DoD's $19.4M Engineering Services Contract Awarded to DLH, LLC for Technical and Production Support
Contract Overview
Contract Amount: $19,377,377 ($19.4M)
Contractor: DLH, LLC
Awarding Agency: Department of Defense
Start Date: 2024-08-02
End Date: 2029-08-01
Contract Duration: 1,825 days
Daily Burn Rate: $10.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: TACNET TECHNICAL AND PRODUCTION SUPPORT -
Place of Performance
Location: NORTH CHARLESTON, CHARLESTON County, SOUTH CAROLINA, 29419
Plain-Language Summary
Department of Defense obligated $19.4 million to DLH, LLC for work described as: TACNET TECHNICAL AND PRODUCTION SUPPORT - Key points: 1. Contract awarded to DLH, LLC for engineering services, indicating a need for specialized technical and production support. 2. The contract's duration of 5 years suggests a long-term requirement for these services. 3. The award was made under full and open competition, implying a robust bidding process. 4. The contract type is Cost Plus Fixed Fee (CPFF), which can incentivize cost control but also carries inherent risks. 5. The specific North American Industry Classification System (NAICS) code 541330 points to engineering services. 6. The contract is a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle or a similar framework.
Value Assessment
Rating: fair
Benchmarking the value of this $19.4 million contract requires more detailed cost breakdowns and comparison to similar engineering support contracts. The Cost Plus Fixed Fee (CPFF) structure means the government pays DLH, LLC's actual costs plus a negotiated fixed fee. While this can be appropriate for research and development or when costs are uncertain, it offers less incentive for the contractor to minimize costs compared to fixed-price contracts. Without specific performance metrics or detailed cost data, it's difficult to definitively assess value for money. However, the presence of multiple bidders suggests some level of price discovery.
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 3 bidders suggests a moderate level of competition for this engineering services requirement. A higher number of bidders typically leads to more competitive pricing and a wider range of technical solutions. The fact that it was competed openly is a positive sign for price discovery and ensuring the government receives a fair market price.
Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it encourages multiple companies to vie for the contract, potentially driving down costs and improving the quality of services offered.
Public Impact
The Department of the Navy benefits from specialized technical and production support, crucial for its engineering and operational needs. This contract ensures the availability of engineering services that likely contribute to the maintenance, development, or modernization of naval assets. The services are geographically focused within South Carolina, potentially impacting the local economy and workforce in that region. The contract may support a specialized engineering workforce, contributing to job creation and skill development in the engineering sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- CPFF contract type can lead to cost overruns if not closely managed.
- Limited visibility into specific cost drivers without detailed reporting.
- Potential for scope creep if requirements are not clearly defined and managed.
Positive Signals
- Awarded under full and open competition, suggesting competitive pricing.
- Long-term contract duration (5 years) indicates a stable requirement and potential for contractor expertise development.
- The contractor, DLH, LLC, likely has a track record in providing similar services to the government.
Sector Analysis
The engineering services sector is a critical component of the defense industrial base, providing essential support for complex weapon systems and platforms. This contract falls under the broader category of professional, scientific, and technical services, which is a significant market for government contractors. The NAICS code 541330 specifically covers establishments primarily engaged in providing architectural, engineering, and related services. Spending in this sector is often driven by defense modernization efforts, research and development, and operational support requirements.
Small Business Impact
This contract does not indicate any specific small business set-aside provisions (ss: false, sb: false). Therefore, the primary contractor, DLH, LLC, is responsible for ensuring that subcontracting opportunities are made available to small businesses, if applicable, as part of their overall contract performance. The absence of a direct set-aside means that large businesses were eligible to compete and potentially win the prime contract.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. The Cost Plus Fixed Fee (CPFF) structure necessitates rigorous oversight of incurred costs to ensure they are reasonable and allocable. Transparency will depend on the reporting requirements stipulated in the contract and the agency's commitment to making relevant data publicly accessible. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Defense Engineering Services
- Naval Technical Support Contracts
- Cost Plus Fixed Fee Contracts
- Professional, Scientific, and Technical Services
Risk Flags
- Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
- Long contract duration may increase risk of scope creep or performance degradation.
- Limited number of bidders (3) suggests moderate, not intense, competition.
Tags
defense, department-of-defense, department-of-the-navy, engineering-services, cost-plus-fixed-fee, full-and-open-competition, delivery-order, technical-support, production-support, south-carolina, dlh-llc
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $19.4 million to DLH, LLC. TACNET TECHNICAL AND PRODUCTION SUPPORT -
Who is the contractor on this award?
The obligated recipient is DLH, 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 $19.4 million.
What is the period of performance?
Start: 2024-08-02. End: 2029-08-01.
What is DLH, LLC's track record with the Department of Defense, particularly in providing engineering and technical support services?
DLH, LLC has a significant history of contracting with the U.S. federal government, including the Department of Defense. Their portfolio often includes IT services, healthcare support, and professional services. For engineering and technical support, their past performance would need to be reviewed against specific contract requirements similar to this award. A review of federal procurement data (e.g., FPDS) would reveal the extent and nature of their previous work, including contract values, performance ratings, and any past issues. This specific contract award suggests they met the DoD's criteria for technical capability and past performance in engineering services.
How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar engineering services, and what are the implications for value for money?
The CPFF structure is often used when the scope of work is not well-defined or involves significant research and development, making it difficult to estimate costs accurately upfront. In such cases, it allows the contractor to incur costs and receive a fixed fee, providing flexibility. However, compared to fixed-price contracts (like FFP), CPFF offers less incentive for the contractor to control costs, as their profit (the fee) is fixed regardless of the actual expenses. This can potentially lead to higher overall costs for the government if not managed with stringent oversight. For engineering services where innovation or unforeseen technical challenges are common, CPFF can be appropriate, but it requires robust government oversight to ensure costs remain reasonable and the value delivered aligns with the expenditure.
What are the primary risks associated with a 5-year engineering services contract, and how might they be mitigated?
A primary risk with a 5-year engineering services contract is the potential for scope creep, where the requirements evolve beyond the initial agreement, leading to increased costs and delays. Another risk is technological obsolescence; the services or systems supported might become outdated over the contract's lifespan. Contractor performance degradation over time is also a concern. Mitigation strategies include clearly defining the scope of work, establishing robust change management processes, incorporating performance metrics and incentives, and conducting regular performance reviews. For technological risks, periodic reviews of emerging technologies and potential contract modifications can be employed. Ensuring strong contract administration and communication channels are vital.
What does the presence of 3 bidders signify for the competition level and potential price discovery in this engineering services market?
The presence of 3 bidders indicates a moderate level of competition for this specific engineering services contract. While more bidders generally lead to greater price competition and potentially lower prices for the government, three offers suggest that the market is not a sole-source situation and that multiple firms possess the capability and interest to pursue this work. This level of competition is sufficient to provide the government with a basis for price analysis and to ensure that the awarded price is reasonably competitive within the market. It suggests that DLH, LLC's winning proposal was deemed the best value among the competing offers.
How does the $19.4 million contract value compare to typical spending on engineering services within the Department of Defense or Navy?
The $19.4 million contract value for engineering services over five years (approximately $3.88 million annually) is a moderate-sized award within the Department of Defense. The DoD procures billions of dollars in engineering and technical services annually across various branches and agencies. This specific amount suggests a focused requirement, perhaps for a particular program, system, or facility, rather than a broad, enterprise-wide support contract. Comparable spending benchmarks would require analyzing contracts with similar NAICS codes (541330) and service scopes awarded by the Navy or other DoD components. Without more specific context on the services rendered, it's challenging to definitively state if it's high or low, but it represents a significant investment in specialized engineering expertise.
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: N6523624R3009
Offers Received: 3
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: DLH Holdings Corp
Address: 6720B ROCKLEDGE DR STE 777, BETHESDA, MD, 20817
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $76,837,448
Exercised Options: $64,459,646
Current Obligation: $19,377,377
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0017819D7739
IDV Type: IDC
Timeline
Start Date: 2024-08-02
Current End Date: 2029-08-01
Potential End Date: 2029-08-01 00:00:00
Last Modified: 2025-12-11
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