What to expect from the Army's $82B LOGCAP V awards

With the help of Moody's Investors Service, here is a primer of what to expect when the Army makes awards next year on its $82 billion LOGCAP V vehicle: one of the government services market's largest opportunities of the decade.

Come April of next year, the Army could unveil the winners for the fifth iteration of its main contract vehicle for overseas logistics support in one of the market’s biggest opportunities of the decade.

But the potential 10-year, $82 billion Logistics Civil Augmentation Program contract often dubbed “LOGCAP V” will also play out differently than the current LOGCAP IV version as the Army envisions a “more vertically integrated arrangement” next time around, credit analysts at Moody’s Investors Service wrote in a research note published Monday.

Just like its predecessors, LOGCAP V will support U.S. regional combatant commands, service component commands and other entities with a wide range of construction, supply, logistics and other services. LOGCAP IV was awarded in 2008 and later heavily used to support combat operations in Afghanistan and Iraq.

But as Moody’s hints at, LOGCAP V stands to be less dependent than the current version on combat or other contingency operations as a driver of activity.

“Each contract holder will collaborate more heavily within their assigned command(s), participating in the planning process for both anticipated and crisis actions, and in training exercises. The program office anticipates faster deployments and better cost predictability from the initiative,” the Moody’s analysts wrote.

The Army plans to award between four and six companies positions on LOGCAP V. All proposals were due in February and the award is scheduled to be announced on April 12 of next year.

Incumbents KBR, DynCorp and Fluor are bidding to retain their seats on this key vehicle.

PAE and Parsons are pursuing the vehicle through a joint venture. Vectrus is bidding as well as their largest contract for military base support in Kuwait is being rolled into LOGCAP V. AECOM is also a likely bidder, according to research from Bloomberg Intelligence analyst James Bach.

Moody’s expects the Army to make one award per regional command. An award for work in Afghanistan -- within Central Command -- will be made separately. Moody’s projects either DynCorp or Fluor will win that piece. Both companies currently divide up services in Afghanistan under LOGCAP IV.

“A range of other companies will likely bid as well, but the program's global capability requirement and other demanding performance qualifications probably confined the pool of bidders to around ten or fewer,” Moody’s analysts wrote.

The government services market’s ongoing wave of consolidation could also give some prospective bidders a stronger footing for LOGCAP V. As the Moody’s report points out, defense services companies that focus on logistics and base operational support have undertaken mergers and acquisitions that are “reducing their dependence on subcontractors and improving their qualifications” for LOGCAP V task orders.

Examples cited include KBR’s acquisition of Wyle two years ago that “broadened the company’s technical and engineering service qualifications, plus PAE’s deal for FCi Federal last year for more “administrative service capabilities such as and visa/passport processing and adjudication support services related to immigration.”

“The greatest benefit of M&A however is added scale across which a bidder can spread its fixed costs,” Moody’s lead government services analyst Bruce Herskovics told WT. “As a cost-based contract, LOGCAP bidders bill the government back for overhead (such as marketing, home office expenses, etc.) costs. The overhead cost per revenue dollar (a price the government pays the contractor) declines with greater scale.”

But while the ceiling of LOGCAP V indicates a substantial opportunity for awardees, Moody’s does caution that having more companies on board means some “may achieve only minimal activity levels, income and experience” from the contract.

Some of that can be attributed to the nature of the work. The Army set a high ceiling value on LOGCAP V as it did for LOGCAP IV to get what Moody's called "substantial financial headroom to issue task orders under the program as operational needs develop."

LOGCAP IV has a $150 billion ceiling and has seen $23 billion spent against it so far.

On the other hand, LOGCAP V's structure means significant revenue opportunities are available to companies supporting a specific region if a large number of troops get deployed there. This is what happened under LOGCAP IV, during which contractors based in Afghanistan took in most of the funding.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.