DoD's $14.2M contract for engineering services awarded to Chugach Industries Inc. shows potential value concerns

Contract Overview

Contract Amount: $13,053,220 ($13.1M)

Contractor: Chugach Industries, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-02-02

End Date: 2009-01-31

Contract Duration: 1,094 days

Daily Burn Rate: $11.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200608!600369!9700!HC1047!DISA, NATIONAL CAPITAL REGION !HC104706C4007 !A!N! !N! ! !20060202!20070131!142120745!142120745!071844021!N!CHUGACH INDUSTRIES INC !560 E 34TH AVE !ANCHORAGE !AK!99503!48376!059!51!MCLEAN !FAIRFAX !VIRGINIA !+000003544011!N!N!000000000354!AD26!RDTE/SERVICES-MANAGEMENT SUPPORT !S1 !SERVICES !000 !NOT DISCERNABLE !541330!E! !3! ! ! ! ! !99990909!B! ! !N!C!B!N!U!1!001!N!5A!A!Y!Z! ! !N!A!N!N!E! ! ! !D!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22204

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $13.1 million to CHUGACH INDUSTRIES, INC. for work described as: 200608!600369!9700!HC1047!DISA, NATIONAL CAPITAL REGION !HC104706C4007 !A!N! !N! ! !20060202!20070131!142120745!142120745!071844021!N!CHUGACH INDUSTRIES INC !560 E 34TH AVE !ANCHORAGE !AK!99503!48376!059!51!MCLEAN !FAIR… Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize overspending. 2. Limited competition raises questions about price discovery and taxpayer value. 3. The contractor's track record and performance history require closer examination. 4. The contract duration of nearly three years suggests a significant operational reliance. 5. The specific services provided are broadly categorized, lacking detailed performance metrics. 6. Geographic concentration of the contractor in Alaska may impact local economic benefits.

Value Assessment

Rating: questionable

The awarded amount of $14.2 million for engineering services over approximately three years warrants scrutiny. Without detailed performance data or comparison to similar contracts, it is difficult to definitively assess value for money. The cost-plus-fixed-fee pricing structure, while common, can sometimes lead to higher costs if not managed tightly, as the contractor is reimbursed for allowable costs plus a fixed fee. Benchmarking this against other engineering service contracts for similar scope and duration within the Department of Defense would be crucial for a comprehensive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition scenario. The data does not specify the reasons for this determination, such as a lack of qualified bidders or an urgent need. Sole-source awards typically result in less competitive pricing and can limit opportunities for other capable businesses to secure government contracts. The absence of a competitive bidding process means that price discovery is not driven by market forces, potentially leading to higher costs for the government.

Taxpayer Impact: When a contract is not competed, taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process. This can result in the government paying a premium for goods or services.

Public Impact

The primary beneficiary is Chugach Industries Inc., a contractor based in Alaska. The contract is intended to deliver engineering services, likely supporting the Defense Information Systems Agency (DISA) in the National Capital Region. The geographic impact is primarily centered around the contractor's base in Anchorage, Alaska, though services are likely performed in the National Capital Region. Workforce implications could include employment opportunities for engineers and support staff within Chugach Industries Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Cost-plus-fixed-fee structure can incentivize higher spending.
Limited transparency on specific performance metrics and deliverables.
Contract duration of nearly three years without clear performance benchmarks.

Positive Signals

Contract awarded to a Native American-owned small business (Chugach Industries Inc.).
Potential for job creation within the contractor's organization.
Services provided are essential for defense information systems support.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting IT and defense-related operations. The North American Industry Classification System (NAICS) code 541330 (Engineering Services) is a broad category encompassing a wide range of specialized services. The market for engineering services supporting the federal government is substantial, with significant spending allocated annually across various agencies. This particular contract's value of $14.2 million is moderate within the context of large federal IT and defense contracts, but its sole-source nature warrants attention regarding market dynamics and potential for competition.

Small Business Impact

While the data indicates the contractor is Chugach Industries Inc., it does not explicitly state if this contract was a small business set-aside. However, Chugach Industries is known to be a Native American-owned small business. If this contract was awarded under a small business program, it would represent a direct benefit to the small business ecosystem. If not, the implications for small business subcontracting are not detailed in the provided data, but larger prime contracts often include subcontracting goals to ensure small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the contracting agency, the Defense Information Systems Agency (DISA), and potentially the Department of Defense's Inspector General. The effectiveness of oversight depends on the clarity of contract terms, performance metrics, and regular reporting requirements. Transparency is enhanced through contract databases like FPDS, but detailed performance reviews and audit findings are not always publicly accessible. The Inspector General can investigate allegations of fraud, waste, and abuse.

Related Government Programs

Defense Information Systems Agency (DISA) IT Support Contracts
Engineering Services Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source IT Contracts
Native American-Owned Small Business Contracts

Risk Flags

Sole-source award may indicate limited competition.
Cost-plus-fixed-fee structure can lead to cost overruns.
Broad service description lacks specific performance metrics.
Contract duration is substantial, requiring ongoing oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.1 million to CHUGACH INDUSTRIES, INC.. 200608!600369!9700!HC1047!DISA, NATIONAL CAPITAL REGION !HC104706C4007 !A!N! !N! ! !20060202!20070131!142120745!142120745!071844021!N!CHUGACH INDUSTRIES INC !560 E 34TH AVE !ANCHORAGE !AK!99503!48376!059!51!MCLEAN !FAIRFAX !VIRGINIA !+000003544011!N!N!000000000354!AD26!RDTE/SERVICES-MANAGEMENT SUPPORT !S1 !SERVICES !000 !NOT DISCERNABLE !541330!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is CHUGACH INDUSTRIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $13.1 million.

What is the period of performance?

Start: 2006-02-02. End: 2009-01-31.

What is the specific nature of the engineering services provided under this contract?

The contract specifies 'RDTE/SERVICES-MANAGEMENT SUPPORT' under NAICS code 541330 (Engineering Services). This broad description suggests services related to research, development, testing, and evaluation, as well as management support for engineering functions. Without more granular detail, it's difficult to pinpoint the exact tasks, but it likely involves technical expertise, project management, and potentially advisory services related to DISA's information technology infrastructure and operations within the National Capital Region. The 'SERVICES' designation further indicates a focus on non-product-based support.

Can the value of this contract be benchmarked against similar services?

Benchmarking this $14.2 million contract is challenging without more specific details on the services rendered and the contract's performance period. The contract duration is approximately 1094 days (from Feb 2006 to Jan 2009). However, the 'NOT AVAILABLE FOR COMPETITION' status limits direct comparisons to competitively awarded contracts, which typically offer better price discovery. To benchmark effectively, one would need to identify comparable sole-source or limited-competition engineering support contracts awarded by DISA or other DoD components for similar scope and duration, focusing on the cost-plus-fixed-fee element and the fixed fee percentage relative to total costs.

What are the potential risks associated with a sole-source award for engineering services?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to higher prices than might be achieved through open competition. This reduces the government's ability to secure the best possible value for taxpayer dollars. Additionally, sole-source awards can limit opportunities for other qualified businesses, potentially stifling innovation and market growth. There's also a risk that the government may not be aware of more cost-effective or technologically superior solutions available from other vendors. Transparency and justification for the sole-source determination are critical to mitigating these risks.

What does the contractor's location in Alaska imply for this National Capital Region contract?

The contractor, Chugach Industries Inc., is based in Anchorage, Alaska, while the contract is for services supporting the Defense Information Systems Agency (DISA) in the National Capital Region. This geographic separation implies that the services are likely performed either remotely or through travel and on-site support by personnel commuting from Alaska or hired locally in the NCR. It raises questions about logistical costs, travel expenses (if applicable), and the potential for utilizing local NCR talent versus relying on a workforce primarily based in Alaska. The contract's structure would need to account for these operational considerations.

How does the Cost Plus Fixed Fee (CPFF) contract type influence cost control?

A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost is variable. This structure can incentivize contractors to control costs to maximize their profit margin, as the fee remains constant regardless of the total cost. However, if cost overruns occur, the government bears the burden of the increased costs. Effective oversight is crucial to ensure that costs are reasonable and allowable, and that the fixed fee represents fair compensation for the work performed.

What is the historical spending pattern for engineering services by DISA?

Analyzing historical spending patterns for engineering services by DISA would require access to comprehensive contract data over multiple fiscal years. This specific contract, awarded in 2006, represents a single data point. To understand broader trends, one would need to examine DISA's total obligations for NAICS code 541330 and similar service categories over time, looking at the prevalence of competitive versus sole-source awards, average contract values, and the distribution of spending among prime contractors. Such an analysis could reveal shifts in procurement strategies, increasing reliance on specific service types, or changes in competition levels.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › Space R&D Services

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Chugach Alaska Corporation (UEI: 071844021)

Address: 560 E 34TH AVE, ANCHORAGE, AK, 00

Business Categories: 8(a) Program Participant, Category Business, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Contract Characteristics

Cost or Pricing Data: NO

Timeline