Department of the Army awards $22.2M for cold weather kits, with significant per-unit cost concerns

Contract Overview

Contract Amount: $22,192,346 ($22.2M)

Contractor: Bethel Services, Incorporated

Awarding Agency: Department of Defense

Start Date: 2009-12-16

End Date: 2011-04-29

Contract Duration: 499 days

Daily Burn Rate: $44.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: COLD WEATHER KITS

Place of Performance

Location: BETHEL, BETHEL County, ALASKA, 99559

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $22.2 million to BETHEL SERVICES, INCORPORATED for work described as: COLD WEATHER KITS Key points: 1. The contract value of $22.2 million for cold weather kits raises questions about overall value for money. 2. Limited competition for this contract may have impacted pricing and potentially increased costs for taxpayers. 3. The duration of the contract (499 days) and its fixed-price nature suggest a need for careful performance monitoring. 4. The contract's focus on packing and crating services indicates a specific logistical need within the Department of the Army. 5. The lack of a small business set-aside suggests this contract was not specifically targeted to support small businesses. 6. The contract's performance period falls within a historical context of significant defense spending.

Value Assessment

Rating: questionable

The total award of $22.2 million for cold weather kits appears high given the limited scope of packing and crating services. Without more detailed specifications on the kits themselves or the exact services rendered, it is difficult to benchmark against similar contracts. However, the reported number of units (44,474) suggests a per-unit cost that warrants further scrutiny, especially when compared to potential commercial off-the-shelf alternatives or standard packing and crating rates for similar goods.

Cost Per Unit: The implied per-unit cost for packing and crating is approximately $500 ($22,192,345.56 / 44,474 units). This figure seems exceptionally high for packing and crating services alone and suggests either the inclusion of significant material costs within the 'kit' or a substantial markup. Further investigation into the specific components and services is needed to validate this cost.

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not competed openly. This approach is typically reserved for situations where only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition limits the government's ability to solicit multiple bids and potentially secure a lower price through a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. This necessitates robust oversight to ensure the awarded price is fair and reasonable.

Public Impact

This contract directly benefits military personnel requiring specialized cold weather gear, ensuring operational readiness in harsh environments. The services provided include packing and crating, essential for the secure and efficient transportation of these critical supplies. The geographic impact is primarily focused on Alaska (ST: AK, SN: ALASKA), indicating a specific operational requirement in that region. While not directly creating new jobs, the contract supports the existing workforce of Bethel Services, Inc. and potentially its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High implied per-unit cost for packing and crating services.
Sole-source award limits price discovery and potentially increases cost to taxpayers.
Lack of transparency regarding the specific components and services included in the 'cold weather kits'.
Contract awarded to a single vendor without competitive bidding.
Potential for cost overruns if not closely monitored due to fixed-price nature.

Positive Signals

Contract addresses a critical need for cold weather operational readiness.
Fixed-price contract provides cost certainty once awarded.
Specific geographic focus (Alaska) suggests tailored support for unique environmental challenges.
Awarded to a known entity (Bethel Services, Inc.) which may have existing expertise.

Sector Analysis

The defense sector, particularly within the Department of the Army, frequently procures specialized equipment and logistical support for diverse operational environments. Contracts for items like cold weather kits are essential for maintaining troop readiness in extreme climates. Spending in this sub-sector often involves high-value, low-volume items requiring specific manufacturing or packaging expertise. Benchmarking this contract's value is challenging without detailed specifications, but the overall defense logistics market is substantial, with significant annual outlays for similar support services.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have a subcontracting plan indicated in the provided data. This suggests that the primary award went to a large business, and there may be limited direct opportunities for small businesses to participate in fulfilling this specific contract, unless they are part of Bethel Services, Inc.'s supply chain or are engaged by the prime contractor.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. As a sole-source award, scrutiny on the justification and pricing reasonableness is paramount. Transparency regarding the specific services and materials is crucial for effective oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Clothing and Equipment Procurement
Arctic Warfare Support Systems
Logistics and Transportation Services
Department of Defense Supply Chain Management
Specialized Kit Assembly and Distribution

Risk Flags

High Per-Unit Cost
Sole-Source Justification
Lack of Competition
Potential Value Concerns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.2 million to BETHEL SERVICES, INCORPORATED. COLD WEATHER KITS

Who is the contractor on this award?

The obligated recipient is BETHEL SERVICES, INCORPORATED.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $22.2 million.

What is the period of performance?

Start: 2009-12-16. End: 2011-04-29.

What specific components and services are included in the 'cold weather kits' that justify the high per-unit cost?

The provided data is limited and does not detail the specific components or services included in the 'cold weather kits.' The contract primarily lists 'Packing and Crating' as the service description, with a total award of $22,192,345.56 for 44,474 units, implying a per-unit cost of approximately $500 for this service. This figure is exceptionally high for packing and crating alone. It is highly probable that the 'kits' themselves, or significant components thereof, are included in this cost, or that the packing and crating service is highly specialized. Without further documentation, such as the Statement of Work (SOW) or contract line item numbers (CLINs) detailing the breakdown of costs, it is impossible to ascertain the exact justification for the per-unit price. Further investigation would require accessing the full contract award file to understand the material costs, labor, overhead, and profit associated with the 'kits' and their preparation for shipment.

How does the $500 per-unit cost for packing and crating compare to industry benchmarks for similar services?

A per-unit cost of $500 for packing and crating services alone is significantly above typical industry benchmarks. Standard packing and crating for commercial goods, even specialized items, usually ranges from tens to a few hundred dollars per unit, depending heavily on size, weight, fragility, and required materials. For military equipment, costs can be higher due to stringent packaging requirements for durability and protection against harsh environments. However, $500 per unit strongly suggests that the cost is not solely for the packing and crating service but likely includes the value of the cold weather kit components themselves, or represents a highly specialized, labor-intensive packing process. Without knowing the exact nature of the 'kit' and the specific packing requirements (e.g., specialized containers, climate control during packing, extensive testing), a direct comparison is difficult. However, based on general industry standards for packing and crating, this figure raises a red flag for potential overpricing of the service component.

What is the track record of Bethel Services, Inc. in fulfilling similar Department of the Army contracts?

Information regarding Bethel Services, Inc.'s specific track record with the Department of the Army for similar cold weather kits or packing/crating services is not detailed in the provided data. The contract award itself indicates a significant value ($22.2 million) and a duration of 499 days, suggesting the company was deemed capable of handling a contract of this magnitude. To assess their track record thoroughly, one would need to examine past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), other contract awards to the company for related services, and any history of performance issues or successes. Given this was a sole-source award, the justification likely included reasons why Bethel Services, Inc. was the only viable option, which might implicitly speak to their unique qualifications or existing relationship with the agency.

What are the potential risks associated with a sole-source award for critical military equipment?

Sole-source awards for critical military equipment carry several inherent risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures that arise in a competitive bidding environment. This can result in taxpayers paying more than necessary. Secondly, it limits the government's options if the sole-source provider experiences performance issues, delays, or financial instability, potentially jeopardizing the supply chain for essential equipment. Thirdly, it can stifle innovation, as there is less incentive for alternative providers to develop competing solutions if the market is effectively closed. Finally, sole-source awards can sometimes be perceived as lacking transparency, raising concerns about fairness and the best use of public funds, necessitating robust justification and oversight.

How does the contract's duration and fixed-price type influence risk and value assessment?

The contract's duration of 499 days (approximately 16 months) combined with a Firm Fixed Price (FFP) type influences risk and value assessment significantly. For the government, an FFP contract provides cost certainty, meaning the price is set and generally not subject to adjustment based on the contractor's cost experience. This shifts the risk of cost overruns to the contractor. However, for a long-duration contract, the initial price might be set high to account for potential contractor risks, or unforeseen circumstances could arise that make the fixed price less advantageous for the government if costs escalate significantly beyond initial projections. For the contractor, the risk lies in accurately estimating all costs associated with performance over the contract period. If costs are higher than anticipated, their profit margin shrinks or they could incur a loss. Conversely, if they manage costs efficiently, their profit increases. The value assessment must consider whether the fixed price remains competitive and fair throughout the contract's lifecycle, and whether the contractor has sufficient incentive to maintain quality and timely delivery under this pricing structure.

What historical spending patterns exist for 'cold weather kits' or similar logistical support within the Department of the Army?

The provided data snippet does not offer historical spending patterns for 'cold weather kits' or similar logistical support. To analyze historical spending, one would need access to broader contract databases or agency procurement reports covering multiple fiscal years. Such analysis would involve identifying all contracts awarded for similar items (e.g., arctic gear, survival kits, specialized packing services for extreme environments) by the Department of the Army and potentially other branches of the DoD. Key metrics to examine would include the total annual spending, the number of contracts awarded, the average contract value, the prevalence of sole-source versus competitive awards, and the average per-unit costs over time. This would help establish a baseline for evaluating the current $22.2 million award in terms of its magnitude, cost-effectiveness, and whether spending trends indicate increasing or decreasing reliance on such procurements.

Industry Classification

NAICS: Transportation and Warehousing › Other Support Activities for Transportation › Packing and Crating

Product/Service Code: TEXTILE/LEATHER/FUR; TENT; FLAG

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

Parent Company: Bethel Native Corporation (UEI: 089331862)

Address: 460 RIDGECREST DR, BETHEL, AK, 00

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, HUBZone Firm, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $22,192,346

Exercised Options: $22,192,346

Current Obligation: $22,192,346

Contract Characteristics

Cost or Pricing Data: NO

Timeline