Navy awards $22.5M contract for business management support, with Serco Inc. as prime

Contract Overview

Contract Amount: $22,532,173 ($22.5M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2023-06-01

End Date: 2026-05-31

Contract Duration: 1,095 days

Daily Burn Rate: $20.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: BUSINESS MANAGEMENT SUPPORT SERVICES - ADMINISTRATIVE MGMT. SERVICES IN SUPPORT OF NAVY RECRUITING COMMAND

Place of Performance

Location: MILLINGTON, SHELBY County, TENNESSEE, 38054

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $22.5 million to SERCO INC for work described as: BUSINESS MANAGEMENT SUPPORT SERVICES - ADMINISTRATIVE MGMT. SERVICES IN SUPPORT OF NAVY RECRUITING COMMAND Key points: 1. Contract focuses on administrative management services for Navy Recruiting Command. 2. Awarded via full and open competition, indicating broad market engagement. 3. Cost Plus Fixed Fee pricing structure requires careful monitoring of contractor performance. 4. Contract duration of 1095 days suggests a significant, ongoing need for these services. 5. The contract value is modest within the broader context of federal IT and professional services spending. 6. Performance is to be in Tennessee, implying a localized impact on the workforce.

Value Assessment

Rating: good

The contract value of $22.5 million over three years appears reasonable for administrative management support services. Benchmarking against similar contracts for business management support within the Department of Defense is necessary for a definitive value assessment. The Cost Plus Fixed Fee (CPFF) structure, while allowing flexibility, necessitates robust oversight to ensure costs remain controlled and the fixed fee is justified by the services rendered. Without specific performance metrics or detailed cost breakdowns, a precise value-for-money assessment is challenging, but the competitive award suggests a fair price was likely achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The presence of two bids suggests a moderate level of competition for this specific requirement. While two bidders is better than a sole-source award, a higher number of competitors typically leads to more aggressive pricing and a wider range of innovative solutions. The contracting activity likely ensured a competitive process, but further analysis of the bidding landscape could reveal if more robust competition was feasible.

Taxpayer Impact: Taxpayers benefit from a competitive process that generally drives down costs and encourages efficiency. Full and open competition increases the likelihood that the government is receiving services at a fair market price.

Public Impact

The primary beneficiaries are the U.S. Navy Recruiting Command, which will receive essential administrative and management support. Services delivered include general management consulting and administrative support, crucial for operational efficiency. The geographic impact is concentrated in Tennessee, where the contract performance is expected. Workforce implications may include direct employment by Serco Inc. in Tennessee and potential indirect benefits to the local economy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts require diligent oversight to prevent cost overruns and ensure the fixed fee remains appropriate for the scope of work.
Limited competition (2 bidders) may not have fully leveraged market forces to achieve the lowest possible price.
The specific nature of 'business management support' can be broad; clarity on deliverables and performance standards is key to ensuring accountability.

Positive Signals

Awarded through full and open competition, indicating a commitment to a fair and accessible procurement process.
The contract is for essential administrative support, directly contributing to the operational effectiveness of Navy Recruiting Command.
A defined contract period (3 years) provides stability for both the agency and the contractor.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically administrative management and general management consulting. This sector is a significant component of federal spending, supporting a wide array of government functions. The market for these services is competitive, with numerous firms offering expertise. The value of this contract ($22.5M) is relatively small compared to the overall federal spending on management consulting, which can reach billions annually across various agencies.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific award, as the 'ss' (small business set-aside) and 'sb' (small business) flags are false. Serco Inc., the prime contractor, is a large business. There is no explicit mention of subcontracting goals for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this particular contract appears limited, though subcontracting opportunities could still arise if Serco chooses to engage small businesses.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting officers and program managers. Accountability measures will be tied to the terms and conditions of the Cost Plus Fixed Fee contract, including performance standards and reporting requirements. Transparency is facilitated by the public nature of federal contract awards, allowing for scrutiny. The Inspector General for the Department of Defense may have jurisdiction for audits and investigations if any issues arise regarding fraud, waste, or abuse.

Related Government Programs

Navy Recruiting Command Operations Support
Department of Defense Administrative Services
Federal Management Consulting Contracts
Professional Services for Military Branches

Risk Flags

Cost Plus Fixed Fee (CPFF) contract type requires diligent oversight.
Limited number of bidders (2) may indicate potential for improved competition.
Need for clear performance metrics to ensure value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.5 million to SERCO INC. BUSINESS MANAGEMENT SUPPORT SERVICES - ADMINISTRATIVE MGMT. SERVICES IN SUPPORT OF NAVY RECRUITING COMMAND

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 $22.5 million.

What is the period of performance?

Start: 2023-06-01. End: 2026-05-31.

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

Serco Inc. has a substantial history of contracting with the U.S. government, including the Department of the Navy. They provide a wide range of services, often including management, technology, and operational support. Analyzing their past performance on similar administrative management contracts, particularly those with CPFF structures, would be crucial. This includes reviewing past performance evaluations, any documented issues or successes, and their ability to manage costs effectively. A review of their contract history with the Navy would reveal the extent of their experience and reliability in delivering services to this specific agency, helping to assess their capability to fulfill the current requirement.

How does the $22.5 million contract value compare to similar administrative management support contracts awarded by the Navy or DoD?

The $22.5 million contract value, spread over three years (1095 days), equates to an average annual value of approximately $7.5 million. To benchmark this, one would compare it to other contracts for 'Administrative Management and General Management Consulting Services' (NAICS code 541611) awarded by the Department of the Navy or the broader Department of Defense. Factors such as contract duration, scope of services, and specific deliverables influence comparability. If similar contracts for comparable services are consistently awarded at higher or lower values, it could indicate whether this award represents a particularly good or poor value. Without access to a comprehensive database of comparable contract values and scopes, a precise comparison is difficult, but $7.5 million annually for specialized administrative support is within a plausible range for a significant command like Navy Recruiting.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for administrative support?

The primary risks with a Cost Plus Fixed Fee (CPFF) contract revolve around cost control and the contractor's incentive for efficiency. While the 'fixed fee' provides the contractor with a defined profit margin, the 'cost plus' element means the government reimburses the contractor's allowable costs. This structure can reduce the contractor's incentive to minimize costs aggressively, as their profit is fixed regardless of the actual expenses incurred (within allowable limits). Key risks include potential for cost overruns if the government's oversight of allowable costs is insufficient, scope creep that isn't properly managed, and the possibility that the fixed fee may not adequately reflect the effort required if the scope is significantly underestimated. Robust government oversight, clear definition of allowable costs, and diligent performance monitoring are essential to mitigate these risks.

How effective is full and open competition in ensuring competitive pricing for administrative management services?

Full and open competition is generally the most effective method for ensuring competitive pricing for administrative management services, as it allows the widest possible pool of qualified vendors to bid. This broad participation increases the likelihood that the government will receive multiple offers, fostering a price-sensitive environment where contractors are motivated to submit their most competitive bids to win the contract. The presence of multiple bidders allows for price discovery and comparison, enabling the government to select the offer that represents the best value (considering both price and non-price factors). While this contract had two bidders, indicating some competition, the effectiveness is maximized when the number of bidders is substantial enough to create significant market pressure.

What are the potential implications of this contract's performance location in Tennessee?

The performance location in Tennessee has several implications. Firstly, it suggests that the administrative support services required by the Navy Recruiting Command are either physically located there or can be effectively managed remotely from that state. This could lead to job creation or the utilization of existing personnel within Tennessee by the prime contractor, Serco Inc. Secondly, it may indicate a specific operational hub or regional focus for certain Navy recruiting support functions. The geographic concentration simplifies oversight for the government in some respects but also means that any disruptions or successes at this location will have a localized impact. It also implies that the workforce supporting this contract will primarily be based in Tennessee.

How does the $22.5M contract value fit into the broader landscape of federal spending on management and administrative support services?

The $22.5 million contract value over three years is a moderate sum within the vast federal procurement landscape. The U.S. government spends billions annually on management and administrative support services, encompassing a wide range of activities from high-level strategic consulting to routine administrative tasks. This particular contract, focused on supporting the Navy Recruiting Command, represents a specific, targeted investment. While significant for the recipient and the contractor, it is a relatively small fraction of the total federal expenditure in this category. Its value suggests a focused scope of work rather than a large-scale, agency-wide transformation or support initiative.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting 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: N0018923QZ020

Offers Received: 2

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: $26,024,852

Exercised Options: $22,532,173

Current Obligation: $22,532,173

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $4,751,368

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0018918DZ046

IDV Type: IDC

Timeline