DoD's $18.6M communication equipment O&M contract with Vectrus Systems LLC shows fair value but limited competition

Contract Overview

Contract Amount: $18,570,548 ($18.6M)

Contractor: Vectrus Systems LLC

Awarding Agency: Department of Defense

Start Date: 2010-08-27

End Date: 2016-09-30

Contract Duration: 2,226 days

Daily Burn Rate: $8.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: OPERATION AND MAINTENANCE OF VARIOUS COMMUNICATION EQUIPMENT THROUGHOUT BELGIUM, GERMANY, THE UNITED KINGDOM (UK), ITALY AND TURKEY

Plain-Language Summary

Department of Defense obligated $18.6 million to VECTRUS SYSTEMS LLC for work described as: OPERATION AND MAINTENANCE OF VARIOUS COMMUNICATION EQUIPMENT THROUGHOUT BELGIUM, GERMANY, THE UNITED KINGDOM (UK), ITALY AND TURKEY Key points: 1. Contract value appears reasonable given the duration and scope of services. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. Performance risk seems manageable given the established contractor and service type. 4. This contract supported critical communication infrastructure across multiple European bases. 5. The IT services sector is characterized by complex, long-term support needs. 6. Contract type (FFP) incentivizes contractor efficiency and cost control.

Value Assessment

Rating: fair

The contract's total value of approximately $18.6 million over roughly six years suggests an average annual spend of around $3.1 million. This figure appears reasonable for maintaining communication equipment across multiple international locations, considering the complexity and geographical spread. Benchmarking against similar IT support contracts for defense installations, the pricing seems within an acceptable range, though a more granular analysis of specific services and equipment would be needed for a definitive value assessment. The firm-fixed-price structure also implies that the contractor bears the risk of cost overruns, which can be a positive indicator for value.

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 offers. However, the provided data shows only 4 bids were received. While full and open competition is the preferred method, a lower-than-expected number of bidders could suggest barriers to entry, such as specialized requirements or limited market capacity for this specific type of service. The presence of multiple bidders, even if limited, generally fosters a competitive environment that can lead to better pricing for the government.

Taxpayer Impact: The use of full and open competition, even with a limited number of bidders, is generally beneficial for taxpayers as it aims to secure the best possible pricing through market forces. However, the relatively low bid count warrants attention to ensure that the government did not miss out on potentially more competitive pricing from a wider pool of qualified vendors.

Public Impact

Service members and civilian personnel stationed in Belgium, Germany, the UK, Italy, and Turkey benefited from reliable communication systems. The contract ensured the operational readiness of essential communication equipment, supporting military command and control functions. Geographic impact is significant, covering key NATO bases and operational hubs across Southern and Central Europe. The contract likely supported a workforce of technicians and engineers responsible for maintenance and repair, potentially including local hires in host nations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders in a full and open competition could indicate potential market concentration or high barriers to entry.
Lack of specific performance metrics makes it difficult to fully assess the contractor's effectiveness and value for money.
The long duration of the contract (over 6 years) could lead to potential price escalation if not managed carefully.

Positive Signals

Firm-fixed-price contract type incentivizes cost efficiency and performance.
Award to an established contractor (Vectrus Systems LLC) suggests a degree of confidence in their capabilities.
Support across multiple critical European locations highlights the strategic importance and potential for economies of scale.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically focusing on the operation and maintenance of communication equipment. The IT services market is vast and diverse, encompassing everything from software development to hardware maintenance and network management. Contracts for maintaining critical infrastructure like communication systems are often long-term and require specialized expertise. Comparable spending benchmarks in this area would typically involve analyzing the total IT spending by the Department of Defense or specific branches like the Air Force on similar support services, often running into billions of dollars annually.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Consequently, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. However, the prime contractor, Vectrus Systems LLC, may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided information. The absence of a small business set-aside means the primary competition was open to all eligible large businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, a component of the Department of Defense. Standard oversight mechanisms would include contract administration by the contracting officer and their representatives, performance reviews, and potentially audits by the Defense Contract Audit Agency (DCAA) or the Inspector General (IG). Transparency is generally facilitated through contract databases like FPDS, which provide public access to contract awards and basic details. The firm-fixed-price nature of the contract also provides a degree of accountability, as the contractor is responsible for delivering the specified services within the agreed-upon price.

Related Government Programs

Defense-wide IT Support Services
Communication Systems Maintenance Contracts
DoD Operations and Maintenance Contracts
IT Services for European Theater Operations

Risk Flags

Limited number of bidders
Geographic concentration of services
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.6 million to VECTRUS SYSTEMS LLC. OPERATION AND MAINTENANCE OF VARIOUS COMMUNICATION EQUIPMENT THROUGHOUT BELGIUM, GERMANY, THE UNITED KINGDOM (UK), ITALY AND TURKEY

Who is the contractor on this award?

The obligated recipient is VECTRUS SYSTEMS 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 $18.6 million.

What is the period of performance?

Start: 2010-08-27. End: 2016-09-30.

What is Vectrus Systems LLC's track record with similar Department of Defense communication maintenance contracts?

Vectrus Systems LLC has a significant history of performing IT and communications support services for the Department of Defense, both domestically and internationally. They have been awarded numerous contracts, including those involving base operations support, network infrastructure management, and communication systems maintenance. Their experience often spans long durations and complex operational environments, similar to the contract in Belgium, Germany, the UK, Italy, and Turkey. Analyzing their past performance on similar contracts, including any reported issues or successes, would provide further insight into their reliability and capability for this specific requirement. Publicly available contract databases often list past awards and performance ratings, which can be used to assess their overall track record.

How does the per-unit cost or service rate for this contract compare to industry benchmarks for similar communication equipment maintenance?

Determining a precise per-unit cost or service rate for this contract is challenging without a detailed breakdown of the services provided and the specific types of communication equipment maintained. The contract covers a broad range of activities across multiple countries. However, the total contract value of approximately $18.6 million over 2226 days (about 6.1 years) averages to roughly $3.04 million per year. To benchmark this, one would need to compare this annual spend against the total cost of ownership for similar communication systems in comparable geographic regions or against rates charged by other large defense contractors for similar O&M services. Industry reports on IT infrastructure maintenance costs and specific defense spending analyses could offer comparative data, but a direct, apples-to-apples comparison is difficult due to the unique scope and location.

What are the primary risks associated with this contract, and how were they mitigated?

Primary risks associated with this contract include geopolitical instability in the operating regions, potential for equipment obsolescence, difficulties in logistics and personnel deployment across multiple countries, and the risk of performance failures impacting critical communication capabilities. Mitigation strategies likely involved robust security protocols, contingency planning for geopolitical events, phased equipment modernization plans, and strong logistical support frameworks. The firm-fixed-price nature of the contract shifts some financial risk to the contractor. Furthermore, the contractor's established presence and experience in these regions likely helped mitigate operational and personnel-related risks. The Department of Defense would also have oversight mechanisms in place to monitor performance and address emerging risks.

How effective has the contractor been in delivering the required communication equipment operation and maintenance services?

Assessing the effectiveness of Vectrus Systems LLC in delivering these services requires access to performance reports, customer satisfaction surveys, and any documented instances of success or failure. The provided data does not include specific performance metrics or ratings. However, the contract's duration (over 6 years) and its renewal or continuation under subsequent awards (if any) could indirectly suggest a level of satisfactory performance. Typically, the Air Force would have Contracting Officer's Representatives (CORs) monitoring performance on the ground. Without these specific details, a definitive judgment on effectiveness cannot be made, but the continued engagement of the contractor implies a baseline level of acceptable performance.

What have been the historical spending patterns for communication equipment O&M by the Department of Defense in Europe?

Historical spending patterns for communication equipment Operation and Maintenance (O&M) by the Department of Defense (DoD) in Europe have generally been substantial and consistent, reflecting the strategic importance of the region. The DoD invests heavily in maintaining robust communication networks to support military operations, intelligence gathering, and logistical coordination across numerous bases and installations. Spending fluctuates based on modernization efforts, geopolitical requirements, and the specific contracts awarded. While this specific contract represents approximately $18.6 million over six years, the overall DoD spending on communication infrastructure in Europe likely amounts to hundreds of millions, if not billions, over similar periods, encompassing various contracts for hardware, software, installation, and ongoing maintenance services provided by multiple contractors.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA561309R0001

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vectrus, Inc. (UEI: 079387563)

Address: 655 SPACE CENTER DR, COLORADO SPRINGS, CO, 80915

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

Financial Breakdown

Contract Ceiling: $21,833,263

Exercised Options: $21,833,263

Current Obligation: $18,570,548

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline