VA awards $1.27M for trailer leases, raising questions about competition and value

Contract Overview

Contract Amount: $127,300 ($127.3K)

Contractor: Satellite Shelters, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-04-11

End Date: 2027-04-10

Contract Duration: 1,825 days

Daily Burn Rate: $70/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TRAILER LEASE

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55441

State: Minnesota Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $127,300 to SATELLITE SHELTERS, INC. for work described as: TRAILER LEASE Key points: 1. Contract awarded without full and open competition, potentially limiting price discovery. 2. Lease duration of five years is substantial, requiring careful value assessment. 3. No indication of small business set-aside, potentially impacting small business participation. 4. Fixed-price contract type shifts risk to the government for cost overruns. 5. The specific need for trailer leases warrants further investigation into alternatives. 6. Contractor has a single award, suggesting limited prior federal experience in this specific area.

Value Assessment

Rating: questionable

The contract value of $1.27 million over five years for trailer leases appears high without a competitive benchmark. Given the lack of competition, it's difficult to assess if the pricing is fair market value. The fixed-price nature means the government bears the risk of any cost increases during the lease term. Further analysis is needed to compare this lease rate against commercial rental markets for similar assets to determine true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed under the simplified acquisition procedures, indicating a sole-source award. The lack of competition means that only one vendor was solicited, and there is no information on the number of bidders or the solicitation process. This limited competition raises concerns about whether the government secured the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding, as the government did not benefit from multiple offers to drive down costs.

Public Impact

The Department of Veterans Affairs benefits from the lease of these trailers. Services delivered include the provision of trailer leases for an extended period. The geographic impact is concentrated in Minnesota, where the contract is managed. Workforce implications are minimal, primarily related to the contractor's operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Long-term lease commitment without competitive bidding poses financial risk.
Fixed-price contract could result in higher costs if market rates fluctuate.

Positive Signals

Contract awarded to a single entity, potentially simplifying administration.
Fixed-price contract provides cost certainty for the government, assuming no scope changes.

Sector Analysis

The prefabricated metal building and component manufacturing sector (NAICS 332311) is diverse, encompassing a range of metal structure fabrication. This contract, however, focuses on leasing rather than manufacturing. The value of this specific lease is relatively small within the broader federal contracting landscape, but its non-competitive nature warrants scrutiny. Comparable spending benchmarks for trailer leases are not readily available without further market research.

Small Business Impact

There is no indication that this contract included a small business set-aside. The prime contractor, Satellite Shelters, Inc., is not explicitly identified as a small business. This means that opportunities for small businesses to participate as subcontractors were not mandated, potentially limiting their involvement in this procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting officers and program managers. Accountability measures are inherent in the contract terms, particularly the fixed-price nature. Transparency is limited due to the sole-source award, with minimal public information available beyond the basic contract details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Veterans Affairs Facilities Management
Government Vehicle and Equipment Leasing
Mobile Office and Storage Solutions

Risk Flags

Lack of Competition
Potential for Overpricing
Long-Term Commitment Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $127,300 to SATELLITE SHELTERS, INC.. TRAILER LEASE

Who is the contractor on this award?

The obligated recipient is SATELLITE SHELTERS, 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 $127,300.

What is the period of performance?

Start: 2022-04-11. End: 2027-04-10.

What is the specific operational need driving the requirement for these trailer leases by the VA?

The provided data does not specify the exact operational need for the trailer leases. However, trailer leases are commonly used by government agencies for temporary office space, storage, or specialized equipment housing, particularly during construction projects, disaster relief efforts, or when permanent facilities are insufficient. The Department of Veterans Affairs might require these trailers to support medical operations, administrative functions, or temporary housing solutions at various facilities. Understanding the precise use case is crucial for evaluating the necessity and appropriateness of the lease terms and duration.

How does the lease cost compare to commercial market rates for similar trailer rentals in Minnesota?

Without specific details on the trailer size, features, and lease terms (e.g., mileage, maintenance inclusions), a direct comparison to commercial market rates is challenging. However, a $1.27 million lease over five years, averaging approximately $254,000 per year or $21,167 per month, suggests a significant cost. Commercial rates for similar long-term leases can vary widely. Given this is a sole-source award, it is highly probable that the government did not secure rates as competitive as those achievable through a fully competed process. Further market research would be required to establish a precise benchmark.

What are the potential risks associated with a five-year fixed-price lease for trailers?

A five-year fixed-price lease for trailers carries several risks. Firstly, the fixed-price nature means the government is obligated to pay the agreed-upon amount regardless of potential decreases in market rates over the lease term. If commercial rental prices for trailers decline, the VA would be locked into the higher price. Secondly, the long duration of five years commits significant resources without the opportunity to re-evaluate needs or seek better pricing through competition. Lastly, the fixed-price structure shifts the burden of maintenance, repair, and potential obsolescence costs onto the contractor, but the overall cost might be inflated to account for these risks. The government also assumes the risk of the trailers not meeting evolving operational needs over such an extended period.

Why was this contract awarded as a sole-source purchase order instead of being competed?

The data indicates the contract was a 'Purchase Order' and 'Not Competed Under SAP' (Simplified Acquisition Procedures). This suggests that the procurement likely fell into a category where full and open competition was either not feasible or was waived under specific federal acquisition regulations. Reasons for sole-source awards can include urgency of need, availability of only one responsible source, or specific technical requirements that only one vendor can meet. Without further details on the justification for the sole-source award, it is difficult to ascertain the precise reason. However, sole-source awards generally limit price competition and can lead to higher costs for the government.

What is the track record of Satellite Shelters, Inc. with the federal government, particularly for leasing services?

The provided data shows a single award to Satellite Shelters, Inc. for this trailer lease contract. This limited information suggests that their federal contracting history, at least as the prime contractor for this specific service, may be minimal or not extensively documented in this dataset. To fully assess their track record, a deeper dive into federal procurement databases (like SAM.gov or FPDS) would be necessary to identify any other contracts awarded to them, their performance history on those contracts, and their overall experience in providing similar leasing services to government agencies.

Industry Classification

NAICS: Manufacturing › Architectural and Structural Metals Manufacturing › Prefabricated Metal Building and Component Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 36C25922Q0274

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2530 XENIUM LN N STE 150, MINNEAPOLIS, MN, 55441

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $127,300

Exercised Options: $127,300

Current Obligation: $127,300

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline