DoD's $38.3M Engineering Services Contract Awarded to NTT DATA Services Raises Value and Competition Questions

Contract Overview

Contract Amount: $38,289,414 ($38.3M)

Contractor: NTT Data Services Federal Government, LLC

Awarding Agency: Department of Defense

Start Date: 2010-12-22

End Date: 2012-12-31

Contract Duration: 740 days

Daily Burn Rate: $51.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PROFESSIONAL SUPPORT SERVICES

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $38.3 million to NTT DATA SERVICES FEDERAL GOVERNMENT, LLC for work described as: PROFESSIONAL SUPPORT SERVICES Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. The 'cost plus fixed fee' pricing structure can incentivize higher spending. 3. Engineering services are critical for defense infrastructure, but the lack of competition warrants scrutiny. 4. The contract duration of 740 days suggests a significant, ongoing need for these services. 5. The specific value-for-money assessment is challenging without competitive benchmarks. 6. Risk indicators include the sole-source award and the cost-plus fee type.

Value Assessment

Rating: questionable

Benchmarking the value of this $38.3 million contract is difficult due to its sole-source nature. The 'cost plus fixed fee' (CPFF) contract type, while sometimes necessary for complex or undefined scopes, can lead to higher overall costs compared to fixed-price contracts if not managed rigorously. Without competitive bids, it's hard to ascertain if the pricing reflects fair market value for engineering services. The government paid approximately $51,742 per day for these services over the contract's life, a figure that requires deeper analysis against similar, competitively awarded contracts for comparable engineering support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'not competed' (sole-source) justification. This means that only one contractor, NTT DATA SERVICES FEDERAL GOVERNMENT, LLC, was solicited and awarded the contract. The absence of a competitive bidding process limits the government's ability to explore various solutions and pricing structures offered by multiple vendors. Consequently, the government may not have secured the most cost-effective option available in the market.

Taxpayer Impact: Taxpayers may have paid a premium for these engineering services due to the lack of competition. Without bids from other firms, there's no market pressure to drive down prices, potentially leading to less efficient use of federal funds.

Public Impact

The Department of the Navy benefits from specialized engineering expertise to support its operations and infrastructure. Services delivered likely include design, analysis, and technical support for naval systems or facilities. The geographic impact is primarily within the Department of the Navy's operational areas, likely domestic. Workforce implications include the direct employment of engineers and technical staff by NTT DATA.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus fee structure can incentivize increased spending.
Limited transparency into the selection process due to sole-source award.

Positive Signals

NTT DATA Services is a known entity in federal IT and professional services.
The contract addresses a specific need within the Department of the Navy.
The contract was awarded to a single, established provider.

Sector Analysis

The engineering services sector within the federal market is diverse, encompassing a wide range of specialized support for defense, infrastructure, and technology. This contract falls under the broader category of professional services, specifically engineering, which is a critical component of the Department of Defense's operational capabilities. Comparable spending in this sector can vary widely based on the specific engineering discipline and project complexity, but significant federal investment is consistently directed towards maintaining and advancing defense systems and infrastructure.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a sole-source award to a large prime contractor, it is unlikely that significant subcontracting opportunities were mandated for small businesses, although the prime contractor may voluntarily engage small business partners. The absence of set-aside provisions means that the direct economic benefit to the small business ecosystem from this specific contract is likely minimal.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award, making it difficult for the public to assess the procurement process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Professional Services Contracts
Naval Engineering Support Services
Cost-Plus Fixed Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.3 million to NTT DATA SERVICES FEDERAL GOVERNMENT, LLC. PROFESSIONAL SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is NTT DATA SERVICES FEDERAL GOVERNMENT, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $38.3 million.

What is the period of performance?

Start: 2010-12-22. End: 2012-12-31.

What is NTT DATA Services Federal Government, LLC's track record with the Department of Defense?

NTT DATA Services Federal Government, LLC has a significant history of contracting with the Department of Defense and other federal agencies. They are a large provider of IT and professional services. Their track record includes numerous awards across various defense components, often in areas like IT modernization, cloud migration, and mission support. While this specific contract was sole-sourced, the company's broader portfolio suggests substantial experience in delivering complex services to the federal government. A deeper dive into past performance reviews and contract close-outs for similar DoD engagements would provide a more granular understanding of their execution capabilities and client satisfaction.

How does the 'cost plus fixed fee' (CPFF) structure compare to other contract types in terms of value for money?

The 'cost plus fixed fee' (CPFF) contract type is generally considered less favorable for value for money compared to fixed-price contracts when the scope of work is well-defined. In a CPFF contract, the government reimburses the contractor for allowable costs plus a fixed fee representing profit. This structure can incentivize contractors to incur higher costs, as their profit margin (the fixed fee) remains constant regardless of the total cost. Fixed-price contracts, conversely, provide a strong incentive for contractors to control costs and improve efficiency to maximize their profit. While CPFF can be appropriate for research and development or services with high uncertainty, its use for engineering services, as in this case, warrants careful justification and robust oversight to ensure cost control and prevent potential overspending.

What are the primary risks associated with sole-source contract awards in the federal government?

Sole-source contract awards, like the one to NTT DATA SERVICES FEDERAL GOVERNMENT, LLC for engineering services, carry several inherent risks. The most significant risk is the lack of competition, which can lead to inflated prices as there is no market pressure to drive costs down. This can result in a suboptimal use of taxpayer funds. Another risk is reduced innovation, as potential solutions from other capable vendors are not explored. Furthermore, sole-source awards can create a perception of favoritism or a lack of transparency in the procurement process, potentially undermining public trust. Agencies must provide strong justifications for sole-source awards, typically citing unique capabilities or urgent needs, to mitigate these risks.

What is the typical market size for engineering services procured by the Department of Defense?

The Department of Defense (DoD) is one of the largest purchasers of engineering services globally. The market size is substantial, encompassing a vast array of needs from basic design and analysis to highly specialized systems engineering for advanced platforms. While precise figures fluctuate annually based on defense priorities and budget allocations, the DoD consistently spends billions of dollars on engineering and related professional services. This includes support for acquisition programs, infrastructure development, research and development, and sustainment activities across all branches of the military. Contracts can range from small, specialized tasks to massive, multi-year programs.

How does the duration of this contract (740 days) impact its overall risk profile?

A contract duration of 740 days (approximately two years) for engineering services suggests a significant, ongoing requirement rather than a short-term, ad-hoc need. Longer contract durations, especially when combined with a sole-source award and a cost-plus fee structure, can increase the overall risk profile. The extended period provides more opportunity for costs to escalate if not managed diligently. It also means that the government is committed to a single provider for an extended time, potentially missing out on innovations or cost savings that could arise from periodic re-competition. Robust contract management and performance monitoring are crucial for mitigating risks associated with longer-duration contracts.

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

Solicitation ID: N0002410R6278

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nippon Telegraph and Telephone Corporation

Address: 13880 DULLES CORNER LN STE 200, HERNDON, VA, 20171

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $63,695,292

Exercised Options: $45,974,127

Current Obligation: $38,289,414

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline