Over $1 Billion Awarded for Army Logistics Support in Southwest Asia, Primarily to Vectrus Systems LLC

Contract Overview

Contract Amount: $1,012,218,498 ($1.0B)

Contractor: Vectrus Systems LLC

Awarding Agency: Department of Defense

Start Date: 2010-03-01

End Date: 2020-09-30

Contract Duration: 3,866 days

Daily Burn Rate: $261.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: MAINTENANCE, SUPPLY,&TRANSPORTATION SERVICES IN SUPPORT OF THE ARMY PREPOSITION STOCK (APS-5) AND DIRECT THEATER SUPPORT (DTS), SOUTHWEST ASIA (SWA) MISSIONS.

Plain-Language Summary

Department of Defense obligated $1.01 billion to VECTRUS SYSTEMS LLC for work described as: MAINTENANCE, SUPPLY,&TRANSPORTATION SERVICES IN SUPPORT OF THE ARMY PREPOSITION STOCK (APS-5) AND DIRECT THEATER SUPPORT (DTS), SOUTHWEST ASIA (SWA) MISSIONS. Key points: 1. Significant long-term contract awarded for critical theater support services. 2. The contract spans over six years, indicating sustained operational needs. 3. Awarded through full and open competition, suggesting a broad market search. 4. The contract type (Cost Plus Fixed Fee) allows for flexibility but requires careful cost monitoring. 5. Vectrus Systems LLC is the primary contractor, highlighting potential concentration risk. 6. The services provided are essential for maintaining military readiness in a key region.

Value Assessment

Rating: good

The total award amount of over $1 billion over six years suggests substantial investment in logistics support. Benchmarking this against similar large-scale, long-duration theater support contracts is challenging due to unique operational environments. However, the Cost Plus Fixed Fee structure, while common for complex services, necessitates diligent oversight to ensure costs remain reasonable and do not escalate beyond initial projections. The fixed fee component provides some cost control, but the variable cost reimbursement requires careful scrutiny of incurred expenses.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple potential bidders were solicited. The presence of 5 bids suggests a reasonably competitive environment for this type of specialized logistics support. While the specific details of the bidding process are not provided, full and open competition generally leads to better price discovery and a wider range of technical solutions being considered by the government.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best value for essential military logistics services, potentially leading to more efficient use of funds compared to sole-source awards.

Public Impact

US Army units operating in Southwest Asia receive essential logistical, maintenance, and transportation services. Ensures the operational readiness and effectiveness of military forces in a critical geopolitical region. Supports ongoing military missions and contingency operations within the Southwest Asia theater. Indirectly supports the defense industrial base and associated workforce through contract execution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can lead to cost overruns if not managed tightly.
Long-term reliance on a single primary contractor (Vectrus Systems LLC) could reduce future competition and potentially increase prices.
The extended duration of the contract (over 6 years) may not always reflect the most current market pricing or technological advancements.
Geopolitical instability in Southwest Asia could impact operational costs and service delivery.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
The contract duration suggests a stable and predictable operational requirement, allowing for efficient resource planning.
Vectrus Systems LLC has a track record in providing similar services, implying experience and capability.
The services are critical for maintaining military readiness, a key government objective.

Sector Analysis

This contract falls within the Facilities Support Services sector, a broad category encompassing a wide range of operational and maintenance activities. The market for defense logistics and base support services is substantial, often characterized by large, long-term contracts awarded to specialized providers. Companies like Vectrus Systems LLC operate in a niche that requires significant expertise in managing complex supply chains, maintenance operations, and transportation in challenging environments. Spending in this sector is driven by global military presence and operational tempo.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). While the primary contractor is Vectrus Systems LLC, a large business, there is no explicit information regarding small business subcontracting plans or performance within this specific award. Large prime contracts of this nature often include subcontracting goals to engage small businesses, but the extent of this engagement and its impact on the small business ecosystem would require further investigation into subcontracting reports.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting officers and program managers responsible for logistics in Southwest Asia. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to validate incurred costs and ensure the fixed fee is earned appropriately. Transparency is generally maintained through contract reporting mechanisms, and the Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Army Prepositioned Stock (APS) Operations
Theater Support Contracts
Logistics and Transportation Services
Base Operations Support (BOS)
Contingency Contracting

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Long-term contract duration may not always reflect current market pricing.
Concentration risk with a single primary contractor for critical services.
Operational environment in Southwest Asia presents inherent risks to service delivery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.01 billion to VECTRUS SYSTEMS LLC. MAINTENANCE, SUPPLY,&TRANSPORTATION SERVICES IN SUPPORT OF THE ARMY PREPOSITION STOCK (APS-5) AND DIRECT THEATER SUPPORT (DTS), SOUTHWEST ASIA (SWA) MISSIONS.

Who is the contractor on this award?

The obligated recipient is VECTRUS SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $1.01 billion.

What is the period of performance?

Start: 2010-03-01. End: 2020-09-30.

What is Vectrus Systems LLC's track record with similar large-scale logistics contracts for the Department of Defense, particularly in austere environments?

Vectrus Systems LLC has a significant history of performing large-scale logistics and base support services for the Department of Defense, including extensive experience in Southwest Asia. They have been awarded numerous contracts for services such as maintenance, supply, transportation, and base operations support, often in challenging or contingency environments. Their portfolio includes managing prepositioned stocks and providing direct theater support, similar to the services outlined in this award. This extensive background suggests a demonstrated capability to manage complex operations, large workforces, and intricate supply chains required for sustained military operations abroad. However, like any large contractor, their performance history may include both successes and areas for improvement, which would be detailed in past performance evaluations during the bidding process.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar services, and what are the implications for cost control?

The Cost Plus Fixed Fee (CPFF) contract type is often used for complex services where the scope of work is not precisely defined at the outset or is subject to change, such as in long-term logistics support in dynamic environments. Under CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set regardless of actual costs, offering greater cost certainty to the government but potentially higher risk for the contractor. It also differs from Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) contracts, which include mechanisms to adjust the fee based on performance or cost savings. For CPFF, cost control relies heavily on robust government oversight to ensure that all claimed costs are reasonable, allocable, and necessary. The fixed fee provides a degree of profit predictability for the contractor but does not inherently incentivize cost reduction as strongly as performance-based fee structures.

What are the key performance indicators (KPIs) typically used to measure the success of logistics support contracts like this one, and how are they monitored?

Key performance indicators (KPIs) for logistics support contracts typically focus on reliability, responsiveness, and efficiency. Common KPIs include on-time delivery rates for supplies and equipment, equipment readiness and availability rates, response times for maintenance requests, inventory accuracy, and cost-efficiency metrics. For services like transportation, KPIs might include transit time adherence and fuel efficiency. These KPIs are usually defined in the contract's Performance Work Statement (PWS) and are monitored through regular reporting by the contractor and government quality assurance personnel. Performance against these KPIs often directly impacts contractor payment or fee, especially in incentive-based contracts, and informs decisions about contract renewal or future awards. For this CPFF contract, while the fee is fixed, performance against KPIs is still crucial for ensuring mission success and identifying potential issues early.

Given the duration of over six years, how does the government ensure that the pricing remains competitive and reflects market conditions throughout the contract's life?

Ensuring competitive pricing over a long-duration contract like this involves several mechanisms. Firstly, the initial award through full and open competition aims to establish a competitive baseline. Secondly, many large contracts include provisions for periodic price reviews or adjustments based on economic price adjustments (EPAs) tied to specific indices, which help account for inflation and market fluctuations. However, these adjustments are typically governed by specific contract clauses and may not always reflect true market shifts. For significant changes or potential inefficiencies, the government may exercise options or negotiate modifications. Furthermore, the government often conducts market research periodically to assess whether the current pricing remains fair and reasonable compared to prevailing market rates for similar services. If significant discrepancies are found, it can inform decisions about future contract actions or negotiations.

What are the potential risks associated with relying on a single primary contractor for such extensive and critical logistics operations in a high-risk region?

Relying on a single primary contractor, Vectrus Systems LLC in this case, for extensive and critical logistics operations in a high-risk region presents several potential risks. One primary risk is contractor dependency; the government may become overly reliant, reducing leverage in future negotiations and potentially facing price increases. Another risk is performance degradation; if the contractor faces internal issues (financial, management, or workforce), it could significantly disrupt essential services. There's also the risk of reduced innovation, as a long-term incumbent might be less incentivized to introduce cost-saving technologies or process improvements. Furthermore, in the event of contractor default or termination, transitioning to a new provider in a complex operational theater can be extremely challenging, costly, and time-consuming, potentially impacting mission readiness. Finally, a single point of failure can be particularly concerning in high-risk environments where operational continuity is paramount.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vectrus, Inc.

Address: 2424 GARDEN OF THE GODS RD STE 300, COLORADO SPRINGS, CO, 80919

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

Financial Breakdown

Contract Ceiling: $1,967,000,192

Exercised Options: $1,012,218,498

Current Obligation: $1,012,218,498

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W911SE07D0006

IDV Type: IDC

Timeline