DoD's $11.5M Lab Testing Contract with Cogeco Shows Fair Value Amidst Limited Competition

Contract Overview

Contract Amount: $11,460,622 ($11.5M)

Contractor: Cogeco (private) Limited

Awarding Agency: Department of Defense

Start Date: 2007-06-01

End Date: 2012-11-30

Contract Duration: 2,009 days

Daily Burn Rate: $5.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LAB TESTING

Plain-Language Summary

Department of Defense obligated $11.5 million to COGECO (PRIVATE) LIMITED for work described as: LAB TESTING Key points: 1. Contract value appears reasonable given the duration and scope of lab testing services. 2. Competition was limited, raising questions about optimal price discovery for taxpayer funds. 3. The contract's fixed-price nature mitigates cost overrun risks. 4. Performance period spanned over five years, indicating a stable, long-term need. 5. This contract falls within the broader Defense Logistics Agency's support services sector. 6. No small business set-aside was utilized, suggesting larger prime contractors were involved.

Value Assessment

Rating: good

The contract's total value of approximately $11.5 million over five years suggests an average annual spend of $2.3 million. Benchmarking against similar large-scale, long-term lab testing contracts for the Department of Defense indicates this is within a reasonable range. The firm fixed-price structure further supports value for money by capping potential cost increases. While competition was not extensive, the pricing appears to have been negotiated effectively within the available market.

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. However, the data indicates only 3 bids were received. This suggests that while the process was open, the pool of qualified bidders for this specific type of specialized lab testing may have been limited, potentially impacting the intensity of price competition.

Taxpayer Impact: A limited number of bidders, even in an open competition, can sometimes lead to higher prices than a more crowded field. Taxpayers benefit from the assurance that the process was open, but the price achieved might not be the absolute lowest possible.

Public Impact

The Department of Defense benefits from reliable and consistent lab testing services essential for its operations. Services delivered include specialized testing crucial for defense readiness and equipment integrity. Geographic impact is national, supporting DoD facilities and personnel across various locations. Workforce implications include support for specialized technical roles within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders may have reduced competitive pressure on pricing.
Contract duration could potentially lock in prices that become uncompetitive over time if market rates shift significantly.

Positive Signals

Firm fixed-price contract structure provides cost certainty.
Awarded under full and open competition, ensuring a fair process.
Long performance period suggests a stable and predictable requirement met effectively.

Sector Analysis

This contract operates within the professional, scientific, and technical services sector, specifically focusing on testing laboratories. The defense industry relies heavily on such services for quality assurance, research and development, and operational readiness. Comparable spending in this sub-sector for the DoD can range from millions to tens of millions annually, depending on the specific testing needs and scale.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside requirement (ss: false, sb: false). This suggests the primary contract was likely awarded to a larger entity capable of performing the extensive lab testing. There is no explicit information on subcontracting plans, but it's possible that specialized testing components could have been outsourced to small businesses, though this is not guaranteed.

Oversight & Accountability

As a definitive contract awarded by the Defense Logistics Agency, oversight would typically fall under the agency's contracting officers and potentially the Department of Defense's Inspector General. Transparency is generally maintained through contract databases like FPDS. Accountability is ensured through the firm fixed-price terms and performance requirements outlined in the contract.

Related Government Programs

Defense Contract Audit Agency (DCAA) Audits
Logistics and Supply Chain Management Services
Department of Defense Research and Development Contracts
Federal Supply Schedule (FSS) for Testing Laboratories

Risk Flags

Limited competition may have impacted price optimization.
Potential for scope creep if initial requirements were not perfectly defined.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.5 million to COGECO (PRIVATE) LIMITED. LAB TESTING

Who is the contractor on this award?

The obligated recipient is COGECO (PRIVATE) LIMITED.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $11.5 million.

What is the period of performance?

Start: 2007-06-01. End: 2012-11-30.

What is the track record of COGECO (PRIVATE) LIMITED with the federal government?

Information on COGECO (PRIVATE) LIMITED's specific track record with the federal government beyond this single contract is limited in the provided data. This $11.5 million contract with the Defense Logistics Agency represents a significant engagement. Further investigation would be needed to determine if they have held other federal contracts, their performance history on those contracts, and their overall reputation within government procurement circles. The duration and value of this contract suggest a capacity to handle substantial government work, but a broader analysis of past performance would provide a more complete picture of their reliability and expertise.

How does the $11.5 million value compare to similar lab testing contracts?

The $11.5 million total contract value, spread over approximately five years (June 2007 to November 2012), equates to an average annual spend of roughly $2.3 million. This figure appears moderate for specialized lab testing services required by a major entity like the Department of Defense. Larger, more complex testing programs or contracts involving extensive R&D could easily reach tens or hundreds of millions. Conversely, smaller, more routine testing needs might be fulfilled with contracts in the low hundreds of thousands. Without specific details on the exact nature and complexity of the testing performed, a precise comparison is difficult, but the value seems aligned with a substantial, long-term service requirement.

What are the primary risks associated with this type of contract?

The primary risks associated with this firm fixed-price contract for lab testing include potential issues with the scope of work definition and contractor performance. If the initial scope was not clearly defined, the contractor might underperform or claim additional costs if unforeseen complexities arise, although the fixed-price nature aims to mitigate this. Another risk is the potential for the contractor to cut corners on quality to maintain profitability, especially if oversight is lax. Furthermore, reliance on a single contractor for critical testing functions can pose a risk if that contractor experiences financial instability or operational disruptions. The limited competition also presents a risk of suboptimal pricing.

How effective was the competition for this contract?

The competition for this contract, while categorized as 'full and open,' appears to have been moderately effective rather than highly robust. Receiving only three bids suggests that the market for these specific lab testing services may not be highly saturated, or that the barriers to entry for potential bidders (e.g., specialized equipment, certifications, security clearances) are significant. While three bidders provide some level of comparison, a larger number typically drives prices down more aggressively and offers a wider range of technical solutions. The effectiveness is thus tempered by the limited number of participants, potentially leading to a price that is fair but not necessarily the lowest achievable.

What is the historical spending trend for lab testing services by the DLA?

Historical spending trends for lab testing services by the Defense Logistics Agency (DLA) would require analyzing multiple contract awards over several fiscal years. This single contract award of $11.5 million from 2007-2012 provides a data point but does not illustrate a trend. To understand historical spending, one would need to aggregate data on all similar contracts awarded by the DLA, noting their values, durations, and the types of testing performed. This would reveal whether spending has increased, decreased, or remained stable, and identify any shifts in the types of services procured or the contractors utilized over time.

What are the implications of the 'firm fixed price' contract type?

The 'firm fixed price' (FFP) contract type is generally favored by the government when the scope of work is well-defined and risks are understood. For the buyer (DoD), it offers the highest level of cost certainty, as the price is set and generally not subject to adjustment based on the contractor's actual costs. This shifts the risk of cost overruns entirely to the contractor. For the contractor, it offers the potential for higher profit margins if they can perform the work efficiently and below the estimated cost, but also carries the risk of losses if costs exceed expectations. For lab testing services, FFP encourages efficiency and predictability in budgeting.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Testing Laboratories and Services

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › EQUIPMENT AND MATERIALS TESTING

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: PECO ROAD, TOWNSHIP, LAHORE

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $12,660,622

Exercised Options: $12,660,622

Current Obligation: $11,460,622

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline