Serco Inc. awarded $41.2M for Naval Installations Command engineering services, with 4 orders over 4 years

Contract Overview

Contract Amount: $41,201,236 ($41.2M)

Contractor: Serco Inc

Awarding Agency: Department of Defense

Start Date: 2019-02-28

End Date: 2023-05-31

Contract Duration: 1,553 days

Daily Burn Rate: $26.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: COMMANDER, NAVAL INSTALLATIONS COMMAND (CNIC) N6 REGIONAL SUPPORT

Place of Performance

Location: HANAHAN, BERKELEY County, SOUTH CAROLINA, 29410

State: South Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $41.2 million to SERCO INC for work described as: COMMANDER, NAVAL INSTALLATIONS COMMAND (CNIC) N6 REGIONAL SUPPORT Key points: 1. Contract value of $41.2M represents significant investment in naval infrastructure support. 2. Engineering services are critical for maintaining and upgrading naval facilities. 3. The contract was awarded through full and open competition, suggesting a competitive bidding process. 4. The use of Cost Plus Fixed Fee (CPFF) pricing indicates potential for cost overruns if not managed carefully. 5. The contract duration of over 4 years suggests a long-term need for these services. 6. The award was made to a single contractor, Serco Inc., over multiple delivery orders.

Value Assessment

Rating: fair

The total award of $41.2 million over approximately four years for engineering services to Naval Installations Command appears to be within a reasonable range for large-scale government contracts of this nature. However, without specific benchmarks for comparable engineering support contracts for naval bases, a precise value-for-money assessment is challenging. The CPFF contract type introduces inherent risk, as costs can escalate beyond initial estimates, though the fixed fee component provides some predictability. Further analysis would require comparing unit costs for specific engineering tasks against industry standards or similar government contracts.

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 bids. The fact that there were 4 delivery orders issued suggests a structured procurement process. While the number of bidders is not specified, full and open competition generally fosters price discovery and encourages competitive pricing. The agency's decision to use this method implies a desire to leverage the broadest possible market to secure the best value.

Taxpayer Impact: Taxpayers benefit from full and open competition as it typically leads to more competitive pricing and a wider selection of qualified contractors, potentially reducing overall costs for essential services.

Public Impact

Naval installations across various regions will benefit from improved engineering and technical support. Services delivered include essential engineering expertise for the maintenance, repair, and upgrade of naval facilities. The contract supports the operational readiness and infrastructure integrity of the U.S. Navy. Geographic impact is likely widespread, covering multiple naval installations managed by CNIC. This contract supports a workforce of engineers and technical specialists, contributing to employment in the sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not meticulously managed and monitored.
Lack of specific details on the number of bidders in the full and open competition makes it difficult to fully assess the competitive pressure on pricing.
The duration of the contract (over 4 years) necessitates ongoing vigilance to ensure continued value and performance.
The contract is for engineering services, which can be complex and require specialized expertise, increasing the potential for unforeseen challenges.

Positive Signals

Awarded through full and open competition, suggesting a robust and fair bidding process.
The contract addresses critical engineering needs for naval installations, ensuring operational readiness.
The fixed fee component in the CPFF structure provides some level of cost certainty for the government.
Multiple delivery orders indicate a structured approach to tasking and management over the contract period.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a significant market supporting government infrastructure and defense needs. The federal government is a major consumer of engineering services, with spending often concentrated in areas like defense, transportation, and construction. The market size for engineering services is substantial, with numerous firms competing for government contracts. This specific award to Serco Inc. for naval installations aligns with broader trends of government investment in maintaining and modernizing its physical assets.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. However, the prime contractor, Serco Inc., may engage small businesses as subcontractors, depending on their own subcontracting plans and the nature of the services required. Without explicit subcontracting goals or reporting, the direct benefit to small businesses remains undetermined.

Oversight & Accountability

Oversight for this contract would typically be managed by the Naval Installations Command (CNIC) and the Department of the Navy. The contract type (CPFF) necessitates close monitoring of costs and performance to ensure value. Accountability measures would include performance reviews, milestone tracking, and adherence to contract terms. Transparency is generally facilitated through contract award databases, though detailed performance reports may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Facilities Engineering Command (NAVFAC) Contracts
Department of Defense Engineering Services
Military Base Operations and Maintenance
Government Engineering Support Services
Defense Infrastructure Projects

Risk Flags

Cost Overrun Risk (CPFF)
Performance Monitoring Complexity
Contract Scope Management

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.2 million to SERCO INC. COMMANDER, NAVAL INSTALLATIONS COMMAND (CNIC) N6 REGIONAL SUPPORT

Who is the contractor on this award?

The obligated recipient is SERCO INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $41.2 million.

What is the period of performance?

Start: 2019-02-28. End: 2023-05-31.

What is Serco Inc.'s track record with similar government engineering contracts?

Serco Inc. has a substantial history of performing government contracts, including significant work within the defense and civilian sectors. They have been awarded numerous contracts for a wide range of services, including base operations, IT support, and professional services, often involving complex engineering and technical requirements. Their track record with the Department of Defense is extensive, encompassing support for various branches and commands. While specific performance metrics for individual contracts are not always publicly detailed, their continued success in winning competitive bids suggests a generally satisfactory performance history. However, like many large government contractors, Serco has also faced scrutiny and contract disputes on occasion, underscoring the importance of diligent oversight for all their engagements.

How does the $41.2M award compare to other engineering services contracts for naval installations?

The $41.2 million award for engineering services to Naval Installations Command (CNIC) by Serco Inc. is a significant sum, reflecting the scale and complexity of supporting naval infrastructure. To benchmark this value effectively, one would need to compare it against similar contracts awarded by CNIC or other Department of Defense entities for comparable engineering and technical support services over similar timeframes. For instance, contracts for base operations, facilities management, or specialized engineering consulting for large military installations often run into tens or hundreds of millions of dollars. Without access to a detailed database of comparable CNIC contracts, it's difficult to definitively state if this award represents a particularly high or low value. However, given the duration and scope implied by supporting multiple naval installations, the total value appears consistent with the substantial investment required for such critical infrastructure support.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Serco Inc., is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. If the contractor's costs exceed initial estimates, the government bears the burden of these increased expenses. This risk is amplified in complex engineering projects where unforeseen technical challenges, scope creep, or inefficient management can drive up costs. While the fixed fee provides some cost certainty regarding profit, the total contract cost can become significantly higher than anticipated. Effective oversight, stringent cost controls, and clear performance metrics are crucial to mitigate these risks and ensure the government receives good value.

How does the 'full and open competition' procurement method impact price discovery for this contract?

The 'full and open competition' method is designed to maximize price discovery by allowing any responsible source to submit an offer. This broad participation increases the likelihood of receiving multiple bids from qualified contractors, creating a competitive environment. When multiple companies vie for a contract, they are incentivized to offer their most competitive pricing to win the award. This process helps establish a market-based price for the services required, reducing the risk of the government overpaying. The presence of numerous bidders typically leads to a more efficient allocation of resources and can result in significant cost savings for the taxpayer compared to less competitive procurement methods like sole-source or limited competition.

What are the implications of awarding multiple delivery orders under one contract vehicle?

Awarding multiple delivery orders under a single contract vehicle, as seen with Serco Inc.'s contract, offers several advantages. It provides flexibility for the agency to procure specific services or task orders as needed over the contract's duration, rather than issuing separate contracts for each requirement. This can streamline the acquisition process, reduce administrative burden, and potentially achieve better pricing through economies of scale or pre-negotiated terms. For the contractor, it offers a degree of workload predictability. However, it also necessitates careful management to ensure that the scope of work remains within the original intent of the contract and that each delivery order represents fair value. The agency must ensure that the cumulative value of the orders does not exceed the contract ceiling and that the process for issuing orders is transparent and equitable.

What is the significance of the 'Engineering Services' (NAICS 541330) classification for this contract?

The classification of 'Engineering Services' (NAICS 541330) signifies that the contract is for professional services requiring specialized knowledge and expertise in the application of engineering principles. This typically includes services such as design, consultation, analysis, planning, and project management related to infrastructure, systems, or processes. For Naval Installations Command, this classification indicates that the contract supports the technical and engineering needs of naval bases, which could range from facility design and construction oversight to environmental engineering, systems engineering, and maintenance planning. This sector is critical for national security and infrastructure development, demanding high levels of technical competence and adherence to stringent standards.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6523618R3093

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Serco Group PLC

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: $54,614,138

Exercised Options: $51,927,487

Current Obligation: $41,201,236

Actual Outlays: $3,118,981

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4114

IDV Type: IDC

Timeline