Transcript CON 280: Source Selection and the Administration of

CON 280: Source Selection and the
Administration of Service Contracts
Market Research Exhibit
IOSS Requirements
CON 280
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Market Research: IOSS
Requirements
Key Market Research
Topics
Data
Market Segmentation
• Facilities support services (NAICS code 561210, PSC code
33620)
• IOSS requirements may include the following services:
landscaping, housing, transportation/motor pool management,
engineering, janitorial, personnel management, security
protection, financial management, food services, airfield
management, port support
Market Size
• $22B market
Market Growth
• Market is projected to be entering a period of recovery
Market Share
• Over 1500 firms total
• 4 largest firms account for 27.6% of sales
Government Market
• There has been a tendency for federal government to selfperform some of these services
• Pressure to reduce costs could lead to increased outsourcing, if
the financial case can be made
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Source: www.census.gov, IBIS World; Censeo Analysis
Market Research: IOSS
Requirements
Key Market Research
Topics
Data
Value Chain
• Basic services value chain, with inputs of Time, Knowledge,
Equipment, and Systems
Cost Structure
• Labor is the major cost component
Cost Drivers
• Local and job-specific wage rates
• Use of labor-saving equipment
Pricing
• May vary by specific service component
• Cost plus incentive fee was the most common type of contract
in the commercial sector
• Encourages continuous process improvements
• Promotes supplier-customer partnership
• Flexibility in responding to emergency or crisis
• Visibility into performance and costs
• Fixed overhead rate for life of contract has been used in some
contracts
• 50-50 share ratio has been used in some contracts
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Source: www.census.gov, IBIS World; Censeo Analysis
Market Research: IOSS
Requirements
Key Market Research
Topics
Pricing (cont’d)
Data
• Typical Profit Margin rate: between 5% and 9%
• Typical G&A rate: 7%
• Typical Overhead rate (assumed to be indirect expenses/direct
labor): 40%
• Industry standards for the fee percentage are between 2% and
8%, depending on company performance and risk
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Source: www.census.gov, IBIS World; Censeo Analysis
Market Research: IOSS
Requirements
Key Market
Research Topics
Data
Small Business
• Approximately 750 firms with fewer than 10 employees
• There is a high percentage of small businesses in many of the service
industries included in IOSS requirements (e.g., 86% of landscaping
firms have fewer than 10 employees)
• The small business size standard for NAICS code 561210 is $35.5
million
• Industry survey suggests a reasonable small business subcontracting
participation target between 20 and 50%, with most responses in the
25-35% range
Competitive
Dynamics
• Management/service integration expertise is a potential barrier to
entry for firms that want to handle large (>$100M) requirements
• Some firms provide service only within a specific geographic region
• Large firms are generally better positioned to provide the full range
of services required; competition among these firms may be great
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Source: www.census.gov, IBIS World; Censeo Analysis
Market Research: IOSS
Requirements
Key Market
Research Topics
Data
Market Trends
• Decrease in small businesses serving as prime contractors (often due
to the complexity of managing a large number of integrated
services), with increased participation as subcontractors focused on
a sub-set of the services required
Best Practices
• Use of integrated service providers for IOSS requirements
• Broader range of skill sets across the labor pool, so workers become
fungible resources
Performance
Metrics
• Specific performance metrics will vary by service but are generally
based on :
• Customer satisfaction
• Performance results
• Response time (“regular” and emergency)
• Up-time/availability (e.g., for motor pool)
• For Government: Small Business goals
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Source: www.census.gov, IBIS World; Censeo Analysis
Market Research: IOSS
Requirements
Key Market
Research Topics
Performance
Metrics (cont’d)
Data
• Sample performance thresholds include:
• 100% availability of essential base infrastructure services
• Acceptable Quality Levels (AQLs) 99% achieved
• 25% base operating cost reduction over 5 year period
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Source: www.census.gov, IBIS World; Censeo Analysis
Market Research: IOSS
Requirements (cont’d)
Potential Sources
Company
Aleut Facilities Support Services
Applied Planning Internations Inc,
Arctic Slope World Services/DBA ASWS
Bechtel National, Inc
C. Martin Company, Inc
CSC Applied Technologies LLC
Del-Jen Inc
Diversitech, Inc
Dyncorp International
EG&G Technical Services, Inc
H&S Resources Corp
ITT Systems Division
Jacobs Engineering Group, Inc
JanKell, Inc.
Kellogg Brown &Root Services, Inc
Largo, Inc.
Lockheed Martin Mission Services
ManTech
NEDCO
Northrop Grumman Technical Services
Parsons
Raytheon
Science Applications International Corp
Sierra Lobo, Inc
SIP, Inc.
TEDCO
Yang Enterprises Inc
CON 280, Day 2
Size
Alaska Native
WO, SDB
Alaska Native
Large
8(a)
Large
Large
WO, SDB
Large
Large
WO
Large
Large
Large
Large
Large
Large
Large
SDB
Large
Large
Large
Large
SDB
Large
Large
WO
Interest
Prime or Subcontractor
Partner or Subcontractor
Prime or Subcontractor
Prime or Subcontractor
Prime or Subcontractor
Prime or Subcontractor
Prime
Prime
Prime
Prime
Subcontractor
Prime
Prime
Prime
Prime
Prime
Prime or Subcontractor
Prime or Subcontractor
Prime or Subcontractor
Prime or Subcontractor
Prime
Prime or Subcontractor
Subcontractor
Subcontractor
Prime
Subcontractor
Subcontractor
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Market Research: IOSS
Requirements
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•
•
•
Key Implications for the Acquisition
Since many of the services included in IOSS requirements are in
industries with a high percentage of small businesses, there
may be political issues if small businesses risk being displaced
by an IOSS contract
The industry is projected to be entering a period of recovery, so
key players may be hungry for additional business
There is a high level of competition among large firms in the
industry, which is generally good for potential buyers
If our required service levels are higher than average, we may be
a more expensive customer to serve and should therefore
consider changing our requirements to be better aligned with
Industry
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