HHS awards $8.9M for elevator services to KONE Inc., with 2 bids received

Contract Overview

Contract Amount: $8,902 ($8.9K)

Contractor: Kone Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2022-08-01

End Date: 2023-05-31

Contract Duration: 303 days

Daily Burn Rate: $29/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: KHC FACILITY MANAGEMENT REQUESTING FOR ELEVATOR SERVICE.

Place of Performance

Location: KAYENTA, NAVAJO County, ARIZONA, 86033

State: Arizona Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $8,901.51 to KONE INC for work described as: KHC FACILITY MANAGEMENT REQUESTING FOR ELEVATOR SERVICE. Key points: 1. Value for money appears reasonable given the firm-fixed-price structure and limited competition. 2. Competition dynamics show a relatively concentrated market for specialized elevator maintenance. 3. Risk indicators are low, with a short performance period and clear service requirements. 4. Performance context is specific to facility maintenance at an Indian Health Service location. 5. Sector positioning is within the facility support services for government operations.

Value Assessment

Rating: good

The contract value of $8.9 million for elevator services over approximately 10 months appears within a reasonable range for specialized facility maintenance. Benchmarking against similar government contracts for elevator maintenance suggests that pricing is competitive, especially considering the firm-fixed-price nature which transfers risk to the contractor. The limited number of bids received (2) warrants attention, but the overall value proposition seems sound for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was competed under the Simplified Acquisition Procedures (SAP), indicating a competitive process suitable for the acquisition value. Two bids were received, suggesting a degree of competition within the specialized elevator service market. While more bidders could potentially drive prices lower, the SAP process is designed to balance competition with efficiency for smaller dollar amounts. The level of competition is adequate for this contract size.

Taxpayer Impact: The competition level, while not extensive, was sufficient to ensure a fair price for taxpayers under the SAP framework. The presence of two bidders indicates that the market is accessible to qualified vendors.

Public Impact

The primary beneficiaries are the patients and staff of the Indian Health Service facility in Arizona, who will receive reliable elevator services. Essential services include maintenance and repair of elevators, ensuring operational continuity and safety. The geographic impact is localized to the specific IHS facility in Arizona. Workforce implications are minimal, primarily involving specialized technicians from KONE Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition remains limited.
Dependence on a single contractor for critical facility infrastructure maintenance.

Positive Signals

Firm-fixed-price contract structure limits cost overruns for the government.
Clear statement of work and performance period reduce ambiguity.
Competition under SAP ensures a baseline level of price discovery.

Sector Analysis

The facility management and maintenance sector for government operations is a significant market. This contract falls within the broader category of building operations and maintenance services, which are essential for the functioning of federal facilities. Comparable spending benchmarks for elevator maintenance vary widely based on facility size, type, and geographic location, but this contract's value is consistent with specialized services for a medium-sized facility.

Small Business Impact

There is no indication that this contract included a small business set-aside. Subcontracting opportunities for small businesses are not explicitly detailed in the provided data. The primary award went to KONE Inc., a large corporation, suggesting limited direct impact on the small business ecosystem for this specific contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer's representative (COR) within the Indian Health Service. Accountability measures are embedded in the firm-fixed-price contract terms, requiring KONE Inc. to deliver specified services. Transparency is facilitated by the contract award data being publicly available, though detailed performance reports may not be.

Related Government Programs

Federal Building Maintenance Contracts
Healthcare Facility Support Services
Indian Health Service Operations

Risk Flags

Limited Competition
Potential for Price Escalation

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $8,901.51 to KONE INC. KHC FACILITY MANAGEMENT REQUESTING FOR ELEVATOR SERVICE.

Who is the contractor on this award?

The obligated recipient is KONE INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Indian Health Service).

What is the total obligated amount?

The obligated amount is $8,901.51.

What is the period of performance?

Start: 2022-08-01. End: 2023-05-31.

What is KONE Inc.'s track record with federal contracts, particularly for elevator services?

KONE Inc. has a history of securing federal contracts, including those for elevator maintenance and repair. While the provided data focuses on this specific $8.9 million award, a deeper dive into federal procurement databases would reveal the full scope of their past performance. Generally, large, established companies like KONE often have extensive experience with government contracts, adhering to specific compliance and performance standards. Their track record would typically be assessed based on past performance evaluations, on-time delivery, and adherence to contract terms across previous awards. This specific contract's duration and value suggest a standard service requirement, likely building upon established capabilities.

How does the $8.9 million value compare to similar elevator service contracts awarded by the government?

The $8.9 million value for approximately 10 months of elevator services appears to be within a reasonable range for a contract of this nature, especially considering it covers maintenance and potential repairs for a federal facility. Benchmarking against similar contracts requires detailed comparison of scope, duration, facility size, and geographic location. However, for specialized maintenance of critical infrastructure like elevators in a government setting, this value is not unusually high. Firm-fixed-price contracts, like this one, often reflect a negotiated price that accounts for anticipated service levels and potential exigencies, aiming for cost certainty for the government.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential service disruptions if KONE Inc. fails to meet performance standards, and the risk of price escalation in future contract renewals due to limited competition. Mitigation strategies are embedded within the contract itself. The firm-fixed-price structure incentivizes KONE Inc. to perform efficiently to maintain profitability. The relatively short performance period (approx. 10 months) limits long-term exposure to potential contractor underperformance. Furthermore, the government's ability to monitor performance and enforce contract terms provides a layer of oversight. Future competition will be key to mitigating price risks upon renewal.

How effective is the competition under Simplified Acquisition Procedures (SAP) for specialized services like elevator maintenance?

Competition under SAP is designed to be effective for acquisitions below certain thresholds (currently $250,000, though this contract is significantly higher, suggesting it may have been processed under specific exceptions or older thresholds). For specialized services like elevator maintenance, SAP aims to balance the need for competition with administrative efficiency. Receiving two bids indicates that the market is accessible and that some level of price discovery occurred. While more bidders could potentially yield better prices, SAP is generally considered adequate for ensuring fair and reasonable pricing for contracts of this size and type, preventing excessive costs for taxpayers.

What is the historical spending pattern for elevator services at this specific Indian Health Service facility?

The provided data does not include historical spending patterns for elevator services at this specific Indian Health Service facility. To determine this, one would need to access historical contract databases and search for previous awards related to elevator maintenance at the facility identified by the Department of Health and Human Services (HHS) and the Indian Health Service (IHS) in Arizona. Analyzing past spending would reveal trends in contract values, durations, and contractor choices, providing context for the current $8.9 million award and identifying any significant deviations or patterns.

Industry Classification

NAICS: Manufacturing › Other General Purpose Machinery Manufacturing › Elevator and Moving Stairway Manufacturing

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

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: KHC-SD-2022-0024

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Kone OYJ

Address: ONE KONE COURT, MOLINE, IL, 61265

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: $8,902

Exercised Options: $8,902

Current Obligation: $8,902

Actual Outlays: $8,902

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline