DoD's $291M contract with Serco Inc. for program management and engineering services awarded via full and open competition
Contract Overview
Contract Amount: $291,162,448 ($291.2M)
Contractor: Serco Inc
Awarding Agency: Department of Defense
Start Date: 2022-02-01
End Date: 2026-01-31
Contract Duration: 1,460 days
Daily Burn Rate: $199.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: PROGRAM MANAGEMENT, FINANCIAL AND BUSINESS MANAGEMENT, TECHNICAL AND ENGINEERING MANAGEMENT, INTEGRATED LOGISTICS SUPPORT, AND FOREIGN MILITARY SALES SUPPORT
Place of Performance
Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20003
Plain-Language Summary
Department of Defense obligated $291.2 million to SERCO INC for work described as: PROGRAM MANAGEMENT, FINANCIAL AND BUSINESS MANAGEMENT, TECHNICAL AND ENGINEERING MANAGEMENT, INTEGRATED LOGISTICS SUPPORT, AND FOREIGN MILITARY SALES SUPPORT Key points: 1. Contract focuses on critical program management, financial, technical, and logistics support. 2. Awarded through full and open competition, suggesting a competitive bidding process. 3. Risk indicators appear low given the established nature of the services and contractor. 4. Performance context is within the Department of the Navy's broad operational needs. 5. Sector positioning is within engineering and professional services supporting defense operations.
Value Assessment
Rating: good
The contract's value of approximately $291 million over its period of performance (2022-2026) appears reasonable for comprehensive program management and engineering support to the Department of the Navy. Benchmarking against similar large-scale defense support contracts suggests this is within expected ranges for the scope of services. The Cost Plus Fixed Fee (CPFF) pricing structure, while offering flexibility, requires careful monitoring to ensure cost efficiencies and prevent overruns. The awarded amount reflects a significant investment in specialized expertise.
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 presence of two bids suggests a moderate level of competition for this significant contract. While two bidders is better than a sole-source award, a higher number of bidders could potentially drive prices down further and increase the range of innovative solutions considered. The agency's decision to use full and open competition is a positive sign for taxpayer value.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and better service quality. It ensures that the government explores a wider pool of potential contractors, increasing the likelihood of securing the best value for public funds.
Public Impact
The Department of the Navy benefits directly through enhanced program management, financial oversight, and technical/engineering support. Services delivered include program management, financial and business management, technical and engineering management, integrated logistics support, and foreign military sales support. Geographic impact is primarily within the District of Columbia, where the contract is managed. Workforce implications include the potential for skilled professionals in program management, engineering, and logistics to be engaged through Serco Inc.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee (CPFF) contracts can sometimes lead to higher costs if not managed diligently.
- Limited competition (two bidders) might indicate potential barriers to entry or a niche market.
- The broad scope of services could present challenges in ensuring consistent quality across all areas.
Positive Signals
- Awarded through full and open competition, maximizing potential for competitive pricing.
- Contractor (Serco Inc.) likely possesses significant experience in defense contracting.
- Clear definition of services (program management, engineering, logistics) provides focus.
Sector Analysis
This contract falls within the professional, scientific, and technical services sector, specifically engineering services (NAICS 541330). This sector is crucial for supporting complex government operations, particularly in defense, where specialized expertise is required for program execution, system development, and logistical planning. The market for these services is large and competitive, with many firms offering a range of capabilities. This contract represents a significant portion of spending within this niche of defense support services.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or benefits specifically for small businesses mandated by this award. The primary contractor, Serco Inc., will likely manage the majority of the work internally or through larger partners, rather than through a structured small business subcontracting plan tied to this specific award.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and the program management office within the Department of the Navy. Accountability measures are inherent in the CPFF structure, requiring detailed reporting and justification of costs. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Defense Program Management Support
- Engineering Services Contracts
- Logistics Support Services
- Foreign Military Sales Support
- Department of Defense IT and Professional Services
Risk Flags
- Potential for cost overruns with CPFF structure.
- Ensuring consistent quality across diverse service areas.
- Managing contractor performance over a multi-year period.
- Dependency on a single contractor for critical support functions.
Tags
defense, department-of-defense, department-of-the-navy, engineering-services, program-management, logistics-support, full-and-open-competition, cost-plus-fixed-fee, large-contract, professional-services, district-of-columbia, serco-inc
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $291.2 million to SERCO INC. PROGRAM MANAGEMENT, FINANCIAL AND BUSINESS MANAGEMENT, TECHNICAL AND ENGINEERING MANAGEMENT, INTEGRATED LOGISTICS SUPPORT, AND FOREIGN MILITARY SALES 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 $291.2 million.
What is the period of performance?
Start: 2022-02-01. End: 2026-01-31.
What is Serco Inc.'s track record with the Department of Defense and similar contracts?
Serco Inc. has a substantial history of contracting with the U.S. government, including the Department of Defense. They are known for providing a wide array of services, often in areas such as defense support, government IT, and operational support. Their experience typically includes managing complex programs, providing technical expertise, and handling logistics. While specific performance metrics for this exact contract are not detailed here, Serco's general profile suggests they are an established player capable of handling large-scale defense contracts. Past performance reviews and contract databases would offer more granular insights into their specific track record with the Navy and other DoD components.
How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar services?
The Cost Plus Fixed Fee (CPFF) structure is common for complex services where the scope of work may evolve or is difficult to define precisely upfront, such as research and development or extensive program management. It allows the contractor to recover all allowable costs plus a predetermined fixed fee, which represents their profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government if the scope changes but can potentially lead to higher costs if not managed rigorously, as the contractor is incentivized to incur costs to cover their base. Other structures like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance-based incentives that can align contractor and government goals more closely towards efficiency and specific outcomes, potentially offering better value than a pure CPFF if performance targets are well-defined and achievable.
What are the primary risks associated with a contract of this size and scope for program management and engineering services?
A contract of this magnitude ($291M) carries several inherent risks. Firstly, cost overruns are a significant concern, especially with a CPFF structure, if project scope creep occurs or if initial cost estimates were inaccurate. Secondly, performance risk exists; ensuring the contractor consistently delivers high-quality program management, technical, and engineering support across all specified areas is critical. A lapse in these services could impact critical defense operations. Thirdly, there's a risk of vendor lock-in or over-reliance on a single contractor for essential functions, potentially reducing future competition or flexibility. Finally, managing the complexity of integrating various support functions (logistics, financial, technical) under one contract requires robust government oversight to mitigate integration failures or communication breakdowns.
What historical spending patterns exist for similar program management and engineering support within the Department of the Navy?
Historical spending patterns for program management and engineering support within the Department of the Navy typically show consistent, substantial investment. The Navy, like other branches of the DoD, relies heavily on external contractors for specialized expertise in areas ranging from ship design and acquisition to IT systems management and operational support. Annual spending in these categories often runs into billions of dollars across various contracts. Contracts of this nature (large, long-term, comprehensive support) are common, reflecting the ongoing need for specialized skills that may not be available in-house or are more cost-effectively outsourced. Benchmarking this $291M award against historical Navy spending on similar services would likely place it as a significant, but not unprecedented, contract within the broader defense services market.
How does the 'full and open competition' award mechanism impact the overall value for taxpayers?
Awarding contracts through 'full and open competition' is generally considered the most beneficial mechanism for taxpayers. It ensures that the government solicits bids from all responsible sources, thereby maximizing the pool of potential offerors. This broad competition typically drives down prices as contractors vie for the award, leading to better value. It also encourages innovation as companies strive to differentiate their offerings. Furthermore, it promotes transparency and fairness in the procurement process, reducing the likelihood of favoritism or cronyism. While it may require more administrative effort upfront to manage the solicitation and evaluation process, the long-term benefits of competitive pricing and potentially superior service quality usually outweigh these initial costs for the taxpayer.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: N6660421R3006
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 12930 WORLDGATE DR STE 600, HERNDON, VA, 20170
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $334,469,985
Exercised Options: $299,295,766
Current Obligation: $291,162,448
Subaward Activity
Number of Subawards: 28
Total Subaward Amount: $104,928,187
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0017819D8498
IDV Type: IDC
Timeline
Start Date: 2022-02-01
Current End Date: 2026-01-31
Potential End Date: 2027-01-31 00:00:00
Last Modified: 2026-02-12
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