DoD's $36.5M Engineering Services Contract Awarded to Science Applications International Corporation

Contract Overview

Contract Amount: $36,503,391 ($36.5M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Defense

Start Date: 2018-03-15

End Date: 2020-09-14

Contract Duration: 914 days

Daily Burn Rate: $39.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SPAWAR 5.0 SYSTEMS ENGINEERING TECHNICAL AUTHORITY SUPPORT SERVICES

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92110

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $36.5 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: SPAWAR 5.0 SYSTEMS ENGINEERING TECHNICAL AUTHORITY SUPPORT SERVICES Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of 914 days indicates a medium-term engagement for engineering support. 3. The award amount of approximately $36.5 million falls within a moderate spending range for specialized engineering services. 4. The primary agency is the Department of the Navy, indicating a focus on naval engineering requirements. 5. The contract type is Cost Plus Fixed Fee (CPFF), which allows for cost reimbursement plus a fixed fee, potentially balancing contractor incentive with cost control. 6. The contractor, Science Applications International Corporation (SAIC), is a large, established defense contractor with a significant presence in the sector.

Value Assessment

Rating: good

The contract value of $36.5 million for engineering services over approximately two years appears reasonable when benchmarked against similar large-scale defense engineering support contracts. The Cost Plus Fixed Fee (CPFF) pricing structure, while not always the most cost-efficient, is common for complex services where final costs are difficult to predict. Further analysis would require comparing the specific deliverables and labor rates against industry benchmarks for engineering support services within the Department of Defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders suggests a moderate level of competition for this specific requirement. While two bidders are better than one, a higher number of bids typically leads to more robust price discovery and potentially lower costs for the government.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it aims to secure the best value by allowing multiple companies to compete, driving down prices through market forces.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving critical engineering and technical support services. Services delivered likely include systems engineering, technical analysis, and support for naval systems and platforms. The geographic impact is primarily centered in California, where the contractor's operations are located and where the services are likely performed. The contract supports a workforce of engineers and technical specialists, contributing to employment in the defense and engineering sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can sometimes lead to cost overruns if not closely managed, as the contractor is reimbursed for costs incurred.
The limited number of bidders (two) may indicate potential barriers to entry or a niche market, which could reduce competitive pressure.
The specific nature of 'Systems Engineering Technical Authority Support Services' can be complex, requiring rigorous oversight to ensure alignment with technical requirements and objectives.

Positive Signals

Awarded through full and open competition, maximizing the opportunity for diverse companies to bid.
The contractor, SAIC, is a well-established entity with a proven track record in defense contracting, suggesting reliability and expertise.
The contract duration allows for continuity of essential engineering support services for the Department of the Navy.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader defense industrial base. The market for defense engineering services is substantial, driven by the continuous need for modernization, maintenance, and development of military systems. Spending in this sector is often characterized by long-term contracts, specialized expertise, and significant government oversight. Comparable spending benchmarks would involve analyzing other large-scale engineering support contracts awarded by the Department of Defense and its various branches.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). As a large contract awarded to a major defense contractor, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed in the provided data and would require further investigation into the contractor's subcontracting plan.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program management office within the Department of the Navy. Accountability measures would be embedded in the contract's performance work statement and reporting requirements. Transparency is generally facilitated through contract award databases, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Engineering Support Services
Systems Engineering and Technical Assistance (SETA) Contracts
Defense Contract Management Agency (DCMA) Oversight

Risk Flags

Potential for cost overruns due to CPFF structure.
Limited competition may impact price discovery.
Complexity of 'Systems Engineering Technical Authority' requires strong oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.5 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. SPAWAR 5.0 SYSTEMS ENGINEERING TECHNICAL AUTHORITY SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $36.5 million.

What is the period of performance?

Start: 2018-03-15. End: 2020-09-14.

What is Science Applications International Corporation's (SAIC) track record with similar Department of the Navy contracts?

Science Applications International Corporation (SAIC) has a substantial and long-standing track record of performing complex engineering, IT, and technical services for the Department of the Navy and other Department of Defense agencies. They are a prime contractor on numerous large-scale programs, often involving systems engineering, integration, and lifecycle support for naval platforms and systems. Their history includes significant work on shipbuilding, C4ISR systems, and cybersecurity for naval applications. While specific performance metrics for individual contracts are not always public, SAIC's continued success in winning competitive bids and securing follow-on work indicates a generally positive performance history and strong capabilities in meeting the Navy's demanding requirements. Their extensive experience positions them as a reliable, albeit expensive, provider for critical defense needs.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar engineering services?

The Cost Plus Fixed Fee (CPFF) contract type is common for research and development or complex services where the scope of work is not precisely defined at the outset, making it difficult to establish a firm fixed price. In a CPFF contract, the government reimburses the contractor for all allowable costs incurred and pays a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government if requirements change but carries a higher risk of cost overruns, as the contractor is incentivized to incur costs to cover their fixed fee. Other types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance incentives. For well-defined engineering services, FFP contracts are often preferred for cost control, but CPFF is utilized when uncertainty necessitates flexibility and contractor expertise.

What are the potential risks associated with a contract having only two bidders?

A contract with only two bidders, as seen in this case, presents several potential risks. Firstly, it suggests a limited competitive landscape, which could mean that the government did not receive the most advantageous pricing possible. With fewer bidders, the pressure to offer the lowest price is reduced. Secondly, it might indicate that the barriers to entry for this type of specialized engineering service are high, potentially limiting innovation and the introduction of new solutions. Thirdly, if one of the bidders withdraws or is disqualified, the government is left with a sole-source situation, further diminishing competition. This scenario necessitates careful negotiation and robust oversight to ensure value for money is still achieved, and that the government is not disadvantaged by the lack of broader market participation.

How effective are oversight mechanisms like the Contracting Officer's Representative (COR) in managing CPFF contracts for engineering services?

Oversight mechanisms, particularly the role of the Contracting Officer's Representative (COR), are crucial for the effective management of Cost Plus Fixed Fee (CPFF) contracts, especially for complex engineering services. The COR is responsible for monitoring the contractor's technical progress, ensuring compliance with the contract's scope of work, and verifying the allowability and allocability of costs. For CPFF contracts, the COR's vigilance is paramount in preventing cost creep and ensuring that the fixed fee remains justified by the work performed. Effective CORs conduct regular reviews, maintain open communication with the contractor, and meticulously document all aspects of performance and cost. Without strong COR oversight, CPFF contracts are susceptible to inefficiencies and potential cost overruns, as the contractor may lack sufficient incentive to control expenses beyond what is necessary to earn their fee.

What is the historical spending trend for engineering services by the Department of the Navy in California?

Historical spending trends for engineering services by the Department of the Navy (DoN) in California are significant, given the state's extensive naval presence, including major shipyards, bases, and research facilities. California consistently ranks among the top states for federal contract awards, with a substantial portion allocated to defense-related services, including engineering. The DoN frequently procures a wide array of engineering support, from naval architecture and marine engineering to systems integration and cybersecurity for naval platforms. While specific aggregate data for 'engineering services' in California for the DoN requires detailed analysis of federal procurement databases (like FPDS-NG or USASpending.gov), it is reasonable to infer that spending in this category is consistently high, reflecting the ongoing modernization and maintenance needs of the Pacific Fleet and associated shore commands. This contract's award to SAIC in California aligns with this broader trend.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0003917R3054

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 12010 SUNSET HILLS RD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $73,449,906

Exercised Options: $43,216,982

Current Obligation: $36,503,391

Actual Outlays: $104,076

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $79,878,644

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4119

IDV Type: IDC

Timeline