DoD's $42.8M Guam lodging contract awarded to local association raises value questions

Contract Overview

Contract Amount: $42,822,410 ($42.8M)

Contractor: Guam Hotel and Restaurant ASS Ociation

Awarding Agency: Department of Defense

Start Date: 2020-04-01

End Date: 2020-06-24

Contract Duration: 84 days

Daily Burn Rate: $509.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LODGING, MEALS, AND LAUNDRY

Place of Performance

Location: TAMUNING, GUAM County, GUAM, 96913

Plain-Language Summary

Department of Defense obligated $42.8 million to GUAM HOTEL AND RESTAURANT ASS OCIATION for work described as: LODGING, MEALS, AND LAUNDRY Key points: 1. Contract awarded to a single entity without competition, potentially limiting price discovery. 2. High per-unit cost suggests potential for overpayment compared to market alternatives. 3. Short contract duration (84 days) may indicate urgent or temporary need. 4. Sole-source award to a local association could reflect specific regional needs or limited market options. 5. Lack of competition increases risk of suboptimal pricing and service delivery. 6. Firm-fixed-price contract type shifts risk to the contractor, but initial pricing is key.

Value Assessment

Rating: questionable

The contract's value is difficult to fully assess due to the lack of competitive bidding. However, the reported average daily rate of approximately $509,791 per day (based on total award and duration) appears high for lodging, meals, and laundry services, especially when considering the relatively short contract period. Without comparable contract data or market benchmarks for Guam, it's challenging to definitively state if this represents good value. The absence of competition is a significant red flag for potential overpricing.

Cost Per Unit: $509,791 per day (estimated average)

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to the Guam Hotel and Restaurant Association. The data indicates no other bidders were considered. This approach bypasses the standard competitive procurement process, which typically involves soliciting offers from multiple vendors. While sole-source awards can be justified under specific circumstances (e.g., urgent need, only one responsible source), the lack of competition here raises concerns about whether the government explored all available options to secure the best possible price and terms.

Taxpayer Impact: Awarding contracts without competition generally leads to higher costs for taxpayers as it removes the incentive for vendors to offer their most competitive pricing. This can result in the government paying more than necessary for goods and services.

Public Impact

Service members and personnel stationed in Guam benefit from essential lodging, meal, and laundry services. The contract supports the operational readiness of the Department of the Navy in the Indo-Pacific region. Local businesses and employees associated with the Guam Hotel and Restaurant Association likely benefited from the contract revenue. The geographic impact is concentrated on Guam, providing critical support infrastructure in a strategic location.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may have resulted in inflated costs for taxpayers.
Sole-source award limits transparency and opportunities for other qualified vendors.
High per-day cost warrants further investigation into the specific services provided and their necessity.

Positive Signals

Contract awarded to a local association, potentially supporting the regional economy.
Firm-fixed-price contract shifts some financial risk to the contractor.
Services provided are essential for personnel support in a key strategic location.

Sector Analysis

The hospitality and lodging sector, particularly in strategic locations like Guam, is crucial for supporting military operations. This contract falls under the broader hospitality industry (NAICS code 721110). While specific market size data for military-specific lodging and support services in Guam is not readily available, the presence of a major military installation necessitates robust support infrastructure. Benchmarking this contract against similar government lodging contracts in other high-cost or remote locations would be necessary for a comprehensive value assessment.

Small Business Impact

The contract was awarded to the Guam Hotel and Restaurant Association, which may represent a collective of businesses rather than a single small business. There is no indication of a small business set-aside or specific subcontracting requirements for small businesses within the provided data. The impact on the broader small business ecosystem is unclear without knowing the composition of the association and its members.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and financial management divisions. Given the sole-source nature and the significant dollar amount, enhanced scrutiny from the Naval Inspector General or potentially the Government Accountability Office (GAO) might be warranted if concerns about value or process arise. Transparency is limited due to the lack of a competitive bidding process, making public oversight more challenging.

Related Government Programs

Department of Defense Lodging Contracts
Military Base Support Services
Government Hospitality Contracts
Guam Defense Infrastructure

Risk Flags

Sole-source award without clear justification
Potentially high per-unit cost
Lack of competitive bidding limits price discovery

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.8 million to GUAM HOTEL AND RESTAURANT ASS OCIATION. LODGING, MEALS, AND LAUNDRY

Who is the contractor on this award?

The obligated recipient is GUAM HOTEL AND RESTAURANT ASS OCIATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $42.8 million.

What is the period of performance?

Start: 2020-04-01. End: 2020-06-24.

What specific services were included in the $42.8 million contract for lodging, meals, and laundry?

The provided data indicates the contract covered 'LODGING, MEALS, AND LAUNDRY'. However, the specifics of the service levels, quality standards, and quantities for each component are not detailed in the summary. For lodging, this could range from basic barracks-style accommodation to hotel-like rooms. Meal provisions might include dining facility access or per diem allowances. Laundry services could be individual or bulk. Understanding the exact scope and quality of these services is crucial for a thorough value assessment, as the $42.8 million total award over 84 days suggests a high per-unit cost that needs justification based on the service delivery.

Why was this contract awarded on a sole-source basis to the Guam Hotel and Restaurant Association?

The provided data simply states the contract was 'NOT COMPETED' and awarded to the 'GUAM HOTEL AND RESTAURANT ASS OCIATION'. Without further documentation or justification from the Department of the Navy, the specific reasons for the sole-source award remain unclear. Potential justifications could include an urgent and compelling need where only this association could meet the requirement in the timeframe, or a determination that the association was the only responsible source capable of providing the necessary services in Guam. However, the lack of competition raises concerns about whether alternative, potentially more cost-effective, solutions were adequately explored.

How does the per-day cost of this contract compare to typical government lodging and meal per diems?

The estimated average daily cost is approximately $509,791. This figure, when divided by the number of personnel served (which is not provided), would give a per-person daily rate. However, the total award divided by the contract duration (84 days) yields a very high daily operational cost. This is significantly higher than standard per diem rates for lodging and meals provided to federal employees or military personnel in most locations. For context, typical CONUS per diem rates for lodging and meals are often in the range of $150-$300 per day. The high figure here suggests either a very large number of personnel being served, exceptionally high service standards, or potentially inflated pricing due to the sole-source nature and location.

What is the track record of the Guam Hotel and Restaurant Association in handling large government contracts?

The provided data identifies the Guam Hotel and Restaurant Association as the contractor. Information regarding their specific track record with large government contracts, particularly of this magnitude ($42.8 million), is not included. As an association, it likely represents multiple member hotels and restaurants. Its capacity to manage such a large, consolidated contract, including performance, quality control, and financial administration, would be a key factor in assessing performance risk. Further investigation into the association's past performance, especially with government entities, would be necessary.

What are the potential risks associated with a sole-source award for essential services like lodging and meals?

Sole-source awards carry several inherent risks. Primarily, the absence of competition can lead to higher prices than might be achieved through a competitive process, resulting in less value for taxpayer money. It also reduces transparency, making it harder to verify that the price is fair and reasonable. Furthermore, without the pressure of competition, the contractor may have less incentive to innovate or maintain high service quality. There's also a risk that the government may not have fully identified or considered alternative solutions that could have been more efficient or effective. For essential services, a sole-source award can also create dependency on a single provider, which can be problematic if performance issues arise.

Are there any indications of urgency or specific circumstances that might justify this sole-source award?

The provided data does not explicitly state the justification for the sole-source award. The contract duration is relatively short (84 days, approximately 3 months), which could suggest a temporary or urgent need, such as supporting a specific operation, exercise, or unforeseen circumstances (e.g., natural disaster response, sudden deployment). However, without official documentation detailing the justification (e.g., a Justification and Approval document), it is impossible to confirm the urgency or specific circumstances that necessitated bypassing the competitive process.

Industry Classification

NAICS: Accommodation and Food Services › Traveler Accommodation › Hotels (except Casino Hotels) and Motels

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRAVEL, LODGING, RECRUITMENT SVCS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 177 ILIPOG DRIVE STE 202, TAMUNING, GU, 96913

Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $42,822,410

Exercised Options: $42,822,410

Current Obligation: $42,822,410

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $43,307,857

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline