Leidos awarded $160M for product supportability, with a significant portion for navigation systems
Contract Overview
Contract Amount: $159,771,826 ($159.8M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2016-06-21
End Date: 2024-04-30
Contract Duration: 2,870 days
Daily Burn Rate: $55.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: PRODUCT SUPPORTABILITY/INTEGRATED
Place of Performance
Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20878
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $159.8 million to LEIDOS, INC. for work described as: PRODUCT SUPPORTABILITY/INTEGRATED Key points: 1. Contract value indicates substantial investment in ongoing product support and system integration. 2. The award is a definitive contract, suggesting a long-term need for these services. 3. The primary focus on navigation and guidance systems highlights a critical defense capability. 4. The contract duration of nearly 8 years points to sustained operational requirements. 5. The cost-plus-fixed-fee structure allows for flexibility but requires careful cost monitoring.
Value Assessment
Rating: good
The contract's value of approximately $160 million over its duration suggests a significant investment in product supportability. Benchmarking against similar contracts for integrated systems and navigation equipment is challenging without more granular data on specific services. However, the fixed-fee component provides a baseline for contractor profit, while cost-plus elements cover allowable expenses. The duration and scope indicate a potentially fair price for sustained, complex support.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of a single award suggests that Leidos, Inc. was selected as the most advantageous offer. The competitive process is expected to have driven a reasonable price, though the specific number of bidders is not provided.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to better pricing and service quality.
Public Impact
The Department of Defense benefits from enhanced product supportability for critical navigation and guidance systems. Military personnel will have access to reliable and maintained equipment, ensuring operational readiness. The contract supports advanced technological capabilities within the defense sector. The contract's performance is likely concentrated in areas where these systems are deployed, potentially impacting various military branches.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee contracts can lead to cost overruns if not managed diligently.
- The long duration of the contract may reduce flexibility to adopt newer technologies if not accounted for in the scope.
- Dependence on a single contractor for critical product support could pose risks if performance issues arise.
Positive Signals
- Awarded under full and open competition, suggesting a robust selection process.
- The contract's duration indicates a stable, long-term requirement, providing predictability for support.
- Leidos, Inc. is a large, established contractor with significant experience in defense systems.
Sector Analysis
This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing and support of navigation, guidance, and control systems. The market for such specialized product support is characterized by high technical barriers to entry and a limited number of qualified large prime contractors. Spending in this area is driven by the continuous need to maintain and upgrade complex military hardware, ensuring operational effectiveness and technological superiority.
Small Business Impact
The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. While Leidos, Inc. is a large business, there may be opportunities for small businesses to participate as subcontractors. The extent of subcontracting to small businesses would depend on Leidos's subcontracting plan and the specific requirements of the product support services.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to monitor allowable costs and ensure the fixed fee is earned appropriately. Transparency is maintained through regular reporting requirements and contract performance reviews.
Related Government Programs
- Defense Logistics Agency (DLA) Support Contracts
- Naval Air Systems Command (NAVAIR) Support
- Air Force Materiel Command (AFMC) Sustainment Contracts
- Intelligence, Surveillance, and Reconnaissance (ISR) Systems Support
Risk Flags
- Potential for cost overruns due to CPFF structure.
- Long contract duration may limit adoption of future technologies.
- Dependence on a single contractor for critical support.
Tags
defense, department-of-defense, leidos-inc, definitive-contract, full-and-open-competition, cost-plus-fixed-fee, product-supportability, navigation-systems, maryland, systems-manufacturing
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $159.8 million to LEIDOS, INC.. PRODUCT SUPPORTABILITY/INTEGRATED
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $159.8 million.
What is the period of performance?
Start: 2016-06-21. End: 2024-04-30.
What is Leidos, Inc.'s track record with similar product supportability contracts for the Department of Defense?
Leidos, Inc. has a substantial track record with the Department of Defense, frequently securing large contracts for a wide array of services, including IT, systems integration, and logistics support. Their experience often encompasses complex product supportability for advanced defense systems. Analyzing their past performance on similar contracts, particularly those involving navigation and guidance systems, would involve reviewing contract award histories, performance evaluations (e.g., CPARS), and any documented instances of cost overruns or performance deficiencies. Given their size and market position, Leidos is generally considered a capable contractor, but specific contract performance can vary.
How does the estimated value of this contract compare to other product supportability contracts for navigation systems?
The $160 million value over nearly 8 years for product supportability of navigation systems is substantial, reflecting the complexity and criticality of such equipment. Without access to a comprehensive database of all defense contracts, a precise comparison is difficult. However, major defense platforms and their associated support systems often command contracts in the tens to hundreds of millions of dollars. This award appears to be in line with significant, long-term sustainment efforts for specialized defense technology. Factors influencing value include the number of systems supported, the scope of maintenance and repair, and the required level of technical expertise.
What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract structure for this type of service?
The primary risk with a Cost Plus Fixed Fee (CPFF) contract for product supportability is the potential for cost overruns. While the fixed fee provides the contractor with a defined profit margin, the 'cost-plus' element means the government reimburses allowable costs incurred by the contractor. If costs escalate beyond initial estimates due to unforeseen technical challenges, scope creep, or inefficient management, the total contract value can increase significantly. This necessitates robust government oversight to scrutinize incurred costs, ensure they are reasonable and allocable, and prevent unnecessary expenditures. The government bears the financial risk of cost increases, while the contractor is incentivized to complete the work within the estimated cost to maximize their fixed fee.
How effective is the Defense Contract Management Agency (DCMA) in overseeing contracts of this nature?
The Defense Contract Management Agency (DCMA) is the primary entity responsible for contract administration and oversight for the Department of Defense. They play a crucial role in monitoring contractor performance, ensuring compliance with contract terms, and verifying costs on cost-reimbursement type contracts like CPFF. DCMA's effectiveness is generally considered good, leveraging experienced personnel and established processes. However, the scale and complexity of defense contracts mean that oversight is a continuous challenge. Factors such as adequate staffing, specialized technical expertise, and timely information flow are critical to DCMA's ability to effectively manage and oversee contracts, ensuring value for taxpayer money.
What is the historical spending trend for product supportability of navigation systems within the DoD?
Historical spending on product supportability for navigation systems within the DoD has been consistently high, driven by the essential nature of these technologies for military operations across all branches. This spending is influenced by factors such as the modernization of existing fleets, the introduction of new platforms, and the ongoing need for maintenance, repair, and upgrade services for complex avionics and guidance equipment. Trends often show a steady demand for sustainment, with peaks and troughs related to major acquisition programs or shifts in strategic priorities. The total annual expenditure can run into billions of dollars when aggregated across all defense agencies and system types.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: FIRE CONTROL EQPT.
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002415R5202
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 9737 WASHINGTONIAN BLVD, GAITHERSBURG, MD, 20878
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $337,215,699
Exercised Options: $337,036,521
Current Obligation: $159,771,826
Actual Outlays: $17,231,182
Subaward Activity
Number of Subawards: 289
Total Subaward Amount: $33,943,238
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-06-21
Current End Date: 2024-04-30
Potential End Date: 2024-04-30 00:00:00
Last Modified: 2024-09-24
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