DHS awarded $113.9M for remote mail delivery, with limited competition and a long performance period

Contract Overview

Contract Amount: $113,884,761 ($113.9M)

Contractor: Servicesource Inc

Awarding Agency: Department of Homeland Security

Start Date: 2007-09-30

End Date: 2015-09-30

Contract Duration: 2,922 days

Daily Burn Rate: $39.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: DHS REMOTE MAIL DELIVERY SITE PROJECT.

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22312

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $113.9 million to SERVICESOURCE INC for work described as: DHS REMOTE MAIL DELIVERY SITE PROJECT. Key points: 1. The contract's value of $113.9M over its duration suggests a significant investment in mail delivery infrastructure. 2. Limited competition for this contract may have impacted pricing and potentially reduced opportunities for cost savings. 3. The contract's extended duration of nearly 8 years indicates a long-term need for these services. 4. The use of a Time and Materials contract type can lead to cost overruns if not carefully managed. 5. The primary recipient of these services is the Department of Homeland Security, indicating a critical operational need. 6. The contract's performance is geographically focused within Virginia. 7. The absence of small business set-aside flags suggests this contract was not specifically targeted for small business participation.

Value Assessment

Rating: fair

Benchmarking the value of this $113.9M contract is challenging without specific service details or comparable contracts. However, the extended performance period of nearly 8 years suggests a substantial, long-term requirement. The Time and Materials (T&M) pricing structure, while flexible, carries inherent risks of cost escalation if not rigorously monitored. Without more granular data on the services provided and the labor rates, a definitive value-for-money assessment is difficult, but the scale of the award warrants close scrutiny of cost controls.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for open competition, indicating that the procurement process likely involved a limited number of bidders or a specific justification for restricting the field. This limited competition could potentially lead to higher prices than a fully open process, as the contractor may face less pressure to offer the most competitive rates. The specific reasons for the limited competition are not detailed, but it suggests that either only a few entities possessed the required capabilities or there were other strategic considerations guiding the procurement.

Taxpayer Impact: For taxpayers, limited competition can mean a higher likelihood of paying more than necessary for the services rendered. It reduces the government's ability to leverage a broad market to drive down costs.

Public Impact

The Department of Homeland Security benefits directly from the enhanced mail delivery services, supporting its operational needs. The contract facilitates the delivery of mail, a fundamental service for government operations and communication. The geographic impact is concentrated in Virginia, where the remote mail delivery sites are presumably located or serviced. The contract likely supports a workforce involved in mail handling, logistics, and site management within Virginia.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Time and Materials contract type poses a risk of cost overruns if not managed diligently.
Limited competition may have resulted in a higher price than could have been achieved through a broader solicitation.
The extended contract duration increases the exposure to potential inefficiencies or changes in service needs over time.
Lack of specific details on the services rendered makes it difficult to fully assess performance and value.

Positive Signals

The contract addresses a clear operational need for the Department of Homeland Security.
The award to a single contractor, Servicesource Inc., suggests a potentially streamlined management relationship.
The contract was awarded by the Office of Procurement Operations, indicating adherence to formal procurement procedures.

Sector Analysis

The Postal Service industry, classified under NAICS code 491110, encompasses establishments primarily engaged in operating postal services. While this contract is for 'remote mail delivery sites,' it falls within the broader ecosystem of mail handling and logistics. The federal government is a significant consumer of postal and related logistics services. This contract's value of $113.9M over nearly 8 years represents a substantial, albeit specific, investment within this sector, likely supporting specialized operational requirements beyond standard postal delivery.

Small Business Impact

The contract details indicate that small business participation was not a specific focus, as the 'sb' (small business) flag is false and there is no mention of small business set-asides. This suggests that the procurement was likely aimed at larger, established providers capable of meeting the specialized requirements. Consequently, there may be limited direct subcontracting opportunities for small businesses through this specific contract, potentially impacting the small business ecosystem in this niche service area.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security's contracting and program management offices. As a Time and Materials contract, rigorous monitoring of labor hours, rates, and material costs would be essential to ensure accountability and prevent overspending. Transparency regarding the specific services delivered and performance metrics would be key. While no specific Inspector General jurisdiction is mentioned, DHS has its own Office of Inspector General, which could investigate potential fraud, waste, or abuse related to this contract.

Related Government Programs

DHS Mail Operations
Federal Logistics Services
Government Mail Handling Contracts
Postal Service Support Contracts

Risk Flags

Potential for cost overruns due to Time and Materials contract type.
Risk of inflated pricing due to limited competition.
Extended contract duration may not align with evolving needs.
Lack of detailed service scope hinders performance assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $113.9 million to SERVICESOURCE INC. DHS REMOTE MAIL DELIVERY SITE PROJECT.

Who is the contractor on this award?

The obligated recipient is SERVICESOURCE INC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Office of Procurement Operations).

What is the total obligated amount?

The obligated amount is $113.9 million.

What is the period of performance?

Start: 2007-09-30. End: 2015-09-30.

What specific services are included under the 'DHS REMOTE MAIL DELIVERY SITE PROJECT' and how are they measured?

The provided data does not detail the specific services encompassed by the 'DHS REMOTE MAIL DELIVERY SITE PROJECT.' Typically, such projects could involve the establishment, operation, and maintenance of facilities for receiving, sorting, and dispatching mail, potentially in locations not served by traditional postal infrastructure. Performance metrics would likely focus on delivery timeliness, security of mail handling, operational uptime of the sites, and adherence to any specific handling protocols mandated by DHS. Without access to the contract's statement of work, a precise understanding of services and their measurement remains elusive.

How does the $113.9M contract value compare to similar federal mail delivery or logistics contracts?

Comparing the $113.9M value of this DHS contract to similar federal mail delivery or logistics contracts is difficult without more specific details on the scope of services. Federal spending on logistics and mail services varies widely based on agency needs, geographic reach, and the complexity of operations. Contracts for large-scale mail processing, transportation, or specialized secure delivery can reach tens or hundreds of millions of dollars. However, the 'remote mail delivery site' aspect suggests a potentially niche requirement. To provide a meaningful comparison, one would need to identify contracts with similar service descriptions, durations, and agency focuses.

What are the primary risks associated with a Time and Materials contract of this magnitude and duration?

The primary risks associated with a Time and Materials (T&M) contract of $113.9M over nearly 8 years are cost overruns and a lack of defined scope leading to potential inefficiencies. T&M contracts pay the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. Without stringent oversight, contractors may not be incentivized to control costs or complete tasks efficiently, as their profit is tied to the time and resources expended. For a contract of this size and duration, the potential for costs to escalate beyond initial estimates is significant if not actively managed through detailed tracking, regular audits, and clear performance expectations.

What is the historical spending pattern for remote mail delivery services by DHS or similar agencies?

The provided data does not include historical spending patterns for remote mail delivery services by DHS or similar agencies. To analyze this, one would need to access historical contract databases (like FPDS or USASpending.gov) and search for relevant keywords (e.g., 'mail delivery,' 'logistics,' 'remote sites,' 'DHS') across multiple fiscal years. Understanding historical spending would reveal trends in contract values, competition levels, and the duration of such services, providing context for the current $113.9M award. It could indicate whether this is a new initiative, an expansion of existing services, or a continuation of a long-standing requirement.

What is the track record of Servicesource Inc. in performing large federal contracts, particularly in logistics or mail services?

The provided data identifies Servicesource Inc. as the contractor but does not offer details on their track record. A comprehensive assessment would require examining Servicesource Inc.'s past performance on federal contracts, looking at factors such as on-time delivery, quality of service, contract modifications, and any past disputes or terminations. Specifically, their experience with similar-sized contracts, logistics, or mail-related services would be crucial. Information on their financial stability and capacity to manage a contract of this scale ($113.9M over nearly 8 years) would also be important for evaluating their reliability.

Given the limited competition, what mechanisms are in place to ensure fair pricing and prevent contractor overcharging?

With limited competition, ensuring fair pricing requires robust government oversight and negotiation. Mechanisms typically include detailed cost analysis of the contractor's proposed pricing, including labor rates, overhead, and material costs. The government may also conduct market research to establish independent government cost estimates (IGCEs) to benchmark the contractor's proposal. Regular audits of invoices, strict adherence to contract terms, and potentially incorporating price adjustment clauses tied to market indices or performance metrics can help mitigate overcharging risks. Strong contract administration by the agency is paramount.

Industry Classification

NAICS: Transportation and Warehousing › Postal Service › Postal Service

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › ADMINISTRATIVE SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 6295 EDSALL RD STE 175, ALEXANDRIA, VA, 22312

Business Categories: AbilityOne Program Participant, Category Business, Nonprofit Organization, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $140,726,580

Exercised Options: $113,942,335

Current Obligation: $113,884,761

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline