DoD's $95.9M contract for communications services awarded to Ceridian LLC shows potential for cost savings

Contract Overview

Contract Amount: $95,917,524 ($95.9M)

Contractor: Ceridian LLC

Awarding Agency: Department of Defense

Start Date: 2005-05-06

End Date: 2006-05-06

Contract Duration: 365 days

Daily Burn Rate: $262.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 200508!237383!1700!N61339!NAVAL AIR WARFARE CENTER !N6133905C0086 !A!N! !N! ! !20050506!20050630!006255996!006255996!006255996!N!CERIDIAN CORPORATION !3311 E OLD SHAKOPEE RD !MINNEAPOLIS !MN!55425!53075!095!12!ORLANDO NTC !ORANGE !FLORIDA !+000007684952!N!N!000042816163!R426!COMMUNICATIONS SERVICES !S1 !SERVICES !000 !* !624190!E! !3! ! ! ! ! !20200930!B! ! !A! !D!U!J!1!001!N!2A!Z!N!Z! ! !N!C!N! ! ! !B!B!A!A!000!A!B!N! ! ! ! !1700!N61339!0001! !

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55425

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $95.9 million to CERIDIAN LLC for work described as: 200508!237383!1700!N61339!NAVAL AIR WARFARE CENTER !N6133905C0086 !A!N! !N! ! !20050506!20050630!006255996!006255996!006255996!N!CERIDIAN CORPORATION !3311 E OLD SHAKOPEE RD !MINNEAPOLIS !MN!55425!53075!095!12!ORLANDO NTC !ORAN… Key points: 1. The contract's value of $95.9 million over one year suggests a high per-unit cost, warranting further investigation into efficiency. 2. Awarded as a sole-source contract, the lack of competition may have led to suboptimal pricing. 3. The contract's duration of one year with a firm fixed-price structure indicates a defined scope but limits flexibility. 4. While the specific services are categorized under communications, the broad 'Other Individual and Family Services' NAICS code requires clarification. 5. The contract was awarded by the Naval Air Warfare Center, highlighting its role in supporting naval aviation operations. 6. The contractor, Ceridian LLC, has a significant presence, suggesting established capabilities but also potential for market dominance.

Value Assessment

Rating: fair

The total award amount of $95.9 million for a one-year contract for communications services appears high, especially considering the NAICS code of 'Other Individual and Family Services' (624190). Benchmarking against similar contracts for communications infrastructure or IT support would be necessary to determine if this represents a fair price. Without more granular detail on the services provided, it is difficult to assess value for money. The lack of competition further raises concerns about whether the government secured the best possible pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in urgent situations. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. A sole-source award limits the government's ability to negotiate the lowest possible price.

Public Impact

Naval Air Warfare Center personnel and operations benefit from the communications services provided. The contract supports critical communication infrastructure necessary for naval aviation readiness and command and control. The geographic impact is primarily within the purview of the Naval Air Warfare Center's operational areas. The contract likely supports a workforce involved in maintaining and operating these communication systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
High contract value for a one-year term warrants scrutiny of service scope and efficiency.
Ambiguity in NAICS code 'Other Individual and Family Services' for communications services requires clarification.
Lack of detailed performance metrics makes it difficult to assess service effectiveness and value.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established contractor like Ceridian LLC suggests a degree of reliability and capability.
Contract duration of one year allows for periodic re-evaluation of needs and contractor performance.

Sector Analysis

The defense sector, particularly within the Department of the Navy, relies heavily on robust communication systems. This contract falls under IT and professional services, a significant segment of federal spending. Comparable spending benchmarks for large-scale communication service contracts within the DoD can range from tens to hundreds of millions of dollars annually, depending on the scope and duration. The specific NAICS code (624190) is unusual for a communications contract, suggesting it might be a specialized service or an administrative categorization.

Small Business Impact

This contract does not appear to have a small business set-aside. As a sole-source award to Ceridian LLC, there is no indication of subcontracting opportunities for small businesses within this specific award. Further analysis would be needed to determine if Ceridian LLC has broader subcontracting plans or if this contract type inherently limits small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Naval Air Warfare Center's contracting and program management offices. The Defense Contract Management Agency (DCMA) may also provide oversight. Transparency is limited due to the sole-source nature and lack of publicly available detailed performance reports. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense IT Services Contracts
Naval Air Systems Command Contracts
Communications Infrastructure Support
Professional Services Contracts
Sole-Source IT Awards

Risk Flags

Sole-source award
High contract value for duration
Unusual NAICS code for service type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $95.9 million to CERIDIAN LLC. 200508!237383!1700!N61339!NAVAL AIR WARFARE CENTER !N6133905C0086 !A!N! !N! ! !20050506!20050630!006255996!006255996!006255996!N!CERIDIAN CORPORATION !3311 E OLD SHAKOPEE RD !MINNEAPOLIS !MN!55425!53075!095!12!ORLANDO NTC !ORANGE !FLORIDA !+000007684952!N!N!000042816163!R426!COMMUNICATIONS SERVICES !S1 !SERVICES !000 !* !624190!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is CERIDIAN LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $95.9 million.

What is the period of performance?

Start: 2005-05-06. End: 2006-05-06.

What specific communications services were provided under this contract, and why was the NAICS code 'Other Individual and Family Services' used?

The provided data indicates the Product Service Code (PSC) as 'R426' for 'Communications Services' and the NAICS code as '624190' for 'Other Individual and Family Services'. This discrepancy is unusual. Typically, communications services fall under IT or telecommunications-related NAICS codes. The use of '624190' might suggest that the services, while communication-related, were bundled with or supported specific social or family services programs managed by the Naval Air Warfare Center, or it could be an administrative error. Without further documentation, the exact nature of the services and the rationale for the NAICS code remain unclear. Clarification from the contracting agency would be necessary to understand the precise scope and justification.

How does the $95.9 million award amount compare to similar one-year communications service contracts within the Department of Defense?

A $95.9 million award for a one-year communications service contract is substantial. Within the Department of Defense, large-scale IT and communications contracts can range significantly, but this figure suggests a comprehensive service package. For instance, contracts for enterprise-wide network support, secure communication systems, or advanced telecommunications infrastructure can reach these levels. However, without knowing the specific deliverables (e.g., number of users supported, bandwidth, specific technologies deployed, geographic coverage), a direct comparison is difficult. Benchmarking against contracts with similar PSC codes (like R426) and within the same agency (Naval Air Warfare Center) would provide a more accurate assessment of whether this represents a competitive price point or potentially an overpayment.

What are the potential risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risk of a sole-source award for a $95.9 million contract is the lack of price competition. This can lead to the government paying a premium compared to what might have been achieved through a competitive bidding process. It also reduces the incentive for the contractor to innovate or offer cost efficiencies, as there is no direct market pressure. Furthermore, sole-source awards can sometimes indicate a lack of market research or planning by the agency, potentially leading to reliance on a single vendor that may not be the most capable or cost-effective in the long run. This can also create vendor lock-in, making it difficult to switch providers later.

What is Ceridian LLC's track record with the federal government, particularly in providing communications services?

Ceridian LLC is a known entity in the federal contracting space, often associated with human capital management, payroll, and HR solutions. While their primary expertise may lie in these areas, their involvement in providing 'Communications Services' under this specific contract (N6133905C0086) suggests a broader or perhaps specialized capability. Federal procurement databases would need to be consulted for a comprehensive review of their past performance, including contract values, agencies served, and the nature of services rendered. A review of past performance evaluations and any reported issues would be crucial to assess their reliability and effectiveness in fulfilling government contracts, especially for a service as critical as communications.

Given the contract's duration and value, what are the implications for long-term communication strategy and potential future spending?

A one-year, $95.9 million contract, even if firm fixed-price, represents a significant, albeit short-term, commitment. Its implications for long-term strategy depend on whether it was a bridge contract, a pilot program, or part of a larger, phased acquisition. If it's a standalone, one-year requirement, it suggests the agency may be re-evaluating its communication needs annually or plans to compete a larger requirement later. If it's intended to be recurring, the sole-source nature raises concerns about future competition and potential cost escalations. The agency's long-term communication strategy should ideally involve market research and competitive procurements to ensure evolving technological needs are met efficiently and cost-effectively.

Industry Classification

NAICS: Health Care and Social Assistance › Individual and Family Services › Other Individual and Family Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Foundation Holdings, Inc. (UEI: 808416841)

Address: 3311 E OLD SHAKOPEE RD, MINNEAPOLIS, MN, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline