VA awards $21.6M for temporary office space and services, raising questions about competition and value

Contract Overview

Contract Amount: $21,616,866 ($21.6M)

Contractor: Metro Office Management, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2015-12-24

End Date: 2021-06-30

Contract Duration: 2,015 days

Daily Burn Rate: $10.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TEMPORARY SERVICES SOLUTION VIA HOTELING SEATS AND SERVICES "IGF::OT::IGF"

Place of Performance

Location: EATONTOWN, MONMOUTH County, NEW JERSEY, 07724

State: New Jersey Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $21.6 million to METRO OFFICE MANAGEMENT, INC. for work described as: TEMPORARY SERVICES SOLUTION VIA HOTELING SEATS AND SERVICES "IGF::OT::IGF" Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. Significant duration of the contract (over 5 years) suggests a need for long-term planning. 3. The service category (lessors of nonresidential buildings) is a common need for federal agencies. 4. Fixed-price contract type aims to control costs, but value depends on initial negotiation. 5. Geographic location in New Jersey may indicate specific regional needs for VA facilities. 6. Lack of small business participation noted, potentially missing opportunities for smaller firms.

Value Assessment

Rating: fair

The contract's value of $21.6 million over approximately 5.5 years for temporary office space and services appears substantial. Without comparable contract data for similar services in the same geographic region, it is difficult to definitively benchmark the value for money. The fixed-price nature of the contract suggests an attempt to control costs, but the absence of competitive bidding means the initial price may not reflect the best possible market rate. Further analysis would require understanding the specific square footage, services included, and prevailing market rates for commercial office leases in New Jersey.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in specific emergency situations. The lack of competition means that the Department of Veterans Affairs did not benefit from the price discovery and innovation that typically arises from a competitive bidding process. This can potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the agency did not explore alternative offers that could have potentially secured better pricing or terms.

Public Impact

Veterans and VA staff benefit from the provision of necessary office space and support services. The services enable the continued operation of VA programs and administrative functions. The contract's impact is primarily concentrated in New Jersey, where the leased space is located. Workforce implications include the potential for temporary or permanent staff to utilize the facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs.
Lack of transparency in the justification for sole-source award.
Extended contract duration without competition raises concerns about long-term value.
No indication of small business participation or subcontracting opportunities.

Positive Signals

Fixed-price contract type helps to define and control costs.
Contract addresses a clear need for administrative and operational space.
Awarded by the Department of Veterans Affairs, indicating support for a critical government function.

Sector Analysis

The provision of office space and related services falls under the commercial real estate and facilities management sector. Federal agencies are significant consumers of such services, often requiring specialized solutions for administrative functions. Benchmarking this contract would involve comparing its terms and pricing against commercial lease rates and government-wide contracts for similar real estate services in the New Jersey region. The market for these services is generally competitive, making the sole-source award notable.

Small Business Impact

This contract does not appear to have included a small business set-aside. The sole-source nature of the award further suggests that opportunities for small businesses, either as prime contractors or subcontractors, were likely limited. Federal policy encourages the use of small businesses, and the absence of set-asides or subcontracting plans in this instance may represent a missed opportunity to support the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures would be tied to the terms and conditions of the fixed-price contract, ensuring that the leased space and services meet the specified requirements. Transparency regarding the justification for the sole-source award and the evaluation process would be crucial for public trust, though details may be limited due to the contract's nature.

Related Government Programs

Federal Government Real Property Leases
Department of Veterans Affairs Administrative Support Contracts
Commercial Real Estate Services

Risk Flags

Sole-source award raises concerns about competition and potential overpayment.
Lack of transparency regarding justification for sole-source award.
Extended contract duration without competitive re-evaluation.
No clear indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $21.6 million to METRO OFFICE MANAGEMENT, INC.. TEMPORARY SERVICES SOLUTION VIA HOTELING SEATS AND SERVICES "IGF::OT::IGF"

Who is the contractor on this award?

The obligated recipient is METRO OFFICE MANAGEMENT, INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $21.6 million.

What is the period of performance?

Start: 2015-12-24. End: 2021-06-30.

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

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for competitive contracting. Sole-source awards are permissible under specific circumstances, such as when only one responsible source is available or when the agency determines that a competitive solicitation is not in the best interest of the government. For this contract, the specific justification would likely be documented in a Justification for Other Than Full and Open Competition (JOFOC) or a similar determination. Without access to that documentation, the precise reasons remain unknown, but common justifications include unique capabilities, urgent needs, or follow-on work where only the original contractor can fulfill requirements due to proprietary data or integration issues.

How does the per-square-foot cost of this lease compare to market rates in New Jersey?

To assess the per-square-foot cost, we would need the total square footage leased under this contract. The total award amount is $21.6 million over approximately 5.5 years. If, for example, the leased space was 50,000 square feet, the average annual cost would be approximately $392,743 ($21.6M / 5.5 years), translating to roughly $7.85 per square foot per year. This figure needs to be compared against prevailing commercial office lease rates in the specific New Jersey submarket where the property is located. Market rates can vary significantly based on location, building class, amenities, and lease terms. Without the square footage, a direct comparison is impossible, but the calculated annual cost provides a starting point for further investigation into market benchmarks.

What are the risks associated with a sole-source award for temporary office space?

The primary risk of a sole-source award for temporary office space is the potential for inflated costs due to the lack of competitive bidding. Without competing offers, the government may not secure the most favorable pricing or terms available in the market. Another risk is a reduced incentive for the contractor to provide exceptional service or value, as there is no immediate threat of losing the contract to a competitor. Furthermore, a sole-source award can limit flexibility if the agency's needs change, as renegotiating terms with a single provider might be less advantageous than having multiple options. Finally, it raises concerns about whether a competitive process was truly not feasible or if it was simply bypassed.

What is the historical spending pattern for temporary office space by the Department of Veterans Affairs?

Analyzing historical spending patterns for temporary office space by the VA would require accessing broader federal procurement data. This specific contract, awarded in late 2015 and ending in mid-2021, represents a significant but isolated data point. To understand broader trends, one would need to aggregate spending on similar services (NAICS code 531120 or related codes) across multiple fiscal years and contract vehicles used by the VA. This would reveal whether the VA frequently utilizes sole-source contracts for office space, the average duration and value of such leases, and the geographic distribution of these awards. Such an analysis could highlight potential systemic issues or effective strategies in the VA's facilities management procurement.

What are the implications of the fixed-price contract type for this service?

A Firm Fixed Price (FFP) contract type, as used here, means the price is set and not subject to adjustment based on the contractor's cost experience. For the VA, this offers cost certainty, as the total expenditure is known upfront, assuming the contractor fulfills the contract terms. The risk of cost overruns lies primarily with Metro Office Management, Inc. However, the effectiveness of an FFP contract in ensuring value for money heavily depends on the accuracy of the initial price negotiation. If the initial price was set too high due to the lack of competition, the VA might end up paying more than necessary, even though the price is fixed. The benefit is predictability, but the potential downside is paying a non-competitive rate.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Lessors of Real Estate › Lessors of Nonresidential Buildings (except Miniwarehouses)

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › ADMINISTRATIVE SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: VA118-15-R-0572

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11710 PLAZA AMERICA DRIVE, SUITE 2000, RESTON, VA, 20190

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $23,365,789

Exercised Options: $21,665,638

Current Obligation: $21,616,866

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline