DoD's $44M engineering services contract with American Bureau of Shipping awarded without competition

Contract Overview

Contract Amount: $43,993,146 ($44.0M)

Contractor: American Bureau of Shipping

Awarding Agency: Department of Defense

Start Date: 2017-04-01

End Date: 2022-03-31

Contract Duration: 1,825 days

Daily Burn Rate: $24.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF N102B HORNER - ABS SURVEYS AND TECHNICAL SERVICES CONTRACT

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77060

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $44.0 million to AMERICAN BUREAU OF SHIPPING for work described as: IGF::OT::IGF N102B HORNER - ABS SURVEYS AND TECHNICAL SERVICES CONTRACT Key points: 1. The contract's value of $44 million over five years suggests a significant investment in specialized engineering expertise. 2. Awarded on a sole-source basis, the lack of competition raises questions about potential price overruns and limited market engagement. 3. The fixed-price contract type offers some cost certainty, but the absence of competitive bidding may have inflated the unit costs. 4. Performance is situated in Texas, indicating a regional focus for these engineering services. 5. The contract falls under Engineering Services, a broad category that can encompass various specialized technical support functions. 6. The duration of 1825 days (5 years) points to a long-term need for the services provided.

Value Assessment

Rating: questionable

Benchmarking the value of this $44 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. Comparing it to similar sole-source engineering contracts within the Department of Defense might offer some context, but the lack of competition inherently limits the ability to assess value for money effectively. The fixed-price nature provides some cost control, but the initial price point is unverified by market forces.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not openly competed. The Department of the Navy identified American Bureau of Shipping as the only responsible source capable of fulfilling the requirement. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms inherent in a robust bidding environment.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to secure the best possible value.

Public Impact

The primary beneficiary is the Department of the Navy, which receives specialized engineering services to support its operations. The services delivered are likely critical for naval engineering projects, maintenance, or design. The geographic impact is concentrated in Texas, where the contractor is based and services are likely performed. The contract supports specialized engineering roles, potentially impacting a niche segment of the engineering workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Sole-source award limits transparency and accountability in pricing.
Potential for contractor lock-in due to specialized nature of services.
Absence of competitive benchmarking makes value assessment difficult.

Positive Signals

Fixed-price contract provides some cost predictability.
Long-term duration indicates a sustained need and potential for stable support.
Contractor is a recognized entity in its field (American Bureau of Shipping).

Sector Analysis

The engineering services sector is a critical component of government contracting, supporting a wide array of technical requirements across defense, infrastructure, and research. The market is characterized by specialized firms with deep technical expertise. This contract, valued at $44 million, represents a significant, albeit sole-sourced, investment within this sector for the Department of the Navy. Comparable spending in engineering services can vary widely based on the specific technical domain and project scope.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss: false'. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary contractor, American Bureau of Shipping, will likely perform the majority of the work internally, potentially limiting opportunities for small businesses to participate in this specific contract's value chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Given it's a definitive contract, standard reporting and performance monitoring mechanisms would be in place. However, the sole-source nature might reduce the intensity of certain oversight functions related to price negotiation and competitive fairness. Transparency is limited by the lack of public competition details, and the Inspector General's office could investigate if any improprieties are suspected.

Related Government Programs

Naval Engineering Support Services
Defense Engineering Consulting
Technical Services for Military Branches
Maritime Engineering Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for unverified pricing
Limited transparency on cost justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.0 million to AMERICAN BUREAU OF SHIPPING. IGF::OT::IGF N102B HORNER - ABS SURVEYS AND TECHNICAL SERVICES CONTRACT

Who is the contractor on this award?

The obligated recipient is AMERICAN BUREAU OF SHIPPING.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $44.0 million.

What is the period of performance?

Start: 2017-04-01. End: 2022-03-31.

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

The provided data indicates the contract falls under the 'Engineering Services' category (NAICS 541330) and is awarded to American Bureau of Shipping. While the exact nature of the services isn't detailed, engineering services in this context for the Department of the Navy typically involve design, analysis, testing, and consulting related to naval vessels, systems, and infrastructure. This could include areas like structural engineering, mechanical systems, electrical engineering, naval architecture, or specialized technical support for fleet readiness and modernization programs. The contract's value and duration suggest a substantial and ongoing requirement for these specialized technical capabilities.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one vendor possesses the unique capabilities, proprietary technology, or specialized expertise required to meet the government's needs. For American Bureau of Shipping, this could stem from their specific certifications, established track record with naval systems, unique intellectual property, or a critical need for continuity with existing systems they are already familiar with. The Department of the Navy would have had to formally document and approve this justification, asserting that a competitive process would not be feasible or advantageous, often due to urgency or the highly specialized nature of the required services.

How does the $44 million contract value compare to similar engineering services contracts within the DoD?

The $44 million value over five years ($8.8 million annually) for specialized engineering services is substantial but not extraordinary within the context of large defense contracts. Many engineering support contracts for major defense platforms or programs can range from tens to hundreds of millions of dollars. However, the key differentiator here is the sole-source award. While the dollar amount itself might be within a typical range for significant engineering efforts, the lack of competition makes it difficult to benchmark against competitively awarded contracts, where pricing is often driven down by market forces. Without competitive bids, it's harder to definitively say if this represents a 'good' or 'fair' price compared to what could have been achieved through open competition.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risk with a sole-source contract of this magnitude is the potential for inflated costs due to the absence of competitive pressure. The government may end up paying more than it would have in a competitive environment. Another risk is contractor lock-in, where the government becomes heavily reliant on a single provider, making it difficult and costly to switch vendors in the future. There's also a reduced incentive for the contractor to innovate or provide exceptional value beyond the contract's minimum requirements, as they face no direct competition. Transparency and accountability in pricing are also diminished.

What is the track record of American Bureau of Shipping with the Department of Defense?

American Bureau of Shipping (ABS) is a well-established classification society and a global leader in marine and offshore industry standards. While their primary focus is often on maritime safety and certification, they do engage in engineering and technical consulting services that are relevant to defense, particularly naval applications. Their track record with the Department of Defense likely involves providing specialized technical expertise, design reviews, and potentially oversight related to naval vessel construction, maintenance, and compliance with safety and operational standards. Their reputation suggests a high level of technical competence in their domain.

How does the fixed-price contract type mitigate risks for the government?

The 'FIRM FIXED PRICE' (FFP) contract type is generally favorable for the government as it shifts the majority of the cost risk to the contractor. Under an FFP contract, the contractor agrees to a set price for the work, regardless of the actual costs incurred. This provides budget certainty for the government. If the contractor's costs exceed the agreed-upon price, the contractor absorbs the loss. Conversely, if costs are lower than anticipated, the contractor benefits from the profit margin. This structure incentivizes the contractor to manage their costs efficiently to maximize their profit.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 16855 NORTHCHASE DR, HOUSTON, TX, 77060

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

Financial Breakdown

Contract Ceiling: $51,508,280

Exercised Options: $43,993,146

Current Obligation: $43,993,146

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline