DoD awards $26.7M for logistics support, but limited competition raises cost concerns

Contract Overview

Contract Amount: $26,673,918 ($26.7M)

Contractor: SRC Inc

Awarding Agency: Department of Defense

Start Date: 2024-07-24

End Date: 2025-03-31

Contract Duration: 250 days

Daily Burn Rate: $106.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LOGISTICS AND FIELD REPRESENTATIVE SUPPORT SERVICES.

Place of Performance

Location: SYRACUSE, ONONDAGA County, NEW YORK, 13212

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to SRC INC for work described as: LOGISTICS AND FIELD REPRESENTATIVE SUPPORT SERVICES. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns. 2. Limited competition suggests potential for higher prices than a fully open market. 3. Short contract duration (less than a year) may indicate a need for ongoing services or a bridge contract. 4. The contract is for logistics and field representative support, a critical but often complex service area. 5. The awardee, SRC INC, has a significant contract value, indicating substantial past performance or market position. 6. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing and support sector.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure warrants scrutiny, as it shifts cost risk to the government. Without a competitive benchmark, assessing the fairness of the fixed fee and overall cost is challenging. The award value of $26.7 million is substantial, and the lack of competition makes it difficult to determine if this represents good value for the logistics and field support services provided. Further analysis of the contractor's proposed costs and historical performance on similar contracts would be necessary for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly limits price discovery and negotiation leverage for the government. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities, urgent needs), the absence of competition typically leads to higher prices and reduced innovation compared to fully competed contracts. The lack of multiple bidders means the government did not benefit from a range of proposals and pricing strategies.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive bidding. Without competing offers, there is less assurance that the government secured the best possible price for these essential logistics services.

Public Impact

The Department of Defense benefits from essential logistics and field representative support services, crucial for operational readiness. The services provided likely ensure the proper functioning and maintenance of critical defense systems and equipment. The contract's geographic impact is centered in New York, where the contractor is located. Workforce implications may include employment opportunities for logistics specialists, field technicians, and support staff at SRC INC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type increases risk of cost overruns for the government.
Sole-source award limits competitive pressure, potentially leading to inflated prices.
Lack of transparency in the justification for sole-source award.
Short contract duration may indicate an inability to plan long-term or a stop-gap measure.
The specific nature of 'field representative support' could be subject to scope creep without clear performance metrics.

Positive Signals

Award to SRC INC suggests a level of trust and potentially specialized expertise required for these services.
The contract value indicates a significant need for these logistics functions within the DoD.
The contract is for essential support services, contributing to overall defense readiness.

Sector Analysis

This contract falls within the broader defense logistics and support services sector, which is a critical component of the defense industrial base. The NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' suggests a focus on specialized equipment support. The market for such services is often characterized by high barriers to entry due to technical expertise, security clearances, and established relationships with government agencies. Comparable spending benchmarks are difficult to establish without more specific details on the services rendered, but the overall defense logistics market is substantial, with billions spent annually on maintaining and supporting military assets.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to SRC INC, a likely larger entity given the contract value, means that opportunities for small businesses within this specific contract are limited. This award does not appear to contribute to the government's small business contracting goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous oversight of incurred costs and contractor performance is essential to mitigate financial risks. Transparency regarding the justification for the sole-source award and detailed reporting on cost expenditures would be crucial for accountability. The Inspector General's office may conduct audits or investigations if specific concerns regarding waste, fraud, or abuse arise.

Related Government Programs

Department of Defense Logistics Support Contracts
Defense Contract Management Agency Services
Military Equipment Maintenance and Repair
Navigation and Guidance System Support
Field Service Representative Contracts

Risk Flags

Sole-source award lacks competitive transparency.
Cost-plus-fixed-fee structure increases government financial risk.
Short contract duration raises questions about long-term planning and efficiency.
Potential for cost overruns due to CPFF and lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to SRC INC. LOGISTICS AND FIELD REPRESENTATIVE SUPPORT SERVICES.

Who is the contractor on this award?

The obligated recipient is SRC INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $26.7 million.

What is the period of performance?

Start: 2024-07-24. End: 2025-03-31.

What is the specific justification provided by the Department of the Army for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under circumstances such as only one responsible source being available, or an urgent and compelling need that precludes full and open competition. Without the official justification document, it is impossible to ascertain the precise reasons. However, common justifications include unique technical capabilities, proprietary technology, or a critical need that cannot be met by any other vendor within the required timeframe. This lack of transparency in the justification is a concern for ensuring fair competition and optimal use of taxpayer funds.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar logistics support services?

Cost-plus-fixed-fee (CPFF) contracts are often used when the scope of work is not precisely defined or when there is significant uncertainty in the cost of performance, such as in research and development or complex service contracts. In this case, the government pays the contractor's actual costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF shifts more cost risk to the government. For logistics support, fixed-price contracts (like Firm-Fixed-Price or Fixed-Price Incentive) are generally preferred when requirements are well-defined, as they incentivize the contractor to control costs. However, if the nature of 'field representative support' involves unpredictable variables or evolving technical requirements, CPFF might be deemed necessary, albeit with heightened oversight needs.

What is SRC INC's track record with the Department of Defense, particularly on similar logistics support contracts?

While the provided data indicates SRC INC is the awardee for this $26.7 million contract, it does not detail their specific track record with the Department of Defense or on similar logistics support services. To assess their performance, one would need to examine historical contract awards, past performance evaluations, and any reported issues or successes on previous DoD contracts. A strong track record with positive past performance reviews would mitigate some of the concerns associated with a sole-source, CPFF award. Conversely, a history of cost overruns or performance issues would heighten these concerns significantly.

What are the potential risks associated with the short contract duration of less than one year?

A contract duration of less than one year (ending March 31, 2025, from a July 24, 2024, start) can indicate several potential risks. It might suggest that the services are needed on an interim basis, potentially leading to a series of short-term contracts that are less efficient and more costly than a longer-term, stable agreement. Alternatively, it could be a 'bridge contract' to allow time for a more comprehensive competition for a follow-on requirement. This short duration may also limit the contractor's ability to invest in long-term solutions or personnel, potentially impacting service continuity or quality. It also raises questions about the government's long-term planning for these critical logistics functions.

How does the NAICS code 334511 relate to the described 'Logistics and Field Representative Support Services'?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' primarily relates to the manufacturing of these specific types of systems and instruments. While the contract is described as 'Logistics and Field Representative Support Services,' the NAICS code suggests that these services are likely tied to the maintenance, repair, calibration, or field support of the manufactured systems falling under this category. This implies that SRC INC may be the original manufacturer or a highly specialized entity with intimate knowledge of these complex defense systems, which could be a contributing factor to the sole-source justification.

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: $26,673,918

Exercised Options: $26,673,918

Current Obligation: $26,673,918

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $12,082,521

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