Navy modernization support contract awarded to Serco Inc. for $6.37M, spanning over 4 years

Contract Overview

Contract Amount: $6,374,472 ($6.4M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2022-02-26

End Date: 2026-02-25

Contract Duration: 1,460 days

Daily Burn Rate: $4.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: OPNAV N96 NAVY MODERNIZATION, LCS, AND SURFACE MANPOWER SUPPORT SERVICES

Place of Performance

Location: WASHINGTON NAVY YARD, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20374

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $6.4 million to SERCO INC for work described as: OPNAV N96 NAVY MODERNIZATION, LCS, AND SURFACE MANPOWER SUPPORT SERVICES Key points: 1. Contract provides essential engineering services for Navy modernization efforts, including LCS and surface manpower support. 2. Awarded via full and open competition, suggesting a competitive bidding process. 3. The contract's duration of 1460 days indicates a long-term need for these services. 4. The cost-plus-fixed-fee pricing structure requires careful monitoring of costs to ensure value. 5. Performance is situated in Washington D.C., a key hub for defense operations. 6. The contract value is modest relative to large-scale defense modernization programs.

Value Assessment

Rating: good

The contract value of approximately $6.37 million over four years appears reasonable for specialized engineering and support services in the defense sector. Benchmarking against similar contracts for naval modernization or manpower support is challenging without more specific service details. However, the fixed fee component suggests a degree of cost control. The pricing structure (Cost Plus Fixed Fee) necessitates diligent oversight to ensure costs remain aligned with the fixed fee and do not escalate unnecessarily.

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 bids. The presence of 5 bidders suggests a healthy level of competition for these specialized services. This competitive environment is generally favorable for price discovery and potentially leads to better value for the government.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down costs and encouraging innovative solutions from multiple offerors.

Public Impact

The U.S. Navy benefits directly through enhanced modernization capabilities and improved surface manpower support. Services delivered are critical for the operational readiness and future development of naval assets. The geographic impact is primarily centered in Washington D.C., a strategic location for defense policy and operations. This contract supports a specialized segment of the defense engineering workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts require robust oversight to manage potential cost overruns.
The specific nature of 'modernization support' could involve evolving requirements, necessitating agile contract management.

Positive Signals

Awarded through full and open competition, indicating a competitive market.
The contract has a defined period of performance, allowing for structured service delivery.
The fixed fee component provides a ceiling for contractor profit, aiding cost predictability.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader defense industry. The defense engineering services market is substantial, driven by continuous modernization and maintenance needs of military assets. This specific contract supports naval modernization, a key area of defense spending focused on upgrading fleet capabilities, including Littoral Combat Ships (LCS) and surface manpower systems. Comparable spending benchmarks would typically involve other large-scale naval engineering support contracts, which can range from millions to billions depending on scope.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false) and the contractor, Serco Inc., is a large business. There is no explicit information regarding subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem from this specific contract appears limited, though Serco may engage small businesses in its broader operations.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract's performance work statement and the cost-plus-fixed-fee structure, which requires detailed reporting and justification of costs against the fixed fee. Transparency is generally maintained through contract award databases, though specific performance metrics and detailed cost breakdowns may be internal.

Related Government Programs

Naval Ship Modernization Programs
Littoral Combat Ship (LCS) Program Support
Surface Warfare Manpower Initiatives
Defense Engineering Services Contracts
Department of the Navy IT and Professional Services

Risk Flags

Cost-plus-fixed-fee contract requires diligent cost oversight.
Potential for scope creep in modernization support services.
Long-term contract necessitates ongoing performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.4 million to SERCO INC. OPNAV N96 NAVY MODERNIZATION, LCS, AND SURFACE MANPOWER SUPPORT SERVICES

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 $6.4 million.

What is the period of performance?

Start: 2022-02-26. End: 2026-02-25.

What is Serco Inc.'s track record with similar Navy modernization contracts?

Serco Inc. has a significant history of performing various services for the U.S. Navy and other defense agencies. While specific details on 'modernization support' contracts comparable to this award require deeper analysis of their portfolio, Serco is known for providing a range of support services, including technical, engineering, and operational support. Their experience often spans areas like fleet readiness, training, and platform support. A review of their past performance ratings and any contract disputes or awards related to naval modernization would provide further insight into their capabilities and reliability for this specific contract. Their broader presence in defense contracting suggests familiarity with the regulatory and operational environment.

How does the $6.37M contract value compare to other Navy modernization support contracts?

The $6.37 million contract value for this four-year period is relatively modest when compared to the vast scale of major Navy modernization programs, which often involve multi-billion dollar investments in new platforms, systems, and upgrades. This contract appears to focus on specific engineering and manpower support services rather than the procurement of major assets. Benchmarking requires identifying contracts with similar scopes, such as engineering support for specific ship classes or manpower analysis. However, in the context of specialized professional services supporting ongoing modernization efforts, this value is within a common range for targeted support contracts.

What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost escalation beyond initial estimates, even though the contractor's profit is fixed. The government bears the risk of increased costs, necessitating rigorous oversight to ensure that all incurred costs are reasonable, allocable, and allowable. If the contractor is inefficient, costs could rise, impacting the overall value. Another risk is scope creep, where the requirements may expand beyond the original intent, potentially leading to contract modifications and increased costs. Effective management requires clear definition of work, robust cost tracking, and proactive communication to mitigate these risks.

How effective is full and open competition in ensuring value for this type of specialized engineering service?

Full and open competition is generally considered the most effective method for ensuring value for specialized engineering services, as it allows a broad range of qualified contractors to compete. The presence of five bidders in this case suggests that the market for these services is sufficiently robust. Competition drives innovation, encourages competitive pricing, and provides the government with a wider selection of technically capable offerors. This process helps ensure that the selected contractor offers the best combination of technical merit and price, thereby maximizing the value of taxpayer funds. However, the effectiveness also depends on the clarity of the solicitation and the evaluation criteria used.

What is the historical spending trend for similar engineering services within the Department of the Navy?

Historical spending trends for engineering services within the Department of the Navy are substantial and generally increasing, driven by continuous fleet modernization, maintenance, and new platform development. The Navy consistently allocates significant portions of its budget to acquiring and supporting advanced capabilities, which heavily relies on engineering expertise. Spending in this category often fluctuates based on major shipbuilding programs, technology insertion initiatives, and readiness requirements. Analyzing specific sub-categories like 'Engineering Services' (NAICS 541330) over several fiscal years would reveal trends in contract values, types of services procured, and key contractors, providing context for the current award.

What are the implications of the contract duration (1460 days) on service delivery and cost?

A contract duration of 1460 days (approximately 4 years) implies a stable, long-term requirement for the specified engineering and support services. This extended period allows the contractor, Serco Inc., to develop deep expertise and institutional knowledge related to the Navy's modernization goals and manpower systems. For the government, it offers continuity of service and potentially better value through economies of scale and reduced transition costs compared to multiple short-term contracts. However, it also necessitates careful performance management throughout the period to ensure ongoing quality and responsiveness, and to mitigate risks associated with long-term contractor dependency.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0018922R3005

Offers Received: 5

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: $8,468,090

Exercised Options: $6,742,031

Current Obligation: $6,374,472

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $513,662

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