DoD's $18.4M elevator maintenance contract awarded to TK Elevator Corporation shows fair value over a decade

Contract Overview

Contract Amount: $18,444,509 ($18.4M)

Contractor: TK Elevator Corporation

Awarding Agency: Department of Defense

Start Date: 2007-10-25

End Date: 2017-08-02

Contract Duration: 3,569 days

Daily Burn Rate: $5.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TAS::17 1106::TAS ELEVATOR MAINTENANCE AND REPAIR AT VARIOUS LOCATIONS IN SOUTHERN CALIFORNIA

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92132

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $18.4 million to TK ELEVATOR CORPORATION for work described as: TAS::17 1106::TAS ELEVATOR MAINTENANCE AND REPAIR AT VARIOUS LOCATIONS IN SOUTHERN CALIFORNIA Key points: 1. Contract value of $18.4 million over 10 years suggests a steady, albeit significant, annual expenditure for elevator services. 2. The contract was awarded through full and open competition, indicating a robust market for elevator maintenance services. 3. The duration of the contract (over 9 years) allowed for consistent service delivery and potential for economies of scale. 4. The firm-fixed-price structure likely provided cost certainty for the government, shifting performance risk to the contractor. 5. The award to a single contractor, TK Elevator Corporation, over an extended period warrants scrutiny for potential long-term price impacts. 6. The absence of small business set-aside suggests the primary contractors were likely large, established entities in the elevator industry.

Value Assessment

Rating: good

The contract's total value of $18.4 million over nearly 10 years averages to approximately $1.84 million annually. This figure appears reasonable for comprehensive elevator maintenance and repair services across multiple Department of Defense locations in Southern California. Benchmarking against similar large-scale, long-term government maintenance contracts suggests that this annual spend is within expected parameters for specialized industrial equipment upkeep. The firm-fixed-price nature of the contract also implies that the government secured predictable costs, which is a positive indicator of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, suggesting that multiple vendors were invited to bid. The presence of 3 bids indicates a competitive environment, though the exact number of interested parties could have been higher. A competitive process generally leads to better price discovery and ensures that the government receives offers from a range of qualified providers. The fact that the award went to a single entity, TK Elevator Corporation, over the long term, however, might suggest consolidation or a strong market position of the awarded vendor.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down prices through market forces. It ensures that government funds are used efficiently by selecting the most cost-effective and technically capable offer. This process minimizes the risk of overpayment and promotes a healthy competitive landscape for future procurements.

Public Impact

Military personnel and civilian staff at various Department of Defense facilities in Southern California benefit from reliable elevator operations, ensuring accessibility and operational efficiency. Essential maintenance and repair services for critical infrastructure are provided, preventing downtime and ensuring the safety of building occupants. The contract supports the operational readiness of military installations by maintaining key building systems. Geographic impact is concentrated in Southern California, affecting multiple DoD sites within the region. The contract likely supports a workforce of skilled technicians and maintenance personnel employed by TK Elevator Corporation and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term contract duration (nearly 10 years) may limit opportunities for new entrants or smaller firms to compete for these services.
Firm-fixed-price contracts can sometimes lead to contractors cutting corners on quality if not adequately monitored, though this is a general risk.
Reliance on a single vendor for an extended period could lead to complacency or reduced incentive for innovation if not managed proactively.

Positive Signals

Full and open competition ensures a broad base of potential bidders, promoting market fairness.
The firm-fixed-price contract provides budget certainty for the government, protecting against cost overruns.
The contract's long duration allows for specialized knowledge development and consistent service quality from the awarded contractor.
Awarding to a known entity like TK Elevator Corporation, a major player, suggests a level of confidence in their capability to perform.

Sector Analysis

The elevator maintenance and repair industry is a specialized segment within the broader industrial machinery and equipment services sector. This contract falls under NAICS code 811310, covering commercial and industrial machinery repair. The market includes global manufacturers and specialized service providers. Government contracts for such services are significant, often awarded through competitive bidding processes to ensure reliability and cost-effectiveness for critical infrastructure maintenance. Spending benchmarks for similar large-scale maintenance contracts can vary widely based on the number and complexity of assets, but annual expenditures in the low millions are common for extensive portfolios.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and the 'sb' field is false. This suggests that the procurement was likely aimed at larger, established firms with the capacity and resources to handle a contract of this scale and duration. While there's no explicit mention of subcontracting requirements for small businesses, it's common for large prime contractors to engage small businesses for specific components or services. However, the absence of a set-aside implies that the primary focus was on full and open competition, potentially favoring larger players in the elevator services market.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant Department of the Navy contracting activity. Performance monitoring, quality assurance checks, and invoice reviews are standard oversight mechanisms. Given the long duration and value, regular performance reviews and site inspections would be crucial. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

General Services Administration (GSA) Federal Supply Schedule (FSS) contracts for maintenance and repair services
Department of Defense facilities maintenance contracts
Commercial and Industrial Machinery Repair Services
Building Operations and Maintenance Contracts

Risk Flags

Long contract duration may limit future competition.
Potential for vendor lock-in with a single provider over an extended period.
Firm-fixed-price contracts require diligent oversight to ensure quality is maintained.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.4 million to TK ELEVATOR CORPORATION. TAS::17 1106::TAS ELEVATOR MAINTENANCE AND REPAIR AT VARIOUS LOCATIONS IN SOUTHERN CALIFORNIA

Who is the contractor on this award?

The obligated recipient is TK ELEVATOR CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $18.4 million.

What is the period of performance?

Start: 2007-10-25. End: 2017-08-02.

What is the historical spending trend for elevator maintenance and repair services by the Department of Defense?

Analyzing historical spending trends for elevator maintenance and repair by the Department of Defense (DoD) reveals a consistent need for these services across its vast infrastructure. While specific aggregate data for this niche service category can be challenging to isolate without detailed searches, the DoD annually awards billions of dollars for facilities maintenance and repair. Contracts like the one awarded to TK Elevator Corporation for $18.4 million over nearly a decade represent a significant, long-term investment in maintaining operational readiness. Spending in this area is influenced by the age and type of facilities, the number of elevators requiring upkeep, and the complexity of the systems. Trends often show steady or increasing expenditure as infrastructure ages and requires more intensive maintenance, or as new facilities are constructed. Competitive bidding processes are standard, aiming to secure cost-effective solutions, but the specialized nature of elevator maintenance can sometimes lead to fewer bidders for highly technical or geographically concentrated requirements.

How does the awarded price per year for this contract compare to industry benchmarks for similar elevator maintenance services?

The awarded contract totals $18.4 million over approximately 3,569 days (nearly 10 years), averaging roughly $1.84 million per year. To benchmark this against industry standards, one would typically compare it to the average annual cost per elevator or per facility for similar maintenance contracts. Factors influencing this benchmark include the type of elevators (e.g., passenger, freight, specialized), the scope of services (preventive maintenance, on-call repairs, modernization), the geographic location, and the service provider's reputation and overhead. For large portfolios of elevators across multiple sites, an annual cost in the low millions is not unusual. However, without specific details on the number of elevators, their condition, and the exact service level agreements, a precise comparison is difficult. Generally, firm-fixed-price contracts for extensive maintenance aim for cost efficiencies, and this average annual spend appears within a plausible range for a large government contract of this nature, assuming a substantial number of elevators are covered.

What are the potential risks associated with a single contractor holding a long-term contract for elevator maintenance?

A significant risk associated with a single contractor holding a long-term contract, such as this nearly decade-long agreement, is the potential for reduced price competition over time. Once established, the contractor may have less incentive to offer aggressive pricing in subsequent periods or renewals if re-competition is not robust. There's also a risk of vendor lock-in, where the government becomes highly dependent on the incumbent's specific systems, knowledge, and parts, making it difficult and costly to switch providers. Performance complacency is another concern; if oversight is lax, the contractor might reduce service quality or responsiveness to maximize profits. Furthermore, unforeseen technological advancements in elevator maintenance could be slower to be adopted if the incumbent contractor is not incentivized to innovate. Finally, the long duration might not adequately reflect current market rates, potentially leading to overpayment if market prices have decreased.

How effective has TK Elevator Corporation been in fulfilling similar government contracts in the past?

Assessing the past performance of TK Elevator Corporation (formerly Thyssenkrupp Elevator) on similar government contracts is crucial for understanding their reliability and capability. TK Elevator is a major global player in the elevator industry, suggesting they possess the scale and expertise for large contracts. Government contract databases often contain performance records, past performance evaluations, and any disputes or contract terminations. While this specific contract award data doesn't detail past performance metrics, a review of their broader federal contract history would reveal their track record with agencies like the Department of Defense, GSA, or others. Positive indicators would include a history of timely completion, adherence to specifications, and minimal contract disputes. Conversely, a history of performance issues, overpricing, or litigation would raise concerns about their suitability for long-term, high-value agreements. Without direct access to detailed performance reports for TK Elevator's prior government work, a definitive statement on their effectiveness is limited.

What is the typical duration for government contracts of this nature (industrial equipment maintenance)?

The typical duration for government contracts involving industrial equipment maintenance, such as elevator systems, can vary significantly but often falls into several categories. Short-term contracts might be for specific repair jobs or initial installations, lasting months. More common are base periods of one to five years, often with multiple option periods that, if exercised, can extend the total contract performance time considerably. Contracts like the one awarded to TK Elevator Corporation, spanning nearly ten years (including the base and potential option periods implied by the award date range), are considered long-term. These extended durations are often chosen for services requiring specialized knowledge, consistent upkeep, and where establishing a stable vendor relationship offers economies of scale or ensures continuity of operations. However, the Federal Acquisition Regulation (FAR) generally favors shorter contract durations to allow for more frequent re-competition and to adapt to changing market conditions and technological advancements, unless specific justifications for longer terms exist.

Industry Classification

NAICS: Other Services (except Public Administration) › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6247306R0013

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: TK Elevator Americas Corporation (UEI: 019563621)

Address: 1965 GILLESPIE WAY STE 101, EL CAJON, CA, 92020

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $37,929,957

Exercised Options: $27,559,612

Current Obligation: $18,444,509

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline