondly, the lack of detailed service scope makes it difficult to assess value for money and could lead to disputes or unmet expectations if the contractor's interpretation of services differs from the agency's. Thirdly, the substantial financial commitment requires robust performance monitoring to ensure the contractor meets all obligations. Finally, if the contract is for a large number of personnel, risks related to security, logistical coordination, and emergency preparedness must be managed effectively by the Department of State.

What is the track record of Sonesta Fifty Hotel, LLC in performing government contracts?

Information regarding the specific track record of 'Sonesta Fifty Hotel, LLC' in performing government contracts is not provided in the data. To assess this, one would typically research past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), previous contract awards to this entity, and any history of disputes, claims, or terminations. A positive track record with similar government agencies or for comparable services would indicate a lower performance risk. Conversely, a history of issues could signal potential problems. Without this specific performance data, the assessment relies on general assumptions about the contractor's capacity and experience.

How does this contract align with the Department of State's overall spending on lodging and hospitality services?

This $31.5 million contract represents a significant portion of the Department of State's spending on lodging for the specified period. To understand its alignment, one would need to analyze the Department's historical spending patterns on hotel and hospitality services over several fiscal years. This would involve examining budgets allocated to travel, temporary duty assignments, conferences, and diplomatic events. Comparing this single award's value against the total annual expenditure for such services would reveal whether it is an outlier, a routine large procurement, or indicative of a new or expanded operational requirement. It's essential to see if this aligns with budgetary allocations and strategic priorities for overseas and domestic operations.

Industry Classification

NAICS: Accommodation and Food Services › Traveler Accommodation › Hotels (except Casino Hotels) and Motels

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRAVEL, LODGING, RECRUITMENT SVCS

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 155 E 50TH ST, NEW YORK, NY, 10022

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,453

Exercised Options: $31,453

Current Obligation: $31,453

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline