SRC INC awarded $34.4M for sustainment and CLS services, with limited competition

Contract Overview

Contract Amount: $34,416,633 ($34.4M)

Contractor: SRC Inc

Awarding Agency: Department of Defense

Start Date: 2021-07-19

End Date: 2023-03-26

Contract Duration: 615 days

Daily Burn Rate: $56.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUSTAINMENT, CLS, AND OTHER

Place of Performance

Location: SYRACUSE, ONONDAGA County, NEW YORK, 13212

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $34.4 million to SRC INC for work described as: SUSTAINMENT, CLS, AND OTHER Key points: 1. Value for money is difficult to assess due to the lack of competitive bidding. 2. The contract was awarded on a sole-source basis, limiting price discovery. 3. Performance risk appears moderate given the nature of sustainment services. 4. The contract duration of 615 days suggests a need for ongoing support. 5. This contract falls within the Defense sector, supporting critical navigation systems. 6. The award amount is substantial, indicating significant service requirements.

Value Assessment

Rating: fair

Benchmarking the value for money is challenging as this contract was sole-sourced. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or if a better value could have been achieved through a more open competition. The Cost Plus Fixed Fee (CPFF) structure can sometimes lead to higher costs if not carefully managed, but it also allows for flexibility in complex sustainment scenarios. Further analysis of the fixed fee and indirect cost rates would be needed for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning SRC INC was the only bidder considered. This approach is typically used when only one responsible source can satisfy the agency's needs. The lack of competition means there was no opportunity for price negotiation against other market participants, potentially leading to a higher price than if multiple bids were received. The rationale for sole-sourcing should be thoroughly documented by the agency.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, the government had limited leverage to negotiate the lowest possible price for these sustainment services.

Public Impact

The Department of Defense benefits from the continued operational readiness of its search, detection, navigation, guidance, aeronautical, and nautical systems. SRC INC provides essential sustainment, lifecycle support (CLS), and other services critical for maintaining complex defense equipment. The services are likely to have a national impact, ensuring the effectiveness of military assets. The contract supports a specialized workforce within SRC INC, likely involving engineers and technicians skilled in defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not rigorously overseen.
Lack of transparency in the sole-source justification could mask underlying issues.
The specific sustainment needs and associated costs require detailed scrutiny to ensure efficiency.

Positive Signals

SRC INC is a known entity in defense contracting, suggesting a degree of familiarity and established capability.
The contract addresses critical sustainment needs, ensuring the operational readiness of defense assets.
The fixed fee component provides some level of cost predictability for the government.

Sector Analysis

The defense electronics and systems manufacturing sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Companies like SRC INC operate within a niche that requires specialized expertise and adherence to stringent government requirements. Spending in this area is driven by the need to maintain and upgrade complex military hardware, often involving proprietary technologies. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of sustainment contracts for specialized systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The prime contractor, SRC INC, is likely a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contracts often involve some level of subcontracting to smaller firms.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Fixed Fee (CPFF) structure necessitates robust financial oversight to manage costs and the fixed fee. Transparency regarding the sole-source justification and performance metrics is crucial for accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency (DLA) Sustainment Programs
Naval Sea Systems Command (NAVSEA) Maintenance, Modernization, and Repair Contracts
Air Force Sustainment Center (AFSC) Operations
Army Aviation and Missile Command (AMCOM) Logistics Support Contracts

Risk Flags

Sole-source award lacks competitive justification.
CPFF contract type requires diligent cost oversight.
Limited public information on specific performance metrics.
Potential for cost creep without strong controls.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.4 million to SRC INC. SUSTAINMENT, CLS, AND OTHER

Who is the contractor on this award?

The obligated recipient is SRC 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 $34.4 million.

What is the period of performance?

Start: 2021-07-19. End: 2023-03-26.

What is SRC INC's track record with the Department of Defense for similar sustainment contracts?

SRC INC has a history of performing contracts with the Department of Defense, often related to advanced electronics, sensors, and systems. Their track record typically involves providing research, development, testing, and production of sophisticated defense technologies. For sustainment and CLS contracts specifically, their experience would likely involve maintaining the operational readiness of systems they have previously developed or integrated. A detailed review of their past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) would provide specific insights into their reliability, quality of work, and adherence to schedule and budget on similar engagements. This particular contract's sole-source nature suggests a specific capability or existing relationship that the DoD deemed essential.

How does the $34.4 million award compare to similar sustainment contracts for navigation systems?

Directly comparing the $34.4 million award for sustainment and CLS services to other navigation system contracts is challenging without more specific details on the scope of work, system complexity, and contract duration. However, sustainment contracts for complex defense systems can range from a few million to hundreds of millions of dollars, depending on the criticality and age of the equipment. Given that this contract spans approximately 20 months (July 2021 to March 2023), the monthly burn rate is roughly $1.76 million. This figure needs to be benchmarked against the specific maintenance requirements and service levels mandated by the DoD for the particular navigation systems involved. The sole-source nature also complicates direct value comparisons.

What are the primary risks associated with this sole-source Cost Plus Fixed Fee contract?

The primary risks associated with this sole-source Cost Plus Fixed Fee (CPFF) contract are twofold. Firstly, the sole-source award inherently limits competitive pressure, potentially leading to higher costs than might be achieved through a competitive bidding process. The government has less leverage to negotiate favorable pricing. Secondly, the CPFF structure, while providing flexibility for uncertain scopes, can incentivize the contractor to incur more costs, as their profit is based on a fixed fee regardless of the actual cost incurred (though the fee itself might be adjusted under certain conditions). This necessitates robust government oversight to ensure costs are reasonable and allocable to the contract. Performance risk also exists, though SRC INC's established presence may mitigate this.

What is the expected program effectiveness or outcome from these sustainment services?

The expected program effectiveness from these sustainment and CLS services is the continued operational readiness and reliability of critical Department of Defense navigation, guidance, and related systems. This ensures that military personnel have access to functioning equipment essential for mission success, whether for navigation, targeting, or detection. Effective sustainment reduces downtime, minimizes unexpected failures, and extends the useful life of expensive assets. Ultimately, the outcome is enhanced warfighter capability and national security, by ensuring that the technological edge provided by these systems is maintained through proper upkeep, repair, and logistical support.

How has federal spending on sustainment and CLS for navigation systems evolved over the past five years?

Analyzing federal spending trends on sustainment and CLS for navigation systems over the past five years requires access to detailed historical contract data across multiple agencies. Generally, spending in this category tends to be relatively stable, driven by the long lifecycle of defense platforms and the continuous need to maintain operational readiness. However, fluctuations can occur due to modernization programs, the introduction of new technologies, or shifts in defense priorities. Increased geopolitical tensions or specific military campaigns can also drive up demand for sustainment services. Without specific aggregated data for this niche, it's difficult to provide precise figures, but the overall trend likely reflects a consistent, significant investment in maintaining critical defense capabilities.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 7502 ROUND POND RD, NORTH SYRACUSE, NY, 13212

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

Financial Breakdown

Contract Ceiling: $34,416,633

Exercised Options: $34,416,633

Current Obligation: $34,416,633

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $428,645

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q20D0032

IDV Type: IDC

Timeline