DoD's $12.6M Logistic Support Facility contract with Serco Inc. awarded under full and open competition

Contract Overview

Contract Amount: $12,574,491 ($12.6M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2007-04-11

End Date: 2012-09-27

Contract Duration: 1,996 days

Daily Burn Rate: $6.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: LOGISTIC SUPPORT FACILITY (LSF) FOLLOW-ON CONTRACT.

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20170

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $12.6 million to SERCO INC for work described as: LOGISTIC SUPPORT FACILITY (LSF) FOLLOW-ON CONTRACT. Key points: 1. The contract's cost-plus-award-fee structure incentivizes performance but requires careful oversight to manage costs. 2. Awarded under full and open competition, suggesting a competitive bidding process that could lead to better pricing. 3. The contract duration of nearly 2,000 days indicates a significant, long-term need for logistic support services. 4. The engineering services NAICS code (541330) points to specialized technical and management support. 5. The contract was awarded by the Defense Contract Management Agency, a key oversight body within the DoD. 6. The absence of small business set-asides suggests the primary contractor is likely a large business.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics and detailed cost breakdowns. The cost-plus-award-fee (CPAF) pricing model allows for cost reimbursement plus a fee that is adjusted based on performance. While this can incentivize efficiency, it also carries a risk of cost overruns if not managed diligently. Comparing it to similar logistic support facilities requires access to data on contract scope, duration, and specific services rendered. The raw dollar amount of approximately $12.6 million over nearly 2,000 days suggests a moderate annual spend, but the true value depends on the criticality and complexity of the support provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 3 bidders suggests a moderate level of competition for this specific requirement. While more bidders could potentially drive prices lower, three offers generally provide a reasonable basis for price discovery and selection. The agency's decision to use full and open competition implies confidence that the market could adequately meet the requirement.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more cost-effective solutions and prevent price gouging.

Public Impact

The primary beneficiaries are the Department of Defense units relying on the logistic support facilities. Services delivered likely include maintenance, storage, distribution, and management of military equipment and supplies. The geographic impact is centered around the specific facility managed by the Defense Contract Management Agency in Virginia. Workforce implications include direct employment by Serco Inc. and potential indirect employment through subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Award Fee (CPAF) contracts if performance incentives are not tightly aligned with cost controls.
Lack of transparency regarding specific performance metrics and award fee determinations makes it difficult to assess true value for money.
The long contract duration could lead to vendor lock-in or reduced flexibility for the agency if needs change significantly.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
The contract structure includes an award fee, which can incentivize contractor performance and efficiency.
The Defense Contract Management Agency's involvement suggests a level of established oversight for defense contracts.

Sector Analysis

The defense logistics sector is a critical component of national security, encompassing a wide range of services from supply chain management to facility operations. This contract falls within the broader engineering services market, specifically supporting the operational readiness of military forces. Comparable spending benchmarks would typically involve analyzing other contracts for similar logistic support facilities, factoring in size, duration, and service complexity. The market for defense logistics is substantial, with numerous large and specialized firms competing for these essential government contracts.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary focus was on securing the best overall solution from the available market, likely favoring larger, established contractors capable of handling the scale and complexity of the requirement. The absence of set-asides means that opportunities for small businesses to directly participate in this specific contract may be limited, though they could potentially engage as subcontractors to the prime.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. Accountability measures are embedded within the Cost Plus Award Fee (CPAF) structure, where the contractor's fee is tied to performance outcomes. Transparency regarding the specific performance metrics and the rationale behind award fee determinations would be crucial for a full assessment, but such details are often considered sensitive.

Related Government Programs

Defense Logistics Agency Contracts
Military Base Operations Support
Engineering Services for Government Facilities
Department of Defense Facility Management

Risk Flags

Cost Overrun Risk (CPAF)
Performance Monitoring Challenges (Long Duration)
Potential for Vendor Lock-in

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.6 million to SERCO INC. LOGISTIC SUPPORT FACILITY (LSF) FOLLOW-ON CONTRACT.

Who is the contractor on this award?

The obligated recipient is SERCO 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 $12.6 million.

What is the period of performance?

Start: 2007-04-11. End: 2012-09-27.

What specific logistic support functions were included in this contract?

While the provided data identifies this as a 'LOGISTIC SUPPORT FACILITY (LSF) FOLLOW-ON CONTRACT' under 'Engineering Services,' the precise scope of logistic support functions is not detailed. Typically, such contracts encompass a range of activities critical to military readiness, including but not limited to: inventory management, warehousing, transportation coordination, equipment maintenance and repair, supply distribution, and facility operations and maintenance. The 'follow-on' nature suggests it replaced or continued services from a previous contract, implying a well-defined set of requirements that were deemed necessary by the Department of Defense.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types for similar services?

The Cost Plus Award Fee (CPAF) structure is common for complex services where performance outcomes are critical but difficult to define precisely upfront, such as logistic support. Unlike fixed-price contracts, CPAF reimburses the contractor for allowable costs and provides a base fee, plus an award fee determined by the government based on performance against specific criteria. This contrasts with Cost Plus Fixed Fee (CPFF), which has a predetermined fee, or firm-fixed-price (FFP) contracts, which offer the most cost certainty but less flexibility. CPAF aims to balance cost control with incentivizing high performance, but requires robust government oversight to prevent potential cost escalation and ensure the award fee criteria are objective and measurable.

What is the significance of the contract being awarded by the Defense Contract Management Agency (DCMA)?

The Defense Contract Management Agency (DCMA) is a critical component of the Department of Defense responsible for ensuring that contracted goods and services meet quality standards and are delivered on time and at the agreed-upon cost. When DCMA awards or manages a contract, it signifies a focus on contract administration, performance monitoring, and compliance. For this Logistic Support Facility contract, DCMA's involvement suggests they are actively overseeing Serco Inc.'s performance, managing payments, and ensuring adherence to the terms and conditions of the Cost Plus Award Fee agreement. This oversight is crucial for mitigating risks associated with CPAF contracts.

What does the number of bidders (3) indicate about the competitiveness of this contract?

Having three bidders for this contract suggests a moderate level of competition. While more bidders could potentially lead to lower prices, three offers generally provide a reasonable basis for the government to assess different approaches and pricing structures. It indicates that the requirement was sufficiently defined and accessible to multiple capable firms in the market. However, it's less competitive than scenarios with five or more bidders, which might indicate potential barriers to entry for smaller firms or a highly specialized niche market. The government would have evaluated these three proposals based on technical merit, past performance, and price to determine the best value.

What are the potential risks associated with a contract duration of nearly 2,000 days?

A contract duration of nearly 2,000 days (approximately 5.5 years) presents several potential risks. Firstly, it increases the likelihood of scope creep or evolving requirements over time, which can be challenging to manage within a CPAF structure if not carefully controlled. Secondly, long durations can lead to vendor lock-in, making it difficult and costly for the government to switch providers even if performance issues arise or better solutions become available. Thirdly, market conditions, technological advancements, or geopolitical shifts could render the original contract terms less optimal over such an extended period. Finally, maintaining consistent oversight and performance management over several years requires sustained effort and resources from the contracting agency.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Serco Group PLC (UEI: 298452707)

Address: 12930 WORLDGATE DR STE 600, HERNDON, VA, 20170

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $13,970,029

Exercised Options: $13,970,029

Current Obligation: $12,574,491

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline