DOT's $836M ERAM/ERIDS contract to Leidos, Inc. awarded as sole-source, extending through 2041
Contract Overview
Contract Amount: $836,206,833 ($836.2M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Transportation
Start Date: 2021-06-15
End Date: 2041-05-24
Contract Duration: 7,283 days
Daily Burn Rate: $114.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: THE PURPOSE OF THIS CONTRACT IS TO ENHANCE AND MAINTAIN THE EN ROUTE AUTOMATION AND MODERNIZATION (ERAM), INCLUDING THE EN ROUTE INFORMATION DISPLAY SYSTEM (ERIDS), AND TO PRODUCE, IMPLEMENT, AND PROVIDE SUPPORT FOR A LIMITED NUMBER OF ERAM/ERIDS SYS
Place of Performance
Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20878
State: Maryland Government Spending
Plain-Language Summary
Department of Transportation obligated $836.2 million to LEIDOS, INC. for work described as: THE PURPOSE OF THIS CONTRACT IS TO ENHANCE AND MAINTAIN THE EN ROUTE AUTOMATION AND MODERNIZATION (ERAM), INCLUDING THE EN ROUTE INFORMATION DISPLAY SYSTEM (ERIDS), AND TO PRODUCE, IMPLEMENT, AND PROVIDE SUPPORT FOR A LIMITED NUMBER OF ERAM/ERIDS SYS Key points: 1. The contract focuses on enhancing and maintaining critical air traffic automation systems. 2. A sole-source award suggests limited competition, potentially impacting price negotiation. 3. The long duration (over 20 years) indicates a strategic, long-term investment in air traffic control infrastructure. 4. The contract's value is substantial, reflecting the complexity and importance of the systems involved. 5. Performance will be crucial for ensuring the reliability and modernization of air traffic management. 6. The IT services sector is characterized by high demand for specialized expertise, as seen here.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to its sole-source nature and long-term scope. The cost-plus-fixed-fee structure means costs can fluctuate, and the final price will depend on actual expenditures. Without competitive bids, it's difficult to definitively assess if the pricing represents optimal value for money. However, the scale and duration suggest a significant investment in a critical national infrastructure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, Leidos, Inc., was considered. This approach is typically used when a unique capability or specialized knowledge is required, or in cases of urgent need. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or offered alternative solutions.
Taxpayer Impact: Taxpayers may not have received the most cost-effective solution due to the absence of competitive pressure. The government's negotiating position is inherently weaker in a sole-source scenario.
Public Impact
The Federal Aviation Administration (FAA) and the flying public benefit from modernized and reliable air traffic control systems. Services delivered include the enhancement, maintenance, and support of the En Route Automation and Modernization (ERAM) system. The geographic impact is nationwide, as ERAM is a core component of the U.S. air traffic control network. Workforce implications include the need for specialized IT professionals to support and develop these complex systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and potential for cost savings.
- Long contract duration (over 18 years) carries inherent risks of technological obsolescence or changing requirements.
- Cost-plus-fixed-fee contract type can incentivize higher spending if not closely managed.
- Lack of transparency in the sole-source justification process could obscure potential alternatives.
- Potential for vendor lock-in due to the specialized nature of the systems.
Positive Signals
- Focus on critical national infrastructure (air traffic control) ensures high priority and dedicated resources.
- Long-term contract provides stability and continuity for essential system maintenance and upgrades.
- Leidos, Inc. likely possesses specialized expertise required for these complex systems.
- The contract aims to modernize and enhance existing systems, promising improved efficiency and safety.
Sector Analysis
This contract falls within the IT services sector, specifically focusing on computing infrastructure, data processing, and related services for a critical government function. The market for air traffic control technology is specialized, with a few key players capable of handling such large-scale, mission-critical systems. Comparable spending benchmarks are difficult to establish due to the unique nature of ERAM, but investments in large-scale IT modernization projects for federal agencies often run into hundreds of millions or billions of dollars over their lifecycle.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the specialized requirements of maintaining and enhancing complex air traffic automation systems, it is unlikely that small businesses would be primary contractors. However, Leidos, Inc. may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Transportation and the Federal Aviation Administration (FAA). Given its critical nature, multiple oversight mechanisms are likely in place, including program management reviews, financial audits, and performance monitoring. The contract's long duration necessitates continuous evaluation to ensure it remains aligned with evolving technological needs and budgetary constraints. Inspector General oversight would also be applicable for investigating any potential fraud, waste, or abuse.
Related Government Programs
- Next Generation Air Transportation System (NextGen)
- FAA Air Traffic Control Modernization Programs
- Federal IT Modernization Initiatives
- Critical Infrastructure Protection Contracts
Risk Flags
- Sole-source award
- Long contract duration
- Cost-plus-fixed-fee pricing
- Critical infrastructure dependency
Tags
it-services, air-traffic-control, federal-aviation-administration, department-of-transportation, definitive-contract, cost-plus-fixed-fee, sole-source, long-term-contract, national-airspace, automation-systems, maryland, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Transportation awarded $836.2 million to LEIDOS, INC.. THE PURPOSE OF THIS CONTRACT IS TO ENHANCE AND MAINTAIN THE EN ROUTE AUTOMATION AND MODERNIZATION (ERAM), INCLUDING THE EN ROUTE INFORMATION DISPLAY SYSTEM (ERIDS), AND TO PRODUCE, IMPLEMENT, AND PROVIDE SUPPORT FOR A LIMITED NUMBER OF ERAM/ERIDS SYS
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
Which agency awarded this contract?
Awarding agency: Department of Transportation (Federal Aviation Administration).
What is the total obligated amount?
The obligated amount is $836.2 million.
What is the period of performance?
Start: 2021-06-15. End: 2041-05-24.
What is the specific justification for awarding this contract as sole-source to Leidos, Inc.?
The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source award. Specific justifications for sole-source procurements typically include that only one responsible source is capable of providing the required service or property, or that there is a compelling justification for an other than full and open competition. For complex systems like ERAM/ERIDS, this often relates to unique technical expertise, proprietary technology, or the need for continuity with existing systems where switching vendors would be prohibitively expensive or disruptive. A detailed justification document, usually available through federal procurement databases, would outline the precise reasons.
How does the cost-plus-fixed-fee (CPFF) contract type influence the total cost and risk for the government?
A Cost-Plus-Fixed-Fee (CPFF) contract type means the contractor (Leidos, Inc.) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts much of the cost risk to the government, as the final contract price is not fixed upfront and can increase if costs escalate. While the fixed fee provides some predictability for the contractor's profit, the government bears the risk of cost overruns. This type of contract is often used when the scope of work is not precisely defined or when there is significant uncertainty in the costs involved, as might be the case with long-term system modernization and maintenance.
What are the potential risks associated with a contract duration extending to May 2041?
A contract duration extending to May 2041, over 18 years from the start date, presents several risks. Technological obsolescence is a primary concern; systems and software developed or maintained under this contract could become outdated long before the contract ends, requiring costly upgrades or replacements. Market conditions and vendor capabilities can also change significantly over such a long period. Furthermore, evolving regulatory requirements or shifts in national priorities could necessitate changes to the system's functionality or scope, potentially leading to contract modifications or disputes. The government also faces the risk of vendor lock-in, where reliance on a single provider for an extended period can reduce leverage in future negotiations.
How does this contract align with the broader goals of the FAA's Next Generation Air Transportation System (NextGen)?
The En Route Automation and Modernization (ERAM) system is a foundational component of the FAA's Next Generation Air Transportation System (NextGen) initiative. NextGen aims to modernize the U.S. air traffic control system to increase capacity, improve efficiency, enhance safety, and reduce environmental impact. ERAM is responsible for managing and separating aircraft in the en route airspace, a critical function that NextGen seeks to optimize through advanced technologies. Therefore, this contract directly supports NextGen's objectives by ensuring the core automation systems are maintained, enhanced, and capable of supporting future advancements in air traffic management.
What is the historical spending trend for ERAM/ERIDS or similar air traffic control systems prior to this contract?
Historical spending data for ERAM/ERIDS prior to this specific contract award is not detailed in the provided snippet. However, the development and modernization of air traffic control systems are known to be multi-billion dollar, long-term endeavors. The FAA has consistently invested heavily in upgrading its infrastructure, including automation systems, to meet increasing air traffic demands and technological advancements. Previous contracts for similar systems, such as the Advanced Automation System (AAS) or earlier iterations of en route automation, involved substantial government funding over many years. The $836 million value of this current contract is indicative of the significant, ongoing investment required for such critical national infrastructure.
What are the performance metrics and key performance indicators (KPIs) likely used to evaluate Leidos, Inc.'s performance under this contract?
While specific KPIs are not provided, performance metrics for a contract like this would likely focus on system availability and reliability (e.g., uptime percentages), system performance (e.g., processing speed, data accuracy), response times for maintenance and support, successful implementation of enhancements and upgrades, and adherence to security protocols. Key Performance Indicators (KPIs) might include metrics such as Mean Time Between Failures (MTBF), Mean Time To Repair (MTTR), successful completion of system tests, and user satisfaction surveys from air traffic controllers and other stakeholders. Meeting these metrics would be crucial for ensuring the continued safe and efficient operation of the national airspace.
Industry Classification
NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services
Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 1750 PRESIDENTS ST, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $6,775,153,307
Exercised Options: $836,206,833
Current Obligation: $836,206,833
Actual Outlays: $697,980,953
Subaward Activity
Number of Subawards: 163
Total Subaward Amount: $74,443,315
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2021-06-15
Current End Date: 2041-05-24
Potential End Date: 2041-05-24 00:00:00
Last Modified: 2026-03-13
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