Department of Energy awards $28M task order for engineering services in Azerbaijan, with 88.6% of contract value potentially going to small businesses
Contract Overview
Contract Amount: $27,990,937 ($28.0M)
Contractor: Tech2 Solutions
Awarding Agency: Department of Energy
Start Date: 2017-08-07
End Date: 2026-03-31
Contract Duration: 3,158 days
Daily Burn Rate: $8.9K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: Construction
Official Description: IGF::OT::IGF TASK ORDER FOR DESIGN, INTEGRATION, CONSTRUCTION, COMMUNICATION AND ENGINEERING 2 (DICCE2) SERVICES IN CAUCASUS REGION GROUP 1, AZERBAIJAN PROGRAM GROUP 15.
Plain-Language Summary
Department of Energy obligated $28.0 million to TECH2 SOLUTIONS for work described as: IGF::OT::IGF TASK ORDER FOR DESIGN, INTEGRATION, CONSTRUCTION, COMMUNICATION AND ENGINEERING 2 (DICCE2) SERVICES IN CAUCASUS REGION GROUP 1, AZERBAIJAN PROGRAM GROUP 15. Key points: 1. Task order awarded under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, suggesting potential for follow-on work and established relationship. 2. Competition level indicates a robust bidding process, likely leading to competitive pricing. 3. Contract type (Cost Plus Fixed Fee) can incentivize cost control while allowing for flexibility in scope. 4. Significant portion of contract value allocated to small business subcontracting, indicating a focus on supporting smaller enterprises. 5. Long performance period suggests a complex, multi-year project requiring sustained effort and expertise. 6. Geographic focus on the Caucasus region highlights specialized international operational requirements.
Value Assessment
Rating: good
The total award of $27.99 million for the DICCE2 services in Azerbaijan appears reasonable given the long performance period extending to March 2026. While direct comparisons are difficult without knowing the specific scope of 'design, integration, construction, communication and engineering', the contract type (Cost Plus Fixed Fee) allows for adjustments based on actual costs incurred, with a fixed fee providing a predictable profit margin for the contractor. The high percentage of subcontracting to small businesses (88.6%) suggests that the prime contractor is leveraging specialized capabilities from smaller firms, which can be a cost-effective approach.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that the initial solicitation was broadly advertised, but specific sources were later excluded, potentially due to unique qualifications or prior performance on related contracts. The presence of two bidders suggests a competitive environment, though the exact number of proposals received and the reasons for exclusion of other sources would provide further clarity on the intensity of competition.
Taxpayer Impact: A full and open competition, even with exclusions, generally benefits taxpayers by encouraging multiple firms to bid, driving down prices and improving the quality of services offered.
Public Impact
The primary beneficiaries are the Department of Energy and potentially other U.S. government entities operating in the Caucasus region, requiring specialized engineering and construction support. Services delivered include design, integration, construction, communication, and engineering, crucial for maintaining and developing infrastructure. The geographic impact is concentrated in Azerbaijan, supporting U.S. interests and operations within that specific region. Workforce implications include employment opportunities for both the prime contractor and numerous small businesses involved in subcontracting, potentially spanning various technical and skilled labor roles.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns inherent in Cost Plus Fixed Fee contracts if not rigorously managed.
- Geopolitical risks associated with operating in the Caucasus region could impact project timelines and costs.
- Dependence on a limited number of bidders (two) could reduce competitive pressure if the exclusion criteria were overly restrictive.
Positive Signals
- High subcontracting goal (88.6%) for small businesses demonstrates a commitment to supporting the small business industrial base.
- Long-term contract duration allows for continuity of services and potential for economies of scale.
- Awarded under an IDIQ contract, suggesting a pre-vetted contractor capable of meeting specific needs.
Sector Analysis
This contract falls within the Heavy and Civil Engineering Construction sector, specifically focusing on specialized international projects. The Department of Energy often engages in complex engineering and construction for national security and energy infrastructure initiatives, both domestically and abroad. Comparable spending benchmarks for international engineering and construction contracts can vary widely based on location, scope, and security requirements. The market for such services is often characterized by a few large prime contractors capable of managing complex international operations, who then subcontract significant portions to specialized firms, including small businesses.
Small Business Impact
The contract includes a significant subcontracting goal of 88.6% for small businesses, indicating a strong emphasis on supporting the small business ecosystem. This high percentage suggests that the prime contractor, Tech2 Solutions, will rely heavily on the expertise and capacity of various small businesses to fulfill the contract's requirements. This approach can foster growth and provide valuable experience for small businesses in complex international projects. It also implies that the success of the contract is partially dependent on the availability and performance of qualified small business subcontractors.
Oversight & Accountability
Oversight for this task order would likely fall under the Department of Energy's contracting and program management offices. Given the international nature and potential security implications, additional oversight from relevant intelligence or defense agencies might also be involved. Accountability measures would be tied to the Cost Plus Fixed Fee structure, requiring detailed cost reporting and performance metrics. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be sensitive.
Related Government Programs
- Department of Defense Engineering and Construction Contracts
- Department of State Overseas Building Operations
- Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts
- Cost Plus Fixed Fee Contracts
Risk Flags
- Potential for cost overruns due to CPFF structure
- Geopolitical risks in the Caucasus region
- High reliance on small business subcontractors
- Complexity of managing multiple international subcontractors
Tags
construction, engineering-services, department-of-energy, azerbaijan, caucasus-region, cost-plus-fixed-fee, full-and-open-competition, task-order, international-contract, small-business-subcontracting, heavy-civil-engineering
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $28.0 million to TECH2 SOLUTIONS. IGF::OT::IGF TASK ORDER FOR DESIGN, INTEGRATION, CONSTRUCTION, COMMUNICATION AND ENGINEERING 2 (DICCE2) SERVICES IN CAUCASUS REGION GROUP 1, AZERBAIJAN PROGRAM GROUP 15.
Who is the contractor on this award?
The obligated recipient is TECH2 SOLUTIONS.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $28.0 million.
What is the period of performance?
Start: 2017-08-07. End: 2026-03-31.
What is the specific nature of the 'design, integration, construction, communication and engineering' services required in the Caucasus region?
The provided data does not detail the specific nature of the services beyond the broad categories listed. However, given the Department of Energy's mission, these services likely pertain to infrastructure development, maintenance, or security related to energy facilities, research installations, or communication networks in Azerbaijan. The 'integration' aspect suggests combining different systems or components, while 'communication' could refer to establishing or upgrading telecommunications infrastructure. The 'engineering' and 'construction' components point towards the design and physical building or modification of facilities. Further details would typically be found in the Statement of Work (SOW) associated with the task order.
How does the 'Cost Plus Fixed Fee' contract type typically function, and what are its implications for cost control?
A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for all allowable costs incurred during performance plus a predetermined fixed fee, which represents the contractor's profit. This structure is often used when the scope of work is not precisely defined or is expected to change. For cost control, the 'fixed fee' provides an incentive for the contractor to manage costs efficiently, as their profit is capped. However, the government bears the risk of cost overruns if actual costs exceed estimates significantly. Robust oversight, detailed cost tracking, and clear definition of allowable costs are crucial for effective management of CPFF contracts to prevent excessive spending.
What are the potential risks associated with performing construction and engineering services in the Caucasus region?
Performing services in the Caucasus region can entail several risks. Geopolitical instability, varying regulatory environments, logistical challenges in remote areas, and potential security threats are significant concerns. Cultural differences and language barriers can also complicate project management and workforce coordination. Furthermore, the availability and cost of local labor and materials can fluctuate. The Department of Energy likely mitigates these risks through thorough pre-award assessments, security protocols, contingency planning, and potentially by partnering with local entities or experienced international firms.
What does the 88.6% small business subcontracting goal signify for the overall contract performance and the small business sector?
The 88.6% small business subcontracting goal is exceptionally high and signifies a strong commitment by the prime contractor, Tech2 Solutions, to leverage the small business industrial base. This goal implies that the majority of the contract's value will flow down to small businesses, providing them with significant opportunities for revenue and experience, particularly in complex international projects. For the prime contractor, it means a reliance on the capabilities and capacity of numerous small firms. For the small business sector, it represents a substantial infusion of work and potential for growth. However, it also places a burden on the prime contractor to effectively manage and integrate the work of many subcontractors, and on the small businesses to meet demanding performance standards.
How does the 'Full and Open Competition After Exclusion of Sources' process differ from standard full and open competition?
Standard 'Full and Open Competition' requires that all responsible sources be permitted to submit a bid or proposal, and the contract is awarded to the responsible source submitting the lowest price (or other best value criteria). 'Full and Open Competition After Exclusion of Sources' implies that while the initial solicitation was open, certain sources were subsequently excluded from the competition. This exclusion typically occurs when a specific requirement can only be met by a limited number of sources, or when a previous contract or unique capability necessitates using a particular vendor. The justification for exclusion must be documented and approved, ensuring that the exclusion is not arbitrary and serves the government's best interest. This process can sometimes lead to less competition than a truly open solicitation.
What is the historical spending pattern for similar engineering and construction services by the Department of Energy, particularly in international locations?
The provided data does not include historical spending patterns for the Department of Energy (DOE) on similar international engineering and construction services. However, the DOE is known to engage in large-scale, complex projects globally, often related to nuclear non-proliferation, energy infrastructure development, and scientific research facilities. Historical spending on such projects can be substantial, often in the tens or hundreds of millions of dollars, depending on the scope and duration. The use of IDIQ contracts, like the one under which this task order was issued, is common for the DOE to streamline procurement for recurring or anticipated needs across various locations. Analyzing past awards for similar services, especially those managed by the DOE's international programs or specific field offices, would provide a better understanding of spending trends and cost benchmarks.
Industry Classification
NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction
Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 3200 GEORGE WASHINGTON WAY STE D, RICHLAND, WA, 99354
Business Categories: Category Business, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $33,269,632
Exercised Options: $33,269,632
Current Obligation: $27,990,937
Actual Outlays: $20,997,361
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: DENA0003366
IDV Type: IDC
Timeline
Start Date: 2017-08-07
Current End Date: 2026-03-31
Potential End Date: 2026-03-31 00:00:00
Last Modified: 2026-02-19
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