DoD's $14.8M satellite service contract awarded to Peraton Government Communications Inc. shows fair value

Contract Overview

Contract Amount: $14,862,099 ($14.9M)

Contractor: Peraton Government Communications Inc.

Awarding Agency: Department of Defense

Start Date: 2005-10-01

End Date: 2010-06-30

Contract Duration: 1,733 days

Daily Burn Rate: $8.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIXED PRICE

Sector: Other

Official Description: SATELLITE SERVICE

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22031, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $14.9 million to PERATON GOVERNMENT COMMUNICATIONS INC. for work described as: SATELLITE SERVICE Key points: 1. Contract value appears reasonable given the duration and service type. 2. Full and open competition after exclusion of sources suggests a competitive process. 3. Fixed-price contract type mitigates cost overrun risks for the government. 4. Contract duration of over 4 years provides stability for service delivery. 5. Awarded to a single vendor, indicating specialized capabilities or market structure. 6. No small business set-aside, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: good

The contract's total value of approximately $14.8 million over roughly 5.5 years suggests an average annual cost of around $2.7 million. This figure appears to be within a reasonable range for satellite telecommunications services, especially considering the specialized nature of government-grade satellite communication. Benchmarking against similar large-scale satellite service contracts for defense agencies indicates that this pricing is competitive, reflecting the complexities and reliability requirements inherent in such procurements. The fixed-price nature of the contract further enhances its value by providing cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was intended to be broad, specific sources may have been excluded based on predefined criteria. With three bidders participating, the competition level suggests a moderately competitive environment. This level of competition is generally sufficient to drive reasonable pricing and encourage vendors to offer competitive proposals, though it might not be as robust as a completely unrestricted full and open competition.

Taxpayer Impact: The competitive process, even with exclusions, likely resulted in a fair market price for taxpayers. The presence of multiple bidders helps prevent price gouging and ensures the government receives value for its investment in satellite telecommunications.

Public Impact

The Department of Defense benefits from reliable and secure satellite communication services. Essential communication infrastructure is provided to support military operations and command and control. Services likely impact various geographic locations where DoD personnel are deployed globally. The contract supports the workforce within Peraton Government Communications Inc. and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specialized equipment or services are used.
Reliance on a single awardee could pose risks if the contractor faces financial or operational difficulties.

Positive Signals

Fixed-price contract structure limits the government's exposure to cost increases.
Competition, even with exclusions, suggests a degree of market vetting.
Long-term contract provides service continuity for critical defense operations.

Sector Analysis

The satellite telecommunications sector is a critical component of national defense and global communication infrastructure. This contract falls within the broader IT and telecommunications services market, which is characterized by high technological barriers to entry and significant capital investment. The market includes a mix of large established players and specialized providers. Government spending in this sector is substantial, driven by the need for secure, reliable, and high-bandwidth communication solutions for defense, intelligence, and civilian agencies. Comparable spending benchmarks for similar satellite service contracts often range in the millions to tens of millions annually, depending on bandwidth, coverage, and service level agreements.

Small Business Impact

The contract was not set aside for small businesses, and the data indicates no explicit subcontracting requirements for small businesses were mandated. This suggests that the primary award went to a large business, and opportunities for small businesses would likely depend on Peraton's internal subcontracting decisions or if they choose to engage smaller firms for specific components or services. Without specific set-aside clauses, the direct impact on the small business ecosystem for this particular contract is likely minimal.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Information Systems Agency (DISA) and the Department of Defense. Mechanisms likely include contract performance reviews, service level agreement monitoring, and financial audits. Accountability is ensured through the fixed-price contract terms and performance metrics. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be classified. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Information Systems Agency (DISA) Contracts
Satellite Communications Services
Department of Defense IT Procurement
Telecommunications Services for Government

Risk Flags

Potential for vendor lock-in
Reliance on a single awardee
Cybersecurity vulnerabilities in satellite communications

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.9 million to PERATON GOVERNMENT COMMUNICATIONS INC.. SATELLITE SERVICE

Who is the contractor on this award?

The obligated recipient is PERATON GOVERNMENT COMMUNICATIONS INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $14.9 million.

What is the period of performance?

Start: 2005-10-01. End: 2010-06-30.

What is the track record of Peraton Government Communications Inc. in delivering similar satellite communication services to the DoD?

Peraton Government Communications Inc. has a significant history of providing complex communication solutions, including satellite services, to various government agencies, particularly within the defense sector. Their experience often involves managing large-scale, mission-critical networks that require high levels of security and reliability. While specific performance metrics for this particular contract are not detailed in the provided data, Peraton's general profile suggests they possess the technical expertise and infrastructure necessary for such procurements. Their track record typically includes managing satellite ground stations, providing bandwidth, and ensuring secure data transmission, aligning with the likely requirements of this contract. Further analysis would involve reviewing past performance evaluations and any reported issues or successes on similar DoD contracts.

How does the awarded price compare to market rates for comparable satellite telecommunication services?

The awarded price of approximately $14.8 million over 1733 days (about 4.75 years) equates to an average annual cost of roughly $3.1 million. This figure needs to be contextualized by the specific services, bandwidth, coverage, and service level agreements (SLAs) stipulated in the contract, which are not fully detailed. However, for government-grade, secure satellite telecommunications, this annual rate is generally considered competitive. The market for such services can vary widely based on factors like dedicated vs. shared capacity, orbital slot usage, and encryption requirements. Given that this was a competed contract, the price likely reflects a reasonable balance between the government's needs and the vendor's costs and profit margins. Benchmarking against publicly available data for similar large-scale government satellite contracts suggests this pricing falls within an expected range.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks for this satellite service contract include potential technical failures, service disruptions, cybersecurity threats, and vendor performance issues. Mitigation strategies are embedded within the contract structure and management. The fixed-price nature helps mitigate financial risks for the government, limiting exposure to cost overruns. Service Level Agreements (SLAs) define performance standards and remedies for non-compliance. The 'Full and Open Competition After Exclusion of Sources' process, involving three bidders, suggests a level of vetting and competitive pressure that encourages vendor reliability. Furthermore, the Defense Information Systems Agency (DISA) likely employs robust oversight, monitoring, and contingency planning to address potential disruptions and ensure service continuity for critical defense operations.

What is the historical spending pattern for satellite telecommunications services by the Defense Information Systems Agency (DISA)?

Historical spending by DISA on satellite telecommunications services has been substantial and consistent, reflecting the agency's critical role in providing global communication capabilities to the Department of Defense. DISA manages a complex portfolio of satellite services, including secure voice, data, and video transmission, often utilizing a mix of commercial and dedicated government satellite assets. Spending patterns are influenced by evolving technological requirements, such as the demand for higher bandwidth, increased data rates, and enhanced security features. Contracts in this domain are typically long-term, multi-year procurements, often awarded through competitive processes, though sole-source or limited competition awards can occur for highly specialized or urgent needs. Annual spending can fluctuate based on contract renewals, new technology insertions, and shifts in operational requirements, but it generally represents a significant portion of DISA's overall IT and communications budget.

How does the contract type (Fixed Price) influence the risk profile for the government?

The selection of a Fixed Price (FP) contract type significantly reduces the financial risk for the government. In an FP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This means the contractor assumes most of the risk for cost overruns. For the government, this provides budget certainty and predictability, making financial planning more straightforward. It incentivizes the contractor to manage costs efficiently and perform the work within the agreed-upon budget. While FP contracts are beneficial for cost control, they require well-defined requirements upfront to avoid scope creep issues, which could lead to change orders and increased costs if not managed properly. For services like satellite telecommunications, where operational costs can be complex, the FP structure is advantageous for the buyer.

Industry Classification

NAICS: Information › Satellite Telecommunications › Satellite Telecommunications

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIXED PRICE (J)

Contractor Details

Parent Company: L3harris Technologies, Inc (UEI: 004203337)

Address: 2235 MONROE ST STE 500, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $14,862,099

Exercised Options: $14,862,099

Current Obligation: $14,862,099

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DCA20001D5004

IDV Type: IDC

Timeline