FAA Funds Embry-Riddle Lease for $11.7M, Raising Questions on Competition and Value

Contract Overview

Contract Amount: $11,709,205 ($11.7M)

Contractor: Embry-Riddle Aeronautical University, Inc.

Awarding Agency: Department of Transportation

Start Date: 2007-08-07

End Date: 2012-08-21

Contract Duration: 1,841 days

Daily Burn Rate: $6.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CMEL RENEWAL LEASE - FUNDING IS PROVIDED FOR THE PERIOD AUGUST 22, 2007 THROUGH SEPTEMBER 30, 2007.

Place of Performance

Location: DAYTONA BEACH, VOLUSIA County, FLORIDA, 32114

State: Florida Government Spending

Plain-Language Summary

Department of Transportation obligated $11.7 million to EMBRY-RIDDLE AERONAUTICAL UNIVERSITY, INC. for work described as: CMEL RENEWAL LEASE - FUNDING IS PROVIDED FOR THE PERIOD AUGUST 22, 2007 THROUGH SEPTEMBER 30, 2007. Key points: 1. The contract awarded to Embry-Riddle Aeronautical University, Inc. for $11.7 million covers a lease period of over 4 years. 2. The lease was not competed, raising concerns about potential overpayment and lack of market price discovery. 3. The Federal Aviation Administration (FAA) is the awarding agency, with the contract falling under the 'Lessors of Residential Buildings and Dwellings' NAICS code. 4. The firm fixed price contract structure offers limited flexibility for cost adjustments.

Value Assessment

Rating: questionable

The total award of $11.7 million for a lease spanning over four years appears high, especially given the lack of competitive bidding. Without comparable contract data or a clear justification for the price, it's difficult to assess its fairness against market rates for similar properties.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source or limited competition award. This significantly reduces the potential for price discovery and may lead to a higher cost for taxpayers compared to a fully competed contract.

Taxpayer Impact: The lack of competition suggests that taxpayers may have paid a premium for this lease, as there was no market pressure to drive down costs.

Public Impact

Taxpayers may be overpaying for a lease due to the absence of competitive bidding. The Federal Aviation Administration's procurement process for this lease warrants closer examination. The long-term nature of the lease, coupled with a lack of competition, could represent a missed opportunity for cost savings.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potentially inflated price
Limited transparency in pricing

Positive Signals

Clear awarding agency (FAA)
Defined lease period

Sector Analysis

The lease falls under the 'Lessors of Residential Buildings and Dwellings' sector. Government leases, particularly those not competed, can be susceptible to above-market pricing if not rigorously evaluated against industry benchmarks.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was awarded directly to Embry-Riddle Aeronautical University, Inc. Further analysis would be needed to determine if subcontracting opportunities were explored.

Oversight & Accountability

The non-competed nature of this award raises questions about the oversight applied to ensure fair and reasonable pricing. A review of the justification for sole-source procurement and the price analysis conducted would be beneficial.

Related Government Programs

Lessors of Residential Buildings and Dwellings
Department of Transportation Contracting
Federal Aviation Administration Programs

Risk Flags

Lack of competition
Potential for overpricing
Limited transparency in award justification
Long-term financial commitment without market validation

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $11.7 million to EMBRY-RIDDLE AERONAUTICAL UNIVERSITY, INC.. CMEL RENEWAL LEASE - FUNDING IS PROVIDED FOR THE PERIOD AUGUST 22, 2007 THROUGH SEPTEMBER 30, 2007.

Who is the contractor on this award?

The obligated recipient is EMBRY-RIDDLE AERONAUTICAL UNIVERSITY, INC..

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $11.7 million.

What is the period of performance?

Start: 2007-08-07. End: 2012-08-21.

What was the justification for not competing this lease award, and was a thorough price analysis conducted to ensure fair and reasonable pricing?

The provided data indicates the contract was 'NOT COMPETED'. Without further documentation, the specific justification remains unclear. Typically, non-competed awards require a justification, such as a sole-source provider or urgent need. A comprehensive price analysis comparing the lease cost to market rates for similar properties in the Florida region would be crucial to validate the $11.7 million award.

How does the $11.7 million lease cost compare to market rates for similar residential building leases in Florida, considering the duration and any specific amenities?

Direct comparison is challenging without detailed property specifics and current market data for Florida. However, a $11.7 million lease over approximately four years averages to nearly $3 million annually. This figure needs to be benchmarked against commercial real estate data for comparable properties in the specific Florida location to assess if it represents a fair market value or an inflated cost due to the lack of competition.

What is the long-term financial impact on the FAA and taxpayers given this non-competed lease award and its duration?

The long-term financial impact could be significant if the lease price exceeds fair market value. A non-competed award removes the downward pressure on price that competition provides. Over the 1841-day duration, any overpayment, even a small percentage, accumulates substantially. This highlights the importance of competitive procurement to ensure fiscal responsibility and maximize taxpayer value.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Lessors of Real Estate › Lessors of Residential Buildings and Dwellings

Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 600 S CLYDE MORRIS BLVD, DAYTONA BEACH, FL, 06

Business Categories: Category Business, Corporate Entity Tax Exempt, Educational Institution, Higher Education, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $238,014,256

Exercised Options: $12,799,155

Current Obligation: $11,709,205

Timeline