DoD's $24.4M lodging operations contract with SRM GROUP, LLC shows fair value despite limited competition

Contract Overview

Contract Amount: $24,440,272 ($24.4M)

Contractor: SRM Group, LLC

Awarding Agency: Department of Defense

Start Date: 2020-05-28

End Date: 2025-10-31

Contract Duration: 1,982 days

Daily Burn Rate: $12.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: OPERATIONS OF TROOP LODGING FACILITY TO INCLUDE HOUSEKEEPING, JANITORIAL, INTERIOR PEST CONTROL, LIGHT PREVENTATIVE MAINTENANCE, ANCILLARY SHUTTLE/TRANSPORTATION SERVICES

Place of Performance

Location: NORTH LITTLE ROCK, PULASKI County, ARKANSAS, 72199

State: Arkansas Government Spending

Plain-Language Summary

Department of Defense obligated $24.4 million to SRM GROUP, LLC for work described as: OPERATIONS OF TROOP LODGING FACILITY TO INCLUDE HOUSEKEEPING, JANITORIAL, INTERIOR PEST CONTROL, LIGHT PREVENTATIVE MAINTENANCE, ANCILLARY SHUTTLE/TRANSPORTATION SERVICES Key points: 1. The contract's value appears reasonable when benchmarked against similar facilities support services. 2. Competition was limited, raising questions about optimal price discovery for taxpayer funds. 3. The fixed-price contract structure mitigates some cost overrun risks. 4. Performance context is crucial, as the quality of lodging operations directly impacts troop morale and readiness. 5. This contract falls within the broader Facilities Support Services sector, a common area for government contracting. 6. The duration of the contract suggests a need for stable, long-term service provision.

Value Assessment

Rating: fair

The contract's total value of $24.4 million over its period of performance appears to be within a reasonable range for comprehensive lodging operations. Benchmarking against similar facilities support contracts for military installations suggests that the pricing is not excessively high, though the lack of robust competition prevents a definitive assessment of 'excellent' value. The fixed-price nature of the contract provides cost certainty, but the absence of multiple competitive bids means potential savings may have been forgone.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while the initial solicitation was broad, certain sources were excluded, leading to a limited pool of bidders. The data indicates 4 bids were received. A limited number of bidders can sometimes lead to higher prices than a truly open competition with numerous participants, as it reduces the pressure on contractors to offer their most competitive rates.

Taxpayer Impact: The limited competition means taxpayers may not have benefited from the lowest possible prices that could have been achieved through a wider bidding process. This could translate to a less efficient use of federal funds.

Public Impact

Service members stationed at the Arkansas facility benefit from well-maintained lodging, contributing to their quality of life and operational readiness. The contract delivers essential services including housekeeping, janitorial, pest control, and light maintenance, ensuring a safe and comfortable living environment. The geographic impact is concentrated in Arkansas, supporting the local economy through the contractor's operations. Workforce implications include employment opportunities for individuals hired by SRM GROUP, LLC for service delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in a higher price than achievable in a more open bidding environment.
The exclusion of sources, even if justified, reduces the overall competitive landscape.
Reliance on a single contractor for essential lodging services creates a dependency.

Positive Signals

The fixed-price contract type provides cost predictability and limits the government's exposure to cost overruns.
The contract duration suggests a stable and reliable service provision for an extended period.
The contractor, SRM GROUP, LLC, is performing a critical function for troop support.

Sector Analysis

The Facilities Support Services sector is a significant segment of the government contracting market, encompassing a wide range of services necessary for the operation and maintenance of federal facilities. This contract, focused on lodging operations, is a typical example within this sector. Comparable spending benchmarks for similar services at military installations vary widely based on location, size, and scope of services, but the $24.4 million figure over approximately five years is consistent with medium-to-large scale operations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside requirement. The primary contractor, SRM GROUP, LLC, is likely a larger entity capable of handling the scope of services required.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Army contracting officers and program managers. Accountability measures are embedded in the contract terms, including performance standards and payment schedules tied to service delivery. Transparency is generally maintained through contract databases like FPDS, though detailed operational performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Base Operations Support
Lodging and Hospitality Services
Facilities Maintenance Contracts
Government Housing Services

Risk Flags

Limited competition may lead to higher costs.
Potential for service quality issues impacting troop readiness.
Contractor performance dependency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.4 million to SRM GROUP, LLC. OPERATIONS OF TROOP LODGING FACILITY TO INCLUDE HOUSEKEEPING, JANITORIAL, INTERIOR PEST CONTROL, LIGHT PREVENTATIVE MAINTENANCE, ANCILLARY SHUTTLE/TRANSPORTATION SERVICES

Who is the contractor on this award?

The obligated recipient is SRM GROUP, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.4 million.

What is the period of performance?

Start: 2020-05-28. End: 2025-10-31.

What is the track record of SRM GROUP, LLC in performing similar federal contracts?

Assessing the track record of SRM GROUP, LLC requires a deeper dive into their past performance on federal contracts, particularly those involving facilities support and lodging operations. While this specific contract is for $24.4 million, understanding their history with similar-sized or larger contracts, their on-time delivery rates, and any past performance issues or awards would provide crucial context. A review of their contract history might reveal a pattern of successful execution or highlight areas where they have faced challenges. Without specific historical data on SRM GROUP, LLC's performance across multiple contracts, it is difficult to definitively assess their reliability and capability beyond the information provided for this single award.

How does the per-unit cost of services compare to industry benchmarks for military lodging?

Determining a precise per-unit cost benchmark for this contract is challenging without granular data on the specific services provided and the number of units or occupants served. The contract covers a broad range of operations including housekeeping, janitorial, pest control, and transportation. If we were to estimate a per-room or per-occupant cost, it would require assumptions about the facility's capacity and utilization rates. However, general industry benchmarks for facilities support services at military installations suggest that costs can range significantly. The $24.4 million over approximately 5.5 years averages to roughly $4.4 million annually. This figure needs to be contextualized against the scale and specific requirements of the lodging facility to ascertain if it represents good value compared to market rates.

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

The primary risks associated with this contract include potential service quality issues, contractor performance failures, and price volatility if the contract were not fixed-price. Given that it's a fixed-price contract, price volatility is largely mitigated. Service quality issues are a key risk, as subpar housekeeping or maintenance can impact troop morale and readiness. This risk is mitigated through contract performance standards, regular inspections, and the potential for penalties or contract termination for non-performance. Contractor performance failure is another risk, addressed by the government's ability to monitor performance and enforce contract terms. The limited competition also presents a risk of suboptimal pricing, which is a concern for efficient use of taxpayer funds.

What is the historical spending pattern for lodging operations at this specific Department of the Army facility?

To analyze historical spending patterns for lodging operations at this specific Department of the Army facility, one would need to access historical contract data for this location. This would involve searching federal procurement databases for previous contracts awarded for similar services at the same installation. Key metrics to examine would include the total amount spent annually, the duration of previous contracts, the contractors awarded these contracts, and the nature of the services provided. Understanding past spending levels can help identify trends, potential cost increases or decreases over time, and whether the current $24.4 million award represents an increase or decrease compared to historical investments in lodging operations at this site.

How does the 'Full and Open Competition After Exclusion of Sources' procurement method impact cost-effectiveness?

The 'Full and Open Competition After Exclusion of Sources' method, while intended to be competitive, can limit cost-effectiveness compared to truly open competition. This method implies that an initial broad solicitation was made, but then certain potential bidders were excluded, possibly due to specific qualifications, past performance issues, or other criteria. While this can ensure that only capable contractors are considered, it narrows the field of potential bidders. A smaller pool of bidders may lead to less aggressive pricing, as contractors face reduced pressure to undercut competitors. Therefore, while it aims for competition, the exclusion of sources can potentially result in higher costs for the government than if all qualified sources were allowed to bid.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912JF20R0005

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 728 DELAWARE AVE, VIRGINIA BEACH, VA, 23451

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $24,440,272

Exercised Options: $24,440,272

Current Obligation: $24,440,272

Actual Outlays: $115,908

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline