DoD's $125M contract for engineering services awarded to Nichols Research Corp. shows significant cost variance

Contract Overview

Contract Amount: $125,253,497 ($125.3M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2001-07-25

End Date: 2006-02-16

Contract Duration: 1,667 days

Daily Burn Rate: $75.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200112!002675!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0100D0012 !A!N!*!N!0017 !20010725!20010805!081390726!081390726!009581091!N!NICHOLS RESEARCH CORPORATION !4090 SOUTH MEMORIAL PARKWA!HUNTSVILLE !AL!35815!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000000848770!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !1GII!BAT FLD CMBT ID SYS - NEAR TRM!541990!*!*!5!B!M! !*!*!*!B!*!*!N!Z!A !N!A!2!005!B! !C!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $125.3 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: 200112!002675!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0100D0012 !A!N!*!N!0017 !20010725!20010805!081390726!081390726!009581091!N!NICHOLS RESEARCH CORPORATION !4090 SOUTH MEMORIAL PARKWA!HUNTSVILLE !AL!35815!37000!089!01!HUNTSVILLE !MADIS… Key points: 1. The contract's final value significantly exceeded initial estimates, indicating potential underestimation or scope creep. 2. Competition was robust, with 5 bidders vying for the contract, suggesting a healthy market for these services. 3. The contract's duration of 1667 days (approx. 4.5 years) allowed for sustained performance but also extended the period for cost overruns. 4. The services provided are critical for missile defense systems, highlighting the strategic importance of this procurement. 5. The contractor, Nichols Research Corporation, has a history of securing significant defense contracts. 6. The fixed-price contract type aimed to control costs, but the final expenditure suggests challenges in precise cost forecasting.

Value Assessment

Rating: fair

The final award amount of $125,253,496.88 for engineering technical services is considerably higher than the initial estimated value, which is not explicitly provided but implied by the contract's nature. Benchmarking against similar engineering services contracts within the Department of Defense is challenging without more specific service details. However, a significant deviation from initial expectations or bids could suggest pricing inefficiencies or unforeseen project complexities. The contract's duration and the number of bidders offer some context, but a direct value-for-money assessment requires deeper analysis of the delivered technical capabilities against the final cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with five distinct bidders participating. This level of competition is generally positive, as it allows for a wider range of potential contractors to submit proposals and can drive down prices through market forces. The presence of multiple bidders suggests that the market for these specialized engineering services is sufficiently robust and that the government had a reasonable selection of qualified vendors to choose from, potentially leading to a more competitive initial bid.

Taxpayer Impact: A full and open competition for a contract of this magnitude is beneficial for taxpayers as it increases the likelihood of securing services at a competitive price, preventing potential overpayment that could occur with less competitive solicitations.

Public Impact

The primary beneficiaries are the U.S. Army's aviation and missile command, receiving critical engineering and technical support. Services delivered include engineering and technical support for the 'BAT FLD CMBT ID SYS - NEAR TRM' (Battlefield Combat Identification System - Near Term). The geographic impact is primarily within the United States, with the contractor based in Huntsville, Alabama. The contract supports a specialized workforce in engineering and technical fields, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from initial estimates to final award value.
The contract's long duration could introduce risks related to evolving technology and requirements.
Potential for scope creep given the extensive performance period.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
The contractor, Nichols Research Corporation, is a known entity in the defense sector.
The contract supports a critical defense system, ensuring national security capabilities.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on engineering and technical services for missile defense systems. The market for such specialized services is characterized by high barriers to entry due to technical expertise requirements and security clearances. Comparable spending benchmarks would typically involve other large-scale engineering support contracts for complex defense platforms. The total contract value of approximately $125 million places it as a significant procurement within its niche.

Small Business Impact

There is no indication that this contract was set aside for small businesses, nor is there information suggesting significant subcontracting opportunities for small businesses. The nature of the specialized engineering services required likely favors larger, established defense contractors with the necessary infrastructure and expertise. Further analysis would be needed to determine if any small business subcontracting plans were mandated or voluntarily pursued by the prime contractor.

Oversight & Accountability

The contract was subject to standard federal procurement oversight mechanisms. As a Department of Defense contract, it would fall under the purview of the Department of Defense Inspector General for audits and investigations. Transparency is generally maintained through contract award databases like FPDS. Accountability measures would include performance reviews, milestone tracking, and adherence to the firm-fixed-price terms, although the final cost variance warrants scrutiny.

Related Government Programs

Missile Defense Systems
Army Aviation and Missile Command
Engineering and Technical Services
Defense Contract Management Agency

Risk Flags

Cost Overrun Potential
Long Contract Duration
Technical Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $125.3 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. 200112!002675!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0100D0012 !A!N!*!N!0017 !20010725!20010805!081390726!081390726!009581091!N!NICHOLS RESEARCH CORPORATION !4090 SOUTH MEMORIAL PARKWA!HUNTSVILLE !AL!35815!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000000848770!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !1GII!BAT FLD CMBT ID SYS - NEAR TRM!541990!*!*!5!B!M! !*!*!*!B!*!*!N!

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $125.3 million.

What is the period of performance?

Start: 2001-07-25. End: 2006-02-16.

What was the initial estimated value of the contract before the final award amount was determined?

The provided data does not explicitly state the initial estimated value of the contract. However, the final award amount of $125,253,496.88 suggests that the initial estimates, or the sum of initial bids, were likely lower. Without the original solicitation documents or pre-award estimates, it's impossible to quantify the exact variance. This lack of initial value data makes a precise assessment of cost growth challenging, but the significant final expenditure implies a substantial difference from whatever baseline was initially considered.

What specific technical capabilities or deliverables were expected under this contract?

The contract is for 'ENGINEERING TECHNICAL SERVICES' related to the 'BAT FLD CMBT ID SYS - NEAR TRM' (Battlefield Combat Identification System - Near Term). While the exact technical specifications are not detailed in the provided summary, these services typically encompass design, development, testing, integration, and sustainment engineering for complex defense systems. For the Battlefield Combat Identification System, this would likely involve ensuring the system's reliability, accuracy, and interoperability in identifying friendly and enemy forces on the battlefield, particularly focusing on near-term operational needs and upgrades.

How did Nichols Research Corporation's past performance on similar contracts influence this award?

The provided data indicates Nichols Research Corporation was awarded this contract, suggesting they met the performance requirements outlined in the solicitation. While specific details of their past performance evaluation are not included, defense agencies typically assess a contractor's track record on previous contracts, including on-time delivery, quality of work, cost control, and overall customer satisfaction. A positive past performance record is crucial for winning large, complex contracts like this one, especially in specialized areas like missile defense systems.

What is the significance of the 'BAT FLD CMBT ID SYS - NEAR TRM' in the context of Army operations?

The Battlefield Combat Identification System (BCIS) is crucial for modern warfare, aiming to reduce fratricide (accidental engagement of friendly forces) and enhance situational awareness. The 'NEAR TRM' designation suggests a focus on current or near-future operational requirements. Accurate and reliable identification systems are vital for commanders to make rapid decisions in complex, high-tempo combat environments. Engineering and technical services supporting such systems are therefore critical for maintaining the effectiveness and safety of Army operations.

Were there any performance risks identified during the contract period, and how were they managed?

The provided data does not contain specific information on performance risks identified during the contract's execution or the management strategies employed. However, given the contract's duration (1667 days) and the complexity of the systems involved, potential risks could include technological obsolescence, changes in military requirements, contractor performance issues, or budget fluctuations. Standard risk management practices within the DoD would involve regular reviews, mitigation plans, and potential contract modifications if necessary. The significant final award value might suggest that some risks materialized or required additional resources to manage.

How does the final contract value compare to the total spending on similar engineering services within the DoD over the same period?

Comparing this single contract's value ($125M) to the total DoD spending on similar engineering services requires access to broader historical spending data across the entire department and fiscal years. This contract represents a significant investment in a specific capability (BCIS). However, without a comprehensive dataset of all comparable contracts awarded by the DoD for engineering technical services during the 2001-2006 period, it is difficult to establish a precise benchmark. The DoD's overall budget is in the hundreds of billions annually, making this contract a notable but not necessarily disproportionately large expenditure within that context.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Computer Sciences Corporation (UEI: 009581091)

Address: 4090 SOUTH MEMORIAL PARKWAY, HUNTSVILLE, AL, 05

Business Categories: Category Business, Not Designated a Small Business

Parent Contract

Parent Award PIID: DAAH0100D0012

IDV Type: IDC

Timeline