DoD's $539M ISR contract to MAG DS Corp for aerial intelligence operations shows fair competition

Contract Overview

Contract Amount: $539,044,917 ($539.0M)

Contractor: MAG DS Corp

Awarding Agency: Department of Defense

Start Date: 2013-09-20

End Date: 2017-11-09

Contract Duration: 1,511 days

Daily Burn Rate: $356.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: MULTI-MISSION, MULTI-INT - MANNED AERIAL INTELLIGENCE, SURVEILLANCE AND RECONNAISSANCE OPERATIONS AND SUSTAINMENT AND CONTRACTOR LOGISTICS SUPPORT CONTRACT TO SUPPORT TASK FORCE OBESERVE, DETECT, IDENTIFY, AND NEUTRALIZE. CUSTOMER: PRODUCT MANAGER OBSERVE, DETECT, AND IDENTIFY.

Place of Performance

Location: TINTON FALLS, MONMOUTH County, NEW JERSEY, 07724

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $539.0 million to MAG DS CORP for work described as: MULTI-MISSION, MULTI-INT - MANNED AERIAL INTELLIGENCE, SURVEILLANCE AND RECONNAISSANCE OPERATIONS AND SUSTAINMENT AND CONTRACTOR LOGISTICS SUPPORT CONTRACT TO SUPPORT TASK FORCE OBESERVE, DETECT, IDENTIFY, AND NEUTRALIZE. CUSTOMER: PRODUCT MANAGER OBSERVE, DETECT, AND IDENTIFY. Key points: 1. The contract's cost-plus-incentive-fee structure aims to align contractor performance with government objectives. 2. Full and open competition suggests a robust market for these specialized intelligence, surveillance, and reconnaissance services. 3. The contract duration of over four years indicates a significant, long-term need for these capabilities. 4. While specific performance metrics are not detailed, the nature of ISR operations implies a focus on actionable intelligence delivery. 5. The contract falls within Engineering Services, a broad category that includes specialized technical and analytical support. 6. The absence of small business set-asides may limit opportunities for smaller firms in this high-value contract.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed performance data and comparable ISR contracts. The $539 million total obligation over approximately four years represents a substantial investment in intelligence gathering. The cost-plus-incentive-fee (CPIF) pricing structure suggests that the government sought to control costs while incentivizing contractor performance. However, CPIF contracts can sometimes lead to higher final costs if cost targets are not met or if incentives are heavily leveraged. Further analysis would require comparing the contractor's performance against established benchmarks for similar ISR services and assessing the efficiency of the incentive mechanisms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of four bidders suggests a competitive environment for these specialized aerial intelligence, surveillance, and reconnaissance (ISR) services. Full and open competition is generally favorable for price discovery, as it allows the government to solicit proposals from a wide range of qualified contractors, driving down costs through market forces. The specific number of bids received and the evaluation criteria would provide further insight into the intensity of the competition.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it increases the likelihood of securing services at a competitive price, maximizing the value of federal dollars spent on critical intelligence operations.

Public Impact

The primary beneficiaries are the Department of Defense and its task forces, receiving critical intelligence for operational decision-making. The services delivered include manned aerial intelligence, surveillance, and reconnaissance (ISR) operations, along with contractor logistics support. The contract supports Task Force Observe, Detect, Identify, and Neutralize, indicating a direct impact on counter-terrorism or similar operational missions. The geographic impact is likely global, given the nature of ISR operations supporting deployed forces, though specific locations are not detailed. Workforce implications include specialized roles for pilots, sensor operators, maintenance personnel, and logistics staff, both within the contractor organization and potentially within the government oversight team.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-incentive-fee contracts can sometimes lead to cost overruns if not managed tightly.
The duration of the contract suggests a long-term reliance on contractor support, potentially limiting organic government capability development.
Lack of specific performance metrics makes it difficult to assess the true value for money and effectiveness of the ISR services.
The absence of small business participation may indicate a lack of focus on fostering a diverse contracting ecosystem for specialized services.

Positive Signals

Awarded under full and open competition, indicating a healthy market and potential for competitive pricing.
The contract structure includes incentives, aiming to align contractor performance with government objectives.
The sustained nature of the contract suggests a critical and ongoing need for these ISR capabilities.
The contractor, MAG DS Corp, is likely experienced in providing complex aerial intelligence and logistics support.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), which encompasses firms providing engineering consulting and services. The Intelligence, Surveillance, and Reconnaissance (ISR) market is a significant segment within the broader aerospace and defense industry. Spending in this area is driven by national security requirements and technological advancements in sensor and platform capabilities. Comparable spending benchmarks would typically be found within defense budgets allocated to intelligence gathering and aerial platforms. The market is characterized by a mix of large defense contractors and specialized niche providers.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This suggests that the primary award went to a large business, and opportunities for small businesses may be limited to indirect support roles or specific components if MAG DS Corp chooses to subcontract. The lack of a small business set-aside for a contract of this magnitude could mean fewer opportunities for smaller, specialized firms to directly contribute to critical ISR operations.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army's Product Manager Observe, Detect, and Identify. The cost-plus-incentive-fee structure necessitates close monitoring of costs and performance against established targets. Accountability measures would be embedded in the contract's incentive clauses and performance requirements. Transparency is generally limited for classified or sensitive ISR operations, but contract awards and basic details are typically made public through federal procurement databases. The Inspector General's office within the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Intelligence, Surveillance, and Reconnaissance (ISR) Programs
Aerial Platforms and Systems
Contractor Logistics Support
Special Operations Support Contracts
Department of Defense Aviation Services

Risk Flags

Cost-Plus-Incentive-Fee (CPIF) contract type requires close monitoring to prevent cost overruns.
Long contract duration may indicate a critical need but also potential for vendor lock-in or reduced organic capability development.
Lack of specific performance metrics makes objective assessment of value for money challenging.
Absence of small business set-aside may limit opportunities for smaller, specialized firms.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $539.0 million to MAG DS CORP. MULTI-MISSION, MULTI-INT - MANNED AERIAL INTELLIGENCE, SURVEILLANCE AND RECONNAISSANCE OPERATIONS AND SUSTAINMENT AND CONTRACTOR LOGISTICS SUPPORT CONTRACT TO SUPPORT TASK FORCE OBESERVE, DETECT, IDENTIFY, AND NEUTRALIZE. CUSTOMER: PRODUCT MANAGER OBSERVE, DETECT, AND IDENTIFY.

Who is the contractor on this award?

The obligated recipient is MAG DS CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $539.0 million.

What is the period of performance?

Start: 2013-09-20. End: 2017-11-09.

What is the track record of MAG DS Corp in delivering similar ISR services?

MAG DS Corp has a history of providing complex support services to the Department of Defense, including aviation, logistics, and intelligence support. While specific details on their ISR performance for this particular contract are not publicly available, their involvement in large-scale defense contracts suggests a capacity to handle demanding operational requirements. Further investigation into their past performance ratings, any contract disputes, or commendations related to intelligence gathering and aerial operations would provide a clearer picture of their capabilities and reliability in this domain. Assessing their experience with manned ISR platforms and associated logistics is crucial for understanding their suitability for this role.

How does the total contract value of $539 million compare to similar ISR contracts awarded by the DoD?

The $539 million total obligation over approximately four years places this contract within the mid-to-large range for specialized ISR services. Contracts for manned ISR operations, especially those involving extensive logistics and sustainment, can vary significantly based on platform type, duration, geographic scope, and technological sophistication. For context, larger programs involving dedicated ISR aircraft fleets or advanced sensor development can reach billions of dollars. Smaller, more localized support contracts might be in the tens of millions. This contract appears to represent a substantial, but not exceptionally large, investment for sustained aerial intelligence gathering operations, suggesting a significant operational requirement without the scale of a full fleet program.

What are the primary risks associated with this type of manned aerial ISR contract?

Key risks include operational risks such as mission failure, loss of aircraft or personnel, and intelligence gaps due to technical malfunctions or environmental factors. Programmatic risks involve cost overruns, schedule delays, and performance shortfalls, particularly with cost-plus-incentive-fee structures if not managed diligently. Contractor risks include financial instability, loss of key personnel, or failure to maintain required security clearances. Furthermore, evolving threats and technological advancements necessitate continuous adaptation, posing a risk of obsolescence if the contracted services do not keep pace. Geopolitical instability in operational areas also presents a significant risk factor.

How effective is the cost-plus-incentive-fee (CPIF) structure in ensuring value for money for this ISR contract?

The CPIF structure is designed to provide value by incentivizing the contractor to control costs while achieving performance targets. It aims to balance the government's need for cost certainty with the contractor's need for flexibility in complex, uncertain environments. Success hinges on the clarity and attainability of the target cost and performance metrics, as well as the fairness of the incentive sharing formula. If targets are well-defined and achievable, and incentives are meaningful, CPIF can lead to cost savings and improved performance. However, poorly defined targets or overly aggressive incentives can lead to unintended consequences, such as cutting corners on quality or focusing solely on incentivized metrics at the expense of overall mission success. Regular oversight is critical to ensure the CPIF structure effectively drives value.

What is the historical spending trend for manned aerial ISR operations within the Department of the Army?

Historical spending on manned aerial ISR operations within the Department of the Army has generally been substantial and consistent, reflecting the enduring importance of intelligence gathering for military operations. Budgets in this area fluctuate based on global threat assessments, technological investments, and specific operational demands. Over the past decade, there has been a significant push towards integrating various ISR platforms, including manned and unmanned systems, and leveraging advanced data analytics. While specific figures for manned ISR sustainment and operations contracts are often embedded within larger program elements, the overall trend indicates sustained, significant investment, often in the hundreds of millions to billions of dollars annually across the DoD, with the Army being a major consumer.

What are the implications of awarding this contract under full and open competition versus a sole-source or limited competition?

Awarding this contract under full and open competition, as opposed to sole-source or limited competition, has significant implications for taxpayers and the government. Full and open competition maximizes the pool of potential bidders, fostering a more competitive environment that typically leads to better pricing and a wider range of innovative solutions. It ensures that the government is not unduly reliant on a single provider and that market forces are leveraged to achieve the best value. Sole-source or limited competition, while sometimes necessary for specialized capabilities or urgent needs, often results in higher costs and reduced innovation due to a lack of competitive pressure. Therefore, the full and open approach here suggests a strategic effort to obtain optimal value and service.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 1 RADAR WAY, TINTON FALLS, NJ, 07724

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

Financial Breakdown

Contract Ceiling: $619,024,281

Exercised Options: $561,773,237

Current Obligation: $539,044,917

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $520,369,693

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15P7T10DD421

IDV Type: IDC

Timeline