DoD's $96.8M Engineering Services Contract with The MIL Corporation: A Deep Dive into Value and Competition

Contract Overview

Contract Amount: $96,771,594 ($96.8M)

Contractor: THE MIL Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-07

End Date: 2024-04-09

Contract Duration: 1,646 days

Daily Burn Rate: $58.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SERVICES/LABOR (RDTE) BASE YEAR

Place of Performance

Location: PATUXENT RIVER, SAINT MARYS County, MARYLAND, 20670

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $96.8 million to THE MIL CORPORATION for work described as: SERVICES/LABOR (RDTE) BASE YEAR Key points: 1. The contract's value appears reasonable given the duration and scope of engineering services required. 2. Full and open competition suggests a healthy market for these specialized services. 3. The fixed-fee structure provides some cost control, but the cost-plus element introduces potential for overruns. 4. Performance context is limited without specific task order details, but the duration indicates ongoing support. 5. This contract falls within the broad engineering services sector, supporting defense readiness. 6. The relatively high number of bids (58792) is unusual and likely represents a data anomaly or a very broad solicitation. 7. The contract's duration of over 4 years suggests a significant, long-term need for these services.

Value Assessment

Rating: good

Benchmarking the value of this contract is challenging without specific details on the engineering tasks performed. However, the total value over its multi-year duration suggests a moderate annual spend. The cost-plus-fixed-fee (CPFF) pricing structure is common for complex R&D and engineering services where scope can evolve. While the fixed fee provides a baseline profit, the cost-plus element necessitates careful oversight to manage expenditures effectively. Compared to similar large-scale engineering support contracts for the Department of Defense, the pricing appears within a typical range, assuming the complexity and criticality of the services align with industry standards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the solicitation was broadly advertised, allowing all responsible sources to submit offers. The reported number of bids (58792) is exceptionally high and may represent a data entry error or a very broad category of interested parties rather than distinct, competitive proposals for this specific delivery order. A high number of bidders generally suggests robust competition, which can drive down prices and encourage innovation. However, the sheer volume here warrants further investigation to understand the true competitive landscape for this particular award.

Taxpayer Impact: The full and open competition process is generally favorable for taxpayers, as it aims to secure the best value through market forces. A competitive environment helps ensure that the government is not overpaying for services and that contractors are incentivized to offer efficient and cost-effective solutions.

Public Impact

The Department of the Navy benefits from specialized engineering expertise to support its missions. Services delivered likely include design, analysis, testing, and technical support for naval systems and platforms. The geographic impact is primarily within the United States, supporting naval operations and research facilities. The contract supports a workforce of engineers, technicians, and support staff, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the cost-plus component of the contract.
The exceptionally high bid count (58792) raises questions about the accuracy of the competition data and the true level of competition.
Lack of specific performance metrics makes it difficult to assess the contractor's effectiveness and value for money.
The duration of the contract (over 4 years) could lead to vendor lock-in if not managed carefully.

Positive Signals

Awarded through full and open competition, suggesting a competitive marketplace.
The fixed-fee component provides some level of cost certainty for the government.
The contract supports critical engineering services for the Department of Defense.
The contractor, The MIL Corporation, has a track record of performing government contracts.

Sector Analysis

The engineering services sector is a critical component of the defense industrial base, providing essential expertise for the design, development, and sustainment of complex military systems. This contract, valued at approximately $96.8 million over its period of performance, falls within the broader professional, scientific, and technical services market. The North American Industry Classification System (NAICS) code 541330 (Engineering Services) encompasses a wide range of activities, from civil and mechanical engineering to specialized defense-related technical consulting. Spending in this sector is substantial, driven by ongoing modernization efforts, research and development, and operational support requirements across various government agencies, particularly the Department of Defense.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, as indicated by 'sb': false. The primary awardee is The MIL Corporation, which is a mid-sized business. While there is no direct set-aside, the contract's structure and the nature of engineering services may involve subcontracting opportunities. Larger prime contractors often engage small businesses for specialized tasks or to meet broader socioeconomic goals. However, without explicit subcontracting plans or data, the direct impact on the small business ecosystem remains unclear. Further analysis would be needed to determine if subcontracting goals were established or met.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. The cost-plus-fixed-fee (CPFF) nature of the contract necessitates robust financial oversight to monitor expenditures against the cost ceiling and ensure that the fixed fee is earned appropriately. Transparency is typically managed through regular reporting requirements from the contractor, including progress reports, financial statements, and performance metrics. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse, with the DoD IG likely having oversight responsibilities.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Engineering Services
Research, Development, Test, and Evaluation (RDTE) Contracts
Professional, Scientific, and Technical Services
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Unusual bid count data requires verification.
Potential for cost escalation in CPFF contracts.
Lack of specific performance metrics hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $96.8 million to THE MIL CORPORATION. SERVICES/LABOR (RDTE) BASE YEAR

Who is the contractor on this award?

The obligated recipient is THE MIL 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 $96.8 million.

What is the period of performance?

Start: 2019-10-07. End: 2024-04-09.

What is the typical profit margin for Cost Plus Fixed Fee (CPFF) contracts in the defense engineering sector?

Profit margins for CPFF contracts in the defense engineering sector can vary based on contract complexity, risk, and specific agency policies. Generally, the fixed fee is negotiated as a percentage of the estimated cost, and it represents the contractor's profit. For defense contracts, this fee typically ranges from 7% to 15% of the estimated cost. However, this is a broad generalization. Factors such as the level of competition, the uniqueness of the required services, the contractor's demonstrated capabilities, and the specific terms negotiated in the contract can influence the final fee. Regulatory guidance, such as the Federal Acquisition Regulation (FAR), provides frameworks for determining fair and reasonable fees, but the actual negotiated fee is a result of negotiation between the government and the contractor.

How does the reported bid count of 58,792 compare to typical competition levels for similar engineering services contracts?

A bid count of 58,792 for a single delivery order is extraordinarily high and deviates significantly from typical competition levels for specialized engineering services contracts. For most complex, high-value defense contracts, the number of responsive bids usually ranges from a handful to perhaps a few dozen. Such a high number suggests a potential data anomaly, a misinterpretation of the data field (e.g., it might represent the total number of interested vendors over a longer period or across multiple related solicitations), or an extremely broad solicitation that attracted a vast number of inquiries rather than formal proposals. Standard practice involves a much smaller, more focused set of bidders competing for specific task orders under a larger contract vehicle.

What are the primary risks associated with Cost Plus Fixed Fee (CPFF) contracts for the government?

The primary risk for the government in CPFF contracts is the potential for cost overruns. While the contractor's profit is fixed, they are reimbursed for all allowable costs incurred. If the contractor's actual costs exceed the initial estimates, the government pays the higher amount. This can lead to the contract exceeding its total estimated cost ceiling, which is often significantly higher than the fixed fee. Effective oversight, detailed cost tracking, and robust negotiation of the initial cost estimate are crucial to mitigate this risk. Additionally, contractors may have less incentive to control costs aggressively once the contract is awarded, as their profit is not directly tied to cost savings, although they must remain within the estimated cost ceiling.

Can you provide context on the historical spending for engineering services by the Department of the Navy?

The Department of the Navy consistently allocates substantial funding towards engineering services, reflecting the complexity and lifecycle management requirements of its vast array of platforms and systems, including ships, aircraft, and shore infrastructure. Historical spending data indicates a strong reliance on both internal expertise and external contractors for specialized engineering support, encompassing areas like design, systems integration, maintenance, modernization, and research and development. Annual expenditures for these services often run into the billions of dollars across the Navy enterprise. This particular contract, valued at approximately $96.8 million over its duration, represents a segment of this broader investment aimed at ensuring technological superiority and operational readiness.

What does the 'MD' status code likely signify for this contract?

The 'MD' status code associated with this contract likely signifies 'Maryland' as the state where the contract was awarded or where the primary performance is expected to occur. Many government contract databases use two-letter abbreviations to denote the state. Given that The MIL Corporation is headquartered in Maryland, this code aligns with the contractor's location. While the contract is with the Department of the Navy, the specific award or administrative location is often recorded, and Maryland is a significant hub for defense contracting activities.

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: W15QKN14R0006

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 4000 MITCHELLVILLE RD STE A210, BOWIE, MD, 20716

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

Financial Breakdown

Contract Ceiling: $100,005,210

Exercised Options: $100,000,910

Current Obligation: $96,771,594

Actual Outlays: $2,621,151

Subaward Activity

Number of Subawards: 114

Total Subaward Amount: $41,582,391

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Parent Contract

Parent Award PIID: N0042117D0008

IDV Type: IDC

Timeline