DoD's $692M Iraq Services Contract Awarded to Sallyport Global Holdings Inc. Raises Value Concerns

Contract Overview

Contract Amount: $692,084,069 ($692.1M)

Contractor: Sallyport Global Holdings Inc

Awarding Agency: Department of Defense

Start Date: 2019-01-31

End Date: 2021-04-30

Contract Duration: 820 days

Daily Burn Rate: $844.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: IRAQ SERVICES PETROLEUM, SECURITY, VEHICLE MAINTENANCE

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20191

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $692.1 million to SALLYPORT GLOBAL HOLDINGS INC for work described as: IRAQ SERVICES PETROLEUM, SECURITY, VEHICLE MAINTENANCE Key points: 1. The contract's significant value raises questions about cost-effectiveness given the services provided. 2. Limited competition for this contract may have impacted pricing and overall value for the government. 3. The duration and scope of the contract suggest potential for cost overruns or scope creep. 4. Performance context is limited, making it difficult to assess the contractor's effectiveness and value. 5. This contract falls within the broader category of support services for overseas operations. 6. The absence of a specific Product Service Code (PSC) hinders direct comparison with similar contracts.

Value Assessment

Rating: questionable

The total award of $692 million for 'IRAQ SERVICES PETROLEUM, SECURITY, VEHICLE MAINTENANCE' is substantial. Without detailed breakdowns of services rendered and performance metrics, it is difficult to benchmark this against similar contracts. The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to higher costs if not managed rigorously, as the contractor is reimbursed for allowable costs plus a fixed fee. The lack of a specific PSC code makes direct comparison challenging, but the overall expenditure warrants scrutiny regarding value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This significantly limits the opportunity for competitive bidding, which typically drives down prices and encourages innovation. The lack of competition means the government did not benefit from multiple offers, potentially leading to a higher price than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government had fewer options to negotiate favorable terms, potentially resulting in less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel operating in Iraq, who receive essential support services. Services include petroleum supply, security, and vehicle maintenance, crucial for maintaining operational readiness. The geographic impact is concentrated in Iraq, supporting U.S. military operations in that region. Workforce implications include employment for personnel involved in delivering these support services, both directly and indirectly.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to inflated costs.
Cost Plus Fixed Fee structure can incentivize higher spending if not closely monitored.
Limited transparency on specific service delivery and cost breakdowns hinders full assessment.
The contract's duration and scope could present risks of cost overruns.
Absence of a specific PSC code makes benchmarking difficult.

Positive Signals

Contract provided essential services to support military operations.
Contract was awarded to a single entity, potentially simplifying management.
The fixed fee component of the contract provides some cost predictability for the fee itself.

Sector Analysis

This contract falls under the broad category of support services, often procured for overseas operations. The market for such services is competitive, but specific requirements like those in a conflict zone can lead to specialized providers and, at times, sole-source awards. Benchmarking is difficult without a specific PSC, but general government spending on logistics and security support in high-risk environments is substantial, often running into billions annually.

Small Business Impact

The data indicates that small business participation was not a stated factor in this award (sb: false, ss: false). There is no indication of small business set-asides or subcontracting plans. This means the primary contractor, Sallyport Global Holdings Inc., likely handled the majority of the work, with limited direct benefit to the small business ecosystem through this specific contract.

Oversight & Accountability

Oversight mechanisms for a contract of this nature would typically involve the Department of Defense's contracting officers and potentially Inspector General offices. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, requiring detailed reporting on costs and performance. Transparency is often limited for contracts supporting operations in conflict zones, but contract award data is publicly available.

Related Government Programs

Department of Defense Overseas Operations Support
Logistics and Security Services Contracts
Petroleum Supply Contracts
Vehicle Maintenance Contracts

Risk Flags

Sole-source award limits competition.
CPFF contract type requires diligent cost oversight.
Lack of specific PSC hinders benchmarking.
Services provided in a high-risk environment.
Significant contract value warrants scrutiny.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $692.1 million to SALLYPORT GLOBAL HOLDINGS INC. IRAQ SERVICES PETROLEUM, SECURITY, VEHICLE MAINTENANCE

Who is the contractor on this award?

The obligated recipient is SALLYPORT GLOBAL HOLDINGS 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 $692.1 million.

What is the period of performance?

Start: 2019-01-31. End: 2021-04-30.

What specific services were included under 'IRAQ SERVICES PETROLEUM, SECURITY, VEHICLE MAINTENANCE' and how were they priced?

The contract broadly covers petroleum supply, security services, and vehicle maintenance for operations in Iraq. Pricing under a Cost Plus Fixed Fee (CPFF) structure involves reimbursement of allowable costs incurred by the contractor, plus a predetermined fixed fee. Detailed breakdowns of how each service component was costed and the rationale behind the fixed fee are not publicly available in the provided data. This lack of granular detail makes it challenging to assess the fairness of the pricing for each service category and to determine if the fixed fee adequately compensated the contractor for the risks and effort involved.

How does the $692 million award compare to similar support service contracts in Iraq or other high-risk environments?

Direct comparison is difficult due to the absence of a specific Product Service Code (PSC) and the unique nature of services provided. However, large-scale support contracts for overseas military operations, especially in complex environments like Iraq, frequently run into hundreds of millions of dollars. Contracts for security, logistics, and base operations support can vary widely based on duration, scope, threat level, and the number of personnel supported. Without more specific comparable contract data, it's hard to definitively state if $692 million is high or low, but it represents a significant investment in operational support.

What are the potential risks associated with a sole-source award for such a critical and large-value contract?

Sole-source awards, by definition, eliminate competition. This carries several risks: 1) Potential for higher costs: Without competing bids, the government may not achieve the best possible price. 2) Reduced innovation: The contractor may have less incentive to find cost-saving efficiencies or innovative solutions. 3) Limited oversight effectiveness: While oversight exists, the lack of alternative options can sometimes reduce leverage in negotiations or performance management. 4) Contractor dependency: The government becomes reliant on a single provider, which can be problematic if performance issues arise or if the contractor faces financial instability.

What is the track record of Sallyport Global Holdings Inc. in performing similar large-scale government contracts?

Sallyport Global Holdings Inc. has a history of performing government contracts, particularly in support of defense and security operations in overseas locations. Information on their past performance, including successes and challenges, would typically be available through government contract databases and performance assessment reports (e.g., Contractor Performance Assessment Reporting System - CPARS). A thorough review would examine their history with CPFF contracts, security-related services, and operations in similar complex environments to gauge their capability and reliability for this specific $692 million award.

How has spending on Iraq services evolved over time, and does this contract represent a trend?

Spending on services in Iraq has fluctuated significantly since the initial invasion and subsequent stabilization efforts. Early years saw massive spending on reconstruction and security. As U.S. military presence evolved, so did the nature and scale of support contracts, shifting towards base operations, logistics, and specialized security. This $692 million contract, awarded in 2019 and ending in 2021, falls within a period of sustained but reduced military presence compared to peak years. It reflects ongoing needs for essential support services, but likely at a scale different from earlier phases of the conflict.

What oversight mechanisms were in place to manage the Cost Plus Fixed Fee aspect of this contract and ensure cost control?

Managing a Cost Plus Fixed Fee (CPFF) contract requires robust oversight to ensure costs are allowable, reasonable, and allocable, and that the fixed fee is earned. Oversight typically involves: 1) Contract Audit: Regular audits by government agencies (like DCAA) to verify incurred costs. 2) Performance Monitoring: Contracting Officer Representatives (CORs) track service delivery against requirements. 3) Financial Reporting: The contractor must submit detailed financial reports on costs incurred. 4) Negotiation: The fixed fee is negotiated upfront, and any changes to scope would require re-negotiation. Effective oversight focuses on scrutinizing expenditures and ensuring the contractor operates efficiently within the agreed-upon cost parameters.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

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

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Michael Baker International, LLC

Address: 11921 FREEDOM DR 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: $692,084,069

Exercised Options: $692,084,069

Current Obligation: $692,084,069

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline