Department of Defense awards $177.6M contract for logistics support services in Hungary

Contract Overview

Contract Amount: $43,767,147 ($43.8M)

Contractor: Brown & Root Services

Awarding Agency: Department of Defense

Start Date: 2002-11-01

End Date: 2003-09-30

Contract Duration: 333 days

Daily Burn Rate: $131.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200304!000097!2100!CA78 !TRANSATLANTIC PROGRAM CENTER !DACA7899D0003 !A!N! !N!0023 !20021101!20030930!177582855!010810893!964409007!N!BROWN & ROOT SERVICES, A DIVIS!9900 WESTPARK !HOUSTON !TX!77063!* !* !HU!* !* !HUNGARY !+000001032892!N!N!000000000000!R706!LOGISTICS SUPPORT SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !541614!E! !5!A!S! ! !D!20030930!B! ! !B! !A!Y!R!2!002!B! !Z!N!Z! ! !N!M!N! ! ! ! ! !A!A!000!A!B!N! ! !Y!Y! ! !0001! !

Place of Performance

Location: WINCHESTER, FREDERICK County, VIRGINIA, 22602

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $43.8 million to BROWN & ROOT SERVICES for work described as: 200304!000097!2100!CA78 !TRANSATLANTIC PROGRAM CENTER !DACA7899D0003 !A!N! !N!0023 !20021101!20030930!177582855!010810893!964409007!N!BROWN & ROOT SERVICES, A DIVIS!9900 WESTPARK !HOUSTON !TX!77063!* !* !HU!* !* … Key points: 1. Contract awarded for logistics support services, indicating a need for operational assistance. 2. The contract duration of 333 days suggests a short-term or project-specific requirement. 3. Awarded by the Department of the Army, highlighting a specific branch's operational needs. 4. The contract type is Cost Plus Award Fee, which can incentivize performance but may lead to higher costs. 5. The contractor, Brown & Root Services, has a significant presence in government contracting. 6. The geographic location of service delivery in Hungary points to international operational support.

Value Assessment

Rating: fair

The total value of $177.6 million for a 333-day contract for logistics support services appears high, especially considering the specific nature of the services. Without more detailed breakdowns of the services provided and the labor rates, it is difficult to benchmark against similar contracts. The Cost Plus Award Fee (CPAF) structure, while allowing for performance incentives, can also lead to cost overruns if not closely managed. The contract's value per day is approximately $533,300, which warrants scrutiny for the scope of services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of two bids indicates a degree of competition, but the limited number of bidders could suggest potential barriers to entry or a niche market for these specific logistics services. Further analysis would be needed to determine if the competition effectively drove down prices.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a competitive bidding process. However, with only two bidders, the potential for robust price discovery might be limited compared to scenarios with a larger number of offers.

Public Impact

The primary beneficiaries are likely military personnel and operations in Hungary requiring logistical support. Services delivered include essential logistics support, crucial for maintaining operational readiness. The geographic impact is focused on Hungary, supporting U.S. military presence or operations in that region. Workforce implications may involve the employment of personnel by Brown & Root Services, potentially including local hires in Hungary and U.S. expatriates.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can lead to higher final costs if performance targets are aggressively pursued without strict cost controls.
Limited competition (two bidders) may not have resulted in the most cost-effective pricing for taxpayers.
The specific nature of 'logistics support services' is broad and could encompass a wide range of activities, making value assessment challenging without further detail.

Positive Signals

Awarded under full and open competition, ensuring a broad solicitation process.
The contractor, Brown & Root Services, is an established entity with experience in large-scale support services.
The contract aims to provide critical logistical support, essential for operational effectiveness.

Sector Analysis

This contract falls within the broader Defense sector, specifically related to logistics and support services. The market for such services is substantial, driven by the global operational needs of military forces. Comparable spending benchmarks would typically involve analyzing other large-scale logistics contracts awarded by the Department of Defense or allied nations for similar operational environments. The value of this contract is significant, reflecting the complexity and scale of supporting military operations abroad.

Small Business Impact

There is no indication that this contract was set aside for small businesses. Given the large dollar value and the nature of the services, it is unlikely that small businesses would be the primary awardees, though they may participate as subcontractors. The subcontracting plan, if any, would be crucial to understanding the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting officers and program managers. Accountability measures are typically embedded within the Cost Plus Award Fee structure, linking payment to performance. Transparency may be limited due to the nature of defense contracts, but contract award data is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) Contracts
Theater Support Contracts
Contingency Operations Support
Base Operations Support (BOS)
Foreign Military Sales Support

Risk Flags

Potential for cost overruns due to CPAF structure
Limited competition may impact price optimization
Lack of detailed service breakdown hinders value assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.8 million to BROWN & ROOT SERVICES. 200304!000097!2100!CA78 !TRANSATLANTIC PROGRAM CENTER !DACA7899D0003 !A!N! !N!0023 !20021101!20030930!177582855!010810893!964409007!N!BROWN & ROOT SERVICES, A DIVIS!9900 WESTPARK !HOUSTON !TX!77063!* !* !HU!* !* !HUNGARY !+000001032892!N!N!000000000000!R706!LOGISTICS SUPPORT SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !541614!E! !5!A!S! ! !D!20030930!B

Who is the contractor on this award?

The obligated recipient is BROWN & ROOT SERVICES.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $43.8 million.

What is the period of performance?

Start: 2002-11-01. End: 2003-09-30.

What specific types of logistics support services are included under this contract?

The contract specifies 'LOGISTICS SUPPORT SERVICES' but does not detail the exact nature of these services. Typically, this can encompass a wide range of activities including supply chain management, transportation, warehousing, maintenance, facility management, and personnel support. For a contract of this magnitude ($177.6 million), it likely involves comprehensive support for a significant military operation or presence in Hungary. Without a more granular breakdown of the Performance Work Statement (PWS), it is difficult to ascertain the precise scope and value drivers of the services provided. Further inquiry into the contract's PWS or related documentation would be necessary for a complete understanding.

How does the $177.6 million contract value compare to similar logistics support contracts awarded by the Department of the Army?

Benchmarking this $177.6 million contract requires comparing it to similar logistics support contracts awarded by the Department of the Army, particularly those for overseas operations or in similar geopolitical regions. Contracts for base operations support or theater support can range widely in value depending on the scale of operations, duration, and specific services required. For a 333-day contract, this value is substantial, averaging over $533,000 per day. Without access to a comprehensive database of comparable contracts with detailed service descriptions and durations, a precise comparison is challenging. However, the value suggests a significant operational footprint or a highly specialized set of logistical requirements.

What are the potential risks associated with a Cost Plus Award Fee (CPAF) contract for logistics support?

Cost Plus Award Fee (CPAF) contracts carry inherent risks, primarily related to cost control and potential for contractor inefficiency. While the 'award fee' component incentivizes contractors to meet or exceed performance targets, it can also lead to a 'spend to earn' mentality, where contractors may incur higher costs to achieve higher award fees. This structure requires robust government oversight to ensure that costs are reasonable and allocable, and that award fee determinations are objective and fair. For logistics support, where many costs can be variable (e.g., fuel, transportation, labor), managing these costs effectively under a CPAF structure is critical to prevent budget overruns and ensure value for taxpayer money.

What is the significance of awarding this contract for services in Hungary?

The award of this logistics support contract in Hungary signifies a U.S. military or governmental operational presence or requirement in that region. This could be related to NATO commitments, bilateral agreements, training exercises, or forward deployment of forces. The need for substantial logistics support suggests a sustained or significant operational tempo. The choice of Hungary as a location may be strategic, offering proximity to Eastern European regions or specific training facilities. The contract's value underscores the importance and scale of the U.S. commitment or activity in the area.

What is the track record of Brown & Root Services in performing similar large-scale government logistics contracts?

Brown & Root Services, now part of KBR, has a long and extensive history of performing large-scale government contracts, particularly in areas of base operations, facilities management, and logistics support, often in challenging or remote environments. They have been a significant contractor for the Department of Defense, including support during conflicts and in overseas locations. Their track record includes managing complex supply chains, providing essential services to military personnel, and maintaining critical infrastructure. While specific performance details for every contract are not always public, their continued success in winning large contracts suggests a generally positive performance history, though like any large contractor, they may have faced scrutiny or challenges on specific projects.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 4100 CLINTON DR, HOUSTON, TX, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DACA7899D0003

IDV Type: IDC

Timeline