Leidos Inc. awarded $337M contract for Air Transportation Support, raising questions about competition and value
Contract Overview
Contract Amount: $336,884,098 ($336.9M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2016-07-13
End Date: 2021-03-12
Contract Duration: 1,703 days
Daily Burn Rate: $197.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF SATURN ARCH SYSTEM PROCUREMENT
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $336.9 million to LEIDOS, INC. for work described as: IGF::OT::IGF SATURN ARCH SYSTEM PROCUREMENT Key points: 1. The contract's value of $337 million over its period of performance suggests a significant investment in air transportation support services. 2. The sole-source nature of this award limits opportunities for competitive bidding, potentially impacting price discovery and overall value for money. 3. The use of a Cost Plus Fixed Fee (CPFF) contract type can introduce risks related to cost overruns if not managed diligently. 4. The contract's duration of over 1700 days indicates a long-term need for these services, requiring sustained oversight. 5. The specific services provided under 'Other Support Activities for Air Transportation' warrant further detail to fully assess performance and impact. 6. The absence of small business participation raises concerns about broader economic impact and equitable distribution of federal contracting opportunities.
Value Assessment
Rating: questionable
Benchmarking the value of this $337 million contract is challenging without specific details on the services rendered and comparable market rates. However, the Cost Plus Fixed Fee (CPFF) structure, while common for complex or uncertain projects, can lead to higher costs compared to fixed-price contracts if not meticulously managed. The lack of competition further complicates a direct value-for-money assessment, as there was no market pressure to drive down prices. The significant duration of the contract also means that any inefficiencies or cost escalations would be amplified over time.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning that only one contractor, Leidos, Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can potentially lead to higher costs for the government compared to a fully competed contract. The absence of competition means there was no direct pressure from other bidders to offer the most cost-effective solution.
Taxpayer Impact: The sole-source award means taxpayers did not benefit from the potential cost savings that could arise from a competitive bidding process. This could translate to a higher overall expenditure for the services provided.
Public Impact
The primary beneficiary of this contract is the Department of Defense, which receives essential support for its air transportation operations. The services provided are critical for maintaining the efficiency and readiness of military air logistics and support functions. The contract's impact is likely concentrated within the operational environments supported by the Defense Contract Management Agency, potentially including various domestic and international locations. While not explicitly detailed, such a large contract likely supports a significant workforce within Leidos, Inc., contributing to employment in the aerospace and defense sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially leading to suboptimal pricing.
- Cost Plus Fixed Fee (CPFF) contract type carries inherent risk of cost overruns if not closely monitored.
- Lack of transparency regarding specific performance metrics and outcomes makes it difficult to assess effectiveness.
- Absence of small business participation may limit broader economic benefits and opportunities.
- Long contract duration increases the potential for cost escalation over time.
Positive Signals
- Leidos, Inc. is a large, established defense contractor with significant experience in complex systems and support.
- The contract addresses a critical need within the Department of Defense for air transportation support.
- The fixed fee component of the CPFF contract provides some level of cost certainty for the contractor's profit.
- The contract was awarded by a reputable agency (Defense Contract Management Agency) suggesting adherence to established procurement processes, albeit with a sole-source justification.
Sector Analysis
This contract falls within the broader aerospace and defense sector, specifically focusing on support services for air transportation. This sector is characterized by high technological complexity, significant government spending, and a relatively concentrated market of large prime contractors. The market size for such specialized support services is substantial, driven by the operational needs of military and government agencies. Comparable spending benchmarks would typically involve analyzing other large-scale support contracts awarded by the DoD for aviation-related services, considering factors like scope, duration, and service complexity.
Small Business Impact
This contract does not appear to have included a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses. The award to a large prime contractor like Leidos, Inc. suggests a focus on prime contract performance rather than fostering small business participation. This could limit the impact on the small business ecosystem within the defense contracting space, as opportunities for growth and development through subcontracting may be reduced.
Oversight & Accountability
Oversight for this contract would primarily fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Fixed Fee (CPFF) nature of the contract necessitates rigorous financial oversight to scrutinize costs and ensure the fixed fee is appropriate. Transparency regarding the specific services delivered and performance metrics would be crucial for effective accountability. While specific Inspector General (IG) involvement isn't detailed, the DoD IG generally has jurisdiction over DoD contracts, and could investigate any reported fraud, waste, or abuse.
Related Government Programs
- DoD Logistics Support Contracts
- Air Mobility Command Services
- Defense Aviation Support
- Government IT and Support Services
- Aerospace Maintenance and Repair Contracts
Risk Flags
- Sole-source award
- Cost-plus contract type
- Lack of small business participation
- Limited public detail on services and performance
Tags
defense, department-of-defense, leidos-inc, cost-plus-fixed-fee, sole-source, air-transportation-support, contract-management, virginia, definitive-contract, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $336.9 million to LEIDOS, INC.. IGF::OT::IGF SATURN ARCH SYSTEM PROCUREMENT
Who is the contractor on this award?
The obligated recipient is LEIDOS, 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 $336.9 million.
What is the period of performance?
Start: 2016-07-13. End: 2021-03-12.
What specific air transportation support services does this contract entail, and how do they align with the Department of Defense's strategic objectives?
The contract, identified under NAICS code 488190 (Other Support Activities for Air Transportation), likely encompasses a range of services critical to military aviation operations. This could include, but is not limited to, aircraft maintenance and repair, ground support equipment operation and maintenance, air traffic control support, aerial port operations, and logistical planning for air movements. These services are fundamental to the DoD's ability to project power, conduct global operations, and maintain readiness. The strategic alignment would involve ensuring the efficient and effective operation of air assets, supporting troop deployment, cargo transport, and contingency operations. Without more granular detail on the statement of work, the precise alignment remains inferred based on the contract's broad classification.
What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. Common justifications include the existence of unique capabilities, proprietary technology, urgent and compelling needs where competition is impractical, or when a previous contract was terminated for cause and only the incumbent can provide continuity. For this specific Leidos, Inc. contract, the justification for a sole-source award is not publicly detailed in the provided data. It is possible that the services required were highly specialized, tied to existing systems only Leidos could support, or that a critical operational need precluded a lengthy competitive process. However, without the official justification documentation, it's impossible to definitively state the reasons or confirm if alternative competitive strategies were explored and deemed unfeasible.
How does the Cost Plus Fixed Fee (CPFF) structure of this contract potentially impact cost control and contractor performance compared to other contract types?
The Cost Plus Fixed Fee (CPFF) contract type is designed to provide the contractor with reimbursement for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves significant uncertainty, making fixed-price contracts impractical. While the fixed fee provides some incentive for the contractor to control costs (as their profit is capped), it also carries a risk of cost overruns, as the government bears the burden of most cost increases. Effective cost control relies heavily on robust government oversight, detailed cost accounting, and clear performance metrics. Compared to firm-fixed-price contracts, CPFF generally offers less cost certainty for the government and can incentivize higher spending if not managed diligently. However, it allows for greater flexibility in adapting to evolving requirements, which can be crucial in complex support roles.
What is Leidos, Inc.'s track record with similar large-scale Department of Defense support contracts, particularly those involving air transportation?
Leidos, Inc. is a major government contractor with extensive experience in defense, intelligence, and aviation sectors. They have a history of managing large, complex contracts for the Department of Defense, often involving systems integration, logistics, and technical support. While specific details on their past performance in air transportation support contracts of this magnitude are not provided here, their overall profile suggests they possess the organizational capacity, technical expertise, and financial stability to execute such requirements. Past performance evaluations, available through government databases like the Contractor Performance Assessment Reporting System (CPARS), would offer a more detailed insight into their specific track record, including timeliness, quality of work, and cost management on similar endeavors.
How does the $337 million spending on this contract compare to historical spending patterns for similar air transportation support services within the DoD?
Comparing this $337 million contract to historical spending requires access to comprehensive historical procurement data for similar services. The provided data indicates a contract duration of approximately 1703 days (roughly 4.6 years), starting in mid-2016 and ending in early 2021. This suggests an average annual spending of approximately $73 million ($337M / 4.6 years). To assess if this is high or low, one would need to analyze trends in DoD spending on air transportation support over several years, identify comparable contracts (considering scope, services, and agency), and look for patterns of increase or decrease. Factors like inflation, changes in operational tempo, and technological advancements would also influence historical spending levels, making a direct comparison complex without a detailed analysis of these variables.
What are the potential risks associated with the long duration (over 1700 days) of this contract, and what mitigation strategies are typically employed?
The long duration of this contract presents several potential risks. Firstly, requirements can change significantly over a period of 4-5 years due to evolving military strategies, technological advancements, or shifts in operational needs. This can lead to scope creep or the need for costly contract modifications. Secondly, long-term contracts can foster complacency in both the contractor and the government oversight team, potentially leading to reduced vigilance in cost control and performance monitoring. Thirdly, market conditions and technology can evolve, making the contracted services or solutions potentially outdated or less cost-effective by the end of the period. Mitigation strategies typically include incorporating flexibility clauses into the contract to adapt to changing requirements, establishing clear performance metrics and regular review cycles, and maintaining active government oversight to ensure continued value and alignment with current needs. Exercising options judiciously and conducting periodic market research can also help manage risks associated with long-duration contracts.
Industry Classification
NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation
Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W911QX16R0013
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 11951 FREEDOM DR, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $368,650,856
Exercised Options: $341,347,461
Current Obligation: $336,884,098
Subaward Activity
Number of Subawards: 79
Total Subaward Amount: $73,106,030
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-07-13
Current End Date: 2021-03-12
Potential End Date: 2021-03-12 00:00:00
Last Modified: 2025-12-31
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