Department of Defense awarded OAO Corporation a $149M contract for electronic and communication facilities, spanning over 6 years

Contract Overview

Contract Amount: $92,867,882 ($92.9M)

Contractor: OAO Corporation

Awarding Agency: Department of Defense

Start Date: 2000-10-01

End Date: 2006-12-20

Contract Duration: 2,271 days

Daily Burn Rate: $40.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200101!000092!5700!CA03 !21 CONS/LGC !F0560400C9004 !A!N!*!Y!P00002 !20001001!20010331!149299679!149299679!074830209!N!OAO CORPORATION !2020 N ACADEMY BLVD !COLORADO SPRIN !CO!80909!14142!041!08!CHEYENNE MTN COMPLEX!EL PASO !COLORADO !+000001966495!N!N!000000000000!M127!OPERATION/ELECTRONIC & COMMUNICATION FACILITIES !S1 !SERVICES !3000!NOT DISCERNABLE OR CLASSIFIED !513390!*!*!3! ! !C!*!*!*!B!*!*!A! !A !N!R!2!004!B! !C!N!Z! ! !N!C!N! ! ! !C!C!A!A!000!A!C!N! ! ! !Y! ! !0001!

Place of Performance

Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20879

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $92.9 million to OAO CORPORATION for work described as: 200101!000092!5700!CA03 !21 CONS/LGC !F0560400C9004 !A!N!*!Y!P00002 !20001001!20010331!149299679!149299679!074830209!N!OAO CORPORATION !2020 N ACADEMY BLVD !COLORADO SPRIN !CO!80909!14142!041!08!CHEYENNE MTN COMPLEX!EL PA… Key points: 1. The contract's cost-plus-award-fee structure incentivizes performance but requires careful monitoring of costs. 2. Full and open competition suggests a healthy market, potentially leading to better pricing for the government. 3. The contract duration of over 6 years indicates a long-term need for these services, suggesting stability. 4. The significant value of the contract points to a critical role in supporting Cheyenne Mountain Complex operations. 5. The absence of small business set-aside flags potential missed opportunities for smaller contractors. 6. The contract's focus on electronic and communication facilities aligns with modern defense infrastructure needs.

Value Assessment

Rating: good

The contract value of approximately $149 million over more than six years suggests a substantial investment. Benchmarking this against similar contracts for electronic and communication facility support is challenging without more specific service details. However, the cost-plus-award-fee (CPAF) pricing structure, while common for complex services, can lead to higher final costs if not managed diligently. The government's ability to award fees based on performance is a positive indicator for value realization, but requires robust oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This competitive process is generally favorable for price discovery and ensuring the government receives competitive pricing. The number of bidders is not specified, but the 'full and open' designation implies a broad solicitation.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which aims to secure the best possible price and value for the services rendered, reducing the risk of overpayment.

Public Impact

The Department of Defense, specifically entities operating at the Cheyenne Mountain Complex, benefits from enhanced electronic and communication facilities. Services delivered include operation and maintenance of electronic and communication facilities, crucial for national security operations. The geographic impact is centered around the Cheyenne Mountain Complex in Colorado, a key strategic location. Workforce implications may include the need for specialized technical personnel to manage and operate these critical systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Award Fee contracts if performance metrics are not tightly controlled.
Long contract duration could lead to vendor lock-in if not managed with regular performance reviews and market checks.
Lack of specific details on service delivery metrics makes it difficult to fully assess performance against cost.
The absence of small business participation may limit opportunities for innovation and broader economic impact.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process and potential for competitive pricing.
The contract's focus on critical electronic and communication facilities supports essential defense operations.
The Cost Plus Award Fee structure provides an incentive for contractor performance, aligning with government objectives.
The long duration indicates a stable, long-term commitment to maintaining vital infrastructure.

Sector Analysis

This contract falls within the Defense sector, specifically supporting critical infrastructure related to electronic and communication facilities. The market for such services is specialized, often involving companies with high security clearances and technical expertise. Spending in this area is vital for maintaining operational readiness and command and control capabilities for the military. Comparable spending benchmarks would typically be found within broader IT and telecommunications infrastructure support contracts for government agencies.

Small Business Impact

The contract data indicates no specific small business set-aside. This suggests that the primary award was not targeted towards small businesses. While OAO Corporation may utilize small business subcontractors, the primary contract structure does not appear to prioritize their direct involvement. This could limit opportunities for smaller firms to directly compete for this significant portion of defense spending.

Oversight & Accountability

Oversight for this contract would likely fall under the Defense Contract Management Agency (DCMA), responsible for monitoring contractor performance, costs, and compliance. The Cost Plus Award Fee structure necessitates rigorous oversight to ensure that award fees are justified by performance and that costs are reasonable. Transparency is generally limited for contracts supporting sensitive defense installations like Cheyenne Mountain Complex, but reporting requirements would exist within the contract terms.

Related Government Programs

Defense Communications Systems
Information Technology Support Services
Facility Operations and Maintenance
Command and Control Systems
Cybersecurity Services

Risk Flags

Cost Overrun Potential (CPAF)
Long-Term Contract Risk
Lack of Specific Performance Metrics
Limited Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $92.9 million to OAO CORPORATION. 200101!000092!5700!CA03 !21 CONS/LGC !F0560400C9004 !A!N!*!Y!P00002 !20001001!20010331!149299679!149299679!074830209!N!OAO CORPORATION !2020 N ACADEMY BLVD !COLORADO SPRIN !CO!80909!14142!041!08!CHEYENNE MTN COMPLEX!EL PASO !COLORADO !+000001966495!N!N!000000000000!M127!OPERATION/ELECTRONIC & COMMUNICATION FACILITIES !S1 !SERVICES !3000!NOT DISCERNABLE OR CLASSIFIED !513390!*!*!3! ! !C!*!*!*!B!*!*!A!

Who is the contractor on this award?

The obligated recipient is OAO 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 $92.9 million.

What is the period of performance?

Start: 2000-10-01. End: 2006-12-20.

What was the contractor's track record prior to this award?

Information regarding OAO Corporation's specific track record prior to this 2000 award is not detailed in the provided data snippet. However, as a contractor likely selected through a full and open competition for a significant Department of Defense contract, it can be inferred that they possessed relevant experience and capabilities. Further investigation into their past performance on similar government contracts, including any past performance evaluations or awards/debarments, would be necessary for a comprehensive assessment. The duration and nature of this contract suggest a level of trust and demonstrated competence was established.

How does the awarded value compare to similar contracts for electronic and communication facility support?

Direct comparison of the $149 million awarded value is difficult without knowing the precise scope of services, duration, and specific technologies involved. Contracts for electronic and communication facilities can vary widely in cost based on factors like the complexity of the systems, the level of security required, and the geographic location. However, for a multi-year contract supporting a critical defense installation like Cheyenne Mountain Complex, this value appears substantial, reflecting the importance and complexity of the services. Benchmarking would require identifying contracts with similar service level agreements, technical requirements, and security postures within the Department of Defense or other federal agencies.

What are the primary risks associated with this Cost Plus Award Fee (CPAF) contract?

The primary risks with a CPAF contract, like this one, revolve around cost control and performance measurement. While CPAF incentivizes performance by allowing for award fees based on meeting or exceeding targets, it also carries the risk of cost growth if the base cost estimates are inaccurate or if the contractor's efforts to achieve award fees lead to increased expenditures. Effective oversight is crucial to ensure that award fees are genuinely earned and that the overall cost remains reasonable and allocable to the contract's objectives. There's also a risk that the definition of 'performance' for award fee determination might be subjective or difficult to measure objectively, leading to disputes.

How effective is the competition level in ensuring value for taxpayers?

The 'full and open competition' designation is a strong indicator that the contract was awarded after a process designed to solicit bids from all responsible sources. This level of competition generally fosters price discovery and encourages bidders to offer competitive pricing to win the contract. For taxpayers, this means a higher likelihood that the government is receiving services at a fair market price, reducing the risk of overpayment compared to sole-source or limited competition awards. The effectiveness is further enhanced if the government clearly defines its requirements and evaluation criteria.

What are the historical spending patterns for similar services at Cheyenne Mountain Complex?

Historical spending patterns for similar services at the Cheyenne Mountain Complex prior to this contract (awarded in 2000) are not detailed in the provided data. However, the nature of the facility suggests a consistent and significant need for robust electronic and communication infrastructure support over decades. Contracts for such facilities are typically long-term and substantial in value, reflecting the critical operational requirements. Analyzing spending trends would require accessing historical contract databases and identifying specific line items related to facility operations, maintenance, and upgrades for this location over various fiscal years.

What are the implications of the contract's long duration (over 6 years)?

A contract duration exceeding six years, as seen here, implies a long-term strategic need for the services provided by OAO Corporation. For the government, this offers stability and continuity in essential operations, reducing the administrative burden and potential disruption associated with frequent re-competitions. For the contractor, it provides a predictable revenue stream and allows for investment in specialized resources and personnel. However, a long duration also increases the risk of technological obsolescence or changes in government requirements, necessitating careful contract management, including potential modification clauses and regular performance reviews to ensure continued relevance and value.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 2020 N ACADEMY BLVD, COLORADO SPRIN, CO, 80909

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline