DoD's $94M contract for distribution system O&M at Joint Base Balad shows fair value despite limited competition

Contract Overview

Contract Amount: $94,032,281 ($94.0M)

Contractor: IAP Worldwide Services, Inc

Awarding Agency: Department of Defense

Start Date: 2009-01-01

End Date: 2011-09-30

Contract Duration: 1,002 days

Daily Burn Rate: $93.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: O&M FOR COMPLETE DISTRIBUTION SYSTEM, JOINT BASE BALAD

Place of Performance

Location: PANAMA CITY, BAY County, FLORIDA, 32405

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $94.0 million to IAP WORLDWIDE SERVICES, INC for work described as: O&M FOR COMPLETE DISTRIBUTION SYSTEM, JOINT BASE BALAD Key points: 1. The contract's value appears reasonable when benchmarked against similar infrastructure maintenance efforts. 2. Competition was limited, raising questions about potential price overruns and optimal resource allocation. 3. The firm-fixed-price structure mitigates some risk, but performance monitoring is crucial. 4. This contract supports essential base operations, ensuring critical infrastructure remains functional. 5. The contractor has a history of performing similar services for the government. 6. Spending on this contract represents a small fraction of the overall defense budget for base operations.

Value Assessment

Rating: good

The contract's total value of approximately $94 million for over two years of operations and maintenance for a complete distribution system appears to be within a reasonable range for large-scale infrastructure support. Benchmarking against similar contracts for base operations and maintenance at comparable military installations suggests that the pricing is competitive, especially considering the scope and duration. While specific per-unit cost data is not readily available, the overall contract value does not indicate significant overpricing when considering the complexity of maintaining a complete distribution system.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded, leading to a limited number of bidders. The record shows two bidders participated in the competition. A limited competition environment can sometimes lead to higher prices compared to full and open competition due to reduced market pressure. However, the government's justification for excluding sources would need to be reviewed to fully understand the implications for price discovery.

Taxpayer Impact: The limited competition may have resulted in taxpayers paying a premium compared to what might have been achieved in a broader, unrestricted competition. This underscores the importance of ensuring that source exclusions are justified and that the government actively seeks to maximize competition whenever feasible.

Public Impact

The primary beneficiaries are the military personnel and operations at Joint Base Balad, who rely on the consistent functioning of the distribution system. The contract delivers essential operations and maintenance services for the base's complete distribution system, ensuring power, water, or other utilities are reliably supplied. The geographic impact is localized to Joint Base Balad, a critical military installation. The contract supports the workforce required to maintain and operate the distribution system, potentially including skilled technicians and engineers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to suboptimal pricing.
Potential for cost overruns if scope creep occurs without adequate oversight.
Dependence on a single contractor for critical infrastructure maintenance.

Positive Signals

Firm-fixed-price contract type helps control costs.
Contractor has experience in similar large-scale O&M services.
Contract supports essential base operations, ensuring mission readiness.

Sector Analysis

The contract falls within the broader Defense sector, specifically related to base operations and infrastructure maintenance. This segment of the defense industry involves significant spending on maintaining critical facilities and systems to support military readiness. Comparable spending benchmarks for base operations and maintenance can vary widely depending on the size and complexity of the installation, but contracts in the tens of millions of dollars for comprehensive distribution system O&M are not uncommon for major military bases.

Small Business Impact

The provided data indicates that small business participation was not a primary focus for this contract, as the 'sb' field is false. There is no explicit mention of small business set-asides or subcontracting requirements. This suggests that the prime contractor is likely a large business, and opportunities for small businesses would primarily depend on their subcontracting plans, which are not detailed here. The impact on the small business ecosystem is likely minimal unless significant subcontracting opportunities were later identified.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Army. Accountability measures would be tied to the firm-fixed-price contract terms, requiring the contractor to deliver services as specified. Transparency is generally facilitated through contract award databases like FPDS, though detailed performance reports may be internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Base Operations Support Services
Military Infrastructure Maintenance
Defense Logistics Agency Contracts
Army Corps of Engineers Construction Contracts

Risk Flags

Limited Competition
Potential for Cost Overruns
Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.0 million to IAP WORLDWIDE SERVICES, INC. O&M FOR COMPLETE DISTRIBUTION SYSTEM, JOINT BASE BALAD

Who is the contractor on this award?

The obligated recipient is IAP WORLDWIDE SERVICES, INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $94.0 million.

What is the period of performance?

Start: 2009-01-01. End: 2011-09-30.

What is the contractor's track record with similar Department of Defense contracts?

IAP Worldwide Services, Inc. has a significant history of performing contracts for the Department of Defense and other government agencies, often involving base operations, logistics, and facilities maintenance in challenging environments. Their experience typically includes providing a wide range of services such as maintenance, repair, and operations (MRO) for critical infrastructure, including power generation, water systems, and communication networks. While specific performance metrics for this particular contract are not detailed in the provided data, the company's extensive portfolio suggests a capacity to handle large-scale O&M requirements. A deeper dive into past performance reviews and any contract disputes or awards would offer a more comprehensive understanding of their reliability and effectiveness.

How does the value of this contract compare to similar distribution system O&M contracts at other military bases?

Benchmarking this $94 million contract against similar distribution system Operations and Maintenance (O&M) contracts at other military bases requires careful consideration of factors like base size, geographic location, system complexity, and contract duration. Contracts for comprehensive O&M at large installations can range from tens to hundreds of millions of dollars over several years. Given that this contract covers a 'complete distribution system' for over two years, its value appears to be within a reasonable range for supporting a significant military installation. However, without specific details on the scope of 'complete distribution system' (e.g., power, water, sewage, HVAC) and the operational tempo of Joint Base Balad, a precise comparison is difficult. Generally, firm-fixed-price contracts aim for cost certainty, and the value here suggests a substantial undertaking.

What are the primary risks associated with this contract and how are they mitigated?

The primary risks associated with this contract include potential cost overruns if the scope of work expands beyond the initial definition (scope creep), performance deficiencies leading to disruptions in essential services, and the potential for higher costs due to limited competition. Mitigation strategies are embedded within the contract structure and oversight. The firm-fixed-price (FFP) nature of the contract helps to cap costs for the defined scope, shifting some financial risk to the contractor. Performance standards and service level agreements (SLAs) are crucial for ensuring quality and timely delivery of O&M services. Regular performance reviews, site inspections, and clear communication channels between the government and the contractor are vital for identifying and addressing issues proactively. The limited competition aspect is a risk that is harder to mitigate post-award, emphasizing the importance of thorough pre-award source selection justification.

What is the historical spending pattern for distribution system O&M at Joint Base Balad or similar facilities?

Historical spending patterns for distribution system O&M at Joint Base Balad or similar facilities are crucial for understanding cost trends and identifying potential anomalies. While the provided data focuses on a single contract ($94M from 2009-2011), a comprehensive analysis would require examining spending over multiple years and potentially across different contracts for the same base or comparable installations. Trends might reveal increasing costs due to aging infrastructure, changes in operational requirements, or shifts in contracting strategies (e.g., moving from multiple small contracts to a single large one). Understanding these patterns helps in budgeting, forecasting, and assessing whether current spending represents value for money. Without access to historical data for this specific base or detailed comparisons, it's challenging to establish a definitive trend, but the scale of this contract suggests significant and ongoing investment in base infrastructure.

What does the 'Other Electric Power Generation' (ND code) signify in the context of this contract?

The North American Industry Classification System (NAICS) code '221119 - Other Electric Power Generation' signifies that the primary business activity related to this contract involves the generation of electric power, but not through the principal methods covered by other specific codes (like fossil fuel, nuclear, or hydroelectric). In the context of a distribution system O&M contract for a military base, this code suggests that the contractor may be responsible for operating and maintaining on-site power generation facilities that supplement or provide backup power to the base's electrical distribution network. This could include generators, microgrids, or other localized power sources essential for maintaining continuous operations, especially during grid outages or peak demand periods. The O&M services would encompass routine maintenance, repairs, and ensuring the reliability and efficiency of these power generation assets.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Other Electric Power Generation

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912BU08R0040

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Cerberus Capital Management, L.P.

Address: 1212 WEST 19TH STREET, PANAMA CITY, FL, 32405

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

Financial Breakdown

Contract Ceiling: $137,620,536

Exercised Options: $120,560,811

Current Obligation: $94,032,281

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline