VA awards $4.3M for chiller services to Johnson Controls, Inc. under a sole-source purchase order

Contract Overview

Contract Amount: $4,308,648 ($4.3M)

Contractor: Johnson Controls, Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-09-28

End Date: 2026-03-31

Contract Duration: 2,010 days

Daily Burn Rate: $2.1K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: YORK SMART CONNECTED CHILLER INSPECTION, MAINTENANCE, AND EMERGENCY REPAIR SERVICES

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77030

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $4.3 million to JOHNSON CONTROLS, INC for work described as: YORK SMART CONNECTED CHILLER INSPECTION, MAINTENANCE, AND EMERGENCY REPAIR SERVICES Key points: 1. Contract awarded without competition raises questions about potential value for money. 2. Sole-source award limits opportunities for competitive pricing and innovation. 3. Long contract duration (over 5 years) may not reflect current market conditions. 4. Fixed-price contract shifts some risk to the government, but oversight is crucial. 5. Facilities support services are essential for VA operations, indicating critical need. 6. Lack of competition could lead to higher costs compared to a bid environment.

Value Assessment

Rating: questionable

The contract's value of $4.3 million over approximately 5.5 years for chiller services requires careful benchmarking. Without competitive bids, it's difficult to definitively assess if this price represents fair market value. Comparisons to similar facilities support contracts for specialized equipment maintenance would be necessary to determine if the pricing is aligned with industry standards. The sole-source nature of the award means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source purchase order, meaning it was not competed. The data indicates it was 'NOT COMPETED UNDER SAP' (Small Purchase Authority), suggesting it may have been justified as a sole-source procurement for reasons such as unique capabilities or existing infrastructure compatibility. The lack of competition means there were no other bidders, and the government did not have the opportunity to evaluate multiple proposals to ensure the best possible price and technical solution.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without bids, the government cannot be certain it received the most cost-effective solution available in the market.

Public Impact

Veterans receiving care at VA facilities benefit from the reliable operation of essential cooling systems. The services ensure the functionality and comfort of critical healthcare infrastructure. The contract impacts facilities management operations within the Department of Veterans Affairs. Maintenance and repair services support the ongoing operational readiness of VA medical centers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can reduce transparency and accountability.
Long-term contract duration without re-competition could lock in potentially suboptimal terms.
Reliance on a single provider might create vendor lock-in.

Positive Signals

Awarding to a known entity like Johnson Controls, Inc. may leverage existing expertise and established performance.
Fixed-price contract structure provides some cost certainty for the government.
The services are critical for maintaining operational facilities, ensuring continuity of care.

Sector Analysis

This contract falls within the Facilities Support Services sector, which encompasses a broad range of services necessary for the operation and maintenance of buildings and infrastructure. This specific award focuses on specialized equipment (chillers) critical for maintaining environmental conditions in healthcare settings. The market for such services is competitive, but specialized maintenance contracts, especially for proprietary systems or in unique environments like healthcare facilities, can sometimes lead to sole-source or limited competition awards. Benchmarking would involve looking at similar maintenance contracts for large-scale HVAC systems in government or commercial facilities.

Small Business Impact

The contract data indicates that small business participation was not a factor in this award (ss: false, sb: false). There is no indication of small business set-aside provisions or subcontracting requirements. Therefore, this contract does not appear to directly benefit the small business ecosystem or provide opportunities for small business subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. As a purchase order, it is subject to standard federal procurement regulations and oversight. Transparency is limited due to the sole-source nature. Accountability would be managed through performance monitoring and contract close-out procedures. The Inspector General's office for the VA would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Facilities Maintenance Contracts
HVAC Services
Government Building Operations
Department of Veterans Affairs Procurement

Risk Flags

Sole-source award
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $4.3 million to JOHNSON CONTROLS, INC. YORK SMART CONNECTED CHILLER INSPECTION, MAINTENANCE, AND EMERGENCY REPAIR SERVICES

Who is the contractor on this award?

The obligated recipient is JOHNSON CONTROLS, INC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $4.3 million.

What is the period of performance?

Start: 2020-09-28. End: 2026-03-31.

What is the historical spending pattern for chiller inspection, maintenance, and emergency repair services at the Department of Veterans Affairs?

Analyzing historical spending for similar services at the VA is crucial for context. Without specific historical data for this exact service line or contractor, we can infer general trends. The VA, like other large federal agencies, consistently spends significant amounts on facilities maintenance and operations to ensure the functionality of its extensive network of medical centers and administrative buildings. Spending on HVAC systems, including chillers, is a substantial component of this budget due to the critical need for climate control in healthcare environments. Trends often show increasing costs over time due to inflation, technological advancements, and the aging of infrastructure. Sole-source awards, like this one, can contribute to higher per-year spending if not properly benchmarked against market rates or previous competitive awards for similar services.

What specific justification was provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED UNDER SAP' and awarded as a 'PURCHASE ORDER' with 'ct': 'NOT COMPETED UNDER SAP'. This suggests that a formal justification for sole-source procurement was likely required and approved by the agency. Common justifications include that only one responsible source is available or capable of providing the required service, or that the service is unique and essential for which adequate substitutes do not exist. For specialized equipment like chillers, this could be due to proprietary technology, existing infrastructure integration, or the need for manufacturer-specific expertise that only Johnson Controls, Inc. possesses. A full justification would typically detail these specific technical or logistical reasons and demonstrate why competition was not feasible or advantageous.

How does the contract duration of over five years compare to typical maintenance contracts for similar equipment?

A contract duration of approximately 5.5 years (September 28, 2020, to March 31, 2026) for specialized equipment maintenance is relatively long, especially when awarded without competition. Typical maintenance contracts can range from one to five years, often with options for renewal. Longer durations can provide stability for both the government and the contractor, potentially leading to better planning and relationship building. However, without periodic re-competition, there's a risk of the pricing becoming uncompetitive over time as market conditions change or technology evolves. For critical infrastructure like VA facilities, longer-term agreements might be justified if they include robust performance metrics and fair pricing adjustments, but the lack of competition here warrants scrutiny of the initial terms and the rationale for such an extended period.

What are the potential risks associated with a sole-source award for essential facilities services?

The primary risk associated with a sole-source award for essential facilities services is the potential for inflated costs due to the absence of competitive pressure. Without multiple bidders vying for the contract, the contractor may have less incentive to offer the most competitive pricing. Another significant risk is reduced innovation; a sole-source provider might not be as motivated to introduce cost-saving efficiencies or advanced solutions as they would be in a competitive environment. Furthermore, there's a risk of vendor lock-in, where the agency becomes overly reliant on a single provider, making it difficult and potentially more expensive to switch vendors in the future. Oversight becomes even more critical to ensure performance standards are met and that the pricing remains reasonable throughout the contract term.

What is the track record of Johnson Controls, Inc. in providing similar services to federal agencies?

Johnson Controls, Inc. is a well-established global provider of building technologies and services, including HVAC systems and maintenance. They have a significant presence in the federal contracting space, often securing contracts for facilities management, energy efficiency solutions, and building automation systems across various agencies. Their track record typically includes experience with large-scale projects and complex infrastructure. However, the specific performance history on VA contracts, particularly for chiller maintenance, would need to be reviewed through contract performance reports (e.g., Contractor Performance Assessment Reporting System - CPARS) to fully assess their reliability, quality of service, and adherence to contract terms. Without access to such detailed performance data, it's assumed they possess the necessary capabilities given the award.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 36C25620Q0982

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Johnson Controls Fire Protection LP

Address: 507 E MICHIGAN ST M-93, MILWAUKEE, WI, 53202

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $4,308,648

Exercised Options: $4,308,648

Current Obligation: $4,308,648

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline