DoD's $24.4M Engineering Services Contract with IIT Research Institute: A Deep Dive into Value and Competition

Contract Overview

Contract Amount: $24,386,488 ($24.4M)

Contractor: IIT Research Institute

Awarding Agency: Department of Defense

Start Date: 2002-09-18

End Date: 2008-03-31

Contract Duration: 2,021 days

Daily Burn Rate: $12.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: BURR RIDGE, COOK County, ILLINOIS, 60527

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $24.4 million to IIT RESEARCH INSTITUTE for work described as: Key points: 1. Analysis of IIT Research Institute's performance and value proposition for the Department of Defense. 2. Examining the competitive landscape for engineering services within the defense sector. 3. Identifying potential risk indicators and performance context for this long-term contract. 4. Assessing the contract's positioning within the broader federal engineering services market. 5. Evaluating the implications of a sole-source award on price discovery and taxpayer value.

Value Assessment

Rating: fair

Benchmarking the $24.4 million cost-plus-fixed-fee contract awarded to IIT Research Institute requires more granular data on the specific engineering services rendered. Without comparable contracts for similar scope and complexity, a precise value-for-money assessment is challenging. However, the cost-plus-fixed-fee structure can incentivize contractors to increase costs to achieve a higher fee, potentially impacting overall value if not rigorously managed. Further analysis of the fixed fee relative to the total contract value and the contractor's performance history would provide a clearer picture of its economic efficiency.

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 is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when it is deemed not to be in the government's best interest to compete. The lack of competition means there was no direct price comparison through bidding, potentially leading to higher costs than if multiple firms had vied for the contract. The government must have justified why IIT Research Institute was the only viable option.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competitive pressures to secure the best possible pricing for taxpayers. This can result in less favorable financial outcomes compared to competed contracts, as the potential for cost savings through bidding is eliminated.

Public Impact

The Department of Defense benefits from specialized engineering services provided by IIT Research Institute. This contract supports critical defense research and development initiatives, enhancing national security capabilities. The services likely contribute to advancements in various defense technologies and systems. The contract's impact on the defense industrial base and the specialized workforce within Illinois is notable.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract structure may incentivize cost escalation if not closely monitored.
Lack of public detail on specific deliverables makes performance and value assessment difficult.
Long contract duration (2002-2008) requires robust oversight to ensure continued relevance and efficiency.

Positive Signals

IIT Research Institute is a known entity with a history of government contracting.
The contract was awarded by a major federal agency (Department of Defense), suggesting a level of established trust.
The fixed-fee component provides some cost certainty for the government, unlike pure cost-reimbursement contracts.

Sector Analysis

The engineering services sector within the federal government is substantial, encompassing a wide range of specialized technical support. This contract falls under the broader category of professional, scientific, and technical services, which is a significant portion of federal procurement. The market includes numerous firms, from large defense contractors to specialized engineering consultancies. Benchmarking this contract's value would ideally involve comparing its cost-plus-fixed-fee rate and total value against other similar engineering support contracts awarded by the DoD or other agencies for comparable services, considering the specific technical domain and duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss': false flag suggests it was not a small business prime award. Therefore, the direct impact on small businesses as prime contractors is likely minimal. However, IIT Research Institute, as the prime contractor, may have subcontracting opportunities for small businesses, depending on the nature of the engineering services required. An analysis of their subcontracting plans would be necessary to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, potentially involving the Defense Contract Management Agency (DCMA) given the 'sa' field. Accountability measures would be tied to the terms of the cost-plus-fixed-fee contract, including adherence to the fixed fee, management of direct costs, and delivery of specified engineering services. Transparency is limited by the sole-source nature and the proprietary aspects of defense engineering, but contract awards and basic details are typically available through federal procurement databases.

Related Government Programs

Department of Defense Research and Development Contracts
Engineering and Technical Services Procurement
Cost-Plus-Fixed-Fee Contracts
Sole-Source Federal Contracts

Risk Flags

Sole-source award limits competitive pricing.
Cost-plus-fixed-fee structure carries inherent cost overrun risks.
Lack of detailed performance metrics in summary data.
Long contract duration without clear competition raises value questions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.4 million to IIT RESEARCH INSTITUTE. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is IIT RESEARCH INSTITUTE.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $24.4 million.

What is the period of performance?

Start: 2002-09-18. End: 2008-03-31.

What is the specific nature of the engineering services provided under this contract, and how do they align with IIT Research Institute's core competencies?

The data indicates the contract falls under NAICS code 541330, 'Engineering Services,' and the Product Service Code (PSC) is not specified. IIT Research Institute (IITRI) is known for its work in applied research, development, and engineering across various domains, including defense, aerospace, and environmental science. Given the DoD award, it's highly probable that the services involved advanced engineering analysis, design, testing, and potentially system integration for defense platforms or technologies. Without more specific contract line item details, it's difficult to pinpoint the exact services, but IITRI's expertise suggests complex technical challenges were addressed, likely related to areas such as materials science, electronics, mechanical engineering, or systems engineering critical to defense applications.

How does the $24.4 million contract value compare to other engineering services contracts awarded by the DoD for similar services during the 2002-2008 period?

Comparing the $24.4 million value requires access to historical contract databases and filtering for similar engineering services (NAICS 541330) awarded by the DoD between 2002 and 2008. However, general market trends indicate that large-scale, long-term engineering support contracts for major defense programs could easily reach tens of millions of dollars. Given that this was a sole-source award to IIT Research Institute, the government likely determined this value was appropriate for the specialized, non-competitively procured services. Without specific comparable contract data, it's challenging to definitively state if $24.4 million was high or low, but it falls within a plausible range for significant defense engineering support over a multi-year period.

What were the primary justifications for awarding this contract on a sole-source basis instead of through full and open competition?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when the agency's need is of such a compelling urgency that it would be seriously impaired by the delay incident to competitive bidding. For IIT Research Institute, justifications could include unique proprietary technology, specialized expertise not readily available elsewhere, or a critical need for continuity of services on a highly specialized project where switching contractors would be detrimental. The Department of Defense would have had to document and approve these justifications, likely citing IITRI's specific capabilities or prior work as essential and irreplaceable through competition.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract structure, and how might they have been mitigated for this DoD contract?

The primary risk of a CPFF contract is that the contractor is reimbursed for all allowable costs plus a fixed fee, which can incentivize cost overruns as the contractor earns the same fee regardless of the final cost. To mitigate this, the government relies on robust oversight, detailed cost accounting standards, and clear performance metrics. For this DoD contract, mitigation would involve rigorous auditing of IIT Research Institute's costs, strict adherence to the 'allowable costs' clause, and potentially performance incentives tied to milestones or quality. The fixed fee itself provides some level of cost certainty compared to pure cost-reimbursement, but effective contract administration and vigilant monitoring by the DoD were crucial to ensure value and prevent excessive spending.

What was IIT Research Institute's track record with the federal government, particularly the DoD, prior to and during the period of this contract (2002-2008)?

IIT Research Institute has a long history of performing research and development and engineering services for various U.S. government agencies, including the Department of Defense. Prior to 2002, IITRI had secured numerous contracts, demonstrating its capability to meet federal requirements. During the 2002-2008 period of this specific contract, their continued engagement with the DoD suggests a satisfactory performance record, as agencies generally prefer to continue working with proven contractors for specialized needs. While specific performance ratings for this contract are not detailed in the provided data, the renewal or continuation of such a significant sole-source award implies that the DoD found IITRI's contributions to be valuable and their performance to be acceptable, meeting the contract's technical and programmatic objectives.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Address: 10 WEST 35TH STREET, CHICAGO, IL, 60616

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline