DoD's $64.5M satellite telecommunications contract awarded to SES Space & Defense, Inc. shows moderate competition

Contract Overview

Contract Amount: $64,560,610 ($64.6M)

Contractor: SES Space & Defense, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-04-16

End Date: 2017-04-15

Contract Duration: 1,825 days

Daily Burn Rate: $35.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: KU BANDWIDTH

Place of Performance

Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $64.6 million to SES SPACE & DEFENSE, INC. for work described as: KU BANDWIDTH Key points: 1. Contract value of $64.5 million over five years suggests a significant investment in satellite communications. 2. Awarded under full and open competition, indicating a broad market solicitation. 3. The contract duration of 1825 days (5 years) points to a long-term need for these services. 4. The firm-fixed-price contract type aims to provide cost certainty for the government. 5. The awarding agency, Defense Information Systems Agency (DISA), is a key player in military IT infrastructure. 6. The North American Industry Classification System (NAICS) code 517410 categorizes this as satellite telecommunications. 7. The contract was awarded as a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle or a pre-existing framework.

Value Assessment

Rating: good

The contract value of $64.5 million over five years averages to approximately $12.9 million annually. Benchmarking this against similar satellite telecommunications contracts requires access to proprietary databases. However, the firm-fixed-price structure suggests an effort to control costs. The number of bids received (2) is on the lower side for full and open competition, which could imply either a specialized market or potential for better pricing with more bidders.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The data indicates two bids were received. While full and open competition is generally preferred for maximizing market reach, receiving only two bids might suggest a niche market for these specific satellite telecommunications services or that other potential bidders did not find the opportunity compelling enough to respond.

Taxpayer Impact: Two bids in a full and open competition scenario suggest that while the process was open, the market for this specific service may be limited, potentially impacting the government's ability to secure the lowest possible price through extensive bidding.

Public Impact

Provides critical satellite telecommunications services to the Department of Defense. Ensures reliable communication channels for military operations and personnel. Supports national security objectives by maintaining robust communication infrastructure. The services likely have a nationwide or global geographic impact due to the nature of satellite communications. The contract supports the workforce within the satellite telecommunications industry, including engineers, technicians, and support staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) for a full and open solicitation could indicate potential for higher prices than if more vendors had participated.
The contract is a delivery order, which might obscure the total value and competition dynamics of the underlying IDIQ or framework contract.
Lack of specific performance metrics or service level agreements in the provided data makes it difficult to assess the quality and effectiveness of the services delivered.

Positive Signals

Awarded under full and open competition, adhering to principles of broad market access.
Firm-fixed-price contract type provides budget certainty and shifts cost risk to the contractor.
The contract duration of five years indicates a stable, long-term requirement being met.
The contractor, SES Space & Defense, Inc., is a known entity in the satellite communications sector, suggesting a degree of established capability.

Sector Analysis

The satellite telecommunications sector is vital for global connectivity, supporting everything from consumer internet to critical government and military operations. This contract falls within the broader telecommunications industry, specifically focusing on the provision of bandwidth and connectivity via satellite. The market is characterized by high infrastructure costs, technological innovation, and a mix of large established players and emerging companies. Government spending in this area is substantial, driven by the need for secure, reliable, and often geographically dispersed communication capabilities.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside requirement. However, the prime contractor, SES Space & Defense, Inc., may engage small businesses as subcontractors for various support services, though this is not explicitly detailed in the given information. The absence of a small business set-aside means the opportunity was open to all responsible sources, including large businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Information Systems Agency (DISA) contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon budget. Transparency is facilitated through contract award databases like FPDS-NG. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Satellite Communications Services
Telecommunications Services
Information Technology Services
Defense Communications Networks
Global Connectivity Solutions

Risk Flags

Limited competition despite full and open solicitation.
Contract awarded as a delivery order, potentially obscuring overall contract value and competition.
Lack of detailed performance metrics in provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $64.6 million to SES SPACE & DEFENSE, INC.. KU BANDWIDTH

Who is the contractor on this award?

The obligated recipient is SES SPACE & DEFENSE, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $64.6 million.

What is the period of performance?

Start: 2012-04-16. End: 2017-04-15.

What is the historical spending pattern for satellite telecommunications by the Department of Defense?

Historical spending on satellite telecommunications by the Department of Defense (DoD) has been substantial and consistent, reflecting the critical nature of these services for global military operations. Over the past decade, the DoD has allocated billions of dollars annually towards satellite bandwidth, terminal equipment, and related services. This spending is driven by the need for secure, resilient, and high-capacity communication links for command and control, intelligence, surveillance, and reconnaissance (ISR), and logistical support across various theaters of operation. Spending fluctuates based on evolving technological capabilities, geopolitical demands, and the lifecycle of satellite constellations. Contracts often involve long-term commitments due to the significant lead times and costs associated with satellite technology. The trend has also seen a move towards more flexible, software-defined satellite capabilities and increased reliance on commercial satellite services to augment military-owned assets.

How does the number of bidders (2) compare to typical full and open competition for similar satellite telecommunications contracts?

Receiving only two bids in a full and open competition for satellite telecommunications can be considered on the lower side. Typically, full and open competition aims to attract a wider range of bidders, often ranging from 3 to 5 or more, depending on the market's competitiveness and the contract's scope. A lower number of bidders might indicate several factors: the specialized nature of the required services, high barriers to entry (e.g., significant infrastructure investment, regulatory hurdles), or that the solicitation's terms and conditions were not sufficiently attractive to a broader market. While two bidders still represent competition, it may limit the government's leverage in price negotiation compared to a scenario with more robust competition. This could suggest that the market for this specific type of satellite service is relatively concentrated.

What is the track record of SES Space & Defense, Inc. in performing government contracts?

SES Space & Defense, Inc. (formerly SES Government Solutions) has a significant track record of performing contracts for various U.S. government agencies, including the Department of Defense, intelligence community, and civilian agencies. They are a well-established provider of satellite-based communication solutions, offering a range of services including secure connectivity, broadband, and mission-critical communications. Their performance history generally reflects experience in delivering complex satellite services, often involving secure networks and global reach. Government contract databases often show numerous awards to SES for telecommunications and related services. While specific performance ratings for individual contracts are not always publicly detailed, their continued success in winning and performing government contracts suggests a generally positive track record and established capabilities in meeting government requirements.

What are the potential risks associated with a firm-fixed-price contract for satellite telecommunications?

While firm-fixed-price (FFP) contracts are designed to provide cost certainty and shift risk to the contractor, there are potential risks, particularly in complex service areas like satellite telecommunications. One primary risk is that the contractor may cut corners on service quality or performance to maximize profit if the initial price was set too low or if unforeseen technical challenges arise. Conversely, if the FFP price was set too high due to insufficient competition or inaccurate cost estimation, the government may overpay for the services. Another risk involves scope creep; if the government's requirements change significantly, managing those changes under an FFP contract can be difficult and may lead to costly change orders or disputes. The contractor might also be less inclined to proactively suggest innovative improvements if they are not directly compensated.

How does the $64.5 million contract value compare to other satellite telecommunications spending by the DoD?

The $64.5 million contract value for SES Space & Defense, Inc. represents a moderate-sized award within the broader context of Department of Defense (DoD) satellite telecommunications spending. The DoD procures satellite services through a variety of contract vehicles, including large, multi-billion dollar programs for dedicated military satellite constellations (like WGS - Wideband Global SATCOM) and numerous smaller to medium-sized contracts for commercial satellite bandwidth and related services. This $64.5 million contract, awarded as a delivery order over five years, averages roughly $12.9 million per year. This annual figure is significant but falls within the range of many commercial satellite service contracts awarded to support specific operational needs, regional requirements, or as supplements to primary military assets. It is considerably smaller than the total lifecycle costs of military satellite programs but represents a substantial investment for the specific services procured.

Industry Classification

NAICS: Information › Satellite Telecommunications › Satellite Telecommunications

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: SES SA (UEI: 400971339)

Address: 2010 CORPORATE RDG STE 550, MC LEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $64,560,610

Exercised Options: $64,560,610

Current Obligation: $64,560,610

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F0328V

IDV Type: FSS

Timeline