HHS awards $10.6M for mailroom operations, a sole-source contract with potential for cost overruns

Contract Overview

Contract Amount: $10,641,272 ($10.6M)

Contractor: Chickasaw Business Solutions, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2021-04-01

End Date: 2026-04-14

Contract Duration: 1,839 days

Daily Burn Rate: $5.8K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: MAILROOM OPERATIONS AND SUPPORT SBA REQUIREMENT NUMBER: TQ1615376982K

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20857

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $10.6 million to CHICKASAW BUSINESS SOLUTIONS, LLC for work described as: MAILROOM OPERATIONS AND SUPPORT SBA REQUIREMENT NUMBER: TQ1615376982K Key points: 1. Contract awarded to Chickasaw Business Solutions, LLC, a service-disabled veteran-owned small business. 2. The contract is a sole-source award, raising questions about price competition and value. 3. A significant portion of the contract value is allocated to labor, indicating potential for cost escalation. 4. The contract duration extends over five years, suggesting a long-term need for these services. 5. The services provided are essential for the daily functioning of the agency. 6. The contract is classified as Time and Materials, which can pose cost control risks.

Value Assessment

Rating: questionable

The contract's Time and Materials (T&M) pricing structure, coupled with a sole-source award, presents a risk for cost control. Without competitive bidding or a firm-fixed-price structure, it is difficult to benchmark the value for money. The contract's value of over $10 million over five years suggests a substantial investment in mailroom operations. Further analysis would be needed to compare labor rates and overhead to industry standards for similar facilities support services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed under the Simplified Acquisition Procedures (SAP) and is listed as a sole-source award. This means that only one vendor, Chickasaw Business Solutions, LLC, was solicited for this requirement. The lack of competition limits the government's ability to explore alternative solutions or secure the most favorable pricing through a bidding process. This approach may be justified by specific circumstances, such as unique capabilities or a prior relationship, but it bypasses the standard competitive acquisition process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no market pressure to drive down prices. The absence of competition means the government cannot be assured it is receiving the best possible value for its investment.

Public Impact

The primary beneficiaries are the Department of Health and Human Services (HHS) staff who rely on efficient mailroom operations for receiving and distributing critical documents and correspondence. The contract ensures the continuity of essential mailroom services, including sorting, delivery, and management of incoming and outgoing mail. Services are primarily delivered within Maryland, supporting the operational needs of HHS facilities in that region. The contract supports jobs within the mailroom services sector, potentially benefiting employees of Chickasaw Business Solutions, LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Time and Materials (T&M) contract type carries inherent risks of cost overruns if not closely monitored, as it allows for reimbursement of labor hours and material costs without a predefined ceiling.
The sole-source nature of the award bypasses competitive processes, potentially leading to suboptimal pricing and limiting the government's ability to explore a wider range of service providers or innovative solutions.
The contract duration of over five years (1839 days) locks the government into a single provider for an extended period, reducing flexibility to adapt to changing needs or market conditions.
Lack of detailed performance metrics or specific deliverables in the provided data makes it difficult to assess the contractor's performance and the overall effectiveness of the mailroom operations.
The contract value of over $10 million suggests a significant expenditure, and without competitive benchmarking, it's challenging to ascertain if this represents a fair market price.

Positive Signals

The awardee, Chickasaw Business Solutions, LLC, is a Service-Disabled Veteran-Owned Small Business (SDVOSB), aligning with federal goals to support veteran-owned enterprises.
The contract supports essential administrative functions for the Department of Health and Human Services, ensuring the smooth operation of agency communications.
The contract duration provides stability and predictability for both the agency and the contractor, allowing for focused service delivery over a defined period.
The contract is for facilities support services, a critical component of maintaining government operations.

Sector Analysis

The Facilities Support Services sector encompasses a broad range of services essential for the operation and maintenance of government and commercial buildings. This includes services like mailroom management, cleaning, security, and groundskeeping. The North American Industry Classification System (NAICS) code 561210, Facilities Support Services, represents a significant market. Federal spending in this area is consistent, as agencies require these services to function. This contract fits within the broader category of administrative and operational support services procured by federal agencies to ensure efficient day-to-day operations.

Small Business Impact

While the awardee, Chickasaw Business Solutions, LLC, is a Service-Disabled Veteran-Owned Small Business (SDVOSB), the contract itself was awarded sole-source. This means it was not set aside for small businesses through a competitive process. The implications for the broader small business ecosystem are limited in terms of fostering competition among small businesses for this specific requirement. However, it does represent a direct award to a small business entity, fulfilling a portion of federal small business contracting goals.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Office of the Assistant Secretary for Administration (ASA) within HHS. As a sole-source, Time and Materials contract, robust oversight is crucial to manage costs and ensure performance. This would involve regular reviews of labor hours, material costs, and service delivery against any established performance standards. The contract's duration and value necessitate diligent monitoring to prevent cost creep and ensure accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Mailroom Operations
Facilities Management Contracts
Administrative Support Services
Service-Disabled Veteran-Owned Small Business (SDVOSB) Contracts
Time and Materials Contracts

Risk Flags

Sole-source award bypasses competition.
Time and Materials contract type poses cost overrun risk.
Long contract duration limits flexibility.
Lack of specific performance metrics in summary data.
Potential for uncompetitive pricing due to sole-source nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $10.6 million to CHICKASAW BUSINESS SOLUTIONS, LLC. MAILROOM OPERATIONS AND SUPPORT SBA REQUIREMENT NUMBER: TQ1615376982K

Who is the contractor on this award?

The obligated recipient is CHICKASAW BUSINESS SOLUTIONS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of the Assistant Secretary for Administration).

What is the total obligated amount?

The obligated amount is $10.6 million.

What is the period of performance?

Start: 2021-04-01. End: 2026-04-14.

What is the specific justification for awarding this contract on a sole-source basis to Chickasaw Business Solutions, LLC?

The provided data does not specify the justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the agency's needs. This could be due to unique capabilities, proprietary technology, or urgent and compelling circumstances. Without further documentation or agency explanation, the rationale remains unclear. This lack of transparency in the procurement process raises concerns about whether the government explored all available options and secured the best possible value. Further investigation into the contract file or agency procurement records would be necessary to ascertain the precise justification.

How does the labor rate and overhead charged by Chickasaw Business Solutions, LLC compare to industry benchmarks for similar facilities support services?

Benchmarking the labor rates and overhead for Chickasaw Business Solutions, LLC requires access to detailed pricing information within the contract, which is not provided in the summary data. As a Time and Materials (T&M) contract, the government pays for actual labor hours and material costs, plus a markup. To assess value for money, these rates would need to be compared against established government-wide contract vehicles (like GSA schedules), industry surveys for facilities support services, and potentially rates charged by other contractors for similar services. Given the sole-source nature, a direct comparison might be difficult, but an analysis of the proposed labor categories and estimated hours against market data is essential for effective oversight and cost control.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this mailroom operations contract?

The provided data does not include specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. For a contract of this value and duration, robust performance metrics are critical for ensuring the contractor delivers services effectively and efficiently. Typical KPIs for mailroom operations might include mail processing times, delivery accuracy rates, package handling efficiency, and customer satisfaction scores. Without defined SLAs, it is challenging to objectively measure the contractor's performance and hold them accountable for service quality. The agency's contracting officer representatives (CORs) would be responsible for monitoring performance, but the absence of explicit, measurable targets in the contract summary makes this assessment difficult.

What is the historical spending pattern for mailroom operations and support services at HHS, and how does this $10.6M contract compare?

The provided data does not offer historical spending patterns for mailroom operations at HHS. To contextualize the $10.6 million award, one would need to examine prior contracts for similar services, potentially with the same or different contractors, over previous fiscal years. Analyzing historical spending would reveal trends in contract values, duration, and pricing structures. Comparing this current contract's value and duration against past expenditures would help determine if spending has increased, decreased, or remained stable. It would also highlight whether this represents a significant shift in the agency's investment in mailroom support services. Without this historical data, it's difficult to assess if the current award is in line with previous budgetary allocations or represents a new level of investment.

What is the track record of Chickasaw Business Solutions, LLC in performing similar government contracts, particularly those involving facilities support services?

The provided data indicates that Chickasaw Business Solutions, LLC is the awardee, but it does not detail their track record or past performance on government contracts. A comprehensive assessment of this contract's value and risk would require reviewing the contractor's performance history, including past performance evaluations, any contract disputes, and their experience with similar services. As a Service-Disabled Veteran-Owned Small Business (SDVOSB), they may have specific contract vehicles or set-aside opportunities they have utilized. Understanding their past performance is crucial, especially for a sole-source award, as it provides assurance that the contractor has the capability and reliability to meet the government's needs effectively.

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) › ADMINISTRATIVE SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 75P00121R00037

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 2600 JOHN SAXON BLVD STE 2223, NORMAN, OK, 73071

Business Categories: 8(a) Program Participant, American Indian Owned Business, Category Business, Government, Native American Tribal Government, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $14,319,981

Exercised Options: $12,590,073

Current Obligation: $10,641,272

Actual Outlays: $8,101,717

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline