Contract to Watch: Air Force to open competition worth up to $2 billion

October 6, 2013

The Air Force is preparing to open a sensor systems contract that could be worth up to $2 billion over seven years in an effort to boost competition.

The deal has long been held by McLean-based Exelis, which has been in charge of sustaining the service’s missile warning, missile defense and space surveillance sensor systems for a decade, according to Herndon-based Deltek, which analyzes the government contracting market. Exelis has earned about $1.2 billion for its work, though much has likely gone to subcontractors, Deltek’s research shows.

The Air Force said in a statement that the new contracting program — known as the Sustainment and Modification of Optical and Radar Sensors, or SMORS, program — will take a more competitive approach that is “now needed in a more austere, fiscally constrained environment.”

The strategy “focuses on maintaining a competitive environment throughout the contract ordering period,” the statement said. “Not only is initial participation in the contract competitively awarded, all subsequent task orders are ‘competed’” among the selected teams.

The new contract will cover not only sustainment but also system modifications and upgrades, said Heath Studer, an analyst at Deltek.

The work is expected to occur around the world, said Studer, including at sites in Alaska, California and the United Kingdom.

The Air Force said it expects to make up to six awards for the contract, which will have a $2 billion ceiling. The service said it plans to release a solicitation in March and make an award in April 2015.

So far, about 400 Deltek users have indicated the program is of interest, Studer said. Though the competition will not include a small-business set aside, the Air Force said it will have a goal that 20 percent of the contract value go to small business.

“We have seen significant interest by large prime contractors and a multitude of small businesses,” the Air Force said in its statement. More than 160 individuals representing more than 60 companies attended the first industry day.

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