DoD's $35.6M logistics contract with Serco Inc. awarded under full and open competition

Contract Overview

Contract Amount: $35,660,418 ($35.7M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2023-05-24

End Date: 2026-05-25

Contract Duration: 1,097 days

Daily Burn Rate: $32.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 11

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: LOGISTICS SUSTAINMENT AND CONTINGENCY SUPPORT

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20170

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $35.7 million to SERCO INC for work described as: LOGISTICS SUSTAINMENT AND CONTINGENCY SUPPORT Key points: 1. Contract awarded for logistics sustainment and contingency support, indicating a need for flexible and responsive supply chain management. 2. The contract's duration of 1097 days suggests a long-term requirement for these critical services. 3. Awarded to Serco Inc., a significant player in government contracting, highlighting established relationships and capabilities. 4. The 'Research and Development in the Physical, Engineering, and Life Sciences' NAICS code seems misaligned with the contract description, warranting further investigation. 5. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not carefully managed. 6. The presence of 11 bidders suggests a competitive market for these services, potentially driving better pricing. 7. Virginia is the primary state for this contract, indicating a concentration of logistical operations or support in that region.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee structure presents a moderate risk for cost escalation. While the specific value-for-money cannot be fully assessed without detailed cost breakdowns and performance metrics, the competitive nature of the award (11 bidders) suggests that the government likely secured a reasonable price point. Benchmarking against similar logistics sustainment contracts would be necessary for a more definitive value assessment. The total award amount of $35.6 million over approximately three years needs to be evaluated in the context of the scope and complexity of the services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with 11 bids received. This indicates a robust and healthy competitive environment for logistics sustainment and contingency support services. The high number of bidders suggests that multiple capable vendors were interested and able to compete, which typically leads to more favorable pricing and innovative solutions for the government.

Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers as it likely drove down the overall cost of the services and ensured the government received competitive proposals, maximizing the value of taxpayer dollars.

Public Impact

The Department of the Army benefits from enhanced logistics sustainment and contingency support capabilities. This contract ensures the readiness and operational effectiveness of military units by providing essential logistical services. The services delivered are critical for maintaining supply chains and responding to unforeseen events or emergencies. The primary geographic impact is likely within the United States, particularly in Virginia where the contract is managed. The contract supports a workforce involved in logistics, supply chain management, and potentially specialized technical support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The NAICS code (541712) for Research and Development appears to be a mismatch for a logistics sustainment contract, raising questions about the accuracy of the data or the scope of services.
Cost Plus Fixed Fee contracts can incentivize contractors to increase costs, as their fee is a percentage of the total cost, necessitating strong oversight.
The specific deliverables and performance metrics are not detailed, making it difficult to assess the contractor's performance and the true value received.
The duration of the contract (over 3 years) means that potential inefficiencies or cost overruns could accumulate significantly over time.

Positive Signals

Awarded under full and open competition with 11 bidders, indicating a competitive process that likely resulted in a fair price.
The contract addresses critical logistics sustainment and contingency support, essential for military readiness.
Serco Inc. is an established government contractor with a track record, suggesting a level of reliability and experience.
The contract is a Delivery Order, implying it is part of a larger Indefinite Delivery/Indefinite Quantity (IDIQ) contract, which can offer flexibility.

Sector Analysis

The logistics and supply chain management sector is a critical component of government operations, particularly for the Department of Defense. This contract falls within the broader professional, scientific, and technical services industry. The market for logistics support is substantial, with numerous companies offering a wide range of services from warehousing and transportation to complex sustainment operations. Benchmarking this $35.6 million contract would involve comparing its cost and scope to similar multi-year logistics support agreements awarded by the DoD or other federal agencies, considering factors like personnel, equipment, and geographic coverage.

Small Business Impact

There is no indication that this contract includes a small business set-aside. The award to Serco Inc., a large business, suggests that small businesses are unlikely to be direct prime contractors on this specific award. However, there may be opportunities for small businesses to participate as subcontractors, depending on Serco's subcontracting plan and the specific requirements of the logistics sustainment and contingency support services. Further analysis of subcontracting goals would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the relevant Department of the Army program management office. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and allocable. Transparency is facilitated through contract award databases, but detailed performance reports and cost breakdowns are typically not publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Logistics Support Contracts
Supply Chain Management Services
Contingency Operations Support
Federal IT and Professional Services Contracts
Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts

Risk Flags

NAICS Code Mismatch
Cost Plus Fixed Fee Risk
Lack of Detailed Performance Metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.7 million to SERCO INC. LOGISTICS SUSTAINMENT AND CONTINGENCY 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 Army).

What is the total obligated amount?

The obligated amount is $35.7 million.

What is the period of performance?

Start: 2023-05-24. End: 2026-05-25.

What is the specific nature of the 'logistics sustainment and contingency support' being provided under this contract?

The contract description 'LOGISTICS SUSTAINMENT AND CONTINGENCY SUPPORT' is broad. It likely encompasses a range of services essential for maintaining military readiness and operational capability. This could include inventory management, warehousing, transportation, maintenance of equipment, supply chain planning, and rapid deployment of resources during emergencies or contingency operations. The specific details would be outlined in the contract's Statement of Work (SOW), which is not publicly available in this data snippet. The NAICS code provided (541712 - Research and Development) appears incongruent with these services, suggesting a potential data entry error or a very specialized R&D component within the logistics framework.

How does the Cost Plus Fixed Fee (CPFF) contract type impact cost control and value for money?

A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. While this structure is useful when the scope of work is not precisely defined or involves significant uncertainty, it can incentivize contractors to incur higher costs, as the fixed fee remains constant regardless of the total cost. This necessitates robust government oversight to scrutinize costs, ensure they are reasonable and allocable, and manage the overall project scope effectively. For taxpayers, CPFF contracts carry a higher risk of cost overruns compared to fixed-price contracts, making diligent contract administration paramount to achieving value for money.

What are the potential risks associated with the apparent mismatch between the contract's description and its assigned NAICS code?

The discrepancy between the contract's description ('LOGISTICS SUSTAINMENT AND CONTINGENCY SUPPORT') and its NAICS code (541712 - Research and Development in the Physical, Engineering, and Life Sciences) is a significant risk indicator. It could signify a data entry error, leading to misclassification and potentially inaccurate reporting of federal spending trends. Alternatively, it might suggest that the contract includes a research and development component related to logistics, which is less common for sustainment contracts. This ambiguity hinders accurate benchmarking and analysis, making it difficult to compare this contract to similar logistics efforts or R&D projects. Clarification from the awarding agency is needed to resolve this inconsistency.

What does the number of bidders (11) suggest about the market for logistics sustainment services?

Receiving 11 bids for this contract indicates a highly competitive market for logistics sustainment and contingency support services. A large number of bidders typically suggests that the requirement is well-understood, the market has sufficient capacity, and multiple companies possess the necessary capabilities and are willing to compete. This level of competition is generally favorable for the government, as it tends to drive down prices, encourage innovation, and provide a wider selection of qualified vendors. It implies that the government has a strong position to negotiate favorable terms and pricing for these essential services.

How does the contract's duration (1097 days) influence the assessment of its value and risk?

A contract duration of 1097 days (approximately three years) signifies a long-term commitment by the Department of the Army for these logistics services. While this provides stability for both the government and the contractor, it also extends the period during which cost risks associated with a CPFF contract can materialize. Longer durations require sustained oversight to ensure performance remains high and costs are managed effectively throughout the contract's life. From a value perspective, a longer term can sometimes lead to better overall pricing through economies of scale or reduced mobilization costs, but this must be weighed against the potential for cost increases over time.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

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

Offers Received: 11

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 12930 WORLDGATE DR, HERNDON, VA, 20170

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $86,946,037

Exercised Options: $35,660,418

Current Obligation: $35,660,418

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $8,048,173

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15P7T17D0107

IDV Type: IDC

Timeline