Homeland Security's $370M logistics contract awarded to Siemens Government Services shows fair value with 4 bidders

Contract Overview

Contract Amount: $370,183,379 ($370.2M)

Contractor: Siemens Government Services, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2009-09-25

End Date: 2015-05-26

Contract Duration: 2,069 days

Daily Burn Rate: $178.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: INTEGRATED LOGISTICS SUPPORT SERVICES FOR AWARD OF RFP HSTS04-09-R-CT3133

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20191, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $370.2 million to SIEMENS GOVERNMENT SERVICES, INC. for work described as: INTEGRATED LOGISTICS SUPPORT SERVICES FOR AWARD OF RFP HSTS04-09-R-CT3133 Key points: 1. The contract demonstrates a reasonable value for integrated logistics support services over its duration. 2. Full and open competition was utilized, suggesting a healthy market for these services. 3. The number of bidders indicates moderate interest and potential for competitive pricing. 4. The firm-fixed-price contract type shifts risk to the contractor, promoting cost control. 5. Performance was managed by the Transportation Security Administration, a key component of DHS. 6. The contract's duration of nearly 6 years allowed for sustained logistics support.

Value Assessment

Rating: good

The total award amount of approximately $370 million over nearly six years suggests a significant investment in logistics support. Benchmarking against similar large-scale logistics contracts is challenging without more specific service details. However, the firm-fixed-price structure implies that the contractor assumed the risk for cost overruns, which is generally favorable for the government. The contract's duration allowed for economies of scale and potentially more stable pricing than shorter-term arrangements.

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 proposals. With four bidders participating, the competition level was moderate, suggesting that while there was interest, it may not have been a highly crowded field. This level of competition generally allows for price discovery and encourages bidders to offer competitive terms to secure the award.

Taxpayer Impact: The use of full and open competition with multiple bidders is beneficial for taxpayers as it increases the likelihood of receiving a fair market price and encourages efficiency from the winning contractor.

Public Impact

The Transportation Security Administration (TSA) directly benefited from these integrated logistics support services, ensuring the smooth operation of its functions. Services provided likely encompassed supply chain management, inventory control, maintenance support, and transportation logistics critical for TSA operations. The contract's impact was primarily felt within the federal government's aviation security infrastructure. While not directly creating public-facing jobs, the contract supported a workforce involved in logistics and supply chain management within the contractor's organization and potentially related industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep if contract scope was not tightly managed, despite fixed-price nature.
Reliance on a single contractor for critical logistics functions could pose a risk if performance falters.
The long duration might lead to vendor lock-in, making future transitions more complex.

Positive Signals

Firm-fixed-price contract structure incentivizes contractor efficiency and cost control.
Full and open competition suggests a robust market and potential for competitive pricing.
The award to Siemens Government Services, a known entity, implies a degree of confidence in their capabilities.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on logistics consulting and support. The market for integrated logistics support services is substantial, driven by the complex supply chain needs of government agencies, particularly in defense and homeland security. Comparable spending benchmarks would depend on the specific scope of services, but large federal contracts for logistics can range from tens to hundreds of millions of dollars annually.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside requirement (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities offered by Siemens Government Services. The extent of such subcontracting is not detailed here, but large prime contracts often aim to include small businesses to meet broader federal goals.

Oversight & Accountability

Oversight for this contract would have been primarily managed by the Department of Homeland Security, specifically the Transportation Security Administration. As a firm-fixed-price contract, oversight would focus on ensuring adherence to the contract terms, delivery schedules, and performance standards. Transparency is generally facilitated through contract award databases and reporting requirements, though specific internal oversight mechanisms are not detailed.

Related Government Programs

Department of Homeland Security Logistics Contracts
Transportation Security Administration Procurement
Federal Integrated Logistics Support Services
Government Consulting Services Contracts

Risk Flags

Contract Duration
Contract Value
Competition Level
Contract Type

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $370.2 million to SIEMENS GOVERNMENT SERVICES, INC.. INTEGRATED LOGISTICS SUPPORT SERVICES FOR AWARD OF RFP HSTS04-09-R-CT3133

Who is the contractor on this award?

The obligated recipient is SIEMENS GOVERNMENT SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Transportation Security Administration).

What is the total obligated amount?

The obligated amount is $370.2 million.

What is the period of performance?

Start: 2009-09-25. End: 2015-05-26.

What was the specific nature of the 'Integrated Logistics Support Services' provided under this contract?

The contract, HSTS04-09-R-CT3133, was awarded for 'INTEGRATED LOGISTICS SUPPORT SERVICES'. While the specific breakdown of services is not detailed in the provided data, such contracts typically encompass a wide range of activities critical to maintaining operational readiness and efficiency. This can include supply chain management, inventory control, warehousing, transportation and distribution, maintenance and repair support for equipment, procurement of spare parts, and overall logistics planning and execution. For the Transportation Security Administration (TSA), these services would be crucial for ensuring that security equipment, operational supplies, and personnel support systems are effectively managed and available when needed across various locations.

How does the awarded amount of $370 million compare to typical spending for similar logistics contracts within DHS or TSA?

The $370 million award over approximately 2069 days (roughly 5.6 years) represents a significant but not necessarily outlier expenditure for integrated logistics support within a large federal agency like the Department of Homeland Security (DHS), particularly for an entity like the Transportation Security Administration (TSA). Large-scale logistics contracts supporting critical infrastructure and operations often run into hundreds of millions of dollars. Without specific details on the scope and complexity of services rendered, a direct comparison is difficult. However, considering the TSA's extensive operational footprint and equipment needs, this level of investment aligns with the substantial requirements for maintaining effective security operations nationwide.

What are the potential risks associated with a firm-fixed-price contract of this magnitude and duration?

While firm-fixed-price (FFP) contracts are generally favored for shifting cost risk to the contractor, large-scale, long-duration FFP contracts carry specific risks. For the government, a primary risk is that the contractor may cut corners on quality or service to maximize profit if oversight is insufficient, potentially impacting operational effectiveness. Conversely, if the initial cost estimates were inaccurate or unforeseen circumstances arise (e.g., significant inflation, unexpected technical challenges), the contractor might face financial distress, potentially leading to performance issues or demands for contract modifications. The long duration (nearly 6 years) also increases the risk of vendor lock-in and potential obsolescence of services or technologies if not managed proactively.

What does the participation of 4 bidders in a full and open competition signify for this contract?

The participation of four bidders in a full and open competition for this logistics support contract suggests a moderately competitive market for these services. It indicates that the opportunity was sufficiently attractive and the requirements were clear enough to draw interest from multiple capable companies. While more bidders could potentially drive prices lower, four participants generally provide a reasonable basis for price discovery and allow the government to select from a pool of qualified offerors. This level of competition helps ensure that the awarded price is likely reflective of market rates and encourages the winning contractor to perform efficiently to maintain profitability.

What is the track record of Siemens Government Services in fulfilling large federal logistics contracts?

Siemens Government Services, Inc. (SGS) has a history of engaging in large federal contracts, including those involving complex IT, infrastructure, and support services. While specific details on their track record solely in large-scale *logistics* support for agencies like TSA are not provided here, SGS's broader experience suggests they possess the organizational capacity and expertise to manage significant government procurements. Their ability to win a contract of this magnitude ($370M) under full and open competition implies they met the government's stringent requirements regarding technical capability, past performance, and price. However, a comprehensive assessment would require reviewing their performance history on similar contracts, including any past issues or commendations.

How might the 'Process, Physical Distribution, and Logistics Consulting Services' NAICS code (541614) inform the scope of this contract?

The North American Industry Classification System (NAICS) code 541614, 'Process, Physical Distribution, and Logistics Consulting Services,' provides a strong indication of the contract's primary focus. This code covers establishments primarily engaged in providing advice and assistance to other businesses and organizations on scientific and management issues, specifically related to process improvement, physical distribution, and logistics strategy. For the TSA, this likely meant the contractor not only managed existing logistics operations but also provided consulting to optimize supply chains, improve distribution networks, enhance inventory management processes, and potentially advise on the implementation of new logistics technologies or methodologies to increase efficiency and reduce costs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Process, Physical Distribution, and Logistics Consulting Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Siemens Aktiengesellschaft (UEI: 316067164)

Address: 1010 E ARAPAHO RD STE 300, RICHARDSON, TX, 75081

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

Financial Breakdown

Contract Ceiling: $370,183,379

Exercised Options: $370,183,379

Current Obligation: $370,183,379

Timeline