DoD's $18.3M warehousing contract with ORI Services Corporation shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $18,310,280 ($18.3M)

Contractor: ORI Services Corporation

Awarding Agency: Department of Defense

Start Date: 2000-11-07

End Date: 2009-04-30

Contract Duration: 3,096 days

Daily Burn Rate: $5.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Place of Performance

Location: YUMA, YUMA County, ARIZONA, 85365

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $18.3 million to ORI SERVICES CORPORATION for work described as: Key points: 1. The contract's value appears reasonable when benchmarked against similar warehousing services. 2. Limited competition suggests potential for higher prices than a fully open market might yield. 3. The long duration of the contract (over 8 years) warrants scrutiny for ongoing value. 4. Performance context is limited, but the contract was awarded by the Department of the Army. 5. This contract falls within the broader logistics and support services sector for the DoD. 6. The firm fixed-price structure provides cost certainty for the government.

Value Assessment

Rating: fair

The total award amount of $18.3 million over approximately 8.5 years suggests an average annual spend of around $2.15 million. Benchmarking against industry standards for warehousing and storage services indicates this pricing is within a reasonable range, especially considering the specific requirements and location. However, without more granular data on the scope of services (e.g., square footage, labor hours, specific storage needs), a precise value-for-money assessment is challenging. The firm fixed-price nature of the contract helps control costs for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while competition was sought, certain sources were excluded, or the initial full and open competition phase did not result in an award, leading to a subsequent limited competition. With only 3 bidders, the level of competition was not as robust as a truly full and open process. This limited competition may have impacted price discovery, potentially leading to a higher price than if more bidders had participated.

Taxpayer Impact: The limited number of bidders suggests that taxpayers may not have benefited from the most competitive pricing possible. A more competitive environment could have driven down costs, leading to greater savings.

Public Impact

The Department of Defense benefits from essential warehousing and storage services, ensuring readiness and operational efficiency. The contract supports the Army's logistical operations, likely within Arizona. The services provided are critical for maintaining military supplies and equipment. Workforce implications include employment opportunities for personnel involved in warehousing operations in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in suboptimal pricing for taxpayers.
The long contract duration could mask inefficiencies or prevent adoption of newer, more cost-effective solutions.
Lack of detailed performance metrics makes it difficult to assess the contractor's efficiency and effectiveness over time.

Positive Signals

The firm fixed-price contract provides cost predictability for the government.
The contract was awarded to a single entity, potentially simplifying management and oversight.
The services are essential for military logistics, contributing to national security.

Sector Analysis

This contract falls within the broader logistics and support services sector, specifically focusing on warehousing and storage. The market for government warehousing is substantial, driven by the needs of various federal agencies, particularly the Department of Defense. Comparable spending benchmarks in this sector are often tied to factors like facility size, inventory management complexity, and labor costs. The government frequently utilizes long-term contracts for such services to ensure continuity and leverage economies of scale.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The prime contractor, ORI Services Corporation, is likely a larger entity capable of handling the scale of this DoD contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and administrative contracting officer within the Department of the Army. Accountability measures are inherent in the firm fixed-price contract type, requiring the contractor to deliver services within the agreed-upon cost. Transparency is generally facilitated through contract databases like FPDS, though detailed performance reports may not always be publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Logistics Support Contracts
Federal Warehousing and Storage Services
Army Supply Chain Management
Government Contract Management

Risk Flags

Limited Competition
Long Contract Duration
Potential for Price Escalation Over Time
Lack of Detailed Performance Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.3 million to ORI SERVICES CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is ORI SERVICES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $18.3 million.

What is the period of performance?

Start: 2000-11-07. End: 2009-04-30.

What specific warehousing services were included under this contract, and how did their scope influence the final price?

The contract, NAICS code 493190 (Other Warehousing and Storage), indicates a broad scope of services related to storing goods. This likely includes receiving, storing, inventory management, and dispatching of military supplies and equipment. The final price of $18.3 million would have been influenced by factors such as the volume and type of goods stored, the duration of storage, the required security measures, climate control needs, labor costs for handling, and any value-added services like kitting or light assembly. Without a detailed Statement of Work (SOW), it's difficult to precisely quantify the impact of each service component on the total cost. However, the firm fixed-price nature suggests these elements were estimated and bundled into the overall contract value.

How does the $18.3 million contract value compare to other similar warehousing contracts awarded by the Department of Defense?

Benchmarking the $18.3 million contract value requires comparing it against similar DoD warehousing contracts awarded around the same period (2000-2009) and with comparable scopes of service and geographic locations. General industry data suggests that large-scale, long-term warehousing contracts for military logistics can range from several million to tens of millions of dollars annually, depending on the scale of operations. Given the contract's duration of over 8 years, the total value is substantial. While specific comparable contract data is not provided, the average annual spend of approximately $2.15 million appears to be within a plausible range for significant logistical support operations. However, a more precise comparison would necessitate access to detailed contract line item details and service level agreements of other DoD warehousing contracts.

What are the potential risks associated with a contract of this duration (over 8 years) awarded with limited competition?

A contract duration exceeding 8 years, especially when awarded under limited competition (3 bidders), presents several risks. Firstly, there's a risk of 'vendor lock-in,' where the government becomes overly reliant on a single provider, potentially hindering the adoption of more innovative or cost-effective solutions that might emerge over time. Secondly, limited competition can lead to suboptimal pricing, as the contractor may face less pressure to offer the most competitive rates throughout the contract's life. Thirdly, the long timeframe increases the risk of the contracted services becoming misaligned with evolving military requirements or technological advancements. Finally, without robust performance monitoring, there's a risk that service quality could degrade over time without adequate recourse or competitive pressure to improve.

What was the historical spending pattern for warehousing and storage services by the Department of the Army prior to and during this contract period?

Analyzing historical spending patterns for the Department of the Army's warehousing and storage services prior to and during the 2000-2009 period would provide crucial context. Without specific historical data, it's presumed that the Army, as a major branch of the DoD, has consistently required significant warehousing capabilities to support its global operations. Spending in this area is typically driven by factors such as troop levels, deployment tempos, and the types of equipment and supplies being managed. The $18.3 million awarded to ORI Services Corporation represents a portion of the Army's overall logistics budget. Understanding whether this contract's value aligns with or deviates from previous spending trends, adjusted for inflation and operational changes, would be key to assessing its fiscal prudence.

How effective has ORI Services Corporation been in fulfilling similar government contracts, and does their track record suggest a higher risk or reward for this contract?

Assessing the effectiveness of ORI Services Corporation requires examining their past performance on government contracts, particularly those involving warehousing and logistics. Information on past performance, including any awards, penalties, or contract terminations, would be critical. A strong track record of timely delivery, adherence to quality standards, and cost control would indicate a lower risk and potentially a good reward for the government. Conversely, a history of performance issues, cost overruns (though less likely with firm fixed-price), or disputes could signal higher risks. Without specific past performance data for ORI Services Corporation, it is difficult to definitively assess their reliability and the associated risk level for this particular contract.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › Other Warehousing and Storage

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4565 RUFFNER STREET, SAN DIEGO, CA, 90

Business Categories: 8(a) Program Participant, Asian Pacific American Owned Business, Category Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline