DoD's $13.8M WAC contract to Serco Services Inc. shows long-term telecom needs

Contract Overview

Contract Amount: $13,784,438 ($13.8M)

Contractor: Serco Services Inc.

Awarding Agency: Department of Defense

Start Date: 2007-02-21

End Date: 2010-07-31

Contract Duration: 1,256 days

Daily Burn Rate: $11.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 7

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: WIDE AREA COVERAGE (WAC)

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80916

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $13.8 million to SERCO SERVICES INC. for work described as: WIDE AREA COVERAGE (WAC) Key points: 1. Contract awarded for Wide Area Coverage (WAC) services, indicating a sustained need for robust telecommunications infrastructure. 2. The contract duration of 1256 days suggests a significant commitment to ensuring continuous service delivery. 3. Awarded under 'Full and Open Competition After Exclusion of Sources,' this implies a specific justification for limiting initial bidders. 4. The Cost Plus Award Fee (CPAF) structure incentivizes performance but requires careful monitoring of costs and award criteria. 5. The presence of 7 bidders indicates a competitive market for these specialized telecommunications services. 6. The contract's value of approximately $13.8 million over its term reflects the scale of telecommunications support required by the Defense Contract Management Agency.

Value Assessment

Rating: fair

The contract's value of $13.8 million over approximately 3.5 years averages to roughly $3.9 million annually. Benchmarking this against similar large-scale telecommunications contracts for government agencies is challenging without more specific service details. However, the Cost Plus Award Fee (CPAF) pricing structure suggests that while there's a base cost, the final price can fluctuate based on performance, making direct value-for-money assessment difficult without knowing the award fees paid. The number of bidders (7) suggests a degree of market interest, which can be a positive indicator for pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This designation typically means that while the competition was intended to be open, certain sources were excluded for specific, documented reasons. The fact that 7 bidders participated suggests that despite the exclusion, a reasonable level of competition was achieved. However, the 'exclusion of sources' aspect warrants further investigation to understand if it limited the competitive landscape more than necessary.

Taxpayer Impact: While 7 bidders indicate some competition, the exclusion of certain sources could potentially lead to higher prices for taxpayers if the most competitive vendors were barred from bidding.

Public Impact

The primary beneficiaries are the Department of Defense and its agencies, such as the Defense Contract Management Agency, which receive essential wide area telecommunications coverage. The services delivered ensure reliable and secure communication networks critical for defense operations and oversight. The geographic impact is likely nationwide, given the 'Wide Area Coverage' designation, supporting dispersed defense activities. The contract supports the telecommunications sector workforce, including engineers, technicians, and support staff involved in maintaining and operating these networks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Full and Open Competition After Exclusion of Sources' designation raises questions about the breadth of competition and potential impact on pricing.
The Cost Plus Award Fee (CPAF) structure requires diligent oversight to ensure that award fees are justified and do not inflate costs unnecessarily.
Lack of specific details on the 'excluded sources' makes it difficult to fully assess the competitive dynamics and potential missed opportunities for cost savings.

Positive Signals

The award to Serco Services Inc. indicates a successful bid in a competitive environment, suggesting the contractor met performance and cost requirements.
The participation of 7 bidders demonstrates market interest and the availability of qualified providers for this type of service.
The contract's long duration implies a stable and reliable service provider, crucial for critical defense communications.

Sector Analysis

This contract falls within the telecommunications services sector, specifically focusing on wide area network (WAN) or similar large-scale connectivity solutions. The market for government telecommunications is substantial, with agencies like the Department of Defense being major consumers. This contract likely represents a portion of the broader spending on network infrastructure and services, which is essential for modern military operations. Comparable spending benchmarks would depend on the specific technologies and service level agreements, but large federal telecom contracts often run into tens or hundreds of millions of dollars.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract (ss: false, sb: false). Therefore, the primary focus was likely on large, established telecommunications providers. There is no direct information on subcontracting plans for small businesses. The absence of set-asides suggests that small businesses may not have been the primary target for this particular award, though they could potentially be involved as subcontractors if not explicitly excluded.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting agency (Department of Defense, via the Defense Contract Management Agency) and potentially the relevant Inspector General's office. The Cost Plus Award Fee (CPAF) structure necessitates robust performance monitoring and financial auditing to ensure that award fees are earned based on objective criteria and that costs are reasonable and allocable. Transparency would depend on the agency's policies regarding the release of contract details and performance reports.

Related Government Programs

Defense Information Systems Agency (DISA) Telecommunications Contracts
General Services Administration (GSA) Schedule for Telecommunications
Federal Communications Commission (FCC) Regulatory Frameworks
Department of Defense Enterprise IT Contracts

Risk Flags

Limited Competition Justification
Cost Plus Award Fee Oversight
Technological Obsolescence Risk
Long-Term Service Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.8 million to SERCO SERVICES INC.. WIDE AREA COVERAGE (WAC)

Who is the contractor on this award?

The obligated recipient is SERCO SERVICES INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $13.8 million.

What is the period of performance?

Start: 2007-02-21. End: 2010-07-31.

What specific telecommunications services are covered under 'Wide Area Coverage (WAC)' for this contract?

The term 'Wide Area Coverage (WAC)' in this context likely refers to the provision of telecommunications services that span a broad geographic area, enabling communication between multiple dispersed locations. This could encompass services such as dedicated data circuits, VPNs, managed network services, or potentially satellite communications, depending on the specific requirements of the Defense Contract Management Agency (DCMA). Without the detailed Performance Work Statement (PWS), the exact nature of the services remains unspecified. However, given the DoD context, it implies a need for secure, reliable, and high-bandwidth connectivity across various operational sites, potentially including domestic and international locations, to support mission-critical functions.

What were the primary reasons for excluding certain sources in this 'Full and Open Competition After Exclusion of Sources' award?

The designation 'Full and Open Competition After Exclusion of Sources' suggests that while the competition was intended to be open, specific vendors were deliberately excluded from bidding. The reasons for such exclusions are typically documented and justified by the procuring agency. Common justifications include national security concerns, specific technical requirements that only a limited number of vendors can meet, prior performance issues with certain contractors, or the need to leverage existing infrastructure or specialized knowledge held by specific entities. Without access to the agency's justification documentation, the precise reasons for excluding sources in this particular contract remain unknown, making it difficult to assess the impact on overall competition and pricing.

How does the Cost Plus Award Fee (CPAF) structure impact the final cost and contractor incentives compared to other contract types?

The Cost Plus Award Fee (CPAF) contract type allows the contractor to recover all allowable costs plus a fixed fee, with the potential for an additional award fee based on performance against defined criteria. This structure incentivizes the contractor to perform well and meet or exceed objectives, as the award fee is contingent on achieving these goals. Compared to a firm-fixed-price contract, CPAF offers more flexibility for the government when requirements are uncertain or performance is difficult to define precisely upfront. However, it also requires robust government oversight to establish fair and objective award fee criteria and to ensure that costs remain reasonable. The final cost can be higher than anticipated if performance is exceptional, but it aims to achieve better outcomes than a simple cost-plus contract.

What is the historical spending trend for Wide Area Coverage (WAC) services by the Department of Defense?

Analyzing historical spending trends for 'Wide Area Coverage (WAC)' services by the Department of Defense (DoD) requires examining multiple contracts over time, potentially across different agencies and service types that fall under this broad description. The DoD is a significant investor in telecommunications infrastructure, with spending often fluctuating based on evolving technological needs, geopolitical situations, and budget allocations. Contracts for similar services can range from tens to hundreds of millions of dollars annually. This specific $13.8 million contract, awarded in 2007, represents a snapshot of spending during that period. Broader trends would likely show an increasing reliance on robust, secure, and wide-reaching communication networks, potentially leading to increased investment in advanced technologies like 5G, satellite communications, and resilient network architectures over subsequent years.

What are the potential risks associated with a long-duration contract like this (1256 days)?

Long-duration contracts, such as this 1256-day (approximately 3.5 years) agreement, carry several potential risks. Firstly, technological obsolescence is a significant concern; telecommunications technology evolves rapidly, and a contract spanning several years might lock the government into outdated systems or services if not managed carefully with upgrade clauses. Secondly, cost escalation risk exists, especially with CPAF contracts, where performance incentives could drive up costs, or unforeseen market changes could increase the base costs. Thirdly, contractor performance risk is present; a contractor's ability to maintain consistent service quality over an extended period can vary. Finally, changes in government requirements or strategic priorities could render the contracted services less relevant or necessitate costly modifications. Effective contract management, including regular reviews and potential for modification, is crucial to mitigate these risks.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 7

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 1050 N NEWPORT RD, COLORADO SPRINGS, CO, 05

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

Financial Breakdown

Contract Ceiling: $14,298,636

Exercised Options: $14,298,636

Current Obligation: $13,784,438

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA251704D0001

IDV Type: IDC

Timeline