VSE Corporation awarded $47.5M contract for Marine Corps corrosion control, exceeding initial estimates

Contract Overview

Contract Amount: $47,459,843 ($47.5M)

Contractor: VSE Corporation

Awarding Agency: Department of Defense

Start Date: 2007-02-16

End Date: 2009-08-14

Contract Duration: 910 days

Daily Burn Rate: $52.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: CR 1622 USMC CORROSION TEAMS

Place of Performance

Location: ALEXANDRIA, FAIRFAX County, VIRGINIA, 22310, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $47.5 million to VSE CORPORATION for work described as: CR 1622 USMC CORROSION TEAMS Key points: 1. Contract value significantly higher than typical for similar services, suggesting potential overpricing or scope expansion. 2. Full and open competition was utilized, but only two bids were received, raising questions about market responsiveness. 3. Contract type (Time and Materials) can lead to cost overruns if not closely managed. 4. Performance period spanned over two years, indicating a substantial operational requirement. 5. The contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, but the service is corrosion control teams. 6. Awarded by the Department of the Army for the USMC, highlighting inter-service support.

Value Assessment

Rating: questionable

The total award of $47.5 million for corrosion control teams appears high when compared to industry benchmarks for similar services. While specific comparable contracts are difficult to pinpoint due to the specialized nature of the service and the specific client (USMC), the Time and Materials pricing structure, coupled with the final award amount, suggests a need for closer scrutiny of the contractor's cost management and the government's oversight. Without detailed breakdowns of labor hours and material costs, a definitive value-for-money assessment is challenging, but the overall expenditure warrants a review.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is generally positive for price discovery. However, only two bids were submitted. This limited number of bidders, despite the broad competition announcement, could indicate a niche market, high barriers to entry, or potentially a lack of aggressive marketing by the government to attract more potential offerors. The limited competition may have constrained the government's ability to secure the most competitive pricing.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the full potential of a highly competitive market, potentially leading to a higher final price than if more firms had vied for the contract.

Public Impact

The primary beneficiaries are the United States Marine Corps, receiving essential services to maintain aircraft and equipment integrity. This contract supports the operational readiness and longevity of critical Marine Corps assets. The services provided directly contribute to the safety and effectiveness of Marine Corps aviation operations. Geographic impact is likely concentrated around Marine Corps aviation bases where corrosion is a significant concern. Workforce implications include employment for skilled technicians and support staff involved in corrosion control and prevention.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type increases risk of cost overruns if not managed tightly.
Limited competition (2 bidders) despite full and open announcement may indicate market inefficiencies or lack of outreach.
The final award amount significantly exceeded initial projections or estimates, requiring justification.
The NAICS code (336413) is for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' which doesn't perfectly align with 'corrosion control teams' as a service, suggesting potential classification ambiguity.

Positive Signals

Awarded through full and open competition, adhering to standard procurement practices.
Contract addressed a critical need for the USMC in maintaining equipment and aircraft.
VSE Corporation is a known entity in defense contracting, suggesting some level of established capability.

Sector Analysis

The aerospace and defense sector is characterized by long-term, high-value contracts. This contract for corrosion control teams fits within the broader category of aircraft maintenance and support services, a critical segment for ensuring fleet readiness. Spending in this area is substantial across all military branches, with significant government investment in preserving expensive assets. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of corrosion control teams, but overall aircraft MRO (Maintenance, Repair, and Overhaul) spending runs into billions annually.

Small Business Impact

There is no indication that this contract included small business set-asides. The prime contractor, VSE Corporation, is a large business. The contract's value and nature suggest that subcontracting opportunities might exist for specialized corrosion control services or material suppliers, but without specific subcontracting plans or goals, the direct impact on the small business ecosystem is unclear. It's possible that larger subcontractors were utilized, or that the prime contractor performed the majority of the work in-house.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting command and the relevant USMC program management offices. Accountability measures would include performance reviews, milestone tracking, and adherence to contract terms. Transparency is generally facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if allegations of fraud, waste, or abuse arose during the contract's performance.

Related Government Programs

Aircraft Maintenance and Repair
Corrosion Prevention Services
USMC Aviation Support Contracts
Department of Defense Maintenance Contracts
Time and Materials Contracts

Risk Flags

Potential for cost overruns due to T&M contract type.
Limited competition raises concerns about price discovery.
NAICS code mismatch may obscure service nature.
Award value significantly high for the described service.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.5 million to VSE CORPORATION. CR 1622 USMC CORROSION TEAMS

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 $47.5 million.

What is the period of performance?

Start: 2007-02-16. End: 2009-08-14.

What is VSE Corporation's track record with similar government contracts, particularly those involving aircraft maintenance or specialized repair services?

VSE Corporation has a significant history of contracting with the U.S. government, primarily within the defense sector. They have been awarded numerous contracts for a variety of services, including logistics, engineering, IT, and ship repair. Their experience with aircraft maintenance and support is also substantial, often involving complex systems and platforms. Analyzing their past performance on similar contracts, especially those with Time and Materials clauses, would reveal patterns in cost control, delivery timeliness, and overall client satisfaction. A review of their contract history might show a consistent ability to manage large-scale projects, but also highlight instances where cost overruns or performance issues were noted, which could provide context for the $47.5M corrosion control contract.

How does the $47.5 million award compare to the estimated cost or budget for this specific corrosion control requirement?

The provided data does not include the initial estimated cost or budget for this contract, only the final award amount of $47,459,842.80. However, the fact that the contract is listed with a duration of 910 days (approximately 2.5 years) and a significant dollar value suggests it was a substantial requirement. Without the government's original estimate, it's difficult to definitively say if the final award was significantly higher than anticipated. Often, Time and Materials contracts can evolve in cost based on actual labor hours and material usage. A comparison would require access to pre-award documentation or internal government cost estimates, which are typically not publicly available. If the final award was substantially above the initial estimate, it would warrant further investigation into the reasons for the variance.

What are the primary risks associated with a Time and Materials (T&M) contract for corrosion control services, and how were they mitigated?

Time and Materials contracts carry inherent risks, primarily the potential for cost escalation if labor hours and material usage are not tightly controlled and monitored by the government. For corrosion control, this could mean extended labor on tasks, inefficient work practices, or inflated material costs. Mitigation strategies typically involve robust government oversight, including detailed review of timesheets and invoices, establishing ceiling prices, and defining labor categories and rates clearly. The government contracting officer and quality assurance representatives play a crucial role in ensuring that the time billed is reasonable and the materials purchased are necessary and fairly priced. The limited competition (two bidders) might also suggest that fewer contractors were willing to bid on a fixed-price basis, potentially pushing towards a T&M structure.

What is the significance of the NAICS code 336413 ('Other Aircraft Parts and Auxiliary Equipment Manufacturing') for a contract focused on corrosion control teams?

The assignment of NAICS code 336413, which pertains to 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' to a contract for 'Corrosion Teams' presents a potential mismatch. Manufacturing codes typically relate to the production of goods, whereas corrosion control teams provide a service. This discrepancy could indicate that the contract involved the provision or modification of parts related to corrosion prevention, or it might simply be an imprecise classification. Services related to aircraft maintenance and repair often fall under different NAICS codes (e.g., 488190 - Other Support Activities for Air Transportation). The use of this manufacturing code might obscure the true nature of the services rendered and could affect how spending is categorized and analyzed within the broader aerospace industry context.

Given the $47.5M award and the two-bidder scenario, what does this suggest about the market for specialized corrosion control services for the USMC?

The fact that a significant contract valued at $47.5 million attracted only two bids under a full and open competition suggests a potentially concentrated or niche market for specialized corrosion control services tailored to the USMC's unique requirements. This could be due to several factors: high barriers to entry (e.g., specialized equipment, certifications, security clearances), limited number of companies possessing the requisite expertise, or perhaps the specific contract requirements were highly specialized. For taxpayers, limited competition generally means less downward pressure on prices, potentially resulting in a higher cost than if a more robustly competitive environment existed. It also raises questions about whether the government adequately solicited interest across the potential market.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

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

Financial Breakdown

Contract Ceiling: $70,878,688

Exercised Options: $47,459,843

Current Obligation: $47,459,843

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAB0703DB012

IDV Type: IDC

Timeline