Guam Base Operations Support Services Contract Awarded to DZSP 21 LLC for Over $107 Million

Contract Overview

Contract Amount: $107,021,238 ($107.0M)

Contractor: Dzsp 21 LLC

Awarding Agency: Department of Defense

Start Date: 2016-07-01

End Date: 2017-06-30

Contract Duration: 364 days

Daily Burn Rate: $294.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: IGF::OT::IGF AWARD OF CONTRACT N62742-16-C-1130, GUAM BASE OPERATIONS SUPPORT SERVICES FOR THE JOINT REGION MARIANAS (JRM). OBLIGATION OF BASE PERIOD.

Place of Performance

Location: SANTA RITA, GUAM County, GUAM, 96915

Plain-Language Summary

Department of Defense obligated $107.0 million to DZSP 21 LLC for work described as: IGF::OT::IGF AWARD OF CONTRACT N62742-16-C-1130, GUAM BASE OPERATIONS SUPPORT SERVICES FOR THE JOINT REGION MARIANAS (JRM). OBLIGATION OF BASE PERIOD. Key points: 1. The contract value of over $107 million for a one-year period suggests a significant scope of services required for base operations. 2. The 'NOT COMPETED' status raises questions about the justification for not seeking multiple bids, potentially impacting price discovery. 3. The cost-plus-fixed-fee contract type indicates that costs are reimbursed, plus a fixed fee, which can incentivize cost control but also carries inherent risks. 4. The duration of 364 days for the base period is standard for initial contract awards, allowing for potential follow-on options. 5. The geographic location in Guam (ST: GU, SN: GUAM) points to strategic importance and potentially unique logistical challenges. 6. The primary NAICS code (561210) for Facilities Support Services aligns with the contract's stated purpose.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable Guam-based facilities support services contracts. The cost-plus-fixed-fee structure, while common for complex services, requires careful oversight to ensure costs are reasonable and the fixed fee is appropriate for the level of effort and risk. The absence of competition makes it difficult to assess if the pricing reflects market value or if taxpayers received the best possible deal. Further analysis of the contractor's proposed costs and the fixed fee against industry standards would be necessary for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, indicating that a full and open competition was not conducted. The specific justification for this sole-source award is not provided in the data. Typically, sole-source awards are made when only one responsible source can provide the required services. The lack of competition means that there were no other bidders to compare against, limiting the government's ability to leverage market forces to achieve the best price and terms.

Taxpayer Impact: The absence of competition means taxpayers may not have benefited from the cost savings that could arise from a competitive bidding process. Without multiple offers, there is a risk that the awarded price may be higher than what could have been achieved in a competitive environment.

Public Impact

The primary beneficiaries are the U.S. military personnel and operations supported by the comprehensive base operations services in Guam. Services delivered likely include facility maintenance, logistics, security, and other essential functions to ensure the smooth operation of Joint Region Marianas. The geographic impact is concentrated on Guam, a critical strategic location in the Indo-Pacific region. The contract supports a workforce involved in facilities management and support services, potentially including local hires and specialized personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
Cost-plus-fixed-fee contracts require robust oversight to prevent cost overruns and ensure efficiency.
The sole-source nature of the award necessitates a strong justification and transparency regarding the selection process.

Positive Signals

The contract addresses critical base operations support, ensuring readiness and functionality of military installations.
The award to DZSP 21 LLC, if they have a proven track record, suggests a level of confidence in their ability to perform these essential services.
The fixed fee component, if well-structured, can provide some cost predictability for the government.

Sector Analysis

The Facilities Support Services sector (NAICS 561210) encompasses a broad range of services essential for the operation and maintenance of buildings and infrastructure. This contract falls within the government services sub-sector, where large-scale support contracts are common for military bases and federal facilities. The market for these services is competitive, but specific geographic locations or specialized requirements can lead to less open competition. Comparable spending benchmarks would typically involve analyzing other large base operations contracts awarded by the Department of Defense in similar strategic locations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (SB: false) and does not appear to have specific subcontracting goals mentioned (SS: false). This suggests that the prime contractor, DZSP 21 LLC, is likely a larger entity capable of performing the extensive services required. The absence of small business set-asides means that opportunities for small businesses to participate in this specific contract as prime contractors are limited. However, the prime contractor may still engage small businesses for subcontracting, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Department of Defense. Given the significant value and the 'NOT COMPETED' status, robust oversight mechanisms are crucial. This would likely involve contract performance monitoring, financial audits, and adherence to the terms and conditions of the Cost Plus Fixed Fee agreement. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract. Transparency would depend on the public availability of the contract's justification for sole-source award and performance reports.

Related Government Programs

Base Operations Support Services
Facilities Maintenance Contracts
Department of Defense Support Services
Joint Region Marianas Operations
Guam Military Infrastructure Support

Risk Flags

Sole-source award without clear justification.
Potential for higher costs due to lack of competition.
Cost-plus-fixed-fee structure requires diligent oversight.
Limited transparency on contractor's past performance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $107.0 million to DZSP 21 LLC. IGF::OT::IGF AWARD OF CONTRACT N62742-16-C-1130, GUAM BASE OPERATIONS SUPPORT SERVICES FOR THE JOINT REGION MARIANAS (JRM). OBLIGATION OF BASE PERIOD.

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 $107.0 million.

What is the period of performance?

Start: 2016-07-01. End: 2017-06-30.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. However, the specific justification for this determination is not detailed. Typically, sole-source awards are made under circumstances such as urgent and compelling needs, unique capabilities of a single contractor, or when only one responsible source exists. Without the official justification document (e.g., a Justification and Approval or J&A), it is impossible to ascertain the precise reasons. This lack of transparency is a concern, as it prevents a thorough assessment of whether competition was genuinely impossible or if alternative approaches could have been considered to foster market competition and potentially achieve better value for the government.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar services, and what are the associated risks?

The Cost-Plus-Fixed-Fee (CPFF) contract type reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainties, making it suitable for complex services like base operations. Compared to fixed-price contracts, CPFF offers flexibility but shifts more cost risk to the government. The primary risk is that the contractor may have less incentive to control costs, as all allowable expenses are reimbursed. Effective oversight, detailed cost accounting, and clear performance metrics are essential to mitigate these risks and ensure the fixed fee remains appropriate for the effort and risk undertaken by the contractor.

What is the track record of DZSP 21 LLC in performing similar base operations support services, particularly in remote or strategic locations?

Information regarding DZSP 21 LLC's specific track record in performing similar base operations support services is not provided in the data snippet. To assess their capability and reliability, a review of their past performance on other government contracts, especially those involving facilities support, logistics, and security in challenging environments like Guam, would be necessary. This would typically involve examining past performance evaluations, any contract disputes or terminations, and their experience with similar contract types (e.g., CPFF). A strong performance history would provide greater confidence in their ability to successfully execute this significant contract.

What are the potential implications of awarding a large contract like this without competition on future market dynamics for base operations support in Guam?

Awarding a substantial contract like this on a sole-source basis can have several implications for future market dynamics. It may discourage other potential bidders from investing in capabilities for the Guam market if they perceive that opportunities are consistently awarded without full competition. This can lead to a less dynamic market, potentially reducing future competition and innovation. Furthermore, if DZSP 21 LLC becomes entrenched as the sole provider, it could create barriers to entry for new companies. Conversely, if the sole-source award was due to a unique, time-sensitive requirement, its impact might be limited. However, a pattern of non-competitive awards can signal a less accessible market.

How does the annual value of this contract compare to historical spending on base operations support in the region or for similar installations?

The annual value of this contract is approximately $107 million. To assess if this is comparable to historical spending, one would need to analyze past contracts for base operations support services at Joint Region Marianas or similar-sized military installations in the Pacific region. This would involve looking at contract awards over the past several years, noting any trends in contract values, scope of services, and contract types. Without this historical data, it's difficult to determine if $107 million represents an increase, decrease, or stable level of spending for these essential services. Such a comparison is crucial for understanding budget trends and identifying potential cost efficiencies or escalations.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6274216R1130

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 901 LINCOLN DR W STE 200, MARLTON, NJ, 08053

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

Financial Breakdown

Contract Ceiling: $107,021,238

Exercised Options: $107,021,238

Current Obligation: $107,021,238

Actual Outlays: $-13,278

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline