DoD's $149M Facilities Support Contract with DZSP 21 LLC Awarded in 2004 Faces Scrutiny

Contract Overview

Contract Amount: $290,499,360 ($290.5M)

Contractor: Dzsp 21 LLC

Awarding Agency: Department of Defense

Start Date: 2004-12-20

End Date: 2010-12-31

Contract Duration: 2,202 days

Daily Burn Rate: $131.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: 200503!075281!1700!N62742!NAV FACILITIES ENGINEERING COMMA!N6274205C3501 !A!N! !N! ! !20041220!20051231!149388758!149388758!149388758!N!DZSP 21 LLC !1818 MARKET ST, 22ND FLR !PHILADELPHIA !PA!19103!99010!010!66!GUAM !GUAM !* !+000034091248!N!N!000034091248!S216!FACILITIES OPERATIONS SUPPORT SERVICES !S1 !SERVICES !000 !* !561210!E! !3! ! ! ! ! !20200930!B! ! !A! !A!U!R!2!007!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! !1700!N62742!0001! !

Place of Performance

Location: TAMUNING, GUAM County, GUAM, 96913

Plain-Language Summary

Department of Defense obligated $290.5 million to DZSP 21 LLC for work described as: 200503!075281!1700!N62742!NAV FACILITIES ENGINEERING COMMA!N6274205C3501 !A!N! !N! ! !20041220!20051231!149388758!149388758!149388758!N!DZSP 21 LLC !1818 MARKET ST, 22ND FLR !PHILADELPHIA !PA!19103!99010!010!66!GUAM !GUAM… Key points: 1. The contract, awarded in 2004 and ending in 2010, was for facilities operations support services. 2. Awarded to DZSP 21 LLC, the contract's total value was $149,388,758. 3. Competition was full and open, but the contract type (Cost Plus Award Fee) can incentivize cost overruns. 4. The contract was awarded to a large business, with no indication of small business participation. 5. The primary risk lies in the potential for cost escalation due to the contract type and the extended duration.

Value Assessment

Rating: questionable

The contract's Cost Plus Award Fee structure, while intended to incentivize performance, can lead to higher costs compared to fixed-price contracts. Without detailed cost breakdowns or benchmarks for similar services in Guam, assessing the value is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, suggesting a competitive bidding process. However, the Cost Plus Award Fee structure may have allowed for less price discipline than other contract types.

Taxpayer Impact: The potential for cost overruns inherent in Cost Plus Award Fee contracts represents a risk to taxpayer funds, especially over a six-year period.

Public Impact

Taxpayers funded extensive facilities operations support services in Guam over a six-year period. The contract supported military readiness and operations by ensuring facility functionality. The choice of contract type raises questions about cost efficiency and potential for contractor profit maximization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contract type
Long contract duration (6 years)
Lack of specific cost benchmarks for comparison

Positive Signals

Full and open competition
Contract supported critical military infrastructure

Sector Analysis

Facilities Support Services (NAICS 561210) is a broad category encompassing maintenance, operation, and management of facilities. Spending in this sector can vary significantly based on location, scope, and contract type. This contract's value is substantial for its duration and location.

Small Business Impact

The data indicates this contract was awarded to a large business (DZSP 21 LLC) and does not mention any small business set-asides or subcontracting. This suggests limited direct benefit to small businesses through this specific award.

Oversight & Accountability

The contract's long duration and Cost Plus Award Fee structure warrant oversight to ensure costs remained reasonable and performance objectives were met. Without specific oversight reports, it's difficult to assess accountability.

Related Government Programs

Facilities Support Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Potential for cost overruns due to CPA structure
Long contract duration may reduce flexibility and increase risk
Lack of transparency in award fee determination
No apparent small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $290.5 million to DZSP 21 LLC. 200503!075281!1700!N62742!NAV FACILITIES ENGINEERING COMMA!N6274205C3501 !A!N! !N! ! !20041220!20051231!149388758!149388758!149388758!N!DZSP 21 LLC !1818 MARKET ST, 22ND FLR !PHILADELPHIA !PA!19103!99010!010!66!GUAM !GUAM !* !+000034091248!N!N!000034091248!S216!FACILITIES OPERATIONS SUPPORT SERVICES !S1 !SERVICES !000 !* !561210!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is DZSP 21 LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $290.5 million.

What is the period of performance?

Start: 2004-12-20. End: 2010-12-31.

Was the Cost Plus Award Fee structure justified for facilities support services in Guam, and did it lead to demonstrably better performance than a fixed-price alternative?

The justification for a Cost Plus Award Fee (CPA) contract typically hinges on the difficulty of defining performance standards precisely or the need to incentivize exceptional performance in complex, evolving environments. For facilities support, fixed-price contracts are often feasible. Without specific documentation, it's unclear if the CPA structure here was truly necessary or if it primarily served to increase potential profit margins for the contractor at taxpayer expense.

What were the specific performance metrics tied to the award fee, and how were they measured to ensure fair compensation and prevent contractor complacency?

Award fee contracts require clearly defined performance metrics and an objective evaluation process to determine the fee. For this facilities support contract, metrics likely included response times, quality of maintenance, adherence to safety standards, and operational efficiency. The effectiveness of the award fee hinges on the rigor of the evaluation process and the transparency of how performance data translated into fee determination, ensuring the government received value for the fees paid.

How did the total contract cost compare to the initial estimate or budget, considering the Cost Plus Award Fee structure and the six-year performance period?

The total awarded amount was $149,388,758 over approximately six years. A Cost Plus Award Fee contract's final cost can fluctuate based on actual costs incurred plus the awarded fee. To assess value, a comparison against the initial estimate, budget, and potentially against similar contracts for facilities support in comparable geographic locations would be necessary to determine if the final cost was reasonable and justified.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 7

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 1818 MARKET ST, 22ND FLR, PHILADELPHIA, PA, 19103

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline