DoD's $54.6M ADNS Increment III contract to Serco Inc. for telephone apparatus manufacturing awarded under full and open competition

Contract Overview

Contract Amount: $54,609,051 ($54.6M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2012-07-16

End Date: 2020-12-29

Contract Duration: 3,088 days

Daily Burn Rate: $17.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ADNS INCREMENT III - FULL RATE PRODUCTION.

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20170

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $54.6 million to SERCO INC for work described as: ADNS INCREMENT III - FULL RATE PRODUCTION. Key points: 1. Contract awarded to Serco Inc. for telephone apparatus manufacturing, indicating a focus on communication hardware. 2. The contract's duration of 3088 days suggests a long-term need for these specialized components. 3. Awarded under 'FULL AND OPEN COMPETITION', this suggests a robust bidding process. 4. The 'DEFINITIVE CONTRACT' type implies a clear scope and established terms. 5. The 'FIRM FIXED PRICE' payment structure aims to control costs for the government. 6. The contract's value of $54.6 million over its term requires careful performance monitoring.

Value Assessment

Rating: good

The contract value of $54.6 million over approximately 8.5 years averages to about $6.4 million annually. Without specific benchmarks for ADNS Increment III components, a direct value-for-money assessment is challenging. However, the firm fixed-price structure suggests an effort to lock in costs. Further analysis would require comparing the unit costs of the telephone apparatus to similar government or commercial procurements to determine if the pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of 3 bids suggests a moderate level of competition for this requirement. While not a large number of bidders, full and open competition generally provides a better opportunity for price discovery and ensures that the government receives offers from a range of qualified contractors.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it encourages multiple companies to bid, potentially driving down prices and ensuring the government secures the best possible value.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical communication apparatus. This contract supports the production and delivery of telephone apparatus, likely for military communication networks. The contract is managed by the Defense Contract Management Agency, indicating a focus on defense-related procurement. The workforce implications are likely within Serco Inc.'s manufacturing and engineering divisions, potentially creating or sustaining jobs in these areas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if ADNS Increment III components are highly specialized and difficult to source elsewhere.
Long contract duration could lead to price erosion if market prices for components decrease significantly over time.
Dependence on a single contractor for a critical communication system component warrants close monitoring of performance and financial stability.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Firm fixed-price contract type helps to mitigate cost overruns for the government.
The contract is managed by a specialized agency (DCMA), indicating robust oversight.
The long duration implies a stable, ongoing requirement that the contractor is expected to fulfill reliably.

Sector Analysis

This contract falls within the 'Telephone Apparatus Manufacturing' sector, a sub-segment of the broader telecommunications and electronics manufacturing industry. The market for specialized military communication equipment can be niche, with a limited number of manufacturers capable of meeting stringent defense requirements. Benchmarking spending in this specific area is difficult without more granular data, but it represents a component of the larger defense industrial base focused on secure and reliable communication systems.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless Serco Inc. voluntarily engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), given its role in contract administration for the Department of Defense. Accountability measures would be embedded within the contract terms, including performance standards, delivery schedules, and quality control requirements. Transparency is generally facilitated through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Communications Systems
Military Telecommunications Equipment
Command and Control Systems
Tactical Communication Networks

Risk Flags

Long contract duration may present risks related to technology obsolescence or market price fluctuations.
Limited number of bidders (3) could indicate potential barriers to entry or a niche market.
Dependence on a single contractor for critical communication components requires robust performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.6 million to SERCO INC. ADNS INCREMENT III - FULL RATE PRODUCTION.

Who is the contractor on this award?

The obligated recipient is SERCO INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $54.6 million.

What is the period of performance?

Start: 2012-07-16. End: 2020-12-29.

What is the specific nature of the 'ADNS INCREMENT III' system and its components?

ADNS (Adaptive Digital Network System) Increment III refers to a specific phase or upgrade of a network system used by the U.S. Navy and potentially other Department of Defense branches. These systems are crucial for providing secure and reliable data and voice communications across various platforms, including ships, shore stations, and aircraft. The 'Increment III' designation suggests a particular set of capabilities or technological advancements implemented in this version. The contract specifically covers the manufacturing of 'Telephone Apparatus,' which are the physical devices used for voice communication within these networks. These apparatus likely incorporate specialized features for military-grade security, durability, and interoperability with the broader ADNS infrastructure.

How does the $54.6 million contract value compare to historical spending on similar communication apparatus by the DoD?

Comparing the $54.6 million value of the ADNS Increment III contract to historical spending requires access to detailed historical procurement data for similar communication apparatus. Without specific data points on comparable contracts (e.g., other military-grade telephone systems, network interface devices, or communication hardware procured under similar conditions), a direct comparison is difficult. However, $54.6 million over an approximate 8.5-year period represents an average annual expenditure of roughly $6.4 million. This figure needs to be contextualized against the total DoD budget for C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems and specifically for communication hardware. If similar systems were procured in the past for significantly lower or higher amounts, it would indicate a trend in pricing or technological evolution.

What are the key performance indicators (KPIs) and risks associated with this contract for the Department of Defense?

Key performance indicators for this contract would likely include timely delivery of the telephone apparatus, adherence to stringent quality standards (e.g., MIL-SPEC requirements), system reliability and uptime, and successful integration with the broader ADNS Increment III network. Risks for the DoD include potential delays in production, defects in the manufactured apparatus leading to communication failures, cybersecurity vulnerabilities within the devices, and the contractor's financial stability impacting long-term support. Given the critical nature of military communications, any failure in these apparatus could have significant operational consequences. The firm fixed-price nature mitigates cost overrun risks but places the burden of managing production costs on the contractor.

What is Serco Inc.'s track record with the Department of Defense and similar communication system contracts?

Serco Inc. is a well-established government contractor with a significant presence across various U.S. federal agencies, including the Department of Defense. They have a broad portfolio that includes support services, technology solutions, and operational management across defense, civilian, and health sectors. While specific details on their track record solely for manufacturing military-grade telephone apparatus under ADNS Increment III would require deeper investigation into past performance reviews and contract history, Serco's general experience suggests they possess the organizational capacity and expertise to manage large-scale government contracts. Their history with the DoD likely includes numerous other communication and IT-related projects, providing a basis for assessing their capability in this domain.

How does the competition level (3 bidders) impact the potential value and innovation for this specific contract?

Having three bidders for this contract, awarded under full and open competition, suggests a moderate level of competition. While more bidders generally lead to greater price pressure and potentially better value, three offers still provide a basis for comparison and negotiation. This level of competition indicates that the market for these specialized telephone apparatus is not overly concentrated but also not so broad as to guarantee the lowest possible price. It implies that the government likely received competitive bids, but there might be room for further price optimization or innovation if a wider range of specialized manufacturers were involved. The government's ability to select the best value offer among the three is crucial.

What are the implications of the 'FIRM FIXED PRICE' contract type on cost control and contractor risk?

The 'FIRM FIXED PRICE' (FFP) contract type is designed to provide the government with cost certainty. Under an FFP agreement, the contractor (Serco Inc.) assumes the primary responsibility for all costs incurred in producing the telephone apparatus. The agreed-upon price remains constant regardless of the contractor's actual costs, unless changes are formally negotiated through contract modifications. This significantly reduces the risk of cost overruns for the government. However, it places a higher risk on the contractor, who must accurately estimate all production expenses, including labor, materials, and overhead. If Serco Inc. underestimates costs, their profit margin will decrease, potentially impacting their financial health or willingness to bid on future similar contracts. Conversely, if they accurately estimate or find efficiencies, their profit margin could be higher than anticipated.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Telephone Apparatus Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0003911R0055

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Serco Group PLC (UEI: 298452707)

Address: 12930 WORLDGATE DR STE 600, HERNDON, VA, 20170

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

Financial Breakdown

Contract Ceiling: $68,258,384

Exercised Options: $57,910,648

Current Obligation: $54,609,051

Subaward Activity

Number of Subawards: 72

Total Subaward Amount: $18,036,713

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline