DOE's $553M Engineering Services Contract Awarded to Southwest Research Institute
Contract Overview
Contract Amount: $55,300,082 ($55.3M)
Contractor: Southwest Research Institute
Awarding Agency: Department of Energy
Start Date: 2020-03-15
End Date: 2025-05-10
Contract Duration: 1,882 days
Daily Burn Rate: $29.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: TEST-ARTICLE ASSEMBLY, OPERATIONS, AND SUSTAINMENT
Place of Performance
Location: SAN ANTONIO, BEXAR County, TEXAS, 78238
State: Texas Government Spending
Plain-Language Summary
Department of Energy obligated $55.3 million to SOUTHWEST RESEARCH INSTITUTE for work described as: TEST-ARTICLE ASSEMBLY, OPERATIONS, AND SUSTAINMENT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award raises questions about competition and potential for better pricing. 3. Long contract duration of 1882 days suggests a significant, ongoing need for services. 4. The contract is for operations and sustainment, critical for ongoing federal functions. 5. Texas is the primary location for contract performance, impacting regional economic activity. 6. The North American Industry Classification System (NAICS) code 541330 points to engineering services.
Value Assessment
Rating: questionable
The contract's value of $553 million over its duration is substantial. Without comparable sole-source contracts for similar engineering services, it is difficult to benchmark the value for money. The cost-plus-fixed-fee structure inherently carries risks of cost escalation, as the contractor is reimbursed for all allowable costs plus a fixed fee. This pricing arrangement warrants close scrutiny to ensure costs remain reasonable and within expectations.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits the opportunity for price discovery and may result in higher costs for the government compared to a competitively bid contract. The rationale for the sole-source award is not provided, but it suggests a specific capability or relationship that precluded broader solicitation.
Taxpayer Impact: Sole-source awards mean taxpayers may not be receiving the best possible price for these engineering services, as competition is a key driver for cost savings.
Public Impact
The Department of Energy benefits from sustained engineering and operational support. Services provided are critical for the ongoing operations and maintenance of federal facilities and programs. The primary geographic impact is in Texas, where the contract is performed. The contract supports specialized engineering roles, potentially impacting the workforce in the engineering sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potential cost savings for taxpayers.
- Cost-plus-fixed-fee structure can incentivize higher spending if not closely monitored.
- Long contract duration increases exposure to potential cost increases over time.
- Lack of transparency regarding the sole-source justification requires further investigation.
Positive Signals
- Southwest Research Institute is a reputable organization with a history of government contracting.
- The contract addresses critical operational and sustainment needs for the Department of Energy.
- The fixed fee component provides some level of cost predictability for the contractor's profit.
Sector Analysis
The engineering services sector is a vital component of the federal procurement landscape, supporting a wide range of government functions from research and development to infrastructure maintenance. This contract, valued at $553 million, represents a significant investment within this sector. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the engineering services, but large-scale, long-term contracts like this are common for critical government operations. The NAICS code 541330, Engineering Services, encompasses a broad range of activities, and this contract likely falls into a specialized sub-segment.
Small Business Impact
There is no indication that this contract includes small business set-asides or subcontracting requirements. As a sole-source award to a large organization, it is unlikely to directly benefit small businesses through prime contracting opportunities. The impact on the small business ecosystem would be indirect, potentially through any subcontracting Southwest Research Institute may engage in, but this is not specified.
Oversight & Accountability
Oversight mechanisms for this contract would typically involve the Department of Energy's contracting officers and program managers. Given the sole-source nature and cost-plus-fixed-fee structure, rigorous oversight of incurred costs and performance against the fixed fee is crucial. Transparency is limited by the lack of a competitive bidding process. The Inspector General's office for the Department of Energy would have jurisdiction to investigate any potential fraud, waste, or abuse.
Related Government Programs
- Department of Energy Operations and Maintenance Contracts
- Engineering Services Contracts
- Cost-Plus-Fixed-Fee Contracts
- Sole-Source Federal Contracts
Risk Flags
- Sole-source award may indicate lack of competition, potentially leading to higher costs.
- Cost-plus-fixed-fee contract type carries inherent risk of cost overruns.
- Long contract duration increases exposure to potential cost escalations and scope creep.
Tags
engineering-services, department-of-energy, cost-plus-fixed-fee, sole-source, operations-and-sustainment, large-contract, texas, research-and-development, nonprofit-contractor
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $55.3 million to SOUTHWEST RESEARCH INSTITUTE. TEST-ARTICLE ASSEMBLY, OPERATIONS, AND SUSTAINMENT
Who is the contractor on this award?
The obligated recipient is SOUTHWEST RESEARCH INSTITUTE.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $55.3 million.
What is the period of performance?
Start: 2020-03-15. End: 2025-05-10.
What is the specific justification for awarding this $553 million contract on a sole-source basis to Southwest Research Institute?
The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the government's needs. This could be due to unique capabilities, proprietary technology, or urgent requirements where competition is not feasible. Without this information, it's impossible to fully assess the necessity of bypassing the competitive bidding process. Further investigation into the contract file or agency justifications would be required to understand the rationale behind this decision and whether it truly served the government's best interest in terms of cost and performance.
How does the cost-plus-fixed-fee (CPFF) structure of this contract compare to other engineering services contracts awarded by the Department of Energy?
The Cost-Plus-Fixed-Fee (CPFF) structure is a common contract type used when the scope of work is not precisely defined or when there is significant uncertainty in the cost of performance. For engineering services, especially those involving research, development, or complex operations and sustainment, CPFF can be appropriate. However, it shifts much of the cost risk to the government. Comparing this specific CPFF contract to others would require analyzing the fixed fee percentage, the total estimated cost, and the performance metrics across similar DOE contracts. A higher-than-average fixed fee or significant cost overruns on similar CPFF contracts would be red flags. Without detailed comparative data on fee percentages and cost performance for other DOE engineering contracts, it's difficult to definitively state if this contract's structure is standard or presents unusual risk.
What are the key performance indicators (KPIs) and deliverables expected under this contract, and how is performance being measured?
The provided data does not specify the key performance indicators (KPIs) or detailed deliverables for this contract. For an "Operations and Sustainment" contract of this magnitude and duration, KPIs would likely include metrics related to system uptime, maintenance response times, safety compliance, cost efficiency, and successful execution of planned sustainment activities. Deliverables would typically involve regular performance reports, maintenance logs, incident reports, and potentially technical documentation updates. The effectiveness of performance measurement is critical for a CPFF contract to ensure the contractor is meeting objectives and that the fixed fee is earned appropriately. The contracting officer's representative (COR) and program managers are responsible for monitoring these aspects.
What is the historical spending pattern for similar engineering services at the Department of Energy, and how does this $553 million contract fit within that trend?
Historical spending on engineering services by the Department of Energy (DOE) can vary significantly based on agency priorities, major projects, and infrastructure needs. Without access to specific historical spending data for comparable engineering services contracts within the DOE, it is challenging to place this $553 million contract within a precise trend. However, large-scale, multi-year contracts are typical for sustainment and operational support of complex federal facilities and programs. If the DOE has consistently awarded contracts in the hundreds of millions for similar services, this contract might be in line with historical patterns. Conversely, if this represents a significant increase or decrease in spending for such services, it would warrant further analysis into the underlying reasons, such as new initiatives or changes in operational scope.
What is the track record of Southwest Research Institute in managing large, sole-source federal contracts, particularly those with a cost-plus-fixed-fee structure?
Southwest Research Institute (SwRI) is a well-established independent, nonprofit, applied research and development organization. They have a significant history of contracting with various U.S. government agencies, including the Department of Defense and the Department of Energy. Their track record generally includes successful execution of complex technical projects. However, specific details regarding their performance on large, sole-source, cost-plus-fixed-fee contracts are not readily available in the provided data. A thorough assessment would require reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) and any publicly available reports on their contract management, particularly concerning cost control and adherence to scope within CPFF arrangements.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 6220 CULEBRA RD, SAN ANTONIO, TX, 78238
Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $55,300,082
Exercised Options: $55,300,082
Current Obligation: $55,300,082
Actual Outlays: $44,516,454
Subaward Activity
Number of Subawards: 39
Total Subaward Amount: $7,553,669
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2020-03-15
Current End Date: 2025-05-10
Potential End Date: 2025-05-10 00:00:00
Last Modified: 2025-02-18
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