DoD's $22.2M MILSATCOM support contract awarded to Serco Inc. shows fair value with 2 bidders

Contract Overview

Contract Amount: $22,218,931 ($22.2M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2013-06-13

End Date: 2018-04-30

Contract Duration: 1,782 days

Daily Burn Rate: $12.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CODE 34 ADVANCED MILITARY SATELLITE COMMUNICATIONS (MILSATCOM) SUPPORT

Place of Performance

Location: NEWPORT, NEWPORT County, RHODE ISLAND, 02841

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $22.2 million to SERCO INC for work described as: CODE 34 ADVANCED MILITARY SATELLITE COMMUNICATIONS (MILSATCOM) SUPPORT Key points: 1. Contract value of $22.2M over 5 years suggests moderate annual spending. 2. Awarded under full and open competition, indicating a competitive bidding process. 3. Engineering services for advanced military satellite communications are critical for national security. 4. The contract's cost-plus-fixed-fee structure allows for flexibility but requires careful oversight. 5. Performance period of nearly 5 years provides stability for the contractor and program. 6. The relatively low number of bids (2) warrants scrutiny of the competition's robustness.

Value Assessment

Rating: good

The contract's total value of $22.2 million over approximately 5 years averages to about $4.4 million annually. While specific benchmarks for MILSATCOM support are difficult to ascertain without more granular data, the pricing appears reasonable given the specialized nature of engineering services for advanced military satellite communications. The cost-plus-fixed-fee (CPFF) contract type, while common for complex services, necessitates diligent oversight to ensure costs remain controlled and the fixed fee provides adequate profit without excessive risk to the government. Compared to similar large-scale defense engineering contracts, this award seems to fall within a typical range for specialized support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that all responsible sources were permitted to submit bids. The record indicates two bids were received. While two bidders represent some level of competition, it is on the lower end for a contract of this nature and value. This limited number of bidders could potentially impact price discovery, as a more robust competition with multiple offers might have driven prices down further. However, it does not necessarily indicate a lack of adequate competition if the two bidders were highly qualified and submitted competitive proposals.

Taxpayer Impact: The full and open competition, despite only two bidders, aims to ensure taxpayers receive fair value by allowing multiple companies to vie for the contract. A more competitive landscape could have potentially led to lower overall costs for the government.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, ensuring the operational readiness and advancement of critical military satellite communication systems. Services delivered include advanced engineering support, likely encompassing design, integration, testing, and maintenance of complex MILSATCOM infrastructure. The geographic impact is likely global, given the nature of satellite communications, supporting military operations worldwide. Workforce implications include the employment of highly skilled engineers and technical specialists in the defense contracting sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may have reduced price pressure.
Cost-plus-fixed-fee contract type requires robust government oversight to manage costs effectively.
The specialized nature of MILSATCOM support could create barriers to entry for smaller or less experienced firms.

Positive Signals

Awarded under full and open competition, maximizing the pool of potential bidders.
Contract duration of nearly 5 years provides program stability and allows for long-term planning.
Serco Inc. has a significant presence in government contracting, suggesting established capabilities.

Sector Analysis

The defense sector, particularly within advanced communications and space systems, is characterized by high technological complexity, significant R&D investment, and stringent security requirements. Military satellite communications (MILSATCOM) is a critical sub-sector, essential for global command and control, intelligence gathering, and operational support. Spending in this area is driven by evolving threats, technological advancements, and the need for secure, resilient communication networks. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of each MILSATCOM program, but large contracts for engineering and support services in this domain often run into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have been set aside for small businesses, as indicated by the 'sb': false flag. The prime contractor, Serco Inc., is a large business. While there is no explicit information on subcontracting plans for small businesses within this specific award, large defense contracts often include provisions for small business participation. The absence of a small business set-aside suggests that the primary focus was on securing specialized engineering expertise, potentially limiting direct opportunities for small businesses as prime contractors on this particular award.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program management office within the Department of the Navy. Given the cost-plus-fixed-fee structure, rigorous financial oversight is crucial to monitor expenditures and ensure the fixed fee is earned appropriately. Transparency is generally maintained through contract reporting mechanisms and performance reviews. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Military Satellite Communications Systems
Defense Engineering Services
Advanced Technology Support Contracts
Naval Information Warfare Systems

Risk Flags

Limited competition
Cost-plus contract type requires oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.2 million to SERCO INC. CODE 34 ADVANCED MILITARY SATELLITE COMMUNICATIONS (MILSATCOM) SUPPORT

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 $22.2 million.

What is the period of performance?

Start: 2013-06-13. End: 2018-04-30.

What is Serco Inc.'s track record with similar Department of Defense contracts, particularly in MILSATCOM?

Serco Inc. has a substantial history of contracting with the U.S. government, including the Department of Defense. Their portfolio often includes a wide range of services, from IT and logistics to technical support and engineering. While specific details on their MILSATCOM performance for this particular contract (CODE 34) are not provided in the summary data, Serco's broader experience suggests they possess the organizational capacity and technical expertise to handle complex defense programs. A deeper dive into contract performance reports, past performance evaluations, and any documented issues or successes related to their previous DoD engagements would provide a more comprehensive understanding of their track record in this specialized area. Their ability to secure and execute contracts of this magnitude indicates a level of trust and proven capability within the defense sector.

How does the $22.2 million contract value compare to other MILSATCOM support contracts awarded by the DoD?

The $22.2 million total contract value for CODE 34 Advanced MILSATCOM Support, awarded to Serco Inc. over approximately five years (June 2013 - April 2018), represents a moderate investment for specialized engineering services within this critical domain. Annual spending averaged around $4.4 million. To benchmark this effectively, one would need to compare it against other contracts for similar MILSATCOM engineering, sustainment, or development services. Larger, more complex programs involving satellite development, launch, or extensive network integration can easily reach hundreds of millions or even billions of dollars. Conversely, smaller, more focused support tasks might be in the low millions. This contract appears to fall in the mid-range for dedicated, long-term engineering support, suggesting a significant but not exceptionally large scope of work compared to the full spectrum of MILSATCOM acquisition and sustainment activities.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for advanced engineering services?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Serco Inc. for MILSATCOM support, is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. While the fixed fee incentivizes the contractor to control costs to maximize profit, the government bears the risk of cost increases if the project scope expands or unforeseen challenges arise. This necessitates robust government oversight to scrutinize costs, ensure they are allowable and reasonable, and manage any changes to the contract's scope. Without diligent monitoring, the government could end up paying significantly more than initially anticipated. Contractor performance and efficiency are key factors in mitigating this risk.

What does the limited competition (2 bidders) imply about the market for advanced MILSATCOM engineering services?

The fact that only two bids were received for this advanced MILSATCOM support contract suggests several possibilities regarding the market. Firstly, it could indicate a highly specialized niche market where only a few companies possess the requisite technical expertise, security clearances, and infrastructure to compete effectively. Advanced MILSATCOM requires sophisticated engineering capabilities, often involving classified technologies and long-standing relationships with government agencies. Secondly, the bidding process itself might have had specific requirements or solicitations that inadvertently limited the pool of interested and capable contractors. While two bidders represent some competition, it is less than ideal for ensuring maximum price competition. This limited competition could potentially lead to higher prices than if more firms had participated, although the quality and capability of the bidders are also critical factors.

How has federal spending on MILSATCOM support evolved over the past decade, and where does this contract fit?

Federal spending on Military Satellite Communications (MILSATCOM) has generally been substantial and often increasing over the past decade, driven by the growing reliance on space-based assets for global operations, intelligence, and secure communications. This spending encompasses research and development, satellite acquisition, launch services, ground infrastructure, and ongoing sustainment and support. Contracts like the $22.2 million award to Serco Inc. for engineering services represent the sustainment and modernization aspect of MILSATCOM. While this specific contract value is moderate in the grand scheme of major satellite programs, it reflects the continuous need for specialized engineering expertise to maintain and upgrade existing systems and support future capabilities. Overall trends show a consistent demand for MILSATCOM, with significant investments allocated across various program phases and support functions.

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: N0002412R3408

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Serco Group PLC

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: $22,968,628

Exercised Options: $22,968,628

Current Obligation: $22,218,931

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017807D4990

IDV Type: IDC

Timeline