The Department of Defense issued a sizable "umbrella" contract award on Wednesday for the provision of business and force support services for the Navy. Characterized as an indefinite-delivery/indefinite-quantity (IDIQ), cost-plus-fixed-fee, performance-based contract, with provisions for fixed-price-incentive (firm target) and firm-fixed-price task orders, the DoD's award actually consists of multiple contracts permitting multiple companies to bid on future work for the military. In all, 15 separate companies have been given the right to bid on individual projects, or task orders, to be awarded under the umbrella contract. These companies include the following publicly traded names:
- BAE Systems
- Booz Allen Hamilton
- CGI Group
- Computer Sciences
- General Dynamics' (NYSE:GD) One Source subsidiary
- Engility (NYSE:EGL)
- Hewlett-Packard's (NYSE:HPQ) HP Enterprise Services subsidiary
- Lockheed Martin (NYSE:LMT) Information Systems & Global Solutions
- SAIC (NYSE:SAI)
- URS Federal Services
In addition, privately held companies Deloitte Consulting, MC Dean, Scientific Research, and Secure Mission Solutions were named winners of the overarching contract.
This contract, which begins with a single base year, to be followed by up to four one-year extensions, has an estimated ceiling value of $179.9 million for Year 1. If all options are exercised, the ultimate value of the contract could rise as high as $899.5 million. Again, if all options are exercised, the contract could run through May 2018. Without extensions, it could expire as early as May 2014.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.