Naval Sea Systems Command awards $190M contract for surface warfare support to Serco-IPS Corp

Contract Overview

Contract Amount: $190,287,249 ($190.3M)

Contractor: Serco-Ips Corporation

Awarding Agency: Department of Defense

Start Date: 2015-03-20

End Date: 2019-01-17

Contract Duration: 1,399 days

Daily Burn Rate: $136.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: THE CONTRACTOR SHALL SUPPLY PROGRAM, TECHNICAL, BUSINESS AND FINANCIAL, LOGISTICS, AND ADMINISTRATIVE SUPPORT SERVICES FOR THE DEPUTY COMMANDER FOR SURFACE WARFARE (SEA 21), NAVAL SEA SYSTEMS COMMAND. SEA 21 MANAGES THE LIFECYCLE MAINTENANCE AND MODERNIZATION OF ALL NON-NUCLEAR U.S. NAVY IN-SERVICE SURFACE SHIPS WITH THE EXCEPTION OF LITTORAL COMBAT SHIPS. IGF::OT::IGF

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20170

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $190.3 million to SERCO-IPS CORPORATION for work described as: THE CONTRACTOR SHALL SUPPLY PROGRAM, TECHNICAL, BUSINESS AND FINANCIAL, LOGISTICS, AND ADMINISTRATIVE SUPPORT SERVICES FOR THE DEPUTY COMMANDER FOR SURFACE WARFARE (SEA 21), NAVAL SEA SYSTEMS COMMAND. SEA 21 MANAGES THE LIFECYCLE MAINTENANCE AND MODERNIZATION OF ALL NON-NUCLEAR U… Key points: 1. Contract provides comprehensive support for lifecycle maintenance and modernization of U.S. Navy surface ships. 2. Full and open competition indicates a potentially competitive bidding process. 3. Contract type is Cost Plus Incentive Fee, which can incentivize contractor performance but also carries cost overrun risks. 4. The duration of the contract (1399 days) suggests a long-term need for these services. 5. The contract is managed by the Defense Contract Management Agency, a key oversight body. 6. Services encompass program, technical, business, financial, logistics, and administrative support.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics and detailed cost breakdowns. The $190 million award over approximately 3.8 years suggests a significant investment in naval surface warfare support. Comparing this to similar contracts for fleet readiness and modernization would provide better insight into its value for money. The Cost Plus Incentive Fee (CPIF) structure implies that cost savings or performance improvements could lead to contractor bonuses, but also that costs could exceed initial estimates if not managed carefully.

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 method is generally preferred for ensuring fair pricing and access to a broad range of capabilities. The number of bidders and the specific evaluation criteria would provide further clarity on the intensity of the competition. A robust competitive process can lead to better value for the government.

Taxpayer Impact: Full and open competition aims to secure the best possible pricing and services for taxpayers by allowing all qualified vendors to participate.

Public Impact

The U.S. Navy's surface warfare fleet benefits from enhanced maintenance and modernization capabilities. Services delivered ensure the operational readiness and longevity of critical naval assets. The primary geographic impact is within naval bases and shipyards where maintenance and modernization activities occur. The contract supports a specialized workforce of program managers, engineers, logisticians, and administrative personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee contracts can lead to cost overruns if not rigorously managed.
The long duration of the contract necessitates ongoing oversight to ensure continued value and performance.
Dependence on a single contractor for comprehensive support could pose risks if performance degrades.

Positive Signals

Awarded through full and open competition, suggesting a competitive market for these services.
The contract addresses critical needs for naval surface ship maintenance and modernization, supporting fleet readiness.
The contractor, Serco-IPS Corporation, has a track record in providing government services, implying some level of established capability.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting naval operations and defense readiness. The market for defense engineering and technical support services is substantial, driven by the continuous need for maintenance, modernization, and upgrades of complex military platforms. Spending in this area is crucial for maintaining technological superiority and operational effectiveness of the armed forces. Comparable spending benchmarks would involve analyzing other large-scale service contracts for fleet support across different military branches.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. Without this information, it's difficult to assess the direct impact on the small business ecosystem. However, large prime contracts often involve subcontracting opportunities, which could potentially benefit small businesses if they are engaged by the prime contractor, Serco-IPS Corporation.

Oversight & Accountability

Oversight for this contract is likely managed by the Naval Sea Systems Command (NAVSEA) and potentially the Defense Contract Management Agency (DCMA), given its nature and value. Accountability measures would be embedded within the contract's performance standards and reporting requirements. Transparency is typically facilitated through contract award databases and performance reports, though detailed operational oversight specifics are often internal.

Related Government Programs

Naval Ship Maintenance and Modernization Programs
Surface Warfare Fleet Readiness
Defense Engineering Services
Logistics and Technical Support Contracts

Risk Flags

Potential for cost overruns due to CPIF structure
Contractor performance variability across diverse service areas
Long contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $190.3 million to SERCO-IPS CORPORATION. THE CONTRACTOR SHALL SUPPLY PROGRAM, TECHNICAL, BUSINESS AND FINANCIAL, LOGISTICS, AND ADMINISTRATIVE SUPPORT SERVICES FOR THE DEPUTY COMMANDER FOR SURFACE WARFARE (SEA 21), NAVAL SEA SYSTEMS COMMAND. SEA 21 MANAGES THE LIFECYCLE MAINTENANCE AND MODERNIZATION OF ALL NON-NUCLEAR U.S. NAVY IN-SERVICE SURFACE SHIPS WITH THE EXCEPTION OF LITTORAL COMBAT SHIPS. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is SERCO-IPS CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $190.3 million.

What is the period of performance?

Start: 2015-03-20. End: 2019-01-17.

What is Serco-IPS Corporation's past performance record with the Department of Defense, particularly on similar large-scale support contracts?

Serco-IPS Corporation, a subsidiary of Serco Group, has a significant history of providing a wide range of services to the U.S. military and government agencies. Their portfolio includes logistics, IT support, training, and operational support. For the Department of Defense, they have held numerous contracts, including those involving fleet readiness, base operations, and technical services. Analyzing their performance on previous contracts of similar scope and value, specifically those related to naval systems or complex engineering support, would be crucial. This would involve reviewing past performance evaluations, any documented issues or successes, and their ability to meet cost, schedule, and performance targets. A strong track record suggests a lower risk of performance issues on this current contract, while a history of challenges might indicate potential future concerns.

How does the Cost Plus Incentive Fee (CPIF) structure compare to other contract types used for similar naval support services, and what are the implications for cost control?

The Cost Plus Incentive Fee (CPIF) contract type allows the contractor to incur costs up to a ceiling, with the final negotiated fee being adjusted based on performance against pre-determined targets (e.g., cost, schedule, or technical performance). This differs from fixed-price contracts, which offer greater cost certainty for the government but place more risk on the contractor, or Cost Plus Fixed Fee (CPFF) contracts, where the fee is fixed regardless of cost variations. For complex, long-term support services like those for naval surface warfare, CPIF can be advantageous as it incentivizes the contractor to manage costs efficiently and meet performance objectives. However, it also requires robust government oversight to ensure targets are realistic and that the contractor is genuinely motivated to achieve them. If targets are not met, or if costs significantly exceed estimates, the government may still end up paying more than anticipated, albeit with potential performance benefits.

What is the historical spending trend for similar surface warfare support services by the Naval Sea Systems Command over the past five years?

Analyzing historical spending trends for similar surface warfare support services by the Naval Sea Systems Command (NAVSEA) over the past five years is essential for context. This would involve identifying contracts with comparable scopes of work, such as fleet maintenance, modernization planning, technical support, and program management for surface vessels. Examining the total obligated amounts, contract durations, and the number of awards within this category can reveal patterns in NAVSEA's investment in these critical functions. For instance, a steady or increasing trend might indicate a growing need or a sustained commitment to these services, while a declining trend could suggest shifts in priorities or efficiencies gained elsewhere. Understanding these historical patterns helps in assessing whether the current $190 million award is in line with previous spending levels or represents a significant deviation, potentially warranting further investigation into the drivers behind such changes.

What specific performance metrics are included in the contract, and how are they used to evaluate Serco-IPS Corporation's performance and determine incentive fee payouts?

The specifics of performance metrics and their linkage to incentive fee payouts are critical components of a CPIF contract. For this contract, performance metrics likely revolve around key areas such as the timely completion of modernization plans, the effectiveness of lifecycle maintenance support, the accuracy of technical documentation, and the efficiency of logistics and administrative processes. The contract document itself would detail these metrics, the targets set for each, and the formula for calculating the incentive fee adjustment. For example, achieving cost savings below a target might result in a higher fee percentage for the contractor, while exceeding cost targets could lead to a reduced fee. Similarly, meeting or exceeding deadlines for modernization milestones or demonstrating high levels of fleet readiness support could trigger positive fee adjustments. Robust government oversight is necessary to accurately measure performance against these metrics and ensure fair application of the incentive structure.

Are there any identified risks associated with the contractor's ability to deliver the full scope of services, considering the breadth of technical, business, and financial support required?

The breadth of services required—encompassing program, technical, business, financial, logistics, and administrative support—presents inherent risks related to the contractor's capability to deliver across all domains effectively. Serco-IPS Corporation's ability to manage such a diverse portfolio hinges on its internal expertise, resource allocation, and subcontractor management, if applicable. Risks could include a lack of specialized technical knowledge in niche areas, challenges in integrating disparate support functions, or difficulties in maintaining consistent quality across all service lines. Furthermore, the financial stability and management capacity of the contractor are crucial, especially under a CPIF contract where financial performance is directly linked to incentives. A thorough risk assessment would involve evaluating Serco-IPS's demonstrated experience in each specific service area, their proposed management approach, and contingency plans for potential service disruptions or performance shortfalls.

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: N0002414R3169

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $193,585,365

Exercised Options: $193,585,365

Current Obligation: $190,287,249

Subaward Activity

Number of Subawards: 24

Total Subaward Amount: $145,936,031

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