DOT's $378.8M Air Traffic Control contract with Serco Inc. awarded under full and open competition

Contract Overview

Contract Amount: $378,800,239 ($378.8M)

Contractor: Serco Inc

Awarding Agency: Department of Transportation

Start Date: 2015-04-07

End Date: 2025-06-30

Contract Duration: 3,737 days

Daily Burn Rate: $101.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: SERCO MANAGEMENT SERVICES INC FOR AREA 5 IGF::CT::IGF

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Transportation obligated $378.8 million to SERCO INC for work described as: SERCO MANAGEMENT SERVICES INC FOR AREA 5 IGF::CT::IGF Key points: 1. Contract value represents significant investment in air traffic control modernization and operations. 2. Full and open competition suggests a potentially competitive bidding process, which can drive better pricing. 3. The contract's duration of over 3700 days indicates a long-term commitment to service provision. 4. Fixed-price contract type shifts performance risk to the contractor, Serco Inc. 5. The award to a single contractor, Serco Inc., warrants scrutiny for potential single-source dependency risks. 6. The North American Industry Classification System (NAICS) code 488111 points to a specialized service within the air transportation sector.

Value Assessment

Rating: good

The contract's total value of $378.8 million over its extended period suggests a substantial investment. Benchmarking this against similar air traffic control service contracts is challenging without more specific service details. However, the firm fixed-price nature indicates that the contractor bears the risk of cost overruns, which is generally favorable for the government. The number of bids received (3) provides some indication of market interest, but a deeper analysis of the bid prices relative to the estimated value would be needed for a definitive value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. Three bids were received, suggesting a moderate level of competition for this significant contract. While three bidders is not a large number for a contract of this magnitude, it does demonstrate that the opportunity was not restricted and that multiple entities were interested in providing these critical air traffic control services.

Taxpayer Impact: The full and open competition process, even with three bidders, is generally beneficial for taxpayers as it encourages competitive pricing and potentially leads to more cost-effective solutions compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the Federal Aviation Administration (FAA) and the traveling public, who rely on safe and efficient air traffic control. The services delivered are critical for the operation and safety of the National Airspace System. The geographic impact is nationwide, covering all areas managed by the FAA's air traffic control operations. This contract supports a workforce involved in highly specialized air traffic control management and support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for contractor lock-in due to the long contract duration and specialized nature of services.
Reliance on a single awardee for critical national infrastructure requires robust performance monitoring.
Limited number of bidders (3) could indicate barriers to entry or consolidation in the market for such services.

Positive Signals

Awarded through full and open competition, maximizing potential for competitive pricing.
Firm fixed-price contract type transfers cost overrun risk to the contractor.
Long contract duration provides stability and predictability for service delivery.

Sector Analysis

The air traffic control services sector is a highly specialized segment of the broader air transportation industry. It is characterized by stringent regulatory requirements, high technical expertise, and significant government oversight. The market size is largely defined by government contracts, as private entities typically do not operate national air traffic control systems. This contract fits within the essential infrastructure services required by the FAA to manage the National Airspace System, representing a significant portion of federal spending in this niche.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no explicit mention of small business subcontracting goals. This suggests that the primary awardee, Serco Inc., is likely a large business. The absence of set-aside provisions means that opportunities for small businesses would primarily come through subcontracting, the extent of which is not detailed here. Further investigation into subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Transportation and the Federal Aviation Administration. As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. The firm fixed-price nature incentivizes contractor performance, but the long duration necessitates continuous monitoring of service delivery and adherence to contract terms. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Federal Aviation Administration Operations
Air Traffic Management Systems
National Airspace System Modernization
Government Contract Services

Risk Flags

Long contract duration may increase risk of obsolescence or changing requirements.
Single awardee for critical infrastructure necessitates robust oversight.
Limited competition (3 bidders) could indicate market concentration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $378.8 million to SERCO INC. SERCO MANAGEMENT SERVICES INC FOR AREA 5 IGF::CT::IGF

Who is the contractor on this award?

The obligated recipient is SERCO INC.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $378.8 million.

What is the period of performance?

Start: 2015-04-07. End: 2025-06-30.

What is Serco Inc.'s track record with similar large-scale government contracts, particularly in the transportation or defense sectors?

Serco Inc. has a substantial history of managing large government contracts across various sectors, including defense, transportation, and civilian services. They are known for operating and maintaining complex systems and infrastructure for government clients. While specific details on past performance for air traffic control services would require a deeper dive into contract histories, Serco's general profile suggests experience with large, mission-critical programs. Analyzing past performance metrics, any significant contract disputes, or awards for similar services would provide a clearer picture of their capabilities and reliability in managing a contract of this scale and importance for the FAA.

How does the awarded price compare to industry benchmarks or previous contracts for similar air traffic control services?

A precise comparison of the awarded price ($378.8 million) to industry benchmarks or previous contracts is difficult without detailed service scope and performance metrics. However, the contract's firm fixed-price structure suggests that the government has negotiated a price that Serco Inc. must adhere to, transferring cost overrun risks. The fact that it was awarded under full and open competition with three bidders implies some level of market validation of the pricing. To conduct a thorough benchmark, one would need to compare the per-unit costs (e.g., cost per flight hour managed, cost per controller hour) against similar FAA contracts or international equivalents, adjusting for differences in service complexity, technology, and labor costs.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract, and how are they monitored?

The specific Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) for this contract are not detailed in the provided data. However, for air traffic control services, typical KPIs would likely include metrics related to safety (e.g., incident rates, adherence to procedures), efficiency (e.g., traffic flow management, delay reduction), and operational availability (e.g., system uptime). Monitoring would be conducted by the Federal Aviation Administration's contracting officers and technical representatives, likely through regular performance reviews, audits, and analysis of contractor-reported data. Adherence to these KPIs and SLAs would be crucial for Serco Inc.'s continued performance and payment under the firm fixed-price agreement.

What is the historical spending trend for air traffic control services under the FAA, and how does this contract fit within that trend?

Historical spending on air traffic control services by the FAA has been substantial and generally increasing over time, driven by modernization efforts, increased air traffic volume, and the need to maintain aging infrastructure. This $378.8 million contract, spanning from 2015 to 2025, represents a significant, long-term investment. Its value aligns with the substantial, ongoing funding required for the National Airspace System. Analyzing FAA budget documents and historical contract awards for air traffic control would reveal if this contract's value is consistent with, higher than, or lower than previous spending patterns, potentially indicating shifts in program scope, efficiency gains, or inflationary pressures.

Are there any identified risks or concerns related to Serco Inc.'s performance on previous government contracts that might impact this award?

Assessing potential risks related to Serco Inc.'s past performance requires a review of their contract history beyond the provided data. Government agencies typically conduct pre-award evaluations of contractor past performance. If Serco has faced significant performance issues, contract disputes, or findings of non-compliance on prior contracts, these could be flagged as risks. However, without specific details on such issues, it's presumed that the FAA's award decision considered Serco's overall track record. A comprehensive risk assessment would involve examining performance reports, any debriefings from previous contract competitions, and public records of contractor issues.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Air Traffic Control

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1818 LIBRARY ST STE 1000, 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: $482,479,476

Exercised Options: $378,800,239

Current Obligation: $378,800,239

Actual Outlays: $199,771,378

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline