DoD's $19.6M hospital O&M contract awarded to HSG ZANDER GMBH shows fair value but limited competition

Contract Overview

Contract Amount: $19,655,372 ($19.7M)

Contractor: HSG Zander Gmbh

Awarding Agency: Department of Defense

Start Date: 2008-05-01

End Date: 2010-06-30

Contract Duration: 790 days

Daily Burn Rate: $24.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COMBINATION (TWO OR MORE)

Sector: Healthcare

Official Description: O&M SERVICES IN HOSPITALS AND CLINICS IN THE ERMC

Plain-Language Summary

Department of Defense obligated $19.7 million to HSG ZANDER GMBH for work described as: O&M SERVICES IN HOSPITALS AND CLINICS IN THE ERMC Key points: 1. Contract value of $19.6M over 2 years for hospital O&M services. 2. Awarded via full and open competition, indicating broad market access. 3. Limited number of bidders (4) suggests potential for price optimization. 4. Contract duration of 790 days is standard for this service type. 5. No small business set-aside, raising questions about broader economic impact. 6. Services cover O&M for hospitals and clinics in the ERMC.

Value Assessment

Rating: fair

The contract's total value of $19.6M for two years of O&M services for hospitals and clinics appears reasonable given the scope. Benchmarking against similar contracts for facility maintenance in large healthcare settings is necessary for a definitive value assessment. The absence of detailed cost breakdowns makes a precise per-unit cost comparison difficult, but the overall price seems within expected ranges for comprehensive building operations and maintenance.

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. Four bids were received, which is a moderate level of competition. While full and open competition is generally preferred for maximizing taxpayer value, a lower number of bidders than anticipated for a contract of this size could indicate barriers to entry or a specialized market, potentially impacting price discovery.

Taxpayer Impact: Full and open competition is positive for taxpayers as it theoretically drives down prices. However, with only four bidders, there's a risk that the competitive pressure was not as intense as it could have been, potentially leading to a higher-than-optimal price.

Public Impact

Beneficiaries include military personnel and their families receiving care at ERMC facilities. Services ensure the operational readiness and safety of critical healthcare infrastructure. Geographic impact is concentrated within the Eastern Regional Medical Command (ERMC). Workforce implications include potential employment for maintenance and technical staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (4) may indicate insufficient market research or high barriers to entry, potentially impacting long-term cost-effectiveness.
Lack of small business set-aside could limit opportunities for smaller, specialized firms in this sector.
The contract's duration (790 days) might not fully capture long-term efficiency gains or allow for frequent re-evaluation of service providers.

Positive Signals

Awarded under full and open competition, maximizing the pool of potential offerors.
The contractor, HSG ZANDER GMBH, has experience in facility management services.
The contract specifies O&M services, crucial for maintaining critical healthcare infrastructure.

Sector Analysis

The healthcare facilities maintenance sector is a significant component of the broader facilities management industry. Contracts for hospital operations and maintenance are critical for ensuring the continuity and safety of healthcare services, especially within military installations. Spending in this area is driven by the need for specialized technical expertise, compliance with stringent health and safety regulations, and the continuous operation of complex building systems. Comparable spending benchmarks would typically involve analyzing contracts for similar-sized healthcare facilities or large institutional buildings.

Small Business Impact

This contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in providing these essential O&M services were likely limited unless they were prime contractors who won the bid. The absence of specific small business provisions could mean a missed opportunity to foster growth and innovation within the small business ecosystem in this specialized sector.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be embedded in the contract's performance work statement (PWS), with defined metrics and potential penalties for non-compliance. Transparency is generally maintained through contract award databases, though detailed performance reports may not always be publicly accessible. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Hospital Operations
Healthcare Facility Maintenance
Department of Defense Facilities Management
Base Operations Support (BOS)

Risk Flags

Limited competition (4 bidders) may indicate potential for price inflation.
Lack of small business participation noted.
Contract performance history for HSG ZANDER GMBH on similar contracts is not detailed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.7 million to HSG ZANDER GMBH. O&M SERVICES IN HOSPITALS AND CLINICS IN THE ERMC

Who is the contractor on this award?

The obligated recipient is HSG ZANDER GMBH.

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 $19.7 million.

What is the period of performance?

Start: 2008-05-01. End: 2010-06-30.

What is the track record of HSG ZANDER GMBH in performing similar O&M services for government facilities?

Information regarding HSG ZANDER GMBH's specific track record in performing similar O&M services for government facilities is not detailed in the provided data. A comprehensive assessment would require reviewing past performance evaluations, contract history, and any reported issues or successes on previous government contracts. Understanding their experience with healthcare facilities, in particular, would be crucial given the nature of this award. Without this data, it's difficult to fully gauge their capability and reliability for this specific $19.6M contract, though the award itself implies they met minimum qualification standards.

How does the awarded price of $19.6M compare to market rates for similar hospital O&M services?

The awarded price of $19.6M over approximately two years for O&M services in hospitals and clinics within the ERMC needs to be benchmarked against market rates for similar services. Factors influencing market rates include the size and complexity of the facilities, the specific services required (e.g., HVAC, electrical, plumbing, janitorial), geographic location, and prevailing labor costs. Without detailed service scope and facility metrics, a precise comparison is challenging. However, for large-scale institutional O&M, this figure appears within a plausible range, though a more granular analysis comparing cost per square foot or cost per bed could reveal potential over or under-pricing relative to industry standards.

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

Primary risks associated with this contract include potential service disruptions impacting patient care, cost overruns due to unforeseen maintenance issues, and contractor performance deficiencies. Mitigation strategies typically involve robust performance monitoring by the government, clearly defined service level agreements (SLAs) in the Performance Work Statement (PWS), contingency planning for critical systems, and established procedures for addressing non-performance. The limited competition (4 bidders) also presents a risk of suboptimal pricing. The Department of the Air Force likely has oversight mechanisms in place to track contractor performance and manage risks proactively.

What is the historical spending pattern for hospital O&M services within the ERMC or similar military healthcare facilities?

Historical spending patterns for hospital O&M services within the ERMC or similar military healthcare facilities are not provided in the current data. To establish such a pattern, one would need to analyze contract awards for O&M services at these facilities over several preceding years. Key metrics to examine would include the total annual spending, the number and value of contracts awarded, the types of services procured, and the contractors involved. Understanding historical spending can help identify trends, assess the consistency of demand, and evaluate whether current spending levels are anomalous or in line with past investments in facility upkeep.

What is the potential impact of awarding this contract to a single entity on future competition and pricing?

Awarding this contract to HSG ZANDER GMBH, even under full and open competition, with only four bidders, could have implications for future competition and pricing. If the contractor performs exceptionally well and is seen as a dominant provider, it might deter new entrants or smaller firms from bidding on future, similar contracts, potentially leading to less competitive pricing over time. Conversely, if the contract is structured with clear performance metrics and opportunities for re-competition, it could encourage strong performance and maintain competitive pressure. The limited number of bidders suggests the market may not be highly competitive, which could allow the incumbent to command higher prices in subsequent solicitations if not carefully managed.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Services to Buildings and Dwellings › Other Services to Buildings and Dwellings

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA561308R3013

Offers Received: 4

Pricing Type: COMBINATION (TWO OR MORE) (2)

Evaluated Preference: NONE

Contractor Details

Parent Company: Bilfinger Berger AG (UEI: 315010108)

Address: AN DER GEHESPITZ 50, NEU-ISENBURG

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $48,687,932

Exercised Options: $19,655,372

Current Obligation: $19,655,372

Contract Characteristics

Consolidated Contract: Yes

Cost or Pricing Data: NO

Timeline