TESCO CO., LTD. awarded $25M for utility plant O&M at U.S. Army installations in Japan

Contract Overview

Contract Amount: $25,066,559 ($25.1M)

Contractor: Tesco CO., Ltd.

Awarding Agency: Department of Defense

Start Date: 2012-07-01

End Date: 2017-03-31

Contract Duration: 1,734 days

Daily Burn Rate: $14.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF OPERATION, MAINTENANCE, AND REPAIR OF UTILTIY PLANTS AND SYSTEMS AT U.S. ARMY INSTALLATIONS IN KANTO AREA, JAPAN

Plain-Language Summary

Department of Defense obligated $25.1 million to TESCO CO., LTD. for work described as: IGF::OT::IGF OPERATION, MAINTENANCE, AND REPAIR OF UTILTIY PLANTS AND SYSTEMS AT U.S. ARMY INSTALLATIONS IN KANTO AREA, JAPAN Key points: 1. Contract value appears reasonable given the duration and scope of services. 2. Full and open competition suggests a competitive bidding process. 3. The contract type (Firm Fixed Price) shifts performance risk to the contractor. 4. Services are critical for maintaining operational readiness of military facilities. 5. This contract falls within the facilities support services sector. 6. The duration of the contract (over 4 years) indicates a stable, long-term need.

Value Assessment

Rating: good

The contract value of approximately $25 million over nearly five years for utility plant operation, maintenance, and repair at U.S. Army installations in Japan suggests a potentially good value. Benchmarking against similar large-scale facilities support contracts for military installations, especially those in overseas locations with logistical complexities, indicates that the pricing is likely competitive. The firm fixed-price structure further supports value by incentivizing contractor efficiency and cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 4 bidders suggests a healthy level of competition for this significant facilities support requirement. This competitive environment is generally favorable for price discovery and achieving a fair market price for the services rendered.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the most cost-effective solution for essential military infrastructure support.

Public Impact

U.S. Army installations in the Kanto area of Japan benefit from reliable utility plant operations. Services include operation, maintenance, and repair of critical utility systems. Ensures continuous power, water, and other essential services for military personnel and operations. Supports the readiness and operational capability of U.S. forces stationed in Japan. Indirectly supports the local economy through contractor employment and resource utilization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen major repairs are required under a fixed-price contract.
Dependence on contractor's ability to maintain a skilled workforce in a foreign location.
Geopolitical risks associated with operating in an overseas environment could impact service delivery.

Positive Signals

Firm Fixed Price contract structure incentivizes contractor efficiency and cost management.
Full and open competition likely resulted in competitive pricing.
Long contract duration provides stability and predictability for essential services.
Contractor has a track record of performance, implied by award.

Sector Analysis

This contract falls within the Facilities Support Services sector, a broad category encompassing a wide range of services necessary for the upkeep and operation of physical infrastructure. The market for these services, particularly for large government installations, is substantial. Comparable spending benchmarks for similar large-scale base operations and maintenance contracts at major military installations globally often run into tens or hundreds of millions of dollars, depending on the scope and location.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside provisions. While the prime contractor is TESCO CO., LTD., there is no explicit information provided regarding subcontracting plans or goals for small businesses. The impact on the small business ecosystem would depend on whether TESCO utilizes small business subcontractors for specialized services or supplies.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant contracting command within the Department of the Air Force. Performance monitoring, quality assurance surveillance plans (QASPs), and regular progress reviews are standard mechanisms to ensure contractor compliance and service delivery. Transparency is generally maintained through contract award databases and reporting requirements, though specific day-to-day oversight details are internal.

Related Government Programs

Base Operations Support (BOS)
Facilities Engineering and Maintenance
Utility Systems Management
Overseas Military Construction
Government Facilities Services

Risk Flags

Contract Duration
Overseas Operations
Critical Infrastructure Support
Firm Fixed Price Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.1 million to TESCO CO., LTD.. IGF::OT::IGF OPERATION, MAINTENANCE, AND REPAIR OF UTILTIY PLANTS AND SYSTEMS AT U.S. ARMY INSTALLATIONS IN KANTO AREA, JAPAN

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 $25.1 million.

What is the period of performance?

Start: 2012-07-01. End: 2017-03-31.

What is the historical spending trend for utility plant O&M at U.S. Army installations in Japan?

Analyzing historical spending trends for utility plant operation, maintenance, and repair at U.S. Army installations in Japan requires access to detailed historical contract data. Without specific historical databases, it's challenging to provide precise figures. However, such services are fundamental to military readiness and typically represent a consistent, albeit variable, portion of installation operating budgets. Factors influencing spending include the age and condition of facilities, technological upgrades, energy price fluctuations, and geopolitical security requirements. Contracts for these services are often long-term due to the critical nature and scale of operations, suggesting a pattern of recurring, significant investment rather than sporadic expenditure. The $25 million awarded to TESCO CO., LTD. for a period of approximately 1734 days (roughly 4.75 years) indicates an average annual expenditure of around $5.26 million for this specific contract, which can be used as a benchmark for similar future or past contracts in the region.

How does the awarded amount compare to similar contracts for facilities support services at overseas military bases?

The awarded amount of approximately $25 million for utility plant operation, maintenance, and repair at U.S. Army installations in Japan over nearly five years appears to be within a reasonable range for large-scale facilities support contracts at overseas military bases. Contracts of this nature often involve significant logistical challenges, higher labor costs, and specific security requirements, which can drive up prices compared to domestic contracts. For instance, similar contracts for base operations support (BOS) at major overseas installations can range from tens to hundreds of millions of dollars annually, depending on the breadth of services (e.g., including housing, transportation, food services, etc.). Given that this contract focuses specifically on utility plants and systems, the $25 million total value suggests a substantial but not necessarily exorbitant expenditure, especially considering the critical infrastructure involved and the complexities of operating in Japan.

What are the key performance indicators (KPIs) typically used to evaluate contractor performance in utility plant O&M contracts?

Key Performance Indicators (KPIs) for utility plant operation, maintenance, and repair contracts typically focus on reliability, efficiency, safety, and responsiveness. Common KPIs include: Uptime/Availability of critical systems (e.g., percentage of time power is consistently supplied), Mean Time Between Failures (MTBF) for key equipment, Mean Time To Repair (MTTR) after a failure, Energy efficiency metrics (e.g., energy consumed per unit of output or per square foot), Compliance with safety regulations and incident rates (e.g., lost time injury frequency rate), Response times for emergency and routine maintenance requests, Water quality and treatment compliance, and adherence to preventative maintenance schedules. These KPIs are crucial for ensuring the continuous and safe operation of essential utilities, directly impacting the readiness and habitability of military installations.

What is the potential impact of firm-fixed-price contracts on contractor risk and government cost control in this context?

Firm-Fixed-Price (FFP) contracts, like the one awarded to TESCO CO., LTD., place the primary risk of cost overruns on the contractor. This structure incentivizes the contractor to manage costs efficiently and perform the work within the agreed-upon price. For the government, FFP contracts offer greater cost certainty and predictability, as the total price is established upfront, barring any contract modifications. However, this certainty comes with the potential downside that contractors may cut corners on quality or service to maintain profitability if not adequately monitored. In the context of utility plant O&M, where unforeseen equipment failures or complex repairs can arise, the contractor bears the risk of these unexpected costs. Effective government oversight is still crucial to ensure that the contractor meets performance standards and does not compromise essential services due to cost-saving measures.

What are the implications of awarding this contract under 'full and open competition' for the U.S. taxpayer?

Awarding this contract under 'full and open competition' is generally beneficial for U.S. taxpayers. This procurement method ensures that a wide range of qualified companies can bid on the contract, fostering a competitive environment. Competition typically drives down prices as contractors strive to offer the most attractive bid to win the contract. It also encourages innovation and efficiency as companies seek to differentiate themselves. Furthermore, full and open competition increases transparency and reduces the likelihood of favoritism or non-competitive pricing. The presence of 4 bidders in this specific case suggests that the market was sufficiently robust to support multiple offers, reinforcing the likelihood that the contract was awarded at a fair and reasonable price, thereby maximizing the value of taxpayer dollars.

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 › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA520912R0001

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1-4-5, NISHIKANDA, CHIYODA-KU

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

Financial Breakdown

Contract Ceiling: $25,066,562

Exercised Options: $25,066,562

Current Obligation: $25,066,559

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline