Serco Inc. awarded $17.6M follow-on contract for Naval hazardous material management

Contract Overview

Contract Amount: $17,608,821 ($17.6M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2022-07-13

End Date: 2026-07-16

Contract Duration: 1,464 days

Daily Burn Rate: $12.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: THIS IS A NON-COMMERCIAL FOLLOW-ON ACQUISITION IN SUPPORT OF THE NAVAL SUPPLY SYSTEMS COMMAND (NAVSUP) HEAD QUARTERS (HQ) HAZARDOUS MATERIAL MANAGEMENT (HMM).

Place of Performance

Location: MECHANICSBURG, CUMBERLAND County, PENNSYLVANIA, 17055

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $17.6 million to SERCO INC for work described as: THIS IS A NON-COMMERCIAL FOLLOW-ON ACQUISITION IN SUPPORT OF THE NAVAL SUPPLY SYSTEMS COMMAND (NAVSUP) HEAD QUARTERS (HQ) HAZARDOUS MATERIAL MANAGEMENT (HMM). Key points: 1. Contract is a non-commercial follow-on acquisition, indicating continuity of services. 2. The acquisition method is a delivery order under a larger contract. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 4. The contract duration is over 4 years, suggesting a long-term need for these services. 5. The geographic location of performance is Pennsylvania. 6. The contractor, Serco Inc., has a significant presence in government contracting.

Value Assessment

Rating: fair

The contract value of $17.6 million over approximately four years for hazardous material management services appears reasonable given the scope. However, without specific benchmarks for hazardous material management contracts within the Navy or DoD, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee structure necessitates close monitoring to ensure costs remain within acceptable parameters and do not escalate beyond the fixed fee. Comparing this to similar contracts for logistical support or environmental services within the DoD would provide a clearer picture of its cost-effectiveness.

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 fact that it is a follow-on acquisition suggests that the initial award was also competed. The level of competition for the original contract and any subsequent modifications would influence price discovery. A robust competition generally leads to better pricing for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down costs through market forces, ensuring the government receives competitive pricing for essential services.

Public Impact

The primary beneficiaries are the Naval Supply Systems Command (NAVSUP) Headquarters, ensuring compliance with hazardous material regulations. Services delivered include the management of hazardous materials, crucial for environmental safety and operational readiness. The geographic impact is centered in Pennsylvania, where the contractor will perform the services. Workforce implications include the potential for direct and indirect employment opportunities related to hazardous material handling and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to incur higher costs to maximize their fee, requiring stringent oversight.
Follow-on acquisitions, while efficient, can sometimes limit the opportunity for new market entrants to compete if not structured carefully.
The long duration of the contract increases the risk of scope creep or changes in requirements that may not be adequately captured in the initial pricing.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process that likely resulted in favorable pricing.
The contract supports a critical function (hazardous material management) for a major military command (NAVSUP), indicating essential service provision.
The follow-on nature of the acquisition implies a proven track record of performance from the incumbent or previous awardee, reducing transition risks.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting logistics and supply chain management for hazardous materials. The market for government logistics and supply chain support services is substantial, with significant spending allocated annually by various federal agencies. This contract represents a portion of the broader DoD spending on operational support and readiness. Comparable spending benchmarks would typically be found in contracts for similar supply chain, environmental, or logistics management services across different branches of the military.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a specific set-aside for this particular delivery order. Therefore, there are no direct subcontracting implications for small businesses mandated by this award. The focus appears to be on full and open competition, which may or may not involve small business prime contractors or subcontractors depending on the bidding landscape. Further analysis of the prime contract under which this delivery order was issued would be needed to assess broader small business utilization.

Oversight & Accountability

Oversight for this contract will likely be managed by the Naval Supply Systems Command (NAVSUP) contracting officers and program managers. Accountability measures would be embedded within the Cost Plus Fixed Fee contract terms, requiring detailed reporting on costs and performance. Transparency is typically facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Supply Systems Command (NAVSUP) Operations
Department of Defense Hazardous Material Management Programs
Federal Supply Chain and Logistics Support Contracts
Environmental Compliance and Management Services

Risk Flags

Cost Plus Fixed Fee contract type requires careful monitoring to control costs.
Follow-on acquisition may perpetuate existing inefficiencies if not re-evaluated.
Long contract duration increases risk of scope creep and requirement changes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.6 million to SERCO INC. THIS IS A NON-COMMERCIAL FOLLOW-ON ACQUISITION IN SUPPORT OF THE NAVAL SUPPLY SYSTEMS COMMAND (NAVSUP) HEAD QUARTERS (HQ) HAZARDOUS MATERIAL MANAGEMENT (HMM).

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 $17.6 million.

What is the period of performance?

Start: 2022-07-13. End: 2026-07-16.

What is Serco Inc.'s track record with the Department of Defense, particularly in hazardous material management?

Serco Inc. is a large government contractor with a significant portfolio of contracts across various federal agencies, including the Department of Defense. While specific details on their hazardous material management performance for NAVSUP are not provided in this data snippet, their extensive experience in defense sector support suggests a capacity to handle complex logistical and operational requirements. A deeper dive into their contract history, past performance evaluations, and any reported issues or successes related to similar services would be necessary for a comprehensive assessment. Their overall financial health and established presence in government contracting indicate a level of stability, but specific performance metrics for this type of service are crucial for a complete understanding.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing structures for similar services in terms of value?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or when there is a high degree of uncertainty, such as in research and development or complex service contracts. For hazardous material management, where unforeseen issues can arise, CPFF can provide flexibility. However, it carries a risk of cost overruns, as the contractor is reimbursed for actual costs plus a fixed fee. Compared to Firm-Fixed-Price (FFP) contracts, CPFF generally offers less cost certainty for the government but can be more adaptable. Value-for-money with CPFF heavily relies on robust oversight, detailed cost tracking, and effective negotiation of the fixed fee to ensure it reflects the anticipated effort and risk. FFP contracts typically offer better price predictability but may require more detailed initial scope definition and can lead to change orders if requirements evolve.

What are the potential risks associated with a follow-on acquisition for hazardous material management?

Follow-on acquisitions, while often efficient, can introduce specific risks. One primary risk is complacency, where the incumbent contractor or agency may not push for innovation or cost efficiencies as aggressively as in a new competition. There's also a risk of 'vendor lock-in,' where the government becomes overly reliant on the existing provider, potentially hindering the ability to switch to a more cost-effective or technologically advanced solution in the future. Furthermore, if the original contract had underlying issues or inefficiencies, these can be perpetuated in a follow-on award without adequate re-evaluation. Ensuring that the follow-on contract includes updated performance metrics, competitive pricing adjustments, and clear mechanisms for addressing evolving requirements is crucial to mitigate these risks.

What historical spending patterns exist for hazardous material management services within the Department of the Navy?

Analyzing historical spending patterns for hazardous material management within the Department of the Navy is essential for contextualizing the current $17.6 million award. This would involve examining annual expenditures on similar services over the past 5-10 years, identifying trends in contract values, durations, and the types of services procured. Understanding the average cost per unit or per service provided, as well as the distribution of spending across different naval commands and geographic locations, would offer valuable insights. Furthermore, tracking the number of contracts awarded and the competitive landscape over time can reveal shifts in market dynamics and pricing. Without access to detailed historical spending data, it is difficult to definitively state whether this current contract represents an increase, decrease, or stable level of investment in these critical services.

How does the engineering services classification (NAICS 541330) align with the stated purpose of hazardous material management?

The NAICS code 541330, 'Engineering Services,' encompasses establishments providing architectural, engineering, and related services. While hazardous material management is a specialized field, it often involves significant engineering expertise, particularly in areas like risk assessment, environmental compliance, facility design for storage, waste treatment processes, and regulatory interpretation. Therefore, classifying this contract under engineering services is appropriate if the scope of work includes technical analysis, design, consulting, and oversight related to the safe handling, storage, transport, and disposal of hazardous materials. If the contract primarily focuses on manual labor for moving or disposing of materials without significant technical or design input, other NAICS codes might be more fitting. However, given the complexity and regulatory nature of HMM, engineering services is a plausible classification.

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: N0018922R3033

Offers Received: 1

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: $24,737,323

Exercised Options: $17,608,821

Current Obligation: $17,608,821

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $403,140

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