DoD's $15.6M custodial services contract awarded to Licking-Knox Goodwill Industries, Inc. raises value concerns

Contract Overview

Contract Amount: $15,655,216 ($15.7M)

Contractor: Licking-Knox Goodwill Industries, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-09-28

End Date: 2011-12-28

Contract Duration: 1,917 days

Daily Burn Rate: $8.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CUSTODIAL SERVICES AT DSCC

Place of Performance

Location: COLUMBUS, FRANKLIN County, OHIO, 43213

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $15.7 million to LICKING-KNOX GOODWILL INDUSTRIES, INC. for work described as: CUSTODIAL SERVICES AT DSCC Key points: 1. The contract's duration of over 5 years and lack of competitive bidding suggest potential overpayment. 2. Benchmarking against similar janitorial contracts is difficult due to limited public data. 3. The sole-source award mechanism bypasses competitive pressures that could drive down costs. 4. Performance context is limited, making it hard to assess if the service level justified the expenditure. 5. This contract falls within the broader Facilities Support Services sector, characterized by diverse pricing models. 6. The absence of small business participation is noted, despite the contractor's mission-oriented nature.

Value Assessment

Rating: questionable

Assessing the value for money is challenging without a competitive baseline. The contract's duration and sole-source nature mean there was no direct comparison to other providers during the award. While the contractor, Licking-Knox Goodwill Industries, Inc., has a social mission, the lack of competition prevents a robust assessment of whether the price paid was aligned with market rates for custodial services of this scale and scope. Further analysis would require benchmarking against similar government contracts for janitorial services, considering factors like square footage, service frequency, and specific tasks performed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one responsible source is available or capable of meeting the requirement. The lack of competition means that potential cost savings that could arise from a bidding process were not realized. Without multiple bids, it's impossible to determine the most cost-effective option available in the market for these custodial services.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pricing. The lack of a bidding process limits the government's ability to secure the lowest possible price for these essential services.

Public Impact

The primary beneficiaries are the personnel and operations at the Defense Supply Center Columbus (DSCC) who receive maintained facilities. Essential janitorial and custodial services are delivered to ensure a clean and functional working environment. The geographic impact is localized to the DSCC facility in Ohio. Workforce implications include employment opportunities provided by Licking-Knox Goodwill Industries, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may have led to inflated costs.
Limited transparency on performance metrics makes value assessment difficult.
Long contract duration without re-competition could reduce incentives for efficiency.
No clear indication of small business subcontracting goals or achievements.

Positive Signals

Contract awarded to an organization with a social mission (Goodwill).
Ensures essential facility maintenance services are provided.
Long-term relationship potentially fosters stability in service delivery.

Sector Analysis

This contract falls under the Facilities Support Services sector, specifically janitorial services. This sector is broad and includes a wide range of services from basic cleaning to comprehensive facility management. Government spending in this area is substantial, supporting the operational needs of numerous federal installations. Benchmarking is often done against industry standards and other government contracts, but pricing can vary significantly based on location, scope of work, and service level agreements. The size of this contract, approximately $15.6 million over five years, places it as a significant award within this service category.

Small Business Impact

This contract was not awarded as a small business set-aside, and the contractor, Licking-Knox Goodwill Industries, Inc., is not typically classified as a small business for federal contracting purposes. There is no explicit information provided regarding subcontracting plans or performance related to small businesses. This means that opportunities for small businesses to participate in fulfilling this contract were likely limited or non-existent, potentially impacting the broader small business ecosystem that supports federal contracts.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA) contracting officers and potentially the Department of Defense Inspector General. Accountability measures would be tied to the contract's performance work statement and delivery requirements. Transparency is limited by the sole-source award and the lack of publicly available detailed performance reports. The contract's duration and fixed-price nature suggest a degree of predictability, but ongoing oversight would be crucial to ensure continued value and compliance.

Related Government Programs

Federal Facilities Maintenance Contracts
Department of Defense Logistics Support
Janitorial Services Government Contracts
Non-Profit Organization Government Contracts

Risk Flags

Sole-source award
Long contract duration
Lack of publicly available performance data
No small business subcontracting noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.7 million to LICKING-KNOX GOODWILL INDUSTRIES, INC.. CUSTODIAL SERVICES AT DSCC

Who is the contractor on this award?

The obligated recipient is LICKING-KNOX GOODWILL INDUSTRIES, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $15.7 million.

What is the period of performance?

Start: 2006-09-28. End: 2011-12-28.

What is the typical cost range for custodial services of this magnitude in the federal government?

Determining a precise cost range for custodial services of this magnitude ($15.6 million over five years) is complex without specific details on the scope of work, square footage, frequency of services, and geographic location. However, federal contracts for janitorial services can range from tens of thousands to millions of dollars annually, depending on the size and complexity of the facility. Factors such as labor costs, materials, specialized cleaning requirements (e.g., for sensitive areas), and security protocols significantly influence pricing. Given the sole-source nature of this contract, direct comparison to competitively bid contracts is difficult, but it's essential to benchmark against similar-sized facilities and service levels to assess value. Industry averages for janitorial services often fall within a certain percentage of facility operating budgets, but government contracts can have unique pricing structures.

How does the duration of this contract (over 5 years) impact its value proposition?

A contract duration of over five years, as seen with this $15.6 million custodial services award, can have mixed impacts on its value proposition. On one hand, a longer term can provide stability and predictability for both the government agency and the contractor, potentially leading to more efficient service delivery and reduced administrative overhead associated with frequent re-procurement. It can also allow the contractor to invest in specialized equipment or training. However, extended durations, especially without mechanisms for price adjustments or performance reviews, can also reduce the government's ability to benefit from market fluctuations or technological advancements. Furthermore, a long-term, sole-source contract might disincentivize the contractor from aggressively seeking cost efficiencies over time, as competitive pressures are absent. Without clear performance metrics and potential for renegotiation, the value could erode.

What are the potential risks associated with a sole-source award for essential services like custodial support?

Sole-source awards for essential services like custodial support carry several potential risks. The primary risk is the lack of price competition, which can lead to the government paying a higher price than if the contract had been competed. This can result in inefficient use of taxpayer funds. Another risk is reduced incentive for the contractor to innovate or improve service quality over time, as there is no direct threat of losing the contract to a competitor. Furthermore, sole-source awards can sometimes mask underlying issues, such as a lack of market research or an over-reliance on a single provider, which can create vulnerabilities if that provider experiences financial difficulties or operational problems. Transparency and oversight become even more critical in sole-source situations to ensure fairness and value.

Can the mission of Licking-Knox Goodwill Industries, Inc. influence the cost-effectiveness of this contract?

The mission of Licking-Knox Goodwill Industries, Inc., which focuses on providing employment and training for individuals with disabilities and other barriers to employment, can influence the cost-effectiveness of this contract in several ways. On one hand, contracting with such an organization aligns with federal goals to support social enterprises and create opportunities for disadvantaged populations. This can be seen as a form of 'social value' that complements the direct service delivery. However, the employment model of a Goodwill organization might involve higher labor costs due to training requirements, supportive services, or a potentially less experienced workforce compared to a purely commercial entity focused solely on profit maximization. While the intention is positive, it's crucial that the contract's pricing and performance metrics still ensure that the government receives value for money comparable to what could be achieved through other means, even if the contractor's overhead or operational structure differs.

What are the implications of this contract not being subject to small business subcontracting requirements?

When a federal contract, particularly one of this size ($15.6 million), is not set aside for small businesses and does not appear to have explicit subcontracting requirements, it has implications for the small business ecosystem. It means that opportunities for small businesses to participate as subcontractors, providing specialized services or supplies, are likely diminished. Federal contracting goals often aim to ensure that a certain percentage of contract dollars flow down to small businesses, including those owned by women, veterans, or minorities. The absence of such provisions in this contract means that these opportunities are not being leveraged. This can limit the growth and revenue potential for small businesses that could otherwise contribute to fulfilling government requirements and potentially reduce the overall economic impact on the small business sector.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Services to Buildings and Dwellings › Janitorial Services

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 65 SOUTH 5TH STREET, NEWARK, OH, 12

Business Categories: AbilityOne Program Participant, Category Business, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,330,236

Exercised Options: $32,330,236

Current Obligation: $15,655,216

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline