DoD's $50.9M DMC Services Contract with Leidos Faces Scrutiny Over Cost and Competition
Contract Overview
Contract Amount: $50,897,059 ($50.9M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2009-09-28
End Date: 2013-09-24
Contract Duration: 1,457 days
Daily Burn Rate: $34.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS AWARD FEE
Sector: Other
Official Description: DISTRIBUTION MANAGEMENT CENTER (DMC) SERVICES
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $50.9 million to LEIDOS, INC. for work described as: DISTRIBUTION MANAGEMENT CENTER (DMC) SERVICES Key points: 1. The contract awarded to Leidos, Inc. for Distribution Management Center (DMC) Services totaled $50.9 million. 2. Competition was full and open, but the contract type (Cost Plus Award Fee) warrants further review. 3. The lack of small business participation is a notable concern. 4. The sector is professional, scientific, and technical services, specifically logistics consulting.
Value Assessment
Rating: fair
The Cost Plus Award Fee structure can incentivize cost overruns. Benchmarking against similar logistics consulting contracts is needed to assess if the final award fee was justified and if the overall pricing was competitive.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the Cost Plus Award Fee (CPA) structure may not always yield the most cost-effective outcome compared to fixed-price contracts.
Taxpayer Impact: While competition was present, the CPA structure and lack of small business involvement could lead to less than optimal taxpayer value.
Public Impact
Taxpayers funded $50.9 million for logistics consulting services supporting the Department of the Army. The contract aimed to improve distribution management processes. The absence of small business participation limits opportunities for smaller, potentially innovative firms.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee contract type
- No small business participation
- Long contract duration (1457 days)
Positive Signals
- Full and open competition
- Services provided to the Department of Defense
Sector Analysis
This contract falls within the Professional, Scientific, and Technical Services sector, specifically logistics consulting. Spending in this area is common for large government agencies needing to optimize supply chains and operational efficiency.
Small Business Impact
The contract data indicates no small business participation (sb: false). This is a missed opportunity to engage smaller businesses in government contracting and could potentially limit the diversity of solutions and competitive pricing.
Oversight & Accountability
The Cost Plus Award Fee structure requires robust oversight to ensure award fees are earned based on performance and not simply cost accumulation. Monitoring the justification for award fees and overall cost control is crucial for accountability.
Related Government Programs
- Process, Physical Distribution, and Logistics Consulting Services
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Cost Plus Award Fee contract type may lead to cost overruns.
- Lack of small business participation.
- Potential for insufficient oversight on award fee justification.
- Long contract duration could indicate scope creep or lack of flexibility.
Tags
process-physical-distribution-and-logist, department-of-defense, va, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $50.9 million to LEIDOS, INC.. DISTRIBUTION MANAGEMENT CENTER (DMC) SERVICES
Who is the contractor on this award?
The obligated recipient is LEIDOS, 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 $50.9 million.
What is the period of performance?
Start: 2009-09-28. End: 2013-09-24.
What specific performance metrics were used to determine award fees under this Cost Plus Award Fee contract, and how effectively did they align with achieving the stated objectives of improved distrib
The effectiveness of award fees hinges on clearly defined, measurable performance metrics directly tied to the contract's goals. For this DMC Services contract, understanding these metrics is key to assessing if Leidos was incentivized appropriately to enhance distribution efficiency and cost savings, rather than just managing costs. Without this detail, it's difficult to gauge the true value delivered.
Given the full and open competition, what factors led to the selection of a Cost Plus Award Fee contract type, and did this structure contribute to the final contract value of $50.9 million?
The choice of a Cost Plus Award Fee (CPA) contract, even under full and open competition, suggests potential uncertainties in scope or performance expectations that favored flexibility over fixed pricing. While CPA can incentivize performance, it also carries inherent risks of cost growth. Analyzing the initial justification for CPA and comparing the final cost to initial estimates would reveal if this structure optimized taxpayer value or contributed to higher overall spending.
How did the absence of small business participation impact the overall innovation and cost-effectiveness of the Distribution Management Center (DMC) services provided under this contract?
The exclusion of small businesses from this $50.9 million contract represents a potential loss of innovative solutions and competitive pressure. Smaller firms often bring specialized expertise and agility, potentially at lower costs. Their absence may have limited the range of approaches considered and could have resulted in higher overall costs for the government compared to a scenario with broader small business involvement.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Process, Physical Distribution, and Logistics Consulting Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: W52P1J07R0126
Offers Received: 4
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc. (UEI: 611641312)
Address: 10260 CAMPUS POINT DR, SAN DIEGO, CA, 92121
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $50,897,059
Exercised Options: $50,897,059
Current Obligation: $50,897,059
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2009-09-28
Current End Date: 2013-09-24
Potential End Date: 2013-09-24 12:09:00
Last Modified: 2017-09-05
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