DHS awards $556M for airport security screening, with 4 bidders competing for a 5-year contract

Contract Overview

Contract Amount: $556,131,654 ($556.1M)

Contractor: Covenant Aviation Security, LLC

Awarding Agency: Department of Homeland Security

Start Date: 2011-03-31

End Date: 2016-12-31

Contract Duration: 2,102 days

Daily Burn Rate: $264.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE AWARD FEE

Sector: Other

Official Description: DESCRIPTION OF SERVICES THE CONTRACTOR SHALL PROVIDE SECURITY SCREENING SERVICES AT THE SAN FRANCISCO INTERNATIONAL AIRPORT, SAN FRANCISCO, CA (SFO) IN ACCORDANCE WITH SECTION C, STATEMENT OF WORK. THIS CONTRACT IS A FIRM FIXED PRICE AWARD FEE CONTRACT FOR A BASE PERIOD OF THREE (3) MONTHS WITH A SIX (6) MONTH OPTION AND FOUR ONE YEAR OPTIONS. THE PERIOD OF PERFORMANCE FOR THE BASE PERIOD AND ALL OPTIONS IS 1 APRIL 2011 THRU 31 DECEMBER 2015.

Place of Performance

Location: SAN FRANCISCO, SAN MATEO County, CALIFORNIA, 94128

State: California Government Spending

Plain-Language Summary

Department of Homeland Security obligated $556.1 million to COVENANT AVIATION SECURITY, LLC for work described as: DESCRIPTION OF SERVICES THE CONTRACTOR SHALL PROVIDE SECURITY SCREENING SERVICES AT THE SAN FRANCISCO INTERNATIONAL AIRPORT, SAN FRANCISCO, CA (SFO) IN ACCORDANCE WITH SECTION C, STATEMENT OF WORK. THIS CONTRACT IS A FIRM FIXED PRICE AWARD FEE CONTRACT FOR A BASE PERIOD OF THREE … Key points: 1. The contract's value suggests a significant, long-term need for security screening services. 2. A firm-fixed-price award fee structure incentivizes performance while managing cost certainty. 3. The 5-year duration indicates a stable, ongoing requirement for these critical services. 4. The award fee component allows for performance-based adjustments, potentially enhancing value. 5. Competition dynamics will be crucial in understanding price efficiency over the contract's life. 6. The specific services are vital for public safety and operational efficiency at a major airport.

Value Assessment

Rating: good

The total contract value of over $556 million for approximately five years of security screening services at a major international airport appears to be within a reasonable range for such extensive operations. Benchmarking against similar large-scale airport security contracts would provide a more precise assessment of value for money. The firm-fixed-price award fee structure suggests an effort to control costs while allowing for performance-based incentives, which can be a good approach if the award fee criteria are well-defined and aligned with desired outcomes. Without specific per-unit cost data or detailed performance metrics, a definitive value assessment is challenging, but the overall scale suggests a substantial investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. With four bidders participating, there was a reasonable level of competition, which generally helps in achieving fair market prices and encourages contractors to offer competitive terms. The presence of multiple bidders suggests that the market for these services is sufficiently robust to support competition. The specific details of the bidding process, such as the number of proposals received and the evaluation criteria, would further illuminate the effectiveness of the competition.

Taxpayer Impact: Full and open competition with multiple bidders is beneficial for taxpayers as it typically drives down prices and encourages innovation, leading to better value for the government's investment in essential security services.

Public Impact

Passengers and staff at San Francisco International Airport (SFO) benefit from enhanced security screening. The Transportation Security Administration (TSA) ensures compliance with federal security mandates. The contract supports the operational continuity and safety of a major transportation hub. Employment opportunities are generated for security screening personnel at SFO. The contract contributes to the overall national security infrastructure by securing a key point of entry/exit.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if award fee criteria are not strictly managed.
Dependence on a single contractor for critical security functions could pose risks if performance falters.
Ensuring consistent quality of screening services across all shifts and personnel is a continuous challenge.

Positive Signals

Firm-fixed-price structure provides cost predictability for the government.
Award fee mechanism incentivizes high performance and quality.
Full and open competition suggests a competitive market and potential for good value.
Long-term contract provides stability for service delivery and workforce planning.

Sector Analysis

This contract falls within the Security Systems Services sector, specifically focusing on screening operations. The market for airport security services is substantial, driven by regulatory requirements and the need to manage passenger and cargo flow safely and efficiently. Major airports often require multi-year, high-value contracts for these services due to the scale of operations and the critical nature of security. Comparable spending benchmarks would involve analyzing other large airport security contracts awarded by the TSA or similar agencies, considering factors like passenger volume, airport size, and service scope.

Small Business Impact

The data indicates this contract was awarded through full and open competition and does not specify any small business set-aside provisions. While the primary contractor, Covenant Aviation Security, LLC, may be a large business, the contract's scale and nature might involve subcontracting opportunities. Analysis of subcontracting plans would be necessary to determine the extent of small business participation and its impact on the small business ecosystem supporting federal contracts.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Homeland Security (DHS) and its Transportation Security Administration (TSA). Mechanisms likely include contract performance monitoring, regular reviews of service delivery, and audits of financial records. The award fee structure itself serves as an oversight tool, linking payment to performance. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Aviation Administration (FAA) Airport Improvement Program
Department of Homeland Security (DHS) Customs and Border Protection (CBP) Operations
Transportation Security Administration (TSA) Passenger and Baggage Screening Contracts
Airport Security Technology Procurement

Risk Flags

Potential for performance variability over a long contract duration.
Dependence on contractor's ability to maintain staffing levels and quality.
Risk of scope creep if requirements are not clearly defined and managed.
Vulnerability to changes in security regulations or technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $556.1 million to COVENANT AVIATION SECURITY, LLC. DESCRIPTION OF SERVICES THE CONTRACTOR SHALL PROVIDE SECURITY SCREENING SERVICES AT THE SAN FRANCISCO INTERNATIONAL AIRPORT, SAN FRANCISCO, CA (SFO) IN ACCORDANCE WITH SECTION C, STATEMENT OF WORK. THIS CONTRACT IS A FIRM FIXED PRICE AWARD FEE CONTRACT FOR A BASE PERIOD OF THREE (3) MONTHS WITH A SIX (6) MONTH OPTION AND FOUR ONE YEAR OPTIONS. THE PERIOD OF PERFORMANCE FOR THE BASE PERIOD AND ALL OPTIONS IS 1 APRIL 2011 THRU 31 DECEMBER 2015.

Who is the contractor on this award?

The obligated recipient is COVENANT AVIATION SECURITY, LLC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Transportation Security Administration).

What is the total obligated amount?

The obligated amount is $556.1 million.

What is the period of performance?

Start: 2011-03-31. End: 2016-12-31.

What is the historical spending pattern for security screening services at SFO by the TSA?

Analyzing historical spending for security screening at SFO prior to this contract award would provide crucial context. This would involve examining previous contracts, their values, durations, and the contractors involved. Understanding if this $556 million award represents an increase, decrease, or stable level of spending compared to prior periods is essential. It would also help identify trends in contract types (e.g., fixed-price vs. cost-plus) and competition levels. For instance, if previous contracts were significantly smaller or awarded under different competition structures, it might indicate a change in service scope, inflation, or market dynamics. Without access to specific historical data for SFO's screening services, it's difficult to provide precise figures, but such an analysis would be a key step in evaluating the current contract's financial context and long-term value proposition.

How does the per-passenger screening cost under this contract compare to national averages or similar airports?

To assess the per-passenger screening cost, we would need to correlate the contract value with the passenger volume at SFO during the contract period (April 2011 - December 2015). The total contract value is approximately $556 million over roughly 4.75 years. SFO is a major international airport with high passenger traffic. If, for example, SFO averaged 50 million passengers per year during that period, the total passenger throughput would be around 237.5 million. Dividing the total contract value by this figure ($556,131,653.83 / 237,500,000 passengers) yields a per-passenger cost of approximately $2.34. This figure needs to be benchmarked against national averages for TSA screening costs and costs at similarly sized airports. Factors like the mix of domestic vs. international passengers, the level of screening required, and labor costs in the San Francisco Bay Area would influence this comparison. A higher per-passenger cost might be justified by higher operational complexity or labor expenses, but it warrants scrutiny against industry benchmarks.

What is Covenant Aviation Security, LLC's track record with federal contracts, particularly with the TSA?

Covenant Aviation Security, LLC has a significant history of performing federal contracts, particularly in the aviation security sector. As a provider of security screening services, their experience with the Transportation Security Administration (TSA) is extensive. Examining their past performance on similar contracts, including their on-time delivery, quality of service, and adherence to budget, is crucial. Data from contract databases like FPDS (Federal Procurement Data System) would reveal the number and value of contracts they have held, their performance ratings, and any past issues or disputes. A strong track record with the TSA suggests reliability and expertise, which are vital for a mission-critical service like airport security. Conversely, a history of poor performance, contract disputes, or significant cost overruns could indicate higher risk for this current award.

What are the key performance indicators (KPIs) used in the award fee structure, and how are they measured?

The effectiveness of the 'award fee' component hinges entirely on the clarity, measurability, and relevance of the Key Performance Indicators (KPIs) defined in the contract. For security screening services, typical KPIs might include: passenger wait times, screening accuracy rates (detection of prohibited items), adherence to security protocols, incident response times, employee training completion rates, and customer satisfaction scores. The contract statement of work (SOW) or a dedicated section on the award fee plan would detail these KPIs, the targets for each, and the methodology for measurement (e.g., random audits, passenger surveys, data reporting from screening equipment). The 'award' portion of the fee is then determined based on how well Covenant Aviation Security, LLC meets or exceeds these defined targets. Robust KPIs and transparent measurement are essential for ensuring the government receives optimal value and performance.

What is the potential impact of this contract on competition within the airport security services market?

This $556 million, five-year contract awarded to Covenant Aviation Security, LLC, represents a significant portion of the market for security screening services at a major hub like SFO. While awarded through full and open competition with four bidders, the long duration and substantial value mean that the winning contractor will likely dominate this specific service area at SFO for an extended period. This could potentially limit opportunities for other firms to enter or expand their presence at this particular airport during the contract term. However, the initial competitive bidding process itself stimulates market activity. The success of Covenant Aviation Security, LLC on this contract could also enhance their reputation and competitiveness for future large-scale contracts elsewhere. The overall impact depends on the number of large airports and the frequency with which such major contracts are re-competed.

Are there any specific risks associated with the firm-fixed-price award fee contract type for this service?

The Firm-Fixed-Price Award Fee (FFP-AF) contract type presents a balanced risk profile. For the government, the 'firm-fixed-price' aspect provides significant cost certainty, as the base price is set and unlikely to increase unless scope changes. This protects against uncontrolled cost growth. The 'award fee' component introduces flexibility and incentivizes performance. However, risks exist. If the award fee criteria are poorly defined or subjective, it can lead to disputes or the government not achieving desired performance levels despite paying higher fees. Conversely, if the criteria are too stringent or difficult to meet, the contractor might be disincentivized or focus only on measurable aspects, potentially neglecting other important service elements. The contractor bears the risk of cost overruns if their operational efficiency is low, but the award fee can mitigate this if performance is excellent. Effective administration and clear performance metrics are key to mitigating these risks.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Investigation and Security Services › Security Systems Services (except Locksmiths)

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HSTS03-10-R-SPP032

Offers Received: 4

Pricing Type: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Parent Company: Covenant Services Worldwide LLC (UEI: 140993309)

Address: 270 REMINGTON RIGHT BLVD STE B, BOLINGBROOK, IL, 60440

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $601,669,623

Exercised Options: $556,131,654

Current Obligation: $556,131,654

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline