DoD's $429M contract for electronics and communication equipment awarded to VSE Corporation shows potential value concerns
Contract Overview
Contract Amount: $428,910,979 ($428.9M)
Contractor: VSE Corporation
Awarding Agency: Department of Defense
Start Date: 2005-12-30
End Date: 2008-02-18
Contract Duration: 780 days
Daily Burn Rate: $549.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 14
Pricing Type: TIME AND MATERIALS
Sector: Defense
Official Description: 200603!001420!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0703DB012 !A!N! !Y!0069 ! !20051230!20090130!049997380!049997380!049997380!N!VSE CORPORATION !2550 HUNTINGTON AVE !ALEXANDRIA !VA!22303!01000!510!51!ALEXANDRIA !ALEXANDRIA (CITY) !VIRGINIA !+000030653370!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !541330!E! !5!B!M! !A! !99990909!B! ! !A! !A!N!Y!2!014!B! !C!N!Z! ! !N!B!N!N! ! !C! !A!A!000!A!B!N! ! ! ! ! ! !0001! !
Place of Performance
Location: ALEXANDRIA, FAIRFAX County, VIRGINIA, 22310, UNITED STATES OF AMERICA
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $428.9 million to VSE CORPORATION for work described as: 200603!001420!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0703DB012 !A!N! !Y!0069 ! !20051230!20090130!049997380!049997380!049997380!N!VSE CORPORATION !2550 HUNTINGTON AVE !ALEXANDRIA !VA!22303!01000!510!51!ALEXANDRIA !ALEX… Key points: 1. The contract's value appears high relative to its duration and scope, warranting further investigation into cost-effectiveness. 2. While awarded under full and open competition, the limited number of bids received may have impacted price discovery. 3. The contract's performance period was significantly shorter than initially planned, raising questions about project execution and potential delays. 4. The use of Time and Materials pricing could lead to cost overruns if not managed diligently. 5. The specific services provided under 'Systems Engineering Services' are broad and require deeper analysis to assess true value. 6. The contract's primary focus on electronics and communication equipment places it within a dynamic and rapidly evolving technological sector.
Value Assessment
Rating: questionable
The total award amount of $428,910,979.07 for a contract that ultimately ran for approximately 2 years and 2 months (from Dec 2005 to Feb 2008) appears substantial. Benchmarking this against similar contracts for systems engineering and electronics/communication equipment is difficult without more granular data on the specific services rendered. However, the relatively short performance period for such a large sum suggests a high per-day or per-month expenditure. The contract's base and all options value was $499,997,380, indicating significant potential for growth that was not fully realized.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, which is generally positive for ensuring a competitive marketplace. However, the data indicates that there were 14 bids received. While 14 bids suggest a degree of competition, the subsequent award value and performance duration warrant a closer look at whether the competition effectively drove down costs or ensured the best value proposition for the government.
Taxpayer Impact: Full and open competition is intended to provide the best value for taxpayers by fostering a competitive environment that can lead to lower prices and higher quality services. The number of bids received in this case suggests a reasonable level of interest, but the ultimate cost and duration need to be evaluated to confirm taxpayer benefit.
Public Impact
The primary beneficiaries are likely components of the Department of Defense, specifically the Army, receiving systems engineering and electronics/communication equipment support. The services delivered are broadly categorized as 'Systems Engineering Services' and relate to 'Electronics and Communication Equipment'. The geographic impact is centered around the contracting agency, the Department of the Army, and potentially VSE Corporation's operational locations within Virginia. Workforce implications would include personnel employed by VSE Corporation and potentially subcontractors involved in delivering these specialized engineering and technical services.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns due to Time and Materials pricing structure.
- The significant difference between the initial award value and the final value suggests potential scope changes or underutilization.
- The contract's performance period was cut short, indicating possible issues with project execution or evolving requirements.
- The broad nature of 'Systems Engineering Services' makes it difficult to precisely measure performance and value delivered.
Positive Signals
- Awarded under full and open competition, indicating an effort to maximize market participation.
- VSE Corporation is a known entity in government contracting, suggesting a level of established capability.
- The contract involved a significant dollar amount, implying the delivery of critical or substantial services to the Department of the Army.
Sector Analysis
This contract falls within the broader aerospace and defense sector, specifically focusing on electronics and communication equipment, and systems engineering services. The North American Industry Classification System (NAICS) code 336413 ('Other Aircraft Parts and Auxiliary Equipment Manufacturing') is somewhat tangential, suggesting the equipment might be related to aerospace platforms, or the classification might be a broader fit. The market for defense electronics and communication systems is highly specialized and competitive, with significant government spending allocated annually. Comparable spending benchmarks would require detailed analysis of similar systems engineering contracts within the DoD.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to VSE Corporation, a significant prime contractor, the primary implications for small businesses would be through subcontracting opportunities. The extent of small business subcontracting is not detailed in the provided data, but large prime contracts often have subcontracting plans that aim to include small businesses.
Oversight & Accountability
Oversight for this Department of Defense contract would typically be managed by the contracting agency (Department of the Army) and potentially involve program managers, contract officers, and quality assurance personnel. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected. Transparency is generally facilitated through contract databases like FPDS, but detailed performance reports and audits are often internal or classified.
Related Government Programs
- Department of Defense Systems Engineering Contracts
- Electronics and Communication Equipment Procurement
- Defense Logistics Agency Contracts
- Army Tactical Systems Contracts
- VSE Corporation Contracts
Risk Flags
- Potential for cost creep due to Time and Materials pricing.
- Contract duration significantly shorter than maximum potential.
- Ambiguous NAICS code classification relative to service description.
- Limited insight into specific performance metrics and value realization.
Tags
defense, department-of-defense, department-of-the-army, systems-engineering, electronics-and-communication-equipment, time-and-materials, full-and-open-competition, vse-corporation, virginia, large-contract, naics-541330, psc-r414
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $428.9 million to VSE CORPORATION. 200603!001420!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0703DB012 !A!N! !Y!0069 ! !20051230!20090130!049997380!049997380!049997380!N!VSE CORPORATION !2550 HUNTINGTON AVE !ALEXANDRIA !VA!22303!01000!510!51!ALEXANDRIA !ALEXANDRIA (CITY) !VIRGINIA !+000030653370!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !541330!E! !5!B!M! !A! !999
Who is the contractor on this award?
The obligated recipient is VSE CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $428.9 million.
What is the period of performance?
Start: 2005-12-30. End: 2008-02-18.
What was the specific nature of the 'Systems Engineering Services' provided under this contract, and how were they utilized by the Department of the Army?
The provided data categorizes the service under NAICS code 541330 (Engineering Services) and describes the product service code as R414 (Support-Management: Engineering/Technical). However, the specific nature of the 'Systems Engineering Services' is not detailed. These services could range from the design, integration, testing, and lifecycle support of complex electronic and communication systems to strategic planning and technical consulting. Without further documentation, it's difficult to ascertain the precise utilization by the Department of the Army, but it likely supported the development, maintenance, or enhancement of their communication and electronic warfare capabilities.
How does the final contract value of approximately $429 million compare to the initial estimated value or ceiling, and what does this variance suggest?
The data shows an 'Awarded Value Amount' (a) of $428,910,979.07 and an 'All Option Value' (br) of $549,886. This appears to be a discrepancy or misinterpretation of the fields. Assuming 'a' represents the total obligated amount and 'br' is a different metric, the awarded value is substantial. If 'br' represents a ceiling or initial estimate, the awarded amount is significantly higher. However, the 'Base and All Option Value' (049997380) is listed multiple times, suggesting the total potential value was around $500 million. The actual awarded amount being slightly less than the potential maximum suggests that not all options or contract scope was fully utilized or exercised, which could indicate efficiencies or changes in requirements.
What were the primary risks associated with this contract, and how were they managed by the Department of the Army?
Key risks associated with this contract likely included technical risks (ensuring the electronics and communication equipment met performance specifications), schedule risks (delays in delivery or integration), cost risks (especially given the Time and Materials pricing structure), and performance risks (ensuring VSE Corporation delivered quality systems engineering services). The management of these risks would typically involve rigorous oversight, milestone tracking, performance reviews, and potentially the application of contract clauses to mitigate cost overruns or schedule slippage. The fact that the contract ended earlier than its maximum potential duration might suggest some risks were realized or requirements evolved.
What is VSE Corporation's track record with similar Department of Defense contracts, particularly in systems engineering and electronics?
VSE Corporation has a long history of contracting with the Department of Defense, providing a range of services including engineering, logistics, and technical support. Their portfolio often includes work on complex systems, naval operations, and aviation. While specific details on their performance for similar systems engineering and electronics contracts would require a deeper dive into their contract history, their sustained presence as a government contractor suggests a generally acceptable track record. However, the specifics of past performance, including any past issues or successes, would be crucial for a comprehensive assessment.
How did the competition level (14 bids) influence the final pricing and value received by the government for this contract?
With 14 bids received under full and open competition, there was a theoretically robust level of market interest, which should ideally drive competitive pricing. However, the ultimate value realized depends on the specifics of the bids submitted and the evaluation criteria used. A higher number of bids generally increases the likelihood of receiving competitive offers. Without access to the bid details and the government's cost analysis, it's difficult to definitively state how much the competition influenced the final price. It's possible that while many bids were received, only a few were technically compliant or offered the best value, narrowing the effective competition.
What is the significance of the contract being classified under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) when the service is 'Systems Engineering Services'?
The classification under NAICS 336413 ('Other Aircraft Parts and Auxiliary Equipment Manufacturing') for a contract primarily described as 'Systems Engineering Services' (PSC R414) is unusual and warrants clarification. It might indicate that the systems engineering work was directly tied to the development, integration, or support of aircraft parts or auxiliary equipment, perhaps for military aircraft. Alternatively, it could represent a broader classification where the end product or the primary focus of the systems supported falls under this manufacturing category, even if the service itself is engineering. This ambiguity highlights the need for more precise categorization to understand the contract's exact scope and industry alignment.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 14
Pricing Type: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Address: 2550 HUNTINGTON AVE, ALEXANDRIA, VA, 22303
Business Categories: Category Business, Not Designated a Small Business
Parent Contract
Parent Award PIID: DAAB0703DB012
IDV Type: IDC
Timeline
Start Date: 2005-12-30
Current End Date: 2008-02-18
Potential End Date: 2008-02-18 00:00:00
Last Modified: 2015-06-04
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