Navy awards $28.5M for undersea surveillance logistics, with Serco Inc. as prime contractor

Contract Overview

Contract Amount: $28,512,046 ($28.5M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2022-04-06

End Date: 2026-04-06

Contract Duration: 1,461 days

Daily Burn Rate: $19.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LOGISTICS SUPPORT FOR INTEGRATED UNDERSEA SURVEILLANCE SYSTEM (IUSS) FIELDED AND IN-SERVICE SYSTEMS AFLOAT AND SHORE FACILITIES, ACTIVITIES, AND UNITS SUPPORTING WORLDWIDE IUSS MISSION, AND FOR INTERNATIONAL PROGRAMS AND OTHER RELATED PROJECT TASKS.

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23510

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $28.5 million to SERCO INC for work described as: LOGISTICS SUPPORT FOR INTEGRATED UNDERSEA SURVEILLANCE SYSTEM (IUSS) FIELDED AND IN-SERVICE SYSTEMS AFLOAT AND SHORE FACILITIES, ACTIVITIES, AND UNITS SUPPORTING WORLDWIDE IUSS MISSION, AND FOR INTERNATIONAL PROGRAMS AND OTHER RELATED PROJECT TASKS. Key points: 1. Contract focuses on essential logistics support for a critical undersea surveillance system. 2. The award was made under full and open competition, suggesting a competitive bidding process. 3. The contract duration of approximately four years indicates a long-term need for these services. 4. The use of a Cost Plus Fixed Fee (CPFF) pricing structure requires careful monitoring of costs. 5. The prime contractor, Serco Inc., has a significant presence in government contracting. 6. This contract supports a vital national security mission with global implications.

Value Assessment

Rating: good

The contract value of $28.5 million over four years appears reasonable for specialized logistics support of complex systems. Benchmarking against similar contracts for Integrated Undersea Surveillance System (IUSS) support is difficult without more specific service details. However, the pricing structure (CPFF) necessitates close oversight to ensure costs remain within expected parameters and that the fixed fee is justified by the scope of work. The contract was awarded via delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle, which can offer some efficiencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. While the number of bidders is not explicitly stated, this method generally fosters a competitive environment. The Department of the Navy sought proposals from a wide range of qualified contractors, which should theoretically lead to a more favorable price and better quality services for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to bid, driving down prices and improving the quality of services offered, ultimately leading to better value for public funds.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader U.S. defense apparatus, ensuring the operational readiness of the Integrated Undersea Surveillance System (IUSS). Services delivered include crucial logistics support for fielded and in-service systems, both at sea and on shore facilities worldwide. The geographic impact is global, supporting the IUSS mission across various operational theaters and international programs. Workforce implications include potential employment opportunities for logistics, technical, and support personnel, both directly with the contractor and indirectly through subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can incentivize contractors to increase costs to achieve a higher fee, requiring robust cost monitoring and control by the agency.
The global nature of the support could introduce complexities in managing logistics, personnel, and compliance across different regions and regulatory environments.
Dependence on a single prime contractor for critical logistics could pose a risk if performance issues arise or if the contractor faces financial instability.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should yield good value.
The contract supports a vital national security system (IUSS), indicating a high level of importance and likely rigorous performance standards.
The contractor, Serco Inc., has extensive experience in government contracting, suggesting a capacity to manage complex logistics operations.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), specifically supporting defense-related systems. The market for defense logistics and systems support is substantial, driven by the continuous need to maintain and operate complex military equipment. Companies like Serco Inc. operate within a competitive landscape that includes large defense contractors and specialized service providers. Benchmarks for similar logistics support contracts for major defense systems can vary widely based on system complexity, geographic scope, and required service levels.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (SB is false) and does not explicitly mention subcontracting goals for small businesses. This suggests that the primary contract was awarded to a large business, Serco Inc. While large prime contractors are often required to have small business subcontracting plans, the specifics of such plans and their effectiveness are not detailed here. The absence of a small business set-aside means that opportunities for small businesses may be limited to subcontracting roles, rather than direct prime contracting.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy, likely through contracting officers and technical representatives. The Cost Plus Fixed Fee (CPFF) structure necessitates diligent cost monitoring and auditing to ensure that expenditures are reasonable and allocable to the contract. Transparency is generally maintained through contract reporting requirements, though specific details on public access to performance or cost data are not provided. The Inspector General of the Department of Defense would have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Integrated Undersea Surveillance System (IUSS) Operations
Naval Logistics Support Services
Defense Contract Management
Global Military Support Contracts
Department of Defense Engineering Services

Risk Flags

Cost Plus Fixed Fee (CPFF) pricing requires diligent oversight to prevent cost escalation.
Global logistics support introduces complexities in management and potential geopolitical risks.
Dependence on a single prime contractor for critical systems support.
Potential for performance issues impacting mission readiness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.5 million to SERCO INC. LOGISTICS SUPPORT FOR INTEGRATED UNDERSEA SURVEILLANCE SYSTEM (IUSS) FIELDED AND IN-SERVICE SYSTEMS AFLOAT AND SHORE FACILITIES, ACTIVITIES, AND UNITS SUPPORTING WORLDWIDE IUSS MISSION, AND FOR INTERNATIONAL PROGRAMS AND OTHER RELATED PROJECT TASKS.

Who is the contractor on this award?

The obligated recipient is SERCO INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $28.5 million.

What is the period of performance?

Start: 2022-04-06. End: 2026-04-06.

What is Serco Inc.'s track record with the Department of the Navy and similar defense logistics contracts?

Serco Inc. is a large, established government contractor with a significant portfolio of contracts across various federal agencies, including the Department of Defense and the Department of the Navy. They have a history of providing a wide range of services, including logistics, technical support, and operational services for complex defense systems. While specific performance metrics for this particular contract are not publicly available, Serco's extensive experience suggests a capacity to manage such requirements. However, like many large contractors, they have faced scrutiny and contract disputes on other engagements, highlighting the importance of ongoing performance monitoring and robust contract management by the Navy.

How does the $28.5 million contract value compare to similar logistics support contracts for undersea surveillance systems?

Directly comparing the $28.5 million value is challenging without detailed service scope and duration benchmarks for comparable Integrated Undersea Surveillance System (IUSS) logistics contracts. However, given that this contract spans approximately four years (1461 days) and covers worldwide support for fielded systems, the annual value is roughly $7.1 million. This figure appears within a reasonable range for specialized, high-demand defense logistics. Factors influencing cost include the complexity of the IUSS components, the need for global reach, personnel requirements, and the specific technical services mandated. The Cost Plus Fixed Fee (CPFF) structure also means the final cost could fluctuate based on incurred costs, though the fixed fee component provides some predictability.

What are the primary risks associated with this contract, particularly given the CPFF pricing structure?

The primary risks associated with this contract include potential cost overruns due to the Cost Plus Fixed Fee (CPFF) pricing structure. CPFF contracts can incentivize contractors to incur higher costs, as a portion of their profit (the fixed fee) is often tied to the total cost. This necessitates stringent oversight from the Department of the Navy to scrutinize all incurred costs and ensure they are reasonable, allocable, and necessary for contract performance. Another risk is the potential for performance issues in delivering global logistics support for a critical system, which could impact the IUSS mission readiness. Contractor performance, supply chain disruptions, and geopolitical factors affecting worldwide operations also represent significant risks.

How effective is the 'full and open competition' approach likely to be in ensuring value for taxpayers on this contract?

The 'full and open competition' approach is generally considered the most effective method for ensuring value for taxpayers. By allowing all responsible sources to bid, it fosters a competitive environment where multiple companies vie for the contract. This competition typically drives down prices, encourages innovation, and improves the quality of services offered. For this $28.5 million contract supporting the IUSS, full and open competition suggests that the Navy received proposals from various qualified vendors, leading to a selection based on the best combination of price and technical merit. This process helps prevent monopolies and ensures that taxpayer funds are used efficiently.

What are the historical spending patterns for logistics support of the IUSS program?

Historical spending data specifically for the logistics support of the Integrated Undersea Surveillance System (IUSS) program is not detailed in the provided information. However, the award of this $28.5 million contract via a delivery order suggests it might be part of a larger Indefinite Delivery/Indefinite Quantity (IDIQ) contract vehicle. Such vehicles are often used for ongoing support requirements, implying a consistent need and potentially recurring spending over multiple years. Analyzing past spending on IUSS logistics would require accessing historical contract databases and reports from the Department of the Navy to identify trends, total expenditures, and the prime contractors involved in previous support efforts.

What are the implications of the contract duration (approx. 4 years) for long-term system sustainment?

The contract duration of approximately four years (1461 days) indicates a significant commitment by the Department of the Navy to ensure the sustained operational readiness of the Integrated Undersea Surveillance System (IUSS). This timeframe suggests that the logistics support provided is considered critical and ongoing, rather than a short-term fix. A multi-year contract allows for better planning and resource allocation by both the government and the contractor, potentially leading to more stable service delivery and cost efficiencies compared to multiple short-term renewals. It also provides the contractor with the incentive to invest in specialized capabilities and personnel required for long-term support of the IUSS mission.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0003921R3009

Offers Received: 6

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

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

Financial Breakdown

Contract Ceiling: $39,842,639

Exercised Options: $29,117,627

Current Obligation: $28,512,046

Subaward Activity

Number of Subawards: 74

Total Subaward Amount: $23,312,805

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017819D8498

IDV Type: IDC

Timeline