State Department's $145M Japan Guard Services Contract Awarded to DAIWA KENSOSHA KK

Contract Overview

Contract Amount: $14,487,593 ($14.5M)

Contractor: Daiwa Kensosha KK

Awarding Agency: Department of State

Start Date: 2003-11-01

End Date: 2010-01-31

Contract Duration: 2,283 days

Daily Burn Rate: $6.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: LOCAL GUARD SERVICES FOR THE U.S. GOVERNMENT PREMESIS THROUGHOUT JAPAN WITH FOUR (4) OPTION YEARS

Plain-Language Summary

Department of State obligated $14.5 million to DAIWA KENSOSHA KK for work described as: LOCAL GUARD SERVICES FOR THE U.S. GOVERNMENT PREMESIS THROUGHOUT JAPAN WITH FOUR (4) OPTION YEARS Key points: 1. Contract awarded through full and open competition, suggesting a robust market for security services in Japan. 2. The contract spans over 7 years, indicating a long-term need for security services at U.S. government premises. 3. The use of Time and Materials pricing may present cost control challenges if not closely monitored. 4. The award to a single contractor, DAIWA KENSOSHA KK, warrants scrutiny for potential performance and pricing risks. 5. The NAICS code 561612 points to a specialized service sector with established industry standards. 6. The contract's duration and value suggest a significant operational footprint for the awarded firm.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the scope of services and locations covered. However, the total value of approximately $145 million over a period of roughly 7 years (including option years) suggests a substantial investment in security. The Time and Materials (T&M) pricing structure, while flexible, can lead to cost overruns if not managed diligently. Comparing this to similar large-scale security contracts for U.S. government facilities abroad would provide a clearer picture of value for money. The absence of a specific Product Service Code (PSC) makes direct comparison difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit offers. This suggests a competitive bidding process was conducted. The data indicates 6 bids were received, which is a moderate level of competition for a contract of this size and scope. A higher number of bidders generally leads to better price discovery and potentially lower costs for the government. The fact that only one award was made implies that DAIWA KENSOSHA KK's proposal was deemed the most advantageous.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, driving down prices and ensuring the government receives competitive rates. The presence of 6 bidders suggests that taxpayers likely benefited from a more cost-effective outcome than would have occurred under a sole-source or limited competition scenario.

Public Impact

U.S. government facilities in Japan benefit from continuous security guard services. The contract ensures the safety and security of personnel and assets at diplomatic and other government installations. Local Japanese workforce is likely employed to provide these security services, contributing to the local economy. The services provided are critical for maintaining diplomatic relations and operational continuity in a foreign country.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing can lead to unpredictable costs if not managed effectively.
Long contract duration increases the risk of contractor complacency or performance degradation over time.
Award to a single contractor for a large geographic area may limit flexibility and responsiveness.
Limited information on specific performance metrics makes it difficult to assess contractor effectiveness.

Positive Signals

Awarded through full and open competition, indicating a competitive process.
Multiple bids received (6) suggest market interest and potential for competitive pricing.
Contract addresses a critical need for security at U.S. government premises.
Long-term contract provides stability for service delivery.

Sector Analysis

The security services industry is a significant sector supporting government operations globally. NAICS code 561612, 'Security Guards and Patrol Services,' encompasses a wide range of protective services. This contract falls within the broader government contracting landscape, where security is a perennial requirement. The market for such services in a key geopolitical region like Japan is substantial, with numerous domestic and international providers. Benchmarking this contract's value against similar large-scale security contracts for U.S. embassies or military installations in other high-cost regions would offer further context.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific benefits for the small business ecosystem stemming from this particular award. The focus is likely on larger, established security firms capable of managing extensive operations across multiple locations.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting officers and program managers. Given the nature of security services, regular performance reviews, site inspections, and audits would be expected to ensure compliance with contract terms and service level agreements. The contract's duration and value suggest that it would likely be subject to oversight from relevant Inspector General offices to ensure accountability and prevent fraud, waste, and abuse. Transparency would be facilitated through contract award databases and reporting requirements.

Related Government Programs

Department of State Security Services
Overseas Security Contracts
Government Facility Security
Guard Services Contracts
International Security Support

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Risk of performance degradation over a long contract duration.
Limited competition information beyond the number of bidders.
Lack of detailed performance metrics in the provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $14.5 million to DAIWA KENSOSHA KK. LOCAL GUARD SERVICES FOR THE U.S. GOVERNMENT PREMESIS THROUGHOUT JAPAN WITH FOUR (4) OPTION YEARS

Who is the contractor on this award?

The obligated recipient is DAIWA KENSOSHA KK.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $14.5 million.

What is the period of performance?

Start: 2003-11-01. End: 2010-01-31.

What is the historical spending pattern for security services at U.S. government premises in Japan?

Analyzing historical spending on security services for U.S. government premises in Japan requires access to detailed procurement data over multiple fiscal years. Without specific historical data for this contract or similar contracts managed by the Department of State in Japan, it's difficult to establish a precise pattern. However, it is reasonable to assume that security needs are consistent, implying a steady or gradually increasing expenditure trend, influenced by geopolitical factors, inflation, and evolving security threats. The current contract's value of approximately $145 million over 7 years suggests an average annual spend of around $20 million. Comparing this average to previous contracts would reveal whether spending has increased, decreased, or remained stable.

How does the awarded price per year compare to industry benchmarks for similar security services in Japan?

Determining the precise price per year and comparing it to industry benchmarks is challenging without a detailed breakdown of services, personnel hours, and specific security measures included in the contract. The contract is valued at approximately $145 million over a duration of about 7 years (2283 days, or roughly 6.25 years), averaging around $23.2 million annually. Industry benchmarks for security services in Japan vary significantly based on the type of security (e.g., armed vs. unarmed guards, specialized surveillance), the number of personnel, and the geographic coverage. To perform a true benchmark, one would need to compare the cost per guard hour, the cost per square foot protected, or the cost per incident response against prevailing market rates for comparable government or commercial contracts in Japan. Given the 'full and open competition' and 6 bids, the price is likely competitive, but specific cost-effectiveness requires deeper analysis.

What are the key performance indicators (KPIs) used to evaluate DAIWA KENSOSHA KK's performance under this contract?

Key Performance Indicators (KPIs) for a contract of this nature typically focus on the effectiveness and reliability of the security services provided. While specific KPIs are not detailed in the provided data, common metrics include response times to security incidents, guard presence and punctuality, adherence to post orders, incident reporting accuracy and timeliness, and overall effectiveness in preventing unauthorized access or security breaches. The Department of State would likely have established specific Service Level Agreements (SLAs) with measurable targets for these KPIs. Performance evaluations would involve regular reporting from the contractor and potentially independent assessments or audits by government representatives to ensure compliance and identify areas for improvement.

What is the track record of DAIWA KENSOSHA KK in providing security services to the U.S. government or other large organizations?

The provided data identifies DAIWA KENSOSHA KK as the contractor but does not include specific details about their track record. To assess their performance history, one would need to research past U.S. government contracts awarded to this company, looking at factors such as contract values, duration, performance reviews, any past disputes or contract terminations, and client feedback. Information might be available through public databases like SAM.gov or through industry-specific reporting. A strong track record with similar large-scale, long-term security contracts, particularly for government entities or in international settings, would indicate a lower risk associated with this award. Conversely, a history of performance issues or contract disputes would raise concerns.

What are the potential risks associated with the Time and Materials (T&M) contract type for this security service?

The primary risk associated with a Time and Materials (T&M) contract type for security services is the potential for cost overruns and a lack of definitive cost control. Unlike fixed-price contracts, T&M contracts reimburse the contractor for the actual costs of labor (at specified hourly rates) and materials, plus a fee or profit. If the scope of work expands, or if labor hours are not efficiently managed, the total cost to the government can escalate beyond initial estimates. For this contract, it means that the $145 million ceiling could potentially be exceeded if not closely monitored. Effective oversight, detailed timesheet verification, and clear definitions of 'materials' are crucial to mitigate these risks and ensure value for money.

How does the geographic scope (Japan) influence the cost and complexity of this security contract?

Operating security services across Japan for U.S. government premises introduces significant geographic and logistical complexities that directly influence cost. These include the need for personnel recruitment and training compliant with both U.S. and Japanese regulations, managing multiple sites potentially spread across different cities or regions, transportation costs for personnel and equipment, and potentially higher labor costs due to the cost of living in Japan and the specialized nature of security work. Cultural nuances and language barriers can also add complexity to management and communication. The contract's value reflects these factors, as providing consistent, high-quality security across a foreign nation requires substantial investment in infrastructure, management, and personnel.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Investigation and Security Services › Security Guards and Patrol Services

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 6

Pricing Type: TIME AND MATERIALS (Y)

Contractor Details

Address: 6-1-2, KITANAGASADORI, CH, KOBE

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $26,209,556

Exercised Options: $26,209,556

Current Obligation: $14,487,593

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline