DoD's $576M contract with DynCorp International for logistics services shows significant cost overruns and extended duration

Contract Overview

Contract Amount: $576,132,812 ($576.1M)

Contractor: Dyncorp International LLC

Awarding Agency: Department of Defense

Start Date: 2004-10-01

End Date: 2017-07-07

Contract Duration: 4,662 days

Daily Burn Rate: $123.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200511!000001!5700!FA4883!HQ USCEN TAF/LGC !F4465000C0006 !A!N! !Y! !P00058!20041001!20050930!058830477!058830477!009581091!N!DYNCORP INTERNATIONAL LLC !6500 WEST FREEWAY, SUITE 6!FORT WORTH !TX!76116!00000! !MU!* !* !OMAN !+000058765774!N!N!000000000000!X111!LEASE/OFFICE BUILDINGS !S1 !SERVICES !000 !* !493110!E! !3! ! !H! ! !20200930!B! ! !A! !A!U!R!2!004!B! !Z!Y!Z!B!MU!N!M!N! ! ! ! ! !A!A!000!A!B!N! ! !Y!Y! ! !0016! !

Plain-Language Summary

Department of Defense obligated $576.1 million to DYNCORP INTERNATIONAL LLC for work described as: 200511!000001!5700!FA4883!HQ USCEN TAF/LGC !F4465000C0006 !A!N! !Y! !P00058!20041001!20050930!058830477!058830477!009581091!N!DYNCORP INTERNATIONAL LLC !6500 WEST FREEWAY, SUITE 6!FORT WORTH !TX!76116!00000! !MU!* !* … Key points: 1. The contract's final value significantly exceeded its initial award amount, indicating potential cost control issues. 2. The contract duration was extended substantially beyond the original period, suggesting scope creep or unforeseen challenges. 3. While a definitive contract, the cost-plus award fee structure may incentivize higher spending. 4. The services provided are critical for military operations, but the cost performance warrants scrutiny. 5. The contractor has a substantial history with the government, but this specific contract's performance is a key indicator. 6. Benchmarking against similar logistics contracts is crucial to assess value for money.

Value Assessment

Rating: concerning

This contract's final value of $576 million is substantially higher than its initial award, and its duration extended significantly beyond the planned period. The cost-plus award fee (CPAF) pricing structure, while common for complex services, can sometimes lead to higher costs if not managed tightly. Comparing this to other large-scale logistics support contracts awarded by the Department of Defense is essential to determine if the cost growth and extended timeline are outliers or indicative of broader issues in contract management or execution.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a broad search for qualified contractors. However, the details on the number of bidders and the specific competitive dynamics are not fully elaborated in the provided data. A robust competition typically leads to better pricing and terms for the government. The fact that it was competed fully is a positive signal, but the subsequent cost and duration issues raise questions about the effectiveness of that competition in securing long-term value.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it aims to drive down costs through market forces. However, in this case, the significant cost growth suggests that the initial competitive process may not have fully anticipated or mitigated the eventual expenses.

Public Impact

The primary beneficiaries are the Department of Defense, receiving essential logistics and base support services. Services include general warehousing and storage, critical for maintaining military readiness and operational capabilities. The contract likely has a broad geographic impact, supporting military operations in potentially diverse locations. The contract supports a significant workforce, both directly employed by DynCorp and indirectly through subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Significant cost growth from initial award to final value.
Extended contract duration beyond original estimates.
Cost-plus award fee structure can incentivize higher spending.
Lack of detailed competition metrics makes it hard to assess initial value.
Potential for scope creep given the duration and cost increases.

Positive Signals

Awarded under full and open competition.
Contractor has a long history of performing government contracts.
Services provided are essential for military operations.
Definitive contract provides a framework for ongoing service delivery.

Sector Analysis

This contract falls within the broader defense logistics and support services sector, a significant area of federal spending. The North American Industry Classification System (NAICS) code 493110, General Warehousing and Storage, represents a critical component of the supply chain for many industries, particularly defense. The market for these services is substantial, with numerous large and small businesses competing for government contracts. Benchmarks for similar contracts often focus on cost per square foot for storage, efficiency in inventory management, and timely delivery metrics.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss=false) and does not explicitly mention subcontracting goals for small businesses (sb=false). This suggests that the primary award went to a large business, DynCorp International. While large contracts can sometimes include subcontracting plans to engage small businesses, the absence of specific flags here implies a limited direct impact on the small business ecosystem through this particular award. Further investigation into subcontracting reports would be needed to confirm the extent of small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA). Inspector General (IG) reports from the Department of Defense could provide insights into any audits or investigations related to cost management, performance, or contractor compliance. Transparency is often facilitated through contract databases like FPDS, but detailed performance reviews and audit findings may not always be publicly accessible.

Related Government Programs

Defense Logistics Agency (DLA) Contracts
Base Operations Support (BOS)
Global Contingency Logistics Support
Military Sealift Command Contracts
Air Mobility Command Contracts

Risk Flags

Significant Cost Growth
Extended Period of Performance
Cost-Plus Award Fee Structure
Potential for Scope Creep
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $576.1 million to DYNCORP INTERNATIONAL LLC. 200511!000001!5700!FA4883!HQ USCEN TAF/LGC !F4465000C0006 !A!N! !Y! !P00058!20041001!20050930!058830477!058830477!009581091!N!DYNCORP INTERNATIONAL LLC !6500 WEST FREEWAY, SUITE 6!FORT WORTH !TX!76116!00000! !MU!* !* !OMAN !+000058765774!N!N!000000000000!X111!LEASE/OFFICE BUILDINGS !S1 !SERVICES !000 !* !493110!E! !3! ! !H! ! !202

Who is the contractor on this award?

The obligated recipient is DYNCORP INTERNATIONAL LLC.

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 $576.1 million.

What is the period of performance?

Start: 2004-10-01. End: 2017-07-07.

What was the initial estimated value of the contract, and how did the final award amount compare?

The provided data indicates an initial award amount of $58,830,477. However, the contract's final value reached $576,132,812.20. This represents a significant increase of over 870% from the initial award. Such a substantial escalation suggests potential issues with the initial cost estimation, unforeseen scope expansion, or challenges in managing contract modifications and change orders throughout its lifecycle. Understanding the drivers behind this dramatic increase is crucial for assessing the contract's value and the effectiveness of the government's oversight.

What was the original period of performance, and how much was it extended?

The original period of performance for this contract was from October 1, 2004, to September 30, 2005, spanning one year. The contract's effective date was October 1, 2004, and it ultimately ended on July 7, 2017. This indicates an extension of approximately 12 years beyond the initial one-year term. Such a prolonged extension, coupled with the significant cost growth, points towards a contract that evolved substantially from its original scope or requirements, potentially indicating a need for more robust initial planning or a shift in strategic objectives over time.

What is the significance of the 'Cost Plus Award Fee' (CPAF) contract type?

A Cost Plus Award Fee (CPAF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs incurred, plus a fee that has a base amount plus an award amount. The award amount is earned only if the contractor meets or exceeds certain performance objectives established by the government. While CPAF contracts are often used for complex services where performance standards are difficult to define precisely upfront, they can incentivize contractors to achieve high performance. However, they also require careful government oversight to ensure that costs remain reasonable and that award fees are justified based on objective performance metrics.

How does DynCorp International's track record with similar contracts inform the assessment of this contract?

DynCorp International has a long history of performing large-scale government contracts, particularly in logistics, aviation, and base support services, often in challenging environments. This extensive experience suggests a deep understanding of government contracting processes and operational requirements. However, a long track record does not automatically guarantee success on every contract. The significant cost growth and duration extension on this specific contract warrant scrutiny, regardless of the contractor's overall experience. It highlights the importance of contract-specific performance analysis rather than relying solely on a contractor's general reputation.

What are the potential risks associated with a contract of this size and duration?

Contracts of this magnitude ($576M) and extended duration (over 13 years total) carry inherent risks. These include the potential for cost overruns due to inflation, changing requirements, and unforeseen operational challenges. There's also a risk of contractor performance degradation over time or a lack of sustained innovation if incentives are not properly structured. Furthermore, long-term reliance on a single contractor for critical services can reduce flexibility and potentially lead to vendor lock-in. Effective risk mitigation requires continuous government oversight, performance monitoring, and adaptive contract management.

What does the NAICS code 493110 (General Warehousing and Storage) imply about the services rendered?

The NAICS code 493110, General Warehousing and Storage, indicates that the core services provided under this contract involve the storage of goods, inventory management, and related logistical support. For a defense contract, this likely translates to managing vast quantities of military equipment, supplies, and materiel. This includes receiving, storing, preserving, and issuing items to support military operations. The efficiency and effectiveness of these warehousing operations are critical for maintaining supply chain integrity and ensuring that the right resources are available when and where needed by the armed forces.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › General Warehousing and Storage

Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Cerberus Capital Management, L.P. (UEI: 014784388)

Address: 6500 WEST FREEWAY, SUITE 6, FORT WORTH, TX, 76116

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline