DoD's $125M IGF SPACE SEGMENT contract awarded to ARTEL LLC shows fair value with 6 bids

Contract Overview

Contract Amount: $125,031,600 ($125.0M)

Contractor: Artel LLC

Awarding Agency: Department of Defense

Start Date: 2016-02-10

End Date: 2021-08-09

Contract Duration: 2,007 days

Daily Burn Rate: $62.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF SPACE SEGMENT

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $125.0 million to ARTEL LLC for work described as: IGF::OT::IGF SPACE SEGMENT Key points: 1. Contract value of $125M over 5 years suggests a significant investment in space segment capabilities. 2. Awarded via full and open competition with 6 bidders indicates a healthy market for these services. 3. The firm-fixed-price contract type shifts risk to the contractor, potentially benefiting the government. 4. Performance period of over 5 years allows for sustained support and development of critical space assets. 5. The contract's focus on space segment services positions it within a specialized and high-demand sector. 6. A relatively low number of bids (6) compared to some large contracts warrants monitoring for future competition.

Value Assessment

Rating: good

The contract's total value of $125M over approximately 5 years averages to $25M annually. Benchmarking against similar large-scale space segment contracts is challenging due to the specialized nature of the services. However, the firm-fixed-price structure and the presence of multiple bidders suggest a reasonable price was negotiated. The award amount of $6.2M for the initial delivery order appears to be a fraction of the total contract value, indicating phased funding and potential for future tasking.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with six bids received. This level of competition is generally considered healthy for specialized defense contracts, suggesting that multiple capable vendors were interested and able to bid. The presence of six bidders likely contributed to price discovery and ensured the government received competitive offers. The award process appears robust, aiming to secure the best value through market forces.

Taxpayer Impact: The full and open competition with multiple bidders is beneficial for taxpayers as it drives down costs through competitive pricing and encourages innovation among contractors vying for the award.

Public Impact

The Department of Defense benefits through enhanced space segment capabilities, crucial for intelligence, surveillance, and reconnaissance missions. Services delivered likely include the operation, maintenance, and potentially upgrade of critical space-based assets. The geographic impact is global, given the nature of space-based defense systems. Workforce implications include specialized technical roles within ARTEL LLC and potentially its subcontractors, supporting the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if ARTEL LLC becomes indispensable for future space segment needs.
Reliance on a single prime contractor for critical space infrastructure could pose risks if performance falters.
The specialized nature of space segment services may limit the pool of future competitors.
Long-term sustainment costs could escalate if not managed proactively.
Cybersecurity risks associated with managing sensitive space segment data and systems.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Awarded through full and open competition, indicating a competitive market.
Contract duration allows for stable planning and execution of space segment operations.
ARTEL LLC's established presence in defense contracting suggests experience with similar requirements.
The contract supports critical national security functions, aligning with strategic defense priorities.

Sector Analysis

The space segment sector within the defense industry is highly specialized, involving the development, launch, operation, and maintenance of satellites and related ground systems. This contract fits within the broader defense IT and aerospace markets, which are characterized by high barriers to entry, significant R&D investment, and stringent security requirements. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of space-based assets, but multi-billion dollar programs are common for national space initiatives.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor is there explicit information on subcontracting plans for small businesses. Given the specialized nature of space segment services, it is possible that larger, established defense contractors like ARTEL LLC are the primary awardees. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within the defense industrial base supporting this contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, likely within the Defense Information Systems Agency (DISA). Accountability measures are embedded in the firm-fixed-price contract terms, requiring ARTEL LLC to deliver specified services within agreed-upon costs. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be classified. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

DoD Satellite Communications Programs
National Reconnaissance Office (NRO) Programs
Space Force Acquisition Programs
DoD Information Technology Services
Defense Intelligence Agency (DIA) Support Contracts

Risk Flags

Potential for performance issues impacting critical space operations.
Risk of cost overruns if contract scope is not tightly managed.
Cybersecurity vulnerabilities in space segment systems.
Dependence on a single contractor for essential services.
Limited visibility into specific operational details due to national security classification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $125.0 million to ARTEL LLC. IGF::OT::IGF SPACE SEGMENT

Who is the contractor on this award?

The obligated recipient is ARTEL LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $125.0 million.

What is the period of performance?

Start: 2016-02-10. End: 2021-08-09.

What is ARTEL LLC's track record with similar large-scale DoD space segment contracts?

ARTEL LLC has a history of supporting the Department of Defense with various communication and IT services. While specific details on prior "space segment" contracts of this magnitude may not be publicly available, their experience in managing complex, high-value defense contracts suggests a capability to handle the requirements of the IGF SPACE SEGMENT contract. Their portfolio often includes network operations, telecommunications, and IT infrastructure support for defense agencies. Further investigation into their specific past performance on satellite communication or space-based system support contracts would provide a more precise assessment of their relevant experience.

How does the $125M contract value compare to other similar space segment procurements?

Direct comparisons for "space segment" contracts are challenging due to the highly specialized and often classified nature of these procurements. However, $125M over five years, averaging $25M annually, falls within the mid-to-large range for specialized defense IT and systems support contracts. Larger, more comprehensive space programs involving satellite manufacturing and launch can run into billions of dollars. Contracts focused on the operation, maintenance, and sustainment of existing space assets, as this likely is, tend to be in the tens to hundreds of millions. The number of bidders (6) suggests it's a competitive area, but not so saturated that prices are driven down to commodity levels.

What are the primary risks associated with this contract for the government?

The primary risks for the government revolve around performance and potential cost growth if the firm-fixed-price (FFP) structure is not adequately managed or if unforeseen technical challenges arise. While FFP shifts cost risk to the contractor, significant performance failures could jeopardize critical space-based operations, impacting national security. There's also a risk of vendor lock-in, where ARTEL LLC becomes so integrated into the space segment infrastructure that replacing them becomes difficult and costly. Ensuring robust oversight and clear performance metrics are crucial to mitigate these risks. Cybersecurity vulnerabilities within the managed systems also represent a significant risk.

How effective is the firm-fixed-price (FFP) contract type in managing costs for this space segment contract?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and technical risks are understood. For a contract focused on operating and maintaining existing space segment capabilities, FFP is advantageous as it places the responsibility for cost control on the contractor, ARTEL LLC. This incentivizes efficiency and discourages scope creep from the contractor's side. However, if unforeseen technical issues or changes in requirements emerge, the government might face challenges in modifying the contract without incurring significant cost increases or delays, necessitating careful contract administration and change management processes.

What is the historical spending trend for similar space segment services within the DoD?

Historical spending on space segment services within the DoD has been substantial and generally increasing, driven by the growing reliance on space-based assets for intelligence, communication, navigation, and missile warning. While specific figures for "IGF SPACE SEGMENT" type contracts are not readily available in aggregate public data, the overall defense space budget encompasses billions of dollars annually dedicated to space acquisition, operations, and sustainment. Trends show a continuous investment in modernizing space capabilities, maintaining existing constellations, and developing new technologies, indicating a sustained demand for the services ARTEL LLC provides.

What are the implications of the contract's duration (over 5 years) on service delivery and innovation?

The contract's duration of over five years (2007 days, approximately 5.5 years) provides significant stability for both the government and the contractor, ARTEL LLC. For the government, it ensures continuity of essential space segment operations and support, reducing the disruption associated with frequent re-procurement. For ARTEL LLC, the long-term commitment allows for strategic investment in personnel, technology, and processes, potentially leading to improved efficiency and service quality. However, a long duration could also potentially stifle innovation if the contract terms do not adequately incentivize or accommodate new technological advancements during its term. Regular reviews and potential for contract modifications would be key to ensuring ongoing relevance and innovation.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 13665 DULLES TECHNOLOGY DR STE 300, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $125,031,600

Exercised Options: $125,031,600

Current Obligation: $125,031,600

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F5151H

IDV Type: FSS

Timeline