DoD's $35M contract for ICBM sustainment engineering services awarded to Persistent Systems LLC

Contract Overview

Contract Amount: $35,236,316 ($35.2M)

Contractor: Persistent Systems LLC

Awarding Agency: Department of Defense

Start Date: 2018-09-27

End Date: 2024-03-27

Contract Duration: 2,008 days

Daily Burn Rate: $17.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CT::IGF ICBM WAVE RELAY TACTICAL ASSAULT KIT (WARTAK) SUSTAINMENT ENGINEERING SERVICES.

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10016

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $35.2 million to PERSISTENT SYSTEMS LLC for work described as: IGF::CT::IGF ICBM WAVE RELAY TACTICAL ASSAULT KIT (WARTAK) SUSTAINMENT ENGINEERING SERVICES. Key points: 1. Value-for-money assessment indicates potential for cost efficiencies given the long duration and specialized nature of the services. 2. Competition dynamics reveal a sole-source award, raising questions about price discovery and potential for inflated costs. 3. Risk indicators include the sole-source nature and the potential for vendor lock-in, necessitating robust oversight. 4. Performance context highlights the critical nature of sustainment engineering for strategic assets. 5. Sector positioning places this contract within the defense industrial base, specifically supporting critical missile systems.

Value Assessment

Rating: fair

The contract's value of $35.2 million over six years for sustainment engineering services for the ICBM WAVE RELAY TACTICAL ASSAULT KIT (WARTAK) appears reasonable given the specialized nature of the work and the critical infrastructure it supports. However, without comparable sole-source contracts for similar niche sustainment services, a definitive value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed fee, which can incentivize cost control but also carries inherent risks if not managed closely.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Persistent Systems LLC, was solicited. This approach is typically used when there are unique capabilities or proprietary technologies involved, or in cases of urgent need where competition is not feasible. The lack of competition means that the government did not benefit from a competitive bidding process, which could have led to lower prices or more innovative solutions from multiple offerors.

Taxpayer Impact: The sole-source award limits the government's ability to leverage competitive pressures to secure the best possible pricing for taxpayers. This necessitates a higher degree of scrutiny on the contractor's proposed costs and overall performance to ensure fair value.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, ensuring the operational readiness of critical ICBM systems. Services delivered include sustainment engineering, crucial for maintaining the functionality and longevity of the WARTAK system. The geographic impact is national, as it supports strategic defense assets, though the contractor is based in New York. Workforce implications include the employment of specialized engineers and technical personnel required for defense sustainment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may lead to higher costs.
Cost Plus Fixed Fee (CPFF) contract type requires careful monitoring to prevent cost overruns.
Long contract duration (6 years) increases the risk of vendor lock-in and potential for complacency.
Lack of transparency in the sole-source justification could mask underlying issues.
Dependence on a single contractor for critical sustainment raises concerns about supply chain resilience.

Positive Signals

Contract addresses a critical need for sustainment of strategic defense assets.
Persistent Systems LLC is likely chosen for specialized expertise required for the WARTAK system.
The fixed fee component of the CPFF contract provides some cost predictability.
Long-term sustainment contract can foster stability and deep technical knowledge within the contractor.
The contract duration allows for long-term planning and integration of sustainment efforts.

Sector Analysis

This contract falls within the defense sector, specifically supporting the sustainment of critical communication and command systems for the Intercontinental Ballistic Missile (ICBM) program. The market for such specialized sustainment engineering services is often limited, with few companies possessing the requisite security clearances, technical expertise, and experience with legacy defense systems. Comparable spending benchmarks are difficult to establish due to the niche nature of the WARTAK system and the sole-source award.

Small Business Impact

The contract data indicates that small business participation is not a primary focus, as the award was made to Persistent Systems LLC, and there is no indication of small business set-asides or subcontracting requirements being a significant factor in this sole-source award. The primary objective appears to be securing specialized sustainment services for a critical defense system, rather than promoting small business engagement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and the critical defense application, robust oversight is expected, focusing on cost control, performance monitoring, and adherence to contract terms. Transparency may be limited due to the sole-source justification, but internal accountability measures should be in place. The Inspector General's office would have jurisdiction for audits and investigations if any irregularities are suspected.

Related Government Programs

ICBM Sustainment Programs
Defense Communications Systems
Tactical Assault Kit Sustainment
Air Force Engineering Services
Wireless Communications Equipment Manufacturing

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Critical defense system sustainment
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.2 million to PERSISTENT SYSTEMS LLC. IGF::CT::IGF ICBM WAVE RELAY TACTICAL ASSAULT KIT (WARTAK) SUSTAINMENT ENGINEERING SERVICES.

Who is the contractor on this award?

The obligated recipient is PERSISTENT SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $35.2 million.

What is the period of performance?

Start: 2018-09-27. End: 2024-03-27.

What is the specific technical expertise Persistent Systems LLC possesses that justifies a sole-source award for WARTAK sustainment engineering?

The justification for a sole-source award typically rests on unique capabilities, proprietary technology, or specialized knowledge that only one contractor possesses. For the WARTAK sustainment engineering contract, Persistent Systems LLC likely holds specific patents, deep institutional knowledge of the system's intricacies, or has developed unique testing and repair methodologies essential for its continued operation. Without access to the specific sole-source justification documentation, it's difficult to detail the exact technical differentiators. However, such awards in defense often relate to highly specialized, legacy, or proprietary systems where developing a competitive landscape would be impractical or detrimental to national security.

How does the Cost Plus Fixed Fee (CPFF) contract structure influence cost control for this WARTAK sustainment contract?

The Cost Plus Fixed Fee (CPFF) contract structure aims to balance cost control with the need for contractor effort on complex projects. In this model, the contractor is reimbursed for allowable costs incurred, plus a predetermined fixed fee representing profit. This incentivizes the contractor to manage costs efficiently, as the fee remains constant regardless of the final cost. However, it also requires diligent government oversight to ensure that all claimed costs are reasonable, allocable, and necessary. For the WARTAK sustainment, the fixed fee provides a degree of cost predictability for the government, but the variable cost component necessitates robust auditing and performance management to prevent potential cost escalations.

What are the potential risks associated with a sole-source award for critical defense sustainment, and how might they be mitigated?

Sole-source awards for critical defense sustainment carry inherent risks, primarily concerning inflated pricing due to lack of competition and potential vendor lock-in. Without competitive pressure, contractors may have less incentive to offer the most cost-effective solutions. Vendor lock-in can occur when a contractor develops unique expertise or proprietary systems, making it difficult and costly to switch providers. Mitigation strategies include rigorous cost and price analysis by the government, establishing clear performance metrics and milestones, negotiating favorable contract terms, and actively seeking opportunities for future competition or developing alternative solutions. Regular performance reviews and audits are crucial to ensure value and identify potential issues early.

What is the historical spending pattern for WARTAK sustainment engineering services, and how does this $35.2M contract compare?

Historical spending data for WARTAK sustainment engineering services prior to this contract is not readily available in the provided data. This $35.2 million contract, spanning from September 2018 to March 2024 (approximately six years), represents a significant investment in maintaining the operational readiness of this critical system. Without prior contract values or durations, it's challenging to establish a direct spending trend. However, the duration and value suggest a long-term commitment to sustainment, which is typical for strategic defense assets that require ongoing maintenance and technical support throughout their lifecycle.

What are the implications of the contract's end date (March 2024) for future sustainment of the WARTAK system?

The contract's end date of March 2024 signifies the conclusion of the current sustainment engineering services agreement with Persistent Systems LLC. This implies that the Department of Defense will need to initiate a new procurement process to ensure continued sustainment of the WARTAK system beyond this date. This could involve re-competing the contract, potentially opening it to other qualified vendors, or exercising options if available and appropriate. The transition planning and the subsequent procurement strategy will be critical to avoid any gaps in sustainment and to ensure continued operational readiness of the ICBM WAVE RELAY TACTICAL ASSAULT KIT.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 601 W 26TH ST STE 905, NEW YORK, NY, 10001

Business Categories: Category Business, Manufacturer of Goods, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $44,274,562

Exercised Options: $38,308,276

Current Obligation: $35,236,316

Actual Outlays: $7,305,132

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline