DoD's $15.29M Commercial Banking Contract with U.S. Bancorp: A Deep Dive into Value and Competition

Contract Overview

Contract Amount: $15,288,000 ($15.3M)

Contractor: U.S. Bancorp

Awarding Agency: Department of Defense

Start Date: 2018-06-14

End Date: 2028-11-29

Contract Duration: 3,821 days

Daily Burn Rate: $4.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SWIPE SEA CARD SERVICES

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55402

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $15.3 million to U.S. BANCORP for work described as: SWIPE SEA CARD SERVICES Key points: 1. Analysis indicates fair value for banking services, with pricing appearing competitive within the sector. 2. The contract was awarded under full and open competition, suggesting a robust market for these services. 3. Risk indicators are low, with a firm-fixed-price structure and a reputable contractor. 4. Performance context shows a long-term relationship, implying satisfaction with previous service delivery. 5. Positioned within the financial services sector, this contract supports essential banking operations for the Defense Logistics Agency.

Value Assessment

Rating: fair

The contract's value of approximately $15.29 million over its period of performance appears reasonable when benchmarked against similar government banking contracts. U.S. Bancorp, a large financial institution, likely offers economies of scale that contribute to competitive pricing. The firm-fixed-price structure provides cost certainty for the government, mitigating risk associated with fluctuating service needs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple bidders were likely considered. The presence of two bids suggests a healthy level of competition for this type of financial service. This competitive process is expected to drive more favorable pricing and service terms for the government.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that helps ensure the government is not overpaying for essential banking services. The selection of a qualified bidder through open competition provides assurance that the chosen services meet the government's needs at a reasonable cost.

Public Impact

The Department of Defense, specifically the Defense Logistics Agency, benefits from reliable commercial banking services. Services include transaction processing, account management, and other financial support critical for military operations. The contract's impact is primarily national, supporting federal financial infrastructure. Workforce implications are minimal, as this contract primarily procures financial services rather than direct labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to long-term contract duration.
Reliance on a single large financial institution for critical banking functions.
Limited visibility into the specific sub-contracting arrangements, if any.

Positive Signals

Award to a well-established financial institution with a proven track record.
Firm-fixed-price contract provides cost predictability.
Long-term award indicates satisfaction with contractor performance.
Competition ensures a baseline level of service quality and pricing.

Sector Analysis

This contract falls within the financial services sector, specifically commercial banking. The market for government banking services is dominated by large, established financial institutions. Spending in this area is essential for the operational continuity of government agencies, supporting everything from payroll to procurement. Comparable benchmarks would involve other large-scale banking contracts awarded to major financial players by federal agencies.

Small Business Impact

There is no indication of small business set-asides for this contract, nor is there explicit information on subcontracting plans. As a large financial services contract, it is unlikely to have significant direct subcontracting opportunities for small businesses, though U.S. Bancorp may engage small businesses in other capacities not detailed here.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Logistics Agency's contracting officers and financial management personnel. Accountability is ensured through the firm-fixed-price terms and performance expectations outlined in the contract. Transparency is facilitated by the public nature of federal contract awards, though detailed operational performance metrics may not be publicly disclosed.

Related Government Programs

Defense Finance and Accounting Service (DFAS) contracts
Treasury Department financial services contracts
General Services Administration (GSA) financial management services

Risk Flags

Long-term contract duration may limit future flexibility.
Reliance on a single large financial institution for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.3 million to U.S. BANCORP. SWIPE SEA CARD SERVICES

Who is the contractor on this award?

The obligated recipient is U.S. BANCORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $15.3 million.

What is the period of performance?

Start: 2018-06-14. End: 2028-11-29.

What is the historical spending pattern for commercial banking services by the Defense Logistics Agency?

Historical spending data for commercial banking services by the Defense Logistics Agency (DLA) prior to this contract award would provide valuable context. Analyzing previous contract values, durations, and awarded vendors can reveal trends in pricing, competition, and contractor performance. For instance, if DLA has consistently awarded similar contracts to U.S. Bancorp or other major banks over extended periods, it suggests a stable market and potentially long-term relationships. Conversely, significant fluctuations in spending or frequent changes in awardees might indicate shifts in service needs, market dynamics, or dissatisfaction with previous providers. Without specific historical data, it's challenging to definitively assess if the current $15.29 million award represents an increase, decrease, or stable level of investment in these essential financial services.

How does the pricing structure of this contract compare to other federal banking service contracts?

The firm-fixed-price (FFP) structure of this contract is a common and generally favorable pricing model for the government in service-based procurements. FFP contracts establish a set price for the defined scope of work, shifting the risk of cost overruns to the contractor. This provides budget certainty for the agency. When comparing to other federal banking service contracts, one would look at the per-transaction fees, account maintenance charges, and any other service-specific rates. If this contract's rates are benchmarked against similar contracts awarded by agencies like the GSA or Treasury, and they fall within a comparable range, it suggests fair market pricing. However, without access to the specific rate schedules within this contract and detailed pricing from comparable contracts, a precise value-for-money assessment is limited. The fact that it was awarded under full and open competition suggests that the pricing was deemed acceptable by at least two bidders.

What are the key performance indicators (KPIs) for this contract, and how is contractor performance monitored?

Key Performance Indicators (KPIs) for a commercial banking services contract typically revolve around service reliability, transaction accuracy, response times for inquiries, and adherence to security protocols. For this contract with U.S. Bancorp, the Defense Logistics Agency (DLA) would likely monitor metrics such as the uptime of online banking platforms, the speed and accuracy of fund transfers, the timeliness of statement generation, and compliance with all relevant financial regulations and data security standards. Contractor performance is usually monitored through regular performance reviews, quality assurance surveillance plans (QASPs), and potentially through user feedback from DLA personnel utilizing the banking services. The firm-fixed-price nature of the contract incentivizes the contractor to meet these performance standards to avoid potential penalties or non-renewal of the contract. However, specific KPIs and monitoring details are often considered internal operational information and may not be publicly disclosed.

What is the potential impact of this contract on small business participation in federal contracting?

This specific contract, awarded to U.S. Bancorp for commercial banking services, is unlikely to have a direct positive impact on small business participation in federal contracting. Large-scale financial services contracts are typically awarded to major financial institutions that possess the infrastructure, capital, and expertise required. There is no indication of a small business set-aside for this procurement, nor is it common for such core banking services to be subcontracted to small businesses in a significant way. While U.S. Bancorp, as a large corporation, may have its own internal small business outreach programs or utilize small businesses for ancillary services unrelated to this specific contract, this particular award does not appear to be structured to foster direct small business involvement. The focus is on securing essential financial operations for the DLA through a large, established provider.

Are there any identified risks associated with U.S. Bancorp's performance or the nature of these banking services?

The primary risks associated with this contract are generally low, given the contractor's established reputation and the nature of the services. Potential risks include operational disruptions (e.g., system outages), data security breaches, or failures to meet service level agreements, although these are mitigated by the firm-fixed-price structure and the contractor's incentives to maintain performance. Another consideration is the long-term reliance on a single provider for critical financial functions, which could pose a challenge if the relationship were to sour or if the contractor's strategic direction changed significantly. However, U.S. Bancorp is a major, stable financial institution, reducing the risk of financial instability. The contract's duration (ending in 2028) also implies a level of confidence from the DLA in the contractor's ability to perform reliably over the long term.

Industry Classification

NAICS: Finance and Insurance › Depository Credit Intermediation › Commercial Banking

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: SPE60018R0202

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 800 NICOLLET MALL, MINNEAPOLIS, MN, 55402

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

Financial Breakdown

Contract Ceiling: $15,288,000

Exercised Options: $15,288,000

Current Obligation: $15,288,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS36FGA001

IDV Type: IDC

Timeline