DOT awards $353M contract for Air Traffic Control services to Serco Inc

Contract Overview

Contract Amount: $35,285,504 ($35.3M)

Contractor: Serco Inc

Awarding Agency: Department of Transportation

Start Date: 2024-11-27

End Date: 2032-01-31

Contract Duration: 2,621 days

Daily Burn Rate: $13.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: THE FCT CONTRACT ENCOMPASSES THE SCOPE OF ATC SERVICES AND ASSOCIATED SUPPORT SERVICES REQUIRED FOR THE DAY-TO-DAY OPERATION OF FCTS AS DEFINED IN THE STATEMENT OF WORK (SOW).

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20591

State: District of Columbia Government Spending

Plain-Language Summary

Department of Transportation obligated $35.3 million to SERCO INC for work described as: THE FCT CONTRACT ENCOMPASSES THE SCOPE OF ATC SERVICES AND ASSOCIATED SUPPORT SERVICES REQUIRED FOR THE DAY-TO-DAY OPERATION OF FCTS AS DEFINED IN THE STATEMENT OF WORK (SOW). Key points: 1. Contract value represents significant investment in critical national infrastructure. 2. Full and open competition suggests a robust bidding process. 3. Long contract duration (over 7 years) implies a need for sustained service delivery. 4. Firm Fixed Price contract type shifts cost risk to the contractor. 5. Contract awarded to a single entity, Serco Inc., for comprehensive ATC services. 6. Geographic focus on Washington D.C. highlights a key operational area.

Value Assessment

Rating: good

The contract value of approximately $353 million over its duration appears reasonable for comprehensive Air Traffic Control (ATC) services, considering the critical nature and complexity of such operations. Benchmarking against similar large-scale ATC contracts is challenging due to the unique scope, but the firm-fixed-price structure suggests the government has negotiated a defined cost. The absence of specific performance metrics in the provided data makes a detailed value-for-money assessment difficult, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With five bidders participating, this suggests a healthy level of competition for this significant contract. A competitive process like this generally leads to better price discovery and potentially more innovative solutions as contractors vie for the award.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that is expected to drive down costs and ensure the government receives the best possible value for its investment in essential air traffic control services.

Public Impact

Ensures the continued safe and efficient operation of air traffic control services. Supports the national airspace system, benefiting commercial airlines, cargo operations, and general aviation. Primarily impacts operations within the Washington D.C. metropolitan area. Likely involves a significant workforce of air traffic controllers and support personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term contract duration could lead to contractor complacency if not actively managed.
Dependence on a single contractor for critical ATC services poses a risk if performance falters.
Firm Fixed Price contracts can sometimes disincentivize contractor innovation if not structured with appropriate incentives.

Positive Signals

Full and open competition indicates a strong market response and potential for competitive pricing.
Firm Fixed Price contract shifts cost overrun risk to the contractor, protecting taxpayer funds.
Award to an established entity like Serco Inc. suggests a level of confidence in their capability to deliver.

Sector Analysis

Air Traffic Control (ATC) services represent a critical component of the transportation sector, specifically within aviation infrastructure. This contract falls under the broader category of government services supporting national infrastructure. The market for large-scale ATC operations is typically dominated by a few specialized government contractors. The value of this contract, at $353 million, is substantial and reflects the high operational costs and specialized expertise required for managing complex airspace.

Small Business Impact

The provided data indicates that small business participation (sb: false) was not a specific set-aside requirement for this contract. While the prime contractor, Serco Inc., is a large business, there may be opportunities for small businesses to participate as subcontractors. Further analysis would be needed to determine the extent of small business subcontracting planned for this contract and its overall impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Federal Aviation Administration (FAA) within the Department of Transportation. Mechanisms would typically include regular performance reviews, adherence to the Statement of Work (SOW), and potentially audits. The firm-fixed-price nature of the contract provides a degree of accountability by capping costs for the government. Transparency would be facilitated through contract award databases and potentially public reporting on service delivery, though specific oversight details are not provided.

Related Government Programs

Federal Aviation Administration Operations
Air Traffic Management Systems
National Airspace System Modernization
Government Aviation Services Contracts

Risk Flags

Potential for cost overruns if unforeseen issues arise under FFP.
Risk of service degradation if contractor prioritizes cost-cutting.
Dependence on a single contractor for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $35.3 million to SERCO INC. THE FCT CONTRACT ENCOMPASSES THE SCOPE OF ATC SERVICES AND ASSOCIATED SUPPORT SERVICES REQUIRED FOR THE DAY-TO-DAY OPERATION OF FCTS AS DEFINED IN THE STATEMENT OF WORK (SOW).

Who is the contractor on this award?

The obligated recipient is SERCO INC.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $35.3 million.

What is the period of performance?

Start: 2024-11-27. End: 2032-01-31.

What is Serco Inc.'s track record with similar large-scale government contracts, particularly in aviation or critical infrastructure services?

Serco Inc. has a significant history of performing large government contracts across various sectors, including defense, transportation, and civilian services. They have been involved in managing complex operations and providing essential services to government agencies. While specific details on their ATC performance are not in the provided data, their extensive experience suggests a capacity to handle such contracts. A deeper dive into their past performance reviews, any past performance issues, and their specific experience with air traffic control systems would be necessary for a comprehensive assessment. Their portfolio often includes contracts requiring similar levels of operational management, personnel, and adherence to strict regulatory standards, which are all relevant to this ATC contract.

How does the $353 million contract value compare to historical spending on similar Air Traffic Control services in the Washington D.C. area?

Direct comparison of the $353 million contract value to historical spending on similar ATC services in the D.C. area requires access to detailed historical contract data for the FAA and potentially other agencies operating in the region. The provided data does not include historical spending figures. However, given that this is a definitive contract with a firm-fixed-price structure and a duration extending beyond seven years (through January 2032), the total value reflects a sustained investment. Factors influencing this value would include the scope of services, the number of facilities managed, staffing levels, technological requirements, and inflation. Without specific historical benchmarks for comparable D.C. area ATC contracts, it's difficult to definitively state if this represents an increase or decrease in spending relative to past efforts.

What are the primary risks associated with a firm-fixed-price contract for Air Traffic Control services, and how are they mitigated?

The primary risk with a firm-fixed-price (FFP) contract for ATC services is that the contractor, Serco Inc., may face financial strain if unforeseen costs arise that exceed the agreed-upon price. This could lead to pressure to cut corners on service quality, maintenance, or staffing, potentially impacting safety. Mitigation strategies employed by the government typically include robust contract oversight, clearly defined performance standards in the Statement of Work (SOW), and potentially performance-based incentives or penalties. The FAA's contracting officers will monitor performance closely. Additionally, the competitive nature of the initial award suggests Serco Inc. likely factored in potential risks and contingencies when submitting their bid, aiming for a price that allowed for a reasonable profit margin while remaining competitive.

What is the expected impact of this contract on the operational effectiveness and safety of the National Airspace System, particularly in the D.C. region?

This contract is crucial for maintaining the operational effectiveness and safety of the National Airspace System (NAS), especially within the highly complex and sensitive airspace surrounding Washington D.C. By ensuring continuous and reliable provision of Air Traffic Control (ATC) services, the contract directly supports the safe separation of aircraft, efficient flow of air traffic, and adherence to flight plans. The FAA's objective in awarding such a contract is to guarantee that these critical functions are performed without interruption. The long duration and firm-fixed-price nature suggest a commitment to stable service delivery. The effectiveness and safety will ultimately depend on Serco Inc.'s execution, adherence to FAA regulations, and the government's oversight of their performance.

How does the competition level (5 bidders) for this contract influence the potential for innovation and cost savings for the government?

A competition involving five bidders for this Air Traffic Control services contract is generally considered a healthy level, suggesting that multiple firms were interested and capable of performing the work. This level of competition typically fosters innovation as bidders strive to differentiate their proposals through unique approaches, technological solutions, or more efficient methodologies to win the contract. For cost savings, robust competition puts downward pressure on pricing, as bidders are incentivized to offer competitive rates to secure the award. The government benefits from this by potentially receiving a lower overall price than if there were fewer bidders, and also by having a wider array of innovative solutions to choose from, potentially leading to long-term efficiencies.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Air Traffic Control

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: TWO STEP

Solicitation ID: 693KA7-23-R-00003

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12930 WORLDGATE DR, HERNDON, VA, 20170

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $146,539,600

Exercised Options: $35,285,504

Current Obligation: $35,285,504

Actual Outlays: $20,835,302

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline