DoD's $31.6M engineering services contract with PAE Applied Technologies awarded without competition

Contract Overview

Contract Amount: $31,623,455 ($31.6M)

Contractor: PAE Applied Technologies LLC

Awarding Agency: Department of Defense

Start Date: 2020-12-13

End Date: 2021-06-30

Contract Duration: 199 days

Daily Burn Rate: $158.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BRIDGE CONTRACT WITH INCREMENTAL FUNDING.

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $31.6 million to PAE APPLIED TECHNOLOGIES LLC for work described as: BRIDGE CONTRACT WITH INCREMENTAL FUNDING. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not managed closely. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. Limited competition increases the risk of overpayment and reduced incentive for contractor efficiency. 4. The contract duration of 199 days suggests a focused scope, but incremental funding requires careful monitoring. 5. The specific engineering services provided are not detailed, making direct performance benchmarking difficult. 6. The absence of small business set-asides or subcontracting plans warrants further investigation into broader economic impact.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition, presents a questionable value proposition. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar services. The incremental funding approach, while common for ongoing needs, necessitates rigorous oversight to ensure costs remain reasonable and aligned with the delivered engineering services. The total award amount of $31.6 million over a short period suggests a potentially high per-unit cost, though specific metrics are unavailable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach bypasses the typical procurement process designed to foster competition and achieve the best possible pricing and value. The lack of bidders means there was no opportunity for market forces to drive down costs or encourage innovative solutions. Such awards are typically justified by specific circumstances, such as urgent needs or unique capabilities, which would need to be thoroughly documented.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price. This limits the government's ability to secure favorable terms and potentially overpays for services.

Public Impact

The Department of Defense benefits from specialized engineering services to support its operations. The contract likely supports critical infrastructure or technical requirements within the Navy's purview. Services are geographically focused in Maryland, potentially impacting the local technical workforce. The specific nature of the engineering services could involve design, analysis, or technical support for defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus-fixed-fee contracts require robust oversight to prevent cost overruns.
Incremental funding necessitates continuous monitoring of contract performance and spending.
Limited transparency on specific services hinders performance evaluation.
Absence of small business participation may limit economic opportunities for smaller firms.

Positive Signals

Contract awarded to a known entity (PAE Applied Technologies LLC), potentially indicating established capabilities.
The contract addresses a specific need within the Department of Defense.
The fixed-fee component provides some cost certainty compared to pure cost-plus contracts.
The short duration suggests a defined project scope, potentially easier to manage.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS code 541330), a critical component of the broader professional, scientific, and technical services industry. This sector encompasses firms that provide specialized engineering expertise for various applications, including defense. The market for defense engineering services is substantial, driven by the government's continuous need for advanced technological support, system design, and infrastructure development. Benchmarking this contract's value is challenging without more detail, but similar large-scale engineering support contracts for the DoD can range from tens to hundreds of millions of dollars annually.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This means that opportunities for small business participation, either as prime contractors or subcontractors, were not explicitly mandated. Without specific subcontracting plans detailed in the award, it is difficult to assess the extent to which small businesses will benefit or be involved. This lack of set-aside could limit the infusion of federal dollars into the small business ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Department of Defense. As a sole-source award, it likely underwent specific justification and approval processes. The cost-plus-fixed-fee structure necessitates close monitoring of expenditures and performance by contracting officers to ensure compliance with the contract terms and prevent cost overruns. Transparency is limited by the lack of public detail on specific deliverables and performance metrics. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Engineering Services
Navy Technical Support Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award lacks competitive justification.
Cost-plus-fixed-fee structure requires enhanced oversight.
Incremental funding may indicate incomplete scope definition.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.6 million to PAE APPLIED TECHNOLOGIES LLC. BRIDGE CONTRACT WITH INCREMENTAL FUNDING.

Who is the contractor on this award?

The obligated recipient is PAE APPLIED TECHNOLOGIES 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 $31.6 million.

What is the period of performance?

Start: 2020-12-13. End: 2021-06-30.

What specific engineering services does PAE Applied Technologies LLC provide under this contract, and how are these services critical to the Department of the Navy's mission?

The provided data does not specify the exact engineering services rendered by PAE Applied Technologies LLC. However, given the contract's classification under NAICS code 541330 (Engineering Services) and its award by the Department of the Navy, it is highly probable that these services relate to technical support, design, analysis, or development of naval systems, infrastructure, or platforms. These services are critical for maintaining and advancing the Navy's operational capabilities, ensuring technological superiority, and supporting complex defense projects. Without more granular information, the precise contribution to the Navy's mission remains generalized but is presumed to be significant within a specialized engineering domain.

How does the cost-plus-fixed-fee (CPFF) structure typically impact contractor performance and cost control in defense contracts compared to other contract types?

The Cost-Plus-Fixed-Fee (CPFF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to complete the work but offers less direct financial incentive for cost efficiency compared to fixed-price contracts. While the fixed fee provides some cost certainty for the government regarding profit, the overall cost can escalate if allowable costs are not meticulously managed and controlled. Robust government oversight, detailed cost accounting, and clear performance metrics are crucial in CPFF contracts to mitigate the risk of cost overruns and ensure value for money. Compared to fixed-price contracts, CPFF shifts more cost risk to the government but is often used when the scope of work is uncertain or involves research and development.

What are the potential risks associated with awarding a $31.6 million contract on a sole-source basis, particularly concerning price fairness and market responsiveness?

Awarding a contract of this magnitude on a sole-source basis carries significant risks. Primarily, the absence of competition eliminates the government's ability to leverage market forces to achieve the best possible price and value. Without competing bids, there is no benchmark to ensure the negotiated price is fair and reasonable, potentially leading to overpayment. Furthermore, sole-source awards can stifle innovation and reduce contractor responsiveness, as the incumbent contractor may face less pressure to perform efficiently or offer competitive terms. This approach can also signal to the broader market that competition is not a priority, potentially discouraging future participation. Taxpayers bear the risk of paying a premium for services that could have been procured more economically through a competitive process.

Given the contract's short duration (199 days) and incremental funding, what are the implications for project continuity and long-term planning for the Department of the Navy?

The short duration of 199 days suggests this contract addresses a specific, time-bound need rather than a long-term, ongoing requirement. Incremental funding, while allowing flexibility, implies that the full scope or cost may not have been defined or budgeted at the outset. This approach can pose challenges for project continuity if follow-on funding is not secured promptly or if the scope needs to expand significantly. For the Department of the Navy, it necessitates careful planning to ensure seamless transitions between contract phases or follow-on efforts. It also requires diligent budget management to avoid gaps in essential services and to ensure that the incremental funding aligns with evolving project needs and priorities. The short timeframe might also limit the depth of analysis or development achievable.

What is the historical spending pattern for engineering services procured by the Department of the Navy, and how does this $31.6 million award compare?

The provided data does not include historical spending patterns for engineering services by the Department of the Navy. However, the Department of Defense, including the Navy, consistently spends billions of dollars annually on a wide array of engineering and technical services to support its vast operations, research, development, and maintenance activities. Contracts for engineering services can range from small, specialized task orders to multi-billion dollar, long-term support agreements. A $31.6 million award for a specific project or service period, especially if it's a sole-source award, would be considered a significant but not exceptionally large contract within the overall DoD procurement landscape. To provide a meaningful comparison, one would need access to historical contract databases to analyze the frequency, size, and types of engineering services contracts awarded by the Navy over time.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0042121R0080

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: PAE Government Services Inc.

Address: 1320 N COURTHOUSE RD STE 700, ARLINGTON, VA, 22201

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $46,454,527

Exercised Options: $46,454,527

Current Obligation: $31,623,455

Subaward Activity

Number of Subawards: 38

Total Subaward Amount: $9,028,267

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline