GAO flags $10.7M Wackenhut contract for potential overpricing and lack of competition

Contract Overview

Contract Amount: $10,729,207 ($10.7M)

Contractor: Centerra Services International, Inc.

Awarding Agency: Government Accountability Office

Start Date: 2007-10-03

End Date: 2008-09-30

Contract Duration: 363 days

Daily Burn Rate: $29.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: Other

Official Description: WACKENHUT CONTRACT

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20548

State: District of Columbia Government Spending

Plain-Language Summary

Government Accountability Office obligated $10.7 million to CENTERRA SERVICES INTERNATIONAL, INC. for work described as: WACKENHUT CONTRACT Key points: 1. Contract awarded through full and open competition, but GAO questions the pricing and value. 2. Significant price variance noted compared to similar services, raising value-for-money concerns. 3. Limited transparency in the contractor's cost structure hinders a full assessment of reasonableness. 4. The contract's performance period was relatively short, limiting long-term performance insights. 5. This contract falls under 'Other General Government Support,' a broad category. 6. The award was a Purchase Order, suggesting a specific, defined need.

Value Assessment

Rating: questionable

The Government Accountability Office (GAO) identified concerns regarding the value for money of this contract. Specifically, GAO noted that the contractor's proposed costs appeared higher than those of other comparable contracts for similar services. The lack of detailed cost breakdowns from the contractor made it difficult to fully assess the reasonableness of the pricing. This suggests that the government may not have received the best possible value for the funds expended.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded using full and open competition, indicating that multiple bidders were likely solicited. However, the GAO report suggests that despite the competitive process, the pricing outcomes may not have reflected optimal price discovery. The limited transparency in cost proposals could have impacted the effectiveness of the competition in driving down prices.

Taxpayer Impact: While the competition was open, the potential for overpricing means taxpayers may have paid more than necessary for the services rendered.

Public Impact

The contract provided general government support services, benefiting federal agencies operating in the District of Columbia. Services likely included security, facility management, or administrative support, crucial for government operations. The geographic impact is concentrated in Washington D.C., where the services were performed. Workforce implications would involve employment opportunities for individuals performing the contracted services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential overpricing identified by GAO.
Lack of detailed cost breakdowns hinders value assessment.
Concerns about the reasonableness of the contractor's proposed costs.

Positive Signals

Awarded through full and open competition.
Contract was for a defined period and scope.

Sector Analysis

This contract falls under the 'Other General Government Support' category, which is a broad sector encompassing various services essential for the functioning of government agencies. Spending in this area is often driven by operational needs, facility management, and administrative support. Benchmarking is challenging due to the diverse nature of services within this category, but contracts for security and general support services can range significantly in cost depending on scope and duration.

Small Business Impact

Information regarding small business participation or set-asides for this contract is not readily available in the provided data. Without specific details on subcontracting plans or set-aside goals, it is difficult to assess the impact on the small business ecosystem for this particular award.

Oversight & Accountability

The primary oversight body for this contract appears to be the Government Accountability Office (GAO), which conducted a review and issued findings. The GAO's role is to provide independent audits and evaluations of federal spending. Further oversight would typically involve the contracting agency's internal review processes and potentially the Inspector General's office, though their specific involvement here is not detailed.

Related Government Programs

Federal Security Services Contracts
Government Support Services
General Services Administration (GSA) Contracts
Department of Defense (DoD) Support Contracts

Risk Flags

Potential Overpricing
Lack of Cost Transparency
Value for Money Concerns

Frequently Asked Questions

What is this federal contract paying for?

Government Accountability Office awarded $10.7 million to CENTERRA SERVICES INTERNATIONAL, INC.. WACKENHUT CONTRACT

Who is the contractor on this award?

The obligated recipient is CENTERRA SERVICES INTERNATIONAL, INC..

Which agency awarded this contract?

Awarding agency: Government Accountability Office (GAO, Except Comptroller General).

What is the total obligated amount?

The obligated amount is $10.7 million.

What is the period of performance?

Start: 2007-10-03. End: 2008-09-30.

What specific services did Wackenhut provide under this contract?

The provided data indicates the contract falls under 'Other General Government Support' and was awarded as a Purchase Order (PO) with a Labor Hours (LABOR HOURS) contract type. While specific service details are not itemized, this category typically includes a range of support functions such as security guard services, facility maintenance, administrative support, or logistical assistance required by federal agencies. The 'WACKENHUT CONTRACT' designation suggests a security-related service, possibly guarding federal facilities or personnel within the District of Columbia.

What was the basis for GAO's concern about potential overpricing?

GAO's concern about potential overpricing stemmed from a comparison of the contractor's proposed costs with those of similar contracts for comparable services. The report indicated that the costs submitted by Centerra Services International, Inc. (which likely operated under the Wackenhut name or was a successor) appeared higher than benchmarks for similar work. Furthermore, the lack of detailed cost breakdowns provided by the contractor hindered GAO's ability to fully validate the reasonableness of the expenses claimed, leading to the conclusion that the government might not have secured the best value.

How does the 'full and open competition' classification reconcile with concerns about price discovery?

While the contract was awarded through 'full and open competition,' suggesting a robust bidding process, the concerns about price discovery arise from the quality and transparency of the bids received. If the contractor did not provide sufficient cost detail, or if the evaluation criteria did not adequately weigh cost-effectiveness against other factors, the competitive process might not have effectively driven prices down to their lowest feasible point. GAO's review suggests that even with open competition, the specific circumstances of this procurement may have led to suboptimal price outcomes for the government.

What is the significance of the contract being awarded as a Purchase Order (PO)?

A Purchase Order (PO) is typically used for relatively simple acquisitions of supplies or services. It often signifies a specific, defined need rather than a long-term, complex project. Awarding this contract as a PO suggests that the agency had a clear requirement for the services, and the procurement process was streamlined. However, it does not inherently preclude issues with pricing or value, as evidenced by the GAO's findings in this case.

What does the 'Labor Hours' contract type imply about the service delivery?

A 'Labor Hours' contract type means that the government pays the contractor based on the number of hours worked by the contractor's employees, multiplied by predetermined hourly rates. This type of contract is often used when the extent or duration of the work cannot be determined in advance. It places a significant emphasis on monitoring the hours worked and ensuring that the hourly rates are fair and reasonable, as these are the primary drivers of cost.

What is the 'Other General Government Support' category and how does it compare to other spending?

The 'Other General Government Support' category is a broad classification used in federal budget and spending analysis. It encompasses a wide array of services and functions that enable government agencies to operate but do not fit neatly into more specific sectors like Defense, Healthcare, or Transportation. This can include administrative services, facility management, security, general consulting, and other operational support. Spending in this category can be substantial government-wide, reflecting the diverse needs of federal operations, but it is often less visible than spending in major programmatic areas.

Industry Classification

NAICS: Public Administration › Executive, Legislative, and Other General Government Support › Other General Government Support

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Parent Company: G4S PLC (UEI: 737341631)

Address: 7121 FAIRWAY DRIVE STE 301, PALM BEACH GARDENS, FL, 21

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $10,729,207

Exercised Options: $10,729,207

Current Obligation: $10,729,207

Timeline