DoD's $241M satellite comms contract awarded to Inmarsat Inc. shows fair value, but limited competition

Contract Overview

Contract Amount: $24,119,900 ($24.1M)

Contractor: Inmarsat Inc.

Awarding Agency: Department of Defense

Start Date: 2005-12-01

End Date: 2010-10-01

Contract Duration: 1,765 days

Daily Burn Rate: $13.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200602!063010!1700!N00039!SPACE AND NAVAL WARFARE SYSTEMS !N0003902D2301 !A!N! !Y!0006 ! !20051201!20061130!800969552!202114617!244607925!N!STRATOS MOBILE NETWORKS INC !6901 ROCKLEDGE DR # 900 !BETHESDA !MD!20817!07125!031!24!BETHESDA !MONTGOMERY !MARYLAND !+000000203458!N!N!000000000000!R426!COMMUNICATIONS SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !517310!E! !5!B!S! ! !D!20070331!B!E!Y!A! !A!N!J!2!002!B! !Z!N!E! ! !Y!C!N! ! ! !A!C!A!A!000!A!C!N! ! ! ! !1700!N00039!0001! !

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $24.1 million to INMARSAT INC. for work described as: 200602!063010!1700!N00039!SPACE AND NAVAL WARFARE SYSTEMS !N0003902D2301 !A!N! !Y!0006 ! !20051201!20061130!800969552!202114617!244607925!N!STRATOS MOBILE NETWORKS INC !6901 ROCKLEDGE DR # 900 !BETHESDA !MD!20817!07125!031!24!BETHESDA !MONT… Key points: 1. Contract value of $241M over 5 years suggests a significant investment in satellite telecommunications. 2. The award to Inmarsat Inc. indicates a reliance on established providers for critical communication services. 3. The firm-fixed-price contract type aims to control costs, but potential for cost overruns exists. 4. The contract's duration of 5 years implies a long-term need for these services. 5. The geographic focus on Maryland suggests a concentration of operations or support in that region. 6. The absence of small business set-asides may limit opportunities for smaller players in this sector.

Value Assessment

Rating: fair

The contract's total value of $241,198,995.51 over approximately five years (December 1, 2005, to October 1, 2010) averages to roughly $48.2 million per year. Benchmarking this against similar large-scale satellite telecommunications contracts for government use is challenging without more specific service details. However, the firm-fixed-price structure suggests an attempt to lock in costs. The number of bids received (2) is low, which could indicate either a highly specialized market or potential limitations in the competition, impacting overall value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with two bids received. While 'full and open' implies a broad solicitation, receiving only two bids suggests that the market for these specific satellite telecommunications services may be concentrated among a few key providers. This limited number of bidders could potentially reduce price discovery and negotiation leverage for the government.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the most competitive pricing that a larger pool of bidders could have generated. This could translate to higher overall costs for the services provided.

Public Impact

Department of Defense personnel and operations are the primary beneficiaries, receiving critical satellite communication services. The services delivered are essential for maintaining command, control, and communication capabilities, particularly in remote or contested environments. The contract's geographic impact is primarily centered around Maryland, where the contractor is located and potentially where services are managed or utilized. Workforce implications are likely within the satellite telecommunications industry, supporting the operations and maintenance of these vital networks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bids) may have resulted in suboptimal pricing for taxpayers.
The contract's significant value raises concerns about potential cost overruns if not managed tightly.
Dependence on a single contractor (Inmarsat) for critical services poses a risk if service is interrupted.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Awarded under full and open competition, ensuring a broad initial solicitation.
Long-term contract duration indicates a sustained need and potential for stable service delivery.

Sector Analysis

This contract falls within the broader telecommunications sector, specifically focusing on satellite-based communication services. The market for government satellite communications is often characterized by a few large, established players due to the high infrastructure costs and specialized technology required. Comparable spending benchmarks are difficult to ascertain without detailed service parameters, but government reliance on satellite communications for secure and global reach is a consistent trend across defense and intelligence agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Given the nature of satellite telecommunications, which often involves large-scale infrastructure and specialized technology, it is common for prime contracts to be awarded to larger corporations. This may limit direct opportunities for small businesses unless they are part of the supply chain for the prime contractor.

Oversight & Accountability

The contract was awarded by the Department of Defense, likely subject to oversight from the Defense Contract Management Agency (DCMA) and potentially the Department of Defense Inspector General (DoDIG). Oversight mechanisms would typically include performance monitoring, quality assurance, and financial audits to ensure compliance with contract terms and value for money. Transparency is generally maintained through contract databases like FPDS, though detailed operational specifics may be classified.

Related Government Programs

Global Positioning System (GPS) Services
Military Satellite Communications (MILSATCOM)
Tactical Data Networks
Secure Communications Systems
Information Technology Services

Risk Flags

Limited competition
Potential for cost overruns
Contractor dependency risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.1 million to INMARSAT INC.. 200602!063010!1700!N00039!SPACE AND NAVAL WARFARE SYSTEMS !N0003902D2301 !A!N! !Y!0006 ! !20051201!20061130!800969552!202114617!244607925!N!STRATOS MOBILE NETWORKS INC !6901 ROCKLEDGE DR # 900 !BETHESDA !MD!20817!07125!031!24!BETHESDA !MONTGOMERY !MARYLAND !+000000203458!N!N!000000000000!R426!COMMUNICATIONS SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !517310!E! !5!B!S! ! !D!200

Who is the contractor on this award?

The obligated recipient is INMARSAT INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $24.1 million.

What is the period of performance?

Start: 2005-12-01. End: 2010-10-01.

What is the track record of Inmarsat Inc. in providing satellite telecommunications services to the U.S. government prior to this contract?

Prior to this specific contract awarded in 2005, Inmarsat Inc. had a history of providing satellite communication services globally. As a well-established international mobile satellite organization, it was known for its commercial satellite network. While specific U.S. government contract details prior to 2005 are not detailed in the provided data snippet, Inmarsat's general reputation and existing infrastructure would have been a key factor in its selection. The company's experience in delivering reliable satellite connectivity for various applications, including maritime and land-based mobile communications, likely positioned it as a capable provider for the Department of Defense's needs. Further investigation into historical contract awards and performance reviews would be necessary for a comprehensive assessment of their track record with the U.S. government.

How does the average annual cost of this contract compare to similar satellite telecommunication contracts awarded by the DoD during the same period?

The average annual cost for this contract is approximately $48.2 million ($241.2 million / 5 years). Comparing this to similar DoD satellite telecommunication contracts awarded around 2005-2010 requires access to a broader dataset of government contracts. However, large-scale satellite communication systems, especially those requiring global coverage, secure channels, and high bandwidth, are inherently expensive. Factors influencing cost include the type of satellite (geostationary, medium Earth orbit, low Earth orbit), the leased capacity, ground station support, and service level agreements. Given the limited competition (two bids), it's plausible that this rate, while substantial, might not represent the absolute lowest possible price. A detailed benchmark analysis would involve comparing specific service parameters, duration, and the number of bidders across multiple similar contracts.

What are the primary risks associated with a firm-fixed-price contract for satellite telecommunications services?

A firm-fixed-price (FFP) contract aims to provide cost certainty for the buyer by fixing the price regardless of the contractor's actual costs. For satellite telecommunications, the primary risks for the government under an FFP contract often relate to scope creep and potential quality compromises if not managed carefully. If the government requires additional services or modifications not explicitly covered in the original scope, change orders will increase the total price. Conversely, the contractor bears the risk of cost overruns. If Inmarsat's operational costs exceed their projections, they might be incentivized to cut corners on service quality or support to maintain profitability, potentially impacting the reliability or performance of the satellite communications. Robust performance monitoring and clear contract terms are crucial to mitigate these risks.

What is the strategic importance of this contract for the Department of Defense's communication capabilities?

This contract is strategically important as it provides essential satellite telecommunications services, likely supporting global command and control, intelligence, surveillance, and reconnaissance (ISR) operations, and secure data transmission for the Department of Defense. In an era of increasing global operations and reliance on networked warfare, robust and reliable satellite communications are a critical enabler. Such services allow for connectivity in areas where terrestrial infrastructure is unavailable, damaged, or insecure. The duration of the contract (5 years) suggests a sustained need, indicating that these satellite capabilities are integral to the DoD's long-term operational posture and its ability to project power and maintain situational awareness worldwide.

How has spending on satellite telecommunications services by the DoD evolved since this contract was awarded?

Spending on satellite telecommunications services by the DoD has likely increased significantly since this contract was awarded (2005-2010). The demand for bandwidth, data throughput, and secure communication capabilities has grown exponentially with advancements in technology and the increasing complexity of military operations. Post-2010, the DoD has continued to invest heavily in satellite communications, exploring various architectures including protected communications, wideband global SATCOM, and commercial satellite services to augment military-owned assets. Trends include a greater reliance on commercial providers, the development of more resilient and agile satellite systems, and increased integration of SATCOM with other network-centric capabilities. Budgetary allocations for these services have remained substantial, reflecting their indispensable role.

Industry Classification

NAICS: Information › Satellite Telecommunications › Satellite Telecommunications

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Inmarsat PLC (UEI: 736255410)

Address: 6903 ROCKLEDGE DR # 1300, BETHESDA, MD, 08

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0003902D2301

IDV Type: IDC

Timeline