DoD awards $2.5M for satellite management, but competition is limited, raising value concerns

Contract Overview

Contract Amount: $2,527,306 ($2.5M)

Contractor: DDC IT Services LLC

Awarding Agency: Department of Defense

Start Date: 2021-07-06

End Date: 2026-07-12

Contract Duration: 1,832 days

Daily Burn Rate: $1.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SATELLITE ENGINEERING/COMMERCIAL SATELLITE MANAGEMENT.

Place of Performance

Location: FORT HUACHUCA, COCHISE County, ARIZONA, 85613

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $2.5 million to DDC IT SERVICES LLC for work described as: SATELLITE ENGINEERING/COMMERCIAL SATELLITE MANAGEMENT. Key points: 1. Limited competition may have inflated costs for essential satellite management services. 2. The contract's duration and fixed-price nature offer some cost predictability. 3. Performance risks are moderate given the specialized nature of satellite engineering. 4. This contract supports critical Department of Defense operations. 5. The chosen contractor has a track record in IT services, but specific satellite experience is unclear. 6. Geographic focus on Arizona for this specific contract. 7. No small business set-aside was utilized, potentially limiting broader economic participation.

Value Assessment

Rating: fair

Benchmarking satellite management contracts is challenging due to specialized requirements. However, the lack of robust competition for this $2.5 million award suggests potential for overpayment. Without comparable bids, it's difficult to definitively assess if the pricing reflects fair market value. The fixed-price structure provides some cost certainty, but the absence of competitive pressure could lead to suboptimal resource allocation.

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 competitive tension. While sole-source awards can be justified for unique capabilities or urgent needs, the justification for this specific award is not detailed here. The lack of multiple bidders means taxpayers did not benefit from a competitive bidding process that could drive down costs.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government missed an opportunity to leverage market forces to secure the best possible price and value.

Public Impact

The Department of Defense benefits from continuous satellite management and engineering support. Essential services for national security and communication infrastructure are maintained. The contract's primary impact is on the operational readiness of military space assets. Workforce implications are likely concentrated within the awarded contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs.
Sole-source award limits transparency in pricing.
Potential for vendor lock-in due to specialized services.
Unclear if contractor possesses deep satellite-specific expertise beyond general IT.

Positive Signals

Contract awarded to a known IT service provider.
Fixed-price contract offers cost predictability.
Long-term award provides stability for critical services.
Contract duration aligns with expected satellite system lifecycles.

Sector Analysis

The satellite services sector is a critical component of national security and commercial communications. This contract falls within the broader IT and professional services market, specifically focusing on computer systems design and related services for satellite management. The market is characterized by high barriers to entry due to specialized knowledge and technology requirements. Comparable spending benchmarks are difficult to establish without detailed service scope and performance metrics.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have subcontracting requirements for small businesses based on the provided data. This means that opportunities for small businesses to participate in this significant federal spending were not actively pursued through this award mechanism. The impact on the small business ecosystem is neutral to negative, as larger prime contractors are less likely to engage small businesses for specialized services unless mandated.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the contract's performance clauses and payment schedules. Transparency is limited by the sole-source nature of the award; however, contract details should be publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense-wide Information Technology Contracting
Space Systems and Support Services
Commercial Satellite Services
IT Professional Services

Risk Flags

Limited competition
Lack of transparency in sole-source justification
Potential for inflated costs
Unclear contractor specialization in satellite domain

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.5 million to DDC IT SERVICES LLC. SATELLITE ENGINEERING/COMMERCIAL SATELLITE MANAGEMENT.

Who is the contractor on this award?

The obligated recipient is DDC IT SERVICES LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $2.5 million.

What is the period of performance?

Start: 2021-07-06. End: 2026-07-12.

What is the specific justification for awarding this satellite management contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification for this determination is not detailed in the data. Typically, sole-source awards are justified when only one responsible source can provide the required supplies or services, such as in cases of urgent and compelling need, unique capabilities, or when a specific technology or system is proprietary. Without further documentation from the Department of Defense, the precise rationale remains unclear. This lack of transparency in the justification process is a common concern with sole-source contracts, as it can obscure whether competitive alternatives were truly unavailable or if the award was made for other reasons.

How does the $2.5 million contract value compare to similar satellite management contracts awarded by the DoD?

Directly comparing the $2.5 million value of this contract to similar satellite management contracts is challenging without more specific details on the scope of services, duration, and performance requirements. Satellite management can encompass a wide range of activities, from basic operational support to complex engineering and mission planning. Contracts for these services can vary significantly in price, from hundreds of thousands to hundreds of millions of dollars, depending on the complexity and scale. The provided data indicates a 3-year duration (July 2021 - July 2024), which suggests a moderate annual value. However, without access to a broader dataset of comparable sole-source or competed satellite management contracts with similar service levels, a precise benchmark is not feasible. The limited competition aspect, however, suggests the price may not be as optimized as it could be in a more competitive environment.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this satellite management contract. Typically, such contracts would include detailed metrics to measure the contractor's performance. For satellite management, these might include satellite uptime, data transmission success rates, response times for anomalies, adherence to orbital parameters, and successful execution of planned maneuvers or payload operations. The absence of this information in the summary data makes it difficult to assess the contractor's accountability and the effectiveness of the services being provided. Robust KPIs and SLAs are crucial for ensuring that the government receives the expected value and that the contractor meets critical operational requirements.

What is the track record of DDC IT SERVICES LLC in providing satellite engineering or management services?

The provided data identifies DDC IT SERVICES LLC as the contractor for this $2.5 million satellite management contract. While the data indicates their North American Industry Classification System (NAICS) code is 541512 for Computer Systems Design Services, it does not offer specific details about their track record in satellite engineering or management. This suggests their primary expertise might lie in broader IT services, and their qualification for this specialized contract warrants further investigation. It is unclear if they have prior experience with similar government contracts, possess specialized satellite operations personnel, or have a history of successful performance in this niche area. A deeper dive into their contract history and client testimonials would be necessary to fully assess their capabilities in this domain.

What are the potential risks associated with a sole-source award for critical satellite operations?

Sole-source awards for critical operations like satellite management carry several potential risks. Firstly, the lack of competition can lead to inflated prices, as the contractor faces no pressure to offer the most cost-effective solution. Secondly, it can result in reduced innovation, as the contractor may have less incentive to develop novel or more efficient approaches. Thirdly, there's a risk of vendor lock-in, where the government becomes dependent on a single provider, making it difficult and costly to switch vendors in the future, even if performance is subpar. Finally, without competitive benchmarking, it's harder to ensure the contractor possesses the most advanced or appropriate technical capabilities for the evolving demands of satellite operations. Transparency regarding the justification for sole-source awards is crucial to mitigate these risks.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8840 E CHAPARRAL RD STE 145, SCOTTSDALE, AZ, 85250

Business Categories: 8(a) Program Participant, American Indian Owned Business, Category Business, Corporate Entity Tax Exempt, Government, Native American Tribal Government, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,721,956

Exercised Options: $2,721,956

Current Obligation: $2,527,306

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline