Lockheed Martin Government Services, Inc. in Seabrook, MD received a 7th year option of $27.1 million as part of contract MDA220-01-D-0002 for management of the Retired and Annuitant pay service. The service was formerly managed by the Defense Finance and Accounting Service (DFAS), but was the subject of an “A-76 action.” The core concept of the American “A-76” option is that it puts in-house services up for bid against private contractors, and may outsource the function if outside contractors can deliver better and cheaper. This sort of thing can be rather disconcerting to our readers in government departments, while many our readers working in large corporations probably wish they had this option with some of their internal departments. DID covered option #6 last year, along with a very provocative and interesting follow-on question from a reader re: A-76 competitions.
The estimated aggregate face value of this contract at time of award was $346.4 million. Primary work is performed at DFAS Cleveland, OH and secondary work which includes document scanning and primarily imaging is performed at London, KY. Under this option, work will be performed between Feb 1/08, through Jan 31/09. The DFAS Contract Services Directorate in Columbus, OH issued the contract (MDA220-01-D-0002).
Pentagon spokesman Bryan Whitman recently said [release | full press conference transcript] that US Department of Defense officials are concerned with the number of contracting improprieties that have been uncovered within the CENTCOM area of responsibility. Problems with the contracts run the gamut of seriousness from bid-rigging, kickbacks and product substitution to double billing, and Whitman added that the DoD is concerned about “ensuring the integrity of our accounting systems, as well as the integrity of our contracting procedures.” The former could be a tall order; accounting systems have been a long-standing issue in the Pentagon.
The Army is the lead agency in the investigations, which cover up to $5 billion in contracts for goods and services issued in Iraq, Kuwait and Afghanistan…
Seaport-Enhanced (Seaport-e) is a $5.3 billion multiple-award umbrella contract that lets the US Navy use an integrated approach to contracting for support services. Most requests involve engineering, financial, and program management support. Receiving an award makes a firm eligible to big on jobs under a pre-set contract vehicle, and the SeaPort-e portal provides a standardized means of soliciting bids and awarding task orders.
Price Waterhouse Coopers L.L.P. in Washington, DC received a delivery order amount of $7.5 million as part of a $16.8 million firm-fixed-price contract to conduct a financial statement audit of the U.S. Army Corps of Engineers Civil Works FY 2007 financial statements.
Work will be performed in Washington, DC and is expected to be complete by April 25, 2008. There were 5 bids solicited on March 20, 2006, and 5 bids were received by the Washington Headquarters Services in Arlington, VA (N00421-05-D-0025).
Tecolote Research Inc. in Goleta, CA and Quantech Services Inc. in Bedford, MA are being awarded an $88 million indefinite-delivery/ indefinite-quantity contract. This contract will procure specialized costing services for Hanscom Air Force Base for the next four years. These services includes but are not limited to cost estimating, earned value computations, what if calculations, etc. These calculations are important for benchmarking the performance of major weapons programs et. al., and feed into both project management and top-level acquisition & budgeting decisions.
The Air Force can issue delivery orders to these contractors totaling up to $88 million, but doesn’t have to spend it all. At this time, $1.2 million has been obligated. Solicitations began June 2006, negotiations were complete October 2006, and work will be complete October 2010. The Headquarters Electronic Systems Center at Hanscom Air Force Base, MA issued the contract (FA8721-07-D-0002-0001 and FA8721-07-D-0003-0001).
United Technologies Corp., whose subsidiaries include Sikorsky and Pratt & Whitney, has entered into a $283 million settlement of government contract accounting matters with the U.S. Department of Defense. The agreement ends litigation over Pratt & Whitney’s cost accounting for engine parts on commercial engine collaboration programs from 1984 through 2004. Since January 1, 2005, Pratt & Whitney has used an alternative method approved by the US government for allocating overhead costs, which is based on the value added by Pratt & Whitney in the manufacturing process.
UTC reports that reserves relating to these matters exceeded the settlement amount by approximately $0.05 per share, and the company anticipates restructuring charges over the course of 2006 will equal or exceed this difference. UTC reaffirmed guidance of earnings per share in the range of $3.50 to $3.60. See corporate release.
The Headquarters Aeronautical Systems Center, Wright-Patterson Air Force Base, OH has awarded an $850 million firm-fixed-price, time and materials and cost-reimbursement contract among a number of firms. It’s a consolidated acquisition of professional services approach, using indefinite-delivery/ indefinite-quantity contracts that will cover a wide range of technical/management support at Wright-Patterson Air Force Base, OH.
Located near the home of the Wright Brothers’ first flight, Wright-Patterson AFB may well be the largest, most diverse and organizationally complex air base in the world. Missions range from acquisition and logistics management, to research and development via the Air force Research Laboratory, education, flight operations, and many other defense related activities. To cover support for such a wide range of activities, the contract must also have a very wide scope…
Defense reform critics like Chuck Spinney, and government organizations like the GAO, have complained for years that the Pentagon’s accounting system is broken. Considerable amounts of money are still being spent trying to improve the services’ systems in order to realize a “clean audit,” but the DoD’s books are such a mess that its accountants aren’t wasting any money by trying to run comprehensive audits. Last year, Managing Director Gregory D. Kutz of the Government Accountability Office told Congress that these accounting problems would cost taxpayers approximately $13 billion in 2005. Indeed, the GAO has classified the Pentagon’s accounting systems as “high risk” since the 1990s.
Now the Raleigh-Durham News & Observer has a report that details the extent of the problem, and the troubles these systems are causing for some troops in the field. But why do the problems persist, even after all of these years?
The USA’s Defense Finance and Accounting Service (DFAS) has picked up a fourth year option with Electronic Data Systems Corp. in Herndon, VA. This indefinite delivery contract (MDA210-02-D-0001) has a maximum face value of $12.2 million, and covers production support, hardware/software support and system improvements for electronic data management. This brings the aggregate value of the contract to a maximum of $59.6 million.
Work will be performed at DFAS Columbus, OH; DFAS Indianapolis, IN; DFAS Omaha, NB; and DFAS Charleston, SC. Under this option, work will be performed between Jan. 1 and Dec. 31, 2006. Funding includes nine months of fiscal 2006 dollars and three months of fiscal 2007 dollars, to be issued by task orders. The DFAS Contract Services Directorate in Columbus OH issued the contract (MDA210-02-D-0001).
Super-carriers may be cheaper than building the same amount of aircraft and mission capacity via smaller carriers, but they aren’t cheap. Just how expensive, however, has recently become an item of some debate. Speciality publications like GovExec.com, and mainstream media papers as well, have put forward figures of $13.7-14 billion for the CVN-21 Class. House Armed Services Committee Chairman Duncan Hunter [R-CA] has been quoted giving similar figures.
In the wake of DID’s anchor article covering the new carriers, Pat Dolan of NAVSEA got in touch with DID to protest those figures. She made a solid case, some minor changes were made, and DID began asking a slew of detailed questions. After all, the US Navy’s own on-line Fact File pegs the cost of a Nimitz Class carrier at $4.5 billion, but Navy representatives claim a cost of $8.1 billion per ship for the CVN-21 Class – and note that this is cheaper than building a new Nimitz Class ship! NAVSEA also claims up to $5 billion of savings over the ship’s lifetime vs. a Nimitz carrier.
How does this math square, and how specifically do the innovations in the CVN-21 Class rack up $5 billion in savings over the ship’s 50-year service life?