DoD's $778M contract with INDYNE, INC. for communications services shows potential value concerns

Contract Overview

Contract Amount: $778,301,555 ($778.3M)

Contractor: Indyne, Inc.

Awarding Agency: Department of Defense

Start Date: 2003-07-11

End Date: 2017-07-16

Contract Duration: 5,119 days

Daily Burn Rate: $152.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 7

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Other

Official Description: 200310!000264!5700!CA12 !30 CONS/LGC !F0468403C0050 !A!N! !Y! !20030711!20030930!161909049!161909049!161909049!N!INDYNE, INC !6862 ELM STREET !MCLEAN !VA!22101!48376!059!51!MCLEAN !FAIRFAX !VIRGINIA !+000000400000!N!N!000047964924!R426!COMMUNICATIONS SERVICES !S1 !SERVICES !3000!NOT DISCERNABLE OR CLASSIFIED !517110!A!B!3! ! ! ! ! !99990909!B! ! !A! !A!N!V!2!007!K! !C!Y!Z! ! !N!B!N!N! ! !C! !B!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: LOMPOC, SANTA BARBARA County, CALIFORNIA, 93437

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $778.3 million to INDYNE, INC. for work described as: 200310!000264!5700!CA12 !30 CONS/LGC !F0468403C0050 !A!N! !Y! !20030711!20030930!161909049!161909049!161909049!N!INDYNE, INC !6862 ELM STREET !MCLEAN !VA!22101!48376!059!51!MCLEAN !FAIRF… Key points: 1. The contract's duration of over 14 years and significant value raise questions about cost-effectiveness. 2. Competition was full and open after exclusion of sources, suggesting a potentially limited but structured bidding process. 3. The contract type (Cost Plus Incentive Fee) can incentivize cost overruns if not managed tightly. 4. Performance context is limited, making it difficult to assess the true value delivered for the taxpayer. 5. The sector is Wired Telecommunications Carriers, a mature industry where pricing benchmarks should be readily available. 6. No small business set-aside was utilized, indicating potential missed opportunities for smaller firms.

Value Assessment

Rating: fair

The total award amount of $778,301,555.26 over a period of 5119 days (approximately 14 years) suggests a substantial investment. Without specific performance metrics or comparable contract data, it is challenging to definitively benchmark the value for money. The Cost Plus Incentive Fee (CPIF) contract type, while offering flexibility, requires diligent oversight to ensure costs remain reasonable and that incentives align with government objectives. Further analysis of the contractor's performance and adherence to cost controls is needed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was broad, certain sources may have been excluded prior to the solicitation. The number of bids received is not specified, but this procurement method suggests a deliberate effort to ensure a competitive environment. The exclusion of sources warrants further investigation to understand its justification and potential impact on the breadth of competition.

Taxpayer Impact: While the competition was broad, the exclusion of certain sources could have limited the number of viable bidders, potentially impacting price discovery and the ultimate value achieved for taxpayers.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Department of the Air Force, which receives communications services. The contract delivers essential wired telecommunications carrier services, crucial for military operations and infrastructure. The geographic impact is not explicitly detailed but likely supports DoD operations across various locations. Workforce implications may include direct and indirect employment opportunities within INDYNE, INC. and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The extended duration of the contract (over 14 years) increases the risk of scope creep and potential cost escalation.
The CPIF contract type, if not rigorously managed, can lead to higher-than-expected costs for the government.
Lack of detailed performance metrics makes it difficult to assess the contractor's efficiency and effectiveness.
The 'exclusion of sources' in the competition process raises questions about the completeness of the bidding pool.

Positive Signals

The contract was awarded through a full and open competition, indicating a structured and potentially robust bidding process.
The use of an incentive fee structure suggests an attempt to align contractor performance with government objectives.
The contractor, INDYNE, INC., has a significant award amount, implying a level of established capability and trust.

Sector Analysis

This contract falls within the Wired Telecommunications Carriers sector (NAICS 517110), a mature industry characterized by established infrastructure and service providers. The total federal spending in this sector can be substantial, supporting critical communication needs across various agencies. Benchmarking this contract's value would involve comparing its per-unit costs and overall value proposition against similar telecommunications service contracts awarded by other government entities or within the commercial sector.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting plans specifically targeting small businesses. This suggests that the primary award went to a large business, and opportunities for small business participation may be limited unless pursued through subcontracting by the prime contractor.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) and the Defense Contract Management Agency (DCMA). The CPIF structure necessitates close monitoring of costs and performance against established targets. Transparency is dependent on the reporting requirements within the contract and the agency's commitment to public disclosure of contract performance information.

Related Government Programs

Defense Communications Services
Wired Network Infrastructure
Telecommunications Support Services
Information Technology Services

Risk Flags

Long contract duration
Cost Plus Incentive Fee contract type
Potential for technological obsolescence
Limited transparency on performance metrics
Exclusion of sources in competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $778.3 million to INDYNE, INC.. 200310!000264!5700!CA12 !30 CONS/LGC !F0468403C0050 !A!N! !Y! !20030711!20030930!161909049!161909049!161909049!N!INDYNE, INC !6862 ELM STREET !MCLEAN !VA!22101!48376!059!51!MCLEAN !FAIRFAX !VIRGINIA !+000000400000!N!N!000047964924!R426!COMMUNICATIONS SERVICES !S1 !SERVICES !3000!NOT DISCERNABLE OR CLASSIFIED !517110!A!B!3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is INDYNE, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $778.3 million.

What is the period of performance?

Start: 2003-07-11. End: 2017-07-16.

What is the historical spending pattern for communications services by the Department of the Air Force?

Analyzing historical spending for communications services by the Department of the Air Force reveals a consistent and significant investment in maintaining robust communication networks. Over the years, the Air Force has procured a wide array of services, including wired telecommunications, satellite communications, and network infrastructure support. Spending patterns often reflect evolving technological needs, security requirements, and operational demands. For instance, there might be a trend towards increased spending on secure, high-bandwidth solutions to support modern warfare and data-intensive operations. Comparing the $778 million awarded to INDYNE, INC. against the total historical expenditure provides context on its relative scale and importance within the Air Force's overall communications budget. Understanding these patterns helps in assessing whether current spending aligns with historical trends or represents a significant shift in procurement strategy or technological focus.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact contractor performance and cost control in long-term contracts?

The Cost Plus Incentive Fee (CPIF) contract structure is designed to incentivize the contractor to meet or exceed certain performance targets while controlling costs. In a CPIF arrangement, the final profit is adjusted based on the relationship between the actual costs and the target costs, as well as performance against other specified objectives. For long-term contracts like this one, CPIF can be effective if the targets are well-defined, measurable, and achievable. However, it also carries risks. If the targets are too easily met or if the cost-sharing formula is not sufficiently weighted towards cost savings, the contractor may have less incentive to aggressively control expenses. Conversely, overly ambitious targets or poorly defined performance metrics can lead to disputes and hinder performance. Effective government oversight is crucial to ensure that the incentives align with the government's best interests and that costs are managed prudently throughout the contract's life.

What are the potential risks associated with a contract duration exceeding 14 years for telecommunications services?

A contract duration exceeding 14 years for telecommunications services presents several significant risks. Firstly, technological obsolescence is a major concern; the telecommunications landscape evolves rapidly, and services or equipment procured today may be outdated or inefficient by the end of the contract term. This could lead to the government paying for suboptimal technology or requiring costly modifications. Secondly, market conditions and pricing can change dramatically over such a long period. The initial pricing may become uncompetitive as new technologies emerge and market competition shifts. Thirdly, long-term contracts can reduce the government's flexibility to adapt to changing mission requirements or to take advantage of new, more cost-effective solutions that become available. Finally, managing such a long-term relationship requires sustained oversight and consistent alignment between the contractor and the government, which can be challenging due to personnel turnover on both sides and shifts in organizational priorities.

What does 'Full and Open Competition After Exclusion of Sources' imply about the bidding process and potential outcomes?

'Full and Open Competition After Exclusion of Sources' implies a procurement process that initially aimed for broad competition but subsequently excluded certain potential bidders before the final solicitation. This means that while the competition was not restricted from the outset, specific entities or types of entities were deemed ineligible to bid. The reasons for exclusion could range from national security concerns, past performance issues, or specific technical requirements that only a subset of potential contractors could meet. While the process still allows for competition among the remaining eligible sources, the exclusion could potentially limit the diversity of proposals received and may impact the final price discovery. It suggests that the government had specific criteria or concerns that led to narrowing the field, which warrants understanding to assess the overall fairness and effectiveness of the competition.

How does the NAICS code 517110 (Wired Telecommunications Carriers) compare to other telecommunications sectors in terms of federal spending and contract types?

The NAICS code 517110, Wired Telecommunications Carriers, represents a significant segment of federal telecommunications spending, focusing on services delivered via physical infrastructure like fiber optic cables and copper lines. Federal agencies rely heavily on these services for secure and reliable data transmission, voice communication, and network connectivity. Compared to other telecommunications sectors, such as wireless or satellite communications, wired services often involve long-term infrastructure investments and maintenance contracts. Federal spending in this area can be characterized by large, multi-year contracts, often utilizing various contract types including fixed-price, cost-reimbursable, and incentive-based structures, depending on the nature of the service and the level of uncertainty. The stability of wired infrastructure can make it a preferred choice for critical, fixed-location operations, leading to substantial and consistent federal outlays in this category.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 7

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 6862 ELM STREET, MCLEAN, VA, 22101

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $829,808,867

Exercised Options: $818,840,028

Current Obligation: $778,301,555

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline