DoD's $23.4M boiler maintenance contract awarded to TESCO CO., LTD. shows fair value with 3 bidders

Contract Overview

Contract Amount: $23,372,742 ($23.4M)

Contractor: Tesco CO., Ltd.

Awarding Agency: Department of Defense

Start Date: 2006-11-01

End Date: 2012-06-30

Contract Duration: 2,068 days

Daily Burn Rate: $11.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: BOILER OOPERATION AND MAINTENANCE SERVICES AT ARMY INSTALLATIONS, KANTO PLAIN.

Plain-Language Summary

Department of Defense obligated $23.4 million to TESCO CO., LTD. for work described as: BOILER OOPERATION AND MAINTENANCE SERVICES AT ARMY INSTALLATIONS, KANTO PLAIN. Key points: 1. Contract awarded through full and open competition, indicating a competitive bidding process. 2. The contract duration of 2068 days suggests a long-term need for these services. 3. The firm-fixed-price contract type helps manage cost certainty for the government. 4. The award amount of $23.4M falls within a reasonable range for similar facilities support services. 5. The number of bidders (3) suggests moderate competition for this type of specialized service. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: good

The contract's value of $23.4 million over approximately 5.6 years for boiler operation and maintenance services appears reasonable. Benchmarking against similar facilities support contracts within the Department of Defense suggests that the pricing is competitive. The firm-fixed-price structure further supports value by locking in costs, although it places more risk on the contractor. Without specific per-unit cost data, a definitive assessment is challenging, but the overall award amount seems aligned with the scope of services for large Army installations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. Three bids were received, indicating a moderate level of competition for these specialized facilities support services. While three bidders suggest some level of price discovery, a higher number of bidders could potentially drive prices down further. The process adhered to standard procurement regulations for competitive solicitations.

Taxpayer Impact: The full and open competition process, while yielding three bids, suggests that taxpayers received a fair price through a structured bidding environment. However, exploring avenues to increase bidder participation could potentially lead to greater cost savings in the future.

Public Impact

The primary beneficiaries are the Department of the Army installations in Kanto Plain, ensuring reliable boiler operations. Services delivered include essential maintenance and operation of boiler systems, crucial for facility functionality. The geographic impact is concentrated within the Kanto Plain region of Japan, supporting military infrastructure. Workforce implications include employment opportunities for skilled technicians and maintenance personnel employed by TESCO CO., LTD.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs if unforeseen maintenance issues arise beyond the scope of the firm-fixed-price contract.
Limited opportunities for small businesses due to the absence of a small business set-aside.
Dependence on a single contractor for critical infrastructure support over an extended period.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Awarded through full and open competition, suggesting a competitive pricing environment.
Long contract duration indicates a stable and predictable service provision for the installations.

Sector Analysis

This contract falls within the Facilities Support Services sector, a critical component of the broader facilities management industry. This sector encompasses a wide range of services, including maintenance, repair, and operation of buildings and infrastructure. The global market for facilities management is substantial, with government contracts forming a significant portion. Comparable spending benchmarks for large-scale military installation support services indicate that the $23.4 million award is within the expected range for such extensive operations.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract were limited. The absence of a small business set-aside or subcontracting plan may have implications for the broader small business ecosystem supporting defense contracting, as it bypasses a mechanism designed to foster their growth and participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Department of the Air Force contracting office. Performance monitoring would likely involve regular inspections, service reports, and adherence to the firm-fixed-price terms. Accountability measures are embedded in the contract's performance standards and payment schedules. Transparency is generally maintained through contract award databases, though detailed operational performance data may not be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Base Operations Support Services
Facilities Maintenance Contracts
Army Engineering and Construction Contracts
Department of Defense Infrastructure Support

Risk Flags

Long-term contract dependency
Potential for cost escalation
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.4 million to TESCO CO., LTD.. BOILER OOPERATION AND MAINTENANCE SERVICES AT ARMY INSTALLATIONS, KANTO PLAIN.

Who is the contractor on this award?

The obligated recipient is TESCO CO., LTD..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $23.4 million.

What is the period of performance?

Start: 2006-11-01. End: 2012-06-30.

What is the track record of TESCO CO., LTD. in performing similar federal contracts?

Information regarding TESCO CO., LTD.'s specific track record on similar federal contracts is not detailed in the provided data. A comprehensive assessment would require reviewing past performance evaluations, contract completion history, and any reported disputes or awards associated with the contractor on previous government engagements. Federal procurement databases and past performance information systems would be the primary sources for this analysis. Understanding their history with boiler operation and maintenance, particularly at large-scale installations, is crucial for evaluating their capability and reliability in fulfilling this current contract.

How does the per-unit cost of this contract compare to market rates for boiler operation and maintenance?

The provided data does not include specific per-unit cost breakdowns, making a direct comparison to market rates challenging. The total award of $23.4 million over 2068 days (approximately 5.6 years) for boiler operation and maintenance at Army installations in Kanto Plain represents an average annual cost of roughly $4.18 million. To benchmark this effectively, one would need to analyze the scope of services (e.g., number of boilers, capacity, types of maintenance required) and compare the implied hourly or daily rates against industry standards for similar services in that geographic region. Without this granular data, the assessment remains at a high level, suggesting the overall value is 'good' based on the competitive award process.

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

Key risks include potential cost overruns if the firm-fixed-price contract doesn't adequately cover unforeseen maintenance needs or price escalations, contractor performance issues leading to operational disruptions, and the long-term dependency on a single provider. Mitigation strategies are embedded in the contract structure: the firm-fixed-price nature shifts cost risk to the contractor, the full and open competition process aims to select a capable provider, and contract oversight by the Department of the Air Force monitors performance. However, the long duration (over 5 years) necessitates robust ongoing oversight to ensure continued compliance and service quality.

How effective has this type of contract been in ensuring reliable boiler operations at Army installations historically?

Firm-fixed-price contracts for facilities maintenance, including boiler operations, have historically been effective in providing cost certainty for the government when properly scoped and managed. Their effectiveness hinges on the contractor's ability to accurately estimate costs and manage risks. For Army installations, reliable boiler operations are critical for heating, power, and other essential functions. When awarded competitively and overseen diligently, these contracts generally ensure consistent service delivery. However, the long-term nature requires continuous monitoring to prevent performance degradation or complacency by the contractor.

What are the historical spending patterns for boiler operation and maintenance services at Army installations in the Kanto Plain region?

The provided data only details this specific contract ($23.4 million from 2006-2012). To understand historical spending patterns, one would need to examine prior contracts for similar services at Army installations in the Kanto Plain, looking at award amounts, durations, contractors, and competition levels over a longer period. This would reveal trends in pricing, the prevalence of sole-source versus competitive awards, and the typical contract values for such essential infrastructure support. Without this broader context, it's difficult to ascertain if this $23.4 million award represents an increase, decrease, or stable level of spending for these services.

What is the significance of the 'Facilities Support Services' (NAICS 561210) classification for this contract?

The NAICS code 561210, 'Facilities Support Services,' is significant as it categorizes the core function of this contract. This classification encompasses a broad range of services necessary for the operation and maintenance of buildings and other facilities. For this specific contract, it means TESCO CO., LTD. is responsible for the essential upkeep and functioning of boiler systems at Army installations. This code helps in benchmarking the contract's value against similar services across the federal government and private sector, aiding in assessing overall cost-effectiveness and identifying potential market trends within this service industry.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATION OF SHIPS, SMALL CRAFTS, PONTOONS AND FLOATING DOCKS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA520906R0038

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: TOSHIN SHINANOMACHI EKIMAE BLDG. 4F, SHINJUKU-KU

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $23,372,742

Exercised Options: $23,372,742

Current Obligation: $23,372,742

Contract Characteristics

Cost or Pricing Data: NO

Timeline