DoD's $103M engineering services contract for IWS 3.0 and CIWS awarded to Serco-IPS Corporation

Contract Overview

Contract Amount: $102,991,602 ($103.0M)

Contractor: Serco-Ips Corporation

Awarding Agency: Department of Defense

Start Date: 2011-05-20

End Date: 2021-11-07

Contract Duration: 3,824 days

Daily Burn Rate: $26.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PROFESSIONAL SUPPORT SERVICES FOR IWS 3.0 AND CIWS

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20170

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $103.0 million to SERCO-IPS CORPORATION for work described as: PROFESSIONAL SUPPORT SERVICES FOR IWS 3.0 AND CIWS Key points: 1. Contract value of $103M over its life suggests significant investment in naval systems support. 2. Full and open competition indicates a potentially robust bidding process, aiming for competitive pricing. 3. The contract's duration of over 10 years points to long-term strategic needs for these engineering services. 4. Engineering services (NAICS 541330) are critical for complex defense systems development and maintenance. 5. Awarded as a delivery order under a larger contract, suggesting a phased approach to service delivery. 6. The cost-plus-fixed-fee (CPFF) contract type allows for flexibility but requires careful oversight of costs.

Value Assessment

Rating: fair

Benchmarking the value of this $103M contract is challenging without specific performance metrics or comparable contracts for IWS 3.0 and CIWS. The CPFF structure means the final cost is tied to actual expenses plus a fixed fee, which can lead to cost overruns if not managed tightly. However, the duration and scope suggest a necessary, albeit potentially expensive, service for the Department of the Navy.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders were likely considered. This approach generally promotes price discovery and can lead to more favorable pricing for the government compared to sole-source or limited competition scenarios. The presence of multiple bidders indicates a healthy market for these specialized engineering services.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best value for the significant investment in naval engineering support.

Public Impact

Naval systems modernization and maintenance are directly supported, enhancing fleet readiness. Personnel in engineering and technical roles within the contractor's organization benefit from employment. The services provided are crucial for the operational effectiveness of the Navy's IWS 3.0 and CIWS. Geographic impact is likely concentrated around naval bases and facilities where these systems are deployed or maintained.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize higher spending if not rigorously monitored.
Long contract durations increase the risk of scope creep or evolving requirements not being adequately addressed.
Reliance on a single contractor for over a decade may reduce future competitive pressure.

Positive Signals

Full and open competition suggests a strong initial market assessment and potential for value.
The contract's duration indicates a stable, long-term need being met by the chosen provider.
Engineering services are vital for maintaining the technological edge of naval assets.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the defense industrial base. The market for defense engineering services is substantial, driven by the continuous need for modernization, maintenance, and upgrades of complex military platforms. Spending in this sector is often characterized by long-term, high-value contracts awarded through competitive processes, reflecting the specialized nature of the work and the significant R&D involved.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While this specific award may not directly benefit small businesses through set-asides, large prime contractors like Serco-IPS Corporation are often required to subcontract portions of their work. This can create opportunities for small businesses to participate in the defense supply chain, provided they have the necessary capabilities and are identified by the prime.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. The CPFF structure necessitates close monitoring of expenditures to ensure costs remain reasonable and the fixed fee is earned appropriately. Transparency is generally maintained through contract reporting requirements, and the Inspector General's office may conduct audits to ensure compliance and prevent fraud.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Defense Engineering Services
Weapons Systems Support Contracts
Information Warfare Systems (IWS)
Close-In Weapon Systems (CIWS)

Risk Flags

Cost Overrun Risk (CPFF)
Long-Term Contract Management
Scope Creep Potential
Dependency on Single Contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $103.0 million to SERCO-IPS CORPORATION. PROFESSIONAL SUPPORT SERVICES FOR IWS 3.0 AND CIWS

Who is the contractor on this award?

The obligated recipient is SERCO-IPS CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $103.0 million.

What is the period of performance?

Start: 2011-05-20. End: 2021-11-07.

What is the track record of Serco-IPS Corporation with the Department of Defense, particularly on similar engineering services contracts?

Serco-IPS Corporation has a significant history of performing services for the Department of Defense. While specific details on their performance for IWS 3.0 and CIWS are not provided in the summary data, their extensive contract portfolio suggests experience in complex government projects. Analyzing past performance reviews, contract modifications, and any reported issues on similar large-scale engineering or technical support contracts would provide a clearer picture of their reliability and effectiveness. Their ability to secure a $103M, decade-long contract indicates a level of trust and proven capability, but a deeper dive into their specific project history is warranted for a comprehensive assessment.

How does the $103M total contract value compare to similar engineering support contracts for naval systems?

The $103 million total contract value over approximately 10 years places this contract in the mid-to-high range for specialized engineering support services within the naval domain. Comparable contracts for major weapons systems upgrades, platform modernization, or sustainment engineering often reach similar or higher figures, especially when involving complex systems like IWS or CIWS. Factors influencing this value include the scope of work, the level of technical expertise required, the duration, and the competitive landscape. Without specific details on the deliverables, it's difficult to make a precise comparison, but the amount reflects the critical and long-term nature of supporting advanced naval defense technologies.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude and duration?

The primary risks with a CPFF contract of this scale and duration revolve around cost control and potential for contractor inefficiency. While the fixed fee provides the contractor with a defined profit margin, the 'cost plus' element means the government bears the risk of cost overruns. If the contractor's actual costs exceed estimates, the government pays them, potentially leading to a higher final price than anticipated. For a 10-year contract, there's also the risk of scope creep, where requirements may evolve, leading to increased costs and potential disputes. Robust oversight, detailed cost tracking, and clear performance metrics are essential to mitigate these risks and ensure value for money.

How effective is 'full and open competition' in ensuring competitive pricing for specialized defense engineering services?

Full and open competition is generally considered the most effective method for ensuring competitive pricing, especially for specialized defense engineering services where multiple capable firms may exist. It maximizes the pool of potential bidders, fostering a more robust bidding environment that incentivizes companies to offer their best prices and technical solutions to win the contract. This process helps the government achieve fair and reasonable pricing by leveraging market forces. However, the effectiveness can be influenced by the complexity of the requirements; if only a few firms possess the necessary unique expertise, the competition might be less intense than in broader markets, potentially impacting the degree of price reduction achieved.

What is the historical spending trend for engineering services by the Department of the Navy in this specific category (NAICS 541330)?

Historical spending by the Department of the Navy on engineering services (NAICS 541330) has been substantial and generally increasing, reflecting ongoing investments in naval modernization, platform upgrades, and sustainment of complex systems. While this specific contract represents a significant single award, the overall trend indicates a consistent demand for these specialized services across various naval programs. Analyzing aggregated spending data for this NAICS code over the past 5-10 years would reveal patterns of investment, identify major program areas driving expenditures, and provide context for the $103M awarded to Serco-IPS Corporation. This trend underscores the strategic importance the Navy places on engineering expertise.

What are the implications of this contract being awarded as a 'delivery order' rather than a standalone contract?

Awarding this contract as a 'delivery order' implies it was likely issued under a pre-existing indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar master agreement. This approach allows the government to procure services incrementally as needed, offering flexibility in scheduling and tasking. For the contractor, it signifies a long-term relationship and potential for consistent work, but the specific scope and value of each delivery order are defined at the time of issuance. This method can streamline the acquisition process for follow-on work and allows the government to adapt to changing requirements more readily than with a fixed-scope, standalone contract. It also means the $103M represents the total anticipated value across all potential delivery orders over the contract's life.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Solicitation ID: N0002410R3088

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Serco Inc

Address: 12930 WORLDGATE DR STE 600, HERNDON, VA, 20170

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $108,939,518

Exercised Options: $108,939,518

Current Obligation: $102,991,602

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $25,794,808

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4066

IDV Type: IDC

Timeline