DoD's $56M warehousing contract with Amentum Services, Inc. shows fair value despite limited competition

Contract Overview

Contract Amount: $56,102,730 ($56.1M)

Contractor: Amentum Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-08-01

End Date: 2017-07-31

Contract Duration: 1,825 days

Daily Burn Rate: $30.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Other

Official Description: (DISTRIBUTION WAREHOUSE-UT)

Place of Performance

Location: HILL AFB, DAVIS County, UTAH, 84056

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $56.1 million to AMENTUM SERVICES, INC. for work described as: (DISTRIBUTION WAREHOUSE-UT) Key points: 1. The contract's fixed-price incentive structure aims to balance cost control with performance. 2. Competition was limited to two bidders, potentially impacting price discovery. 3. The contract duration of five years suggests a need for stable, long-term warehousing support. 4. Performance context is crucial to assess if the incentive structure effectively drove desired outcomes. 5. The Defense Logistics Agency's reliance on this contract highlights its importance in the defense supply chain. 6. Amentum Services, Inc. has a significant track record in government contracting, particularly in logistics and support services.

Value Assessment

Rating: fair

The contract's total value of $56.1 million over five years averages to approximately $11.2 million annually. Benchmarking this against similar large-scale warehousing and distribution contracts within the Department of Defense is challenging without more specific service details. However, the fixed-price incentive (FPI) contract type suggests an effort to achieve value by incentivizing cost savings and performance targets. The relatively low number of bidders (2) could indicate either a specialized market or potential barriers to entry, which might influence the final negotiated price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under full and open competition, but only two bids were received. This limited competition level suggests that while the opportunity was broadly advertised, only a few entities possessed the necessary qualifications or capacity to bid. The presence of only two bidders may have reduced the downward pressure on pricing that typically occurs with a larger pool of competitors, potentially leading to a less competitive outcome for the government.

Taxpayer Impact: With only two bidders, taxpayers may have received less competitive pricing than if more firms had participated. This situation warrants scrutiny to ensure the government secured the best possible value under the circumstances.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the efficient storage and distribution of essential supplies. Services delivered include general warehousing and storage, critical for maintaining operational readiness. The geographic impact is centered in Utah (UT), serving as a key distribution hub. Workforce implications include employment opportunities for personnel involved in warehousing, logistics, and management within the Utah region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may have resulted in a higher price than a more robust bidding process.
The fixed-price incentive structure requires careful monitoring to ensure the incentives are effectively driving performance and cost savings.
Reliance on a single contract for significant warehousing needs in a specific region could pose a risk if performance falters.

Positive Signals

The fixed-price incentive contract type is designed to reward cost efficiency and performance, potentially leading to better value.
Amentum Services, Inc. has a demonstrated history of performance in government contracting, suggesting a lower risk of execution failure.
The contract's duration indicates a stable, long-term need, allowing for optimized operations and potential economies of scale.

Sector Analysis

The General Warehousing and Storage sector (NAICS 493110) is a critical component of the logistics and supply chain industry, supporting various government agencies and private enterprises. The market size for federal warehousing services is substantial, driven by the logistical needs of defense, disaster relief, and other government operations. This contract with the Defense Logistics Agency (DLA) fits within the broader landscape of federal logistics support, where DLA plays a pivotal role in managing the supply chain for the U.S. military. Comparable spending benchmarks are difficult to establish without granular data on service scope, but large-scale distribution centers often represent significant investments.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific small business subcontracting requirements in the provided data. The prime contractor, Amentum Services, Inc., is a large business. The absence of small business set-asides means that opportunities for small businesses to directly participate as prime contractors were limited. However, there may be indirect opportunities for small businesses to subcontract to Amentum, depending on their specific needs and procurement practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA), which is responsible for managing and administering the contract. Accountability measures are embedded within the contract's fixed-price incentive structure, which links contractor payment to performance and cost targets. Transparency is generally facilitated through contract award databases and reporting requirements, though specific performance metrics and oversight reports may not always be publicly accessible. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Defense Logistics Agency (DLA) Operations
Department of Defense Supply Chain Management
Federal Warehousing and Storage Services
Logistics and Distribution Contracts
Fixed-Price Incentive Contracts

Risk Flags

Limited Competition
Potential for Cost Overruns
Performance Monitoring Required

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $56.1 million to AMENTUM SERVICES, INC.. (DISTRIBUTION WAREHOUSE-UT)

Who is the contractor on this award?

The obligated recipient is AMENTUM SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $56.1 million.

What is the period of performance?

Start: 2012-08-01. End: 2017-07-31.

What is Amentum Services, Inc.'s track record with the Defense Logistics Agency and similar contracts?

Amentum Services, Inc. (and its predecessor companies) has a substantial history of performing logistics and support services for the U.S. government, including significant work with the Defense Logistics Agency (DLA). Their portfolio often includes base operations support, facility maintenance, and supply chain management. For example, Amentum has held numerous large-scale contracts involving warehousing, transportation, and base support services across various military installations. Their experience suggests a capacity to manage complex logistical operations. However, a detailed review of past performance ratings, any past disputes, or contract modifications would be necessary for a comprehensive assessment of their track record specifically related to this warehousing contract.

How does the pricing of this contract compare to similar warehousing contracts awarded by the DLA or other federal agencies?

Directly comparing the pricing of this $56.1 million, five-year contract without granular details on the specific services, volume, and performance metrics is difficult. The contract type, Fixed-Price Incentive (FPI), aims to provide value by sharing cost savings and overruns between the government and contractor. The average annual value of approximately $11.2 million needs to be contextualized by the scope of operations. If this contract covers a large, complex distribution center with high throughput, the price might be competitive. Conversely, if the scope is more limited, the price could be higher. Benchmarking would require access to data on similar FPI warehousing contracts with comparable service levels and geographic locations.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential cost overruns if the incentive structure is not effectively managed, performance failures impacting supply chain continuity, and the risk associated with limited competition (only two bidders). Mitigation strategies are embedded in the FPI contract type, which incentivizes cost control and performance. The DLA's contract administration and oversight are crucial for monitoring performance against targets and managing any deviations. The limited competition risk is mitigated by the government's due diligence in ensuring the selected contractor offers the best value, even with fewer bids. Furthermore, Amentum's established track record suggests a lower probability of performance failure.

How effective has the fixed-price incentive (FPI) contract type been in achieving cost savings and performance goals for similar DLA warehousing contracts?

The effectiveness of FPI contracts can vary significantly based on the specific contract terms, the clarity of performance metrics, and the diligence of contract oversight. In theory, FPI contracts are designed to encourage efficiency by allowing the contractor to share in any cost savings below a target cost, while also sharing in cost overruns above the target. For DLA warehousing contracts, this could lead to optimized inventory management, reduced operational expenses, and improved delivery times if the incentives are well-aligned with desired outcomes. However, poorly defined targets or inadequate monitoring can undermine these benefits, potentially leading to disputes or a failure to achieve the intended cost efficiencies. Historical data on DLA's use of FPI for warehousing would be needed to assess its general effectiveness.

What is the historical spending pattern for general warehousing and storage services by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) consistently spends significant amounts on warehousing and storage services to support military operations globally. Historical spending data reveals a substantial and ongoing investment in maintaining a robust supply chain infrastructure. This includes contracts for operating distribution centers, managing inventory, and providing related logistical support. The total annual spending can fluctuate based on operational tempo, strategic shifts, and the consolidation or expansion of facilities. The DLA's budget for these services typically runs into billions of dollars annually, reflecting the vast scale of its logistical mission. This specific contract represents a portion of that broader spending.

What are the implications of awarding a large warehousing contract to a single entity in a specific geographic region like Utah?

Awarding a large warehousing contract to a single entity in a specific region like Utah concentrates significant logistical operations and associated economic activity within that area. This can lead to job creation in warehousing, transportation, and management roles, benefiting the local economy. It also centralizes critical supply chain functions, potentially leading to efficiencies through economies of scale and streamlined operations. However, it also creates a dependency on that single contractor. Any disruption in service due to contractor performance issues, labor disputes, or unforeseen events could have a substantial impact on the DLA's ability to distribute supplies in that region. Furthermore, it limits opportunities for other local businesses that might otherwise compete for or subcontract on such contracts.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › General Warehousing and Storage

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Amentum Government Services Holdings LLC

Address: 20501 SENECA MEADOWS PKWY STE 300, GERMANTOWN, MD, 20876

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

Financial Breakdown

Contract Ceiling: $56,102,730

Exercised Options: $56,102,730

Current Obligation: $56,102,730

Actual Outlays: $1,008,664

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $247,036

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline