Department of the Army's $78.7M engineering services contract awarded to SRC INC, lacking competition

Contract Overview

Contract Amount: $78,760,973 ($78.8M)

Contractor: SRC Inc

Awarding Agency: Department of Defense

Start Date: 2017-01-31

End Date: 2019-09-28

Contract Duration: 970 days

Daily Burn Rate: $81.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: IGF::OT::IGF

Place of Performance

Location: SYRACUSE, ONONDAGA County, NEW YORK, 13212

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $78.8 million to SRC INC for work described as: IGF::OT::IGF Key points: 1. Contract awarded on a sole-source basis, raising concerns about potential overpayment and lack of market-driven pricing. 2. The contract duration of 970 days suggests a significant, long-term need for engineering services. 3. Performance was in New York, indicating a localized impact for this specific service. 4. The absence of competition limits the ability to benchmark pricing against market alternatives. 5. The contract type 'COST NO FEE' can sometimes lead to higher costs if not tightly managed. 6. No small business set-aside was applied, potentially limiting opportunities for smaller firms in this sector.

Value Assessment

Rating: questionable

Without competitive bids, it's difficult to definitively assess the value for money. The total award amount of $78.7 million for engineering services over approximately 2.7 years suggests a substantial investment. However, the lack of competition means there's no clear benchmark against similar contracts or market rates to determine if the pricing was optimal. The 'COST NO FEE' contract type, while sometimes necessary, requires rigorous oversight to ensure costs remain reasonable and that the government receives fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when only one vendor can provide the required services, or for specific urgent needs. The lack of multiple bidders means the government did not benefit from the price discovery that typically occurs in a competitive bidding process. This can lead to higher prices than might be achieved in a more open market.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple offers, the government had less leverage to negotiate the best possible price for these engineering services.

Public Impact

The primary beneficiary is SRC INC, the sole contractor, which received significant revenue for engineering services. The services delivered likely supported specific Department of the Army engineering projects, contributing to military infrastructure or operational capabilities. The geographic impact was concentrated in New York, where the services were performed. The contract supported specialized engineering roles within SRC INC, potentially impacting their workforce and operational capacity.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition raises questions about whether the most innovative or cost-effective solutions were considered.
The 'COST NO FEE' contract type requires robust oversight to prevent cost overruns.
No small business participation noted, potentially excluding smaller, specialized engineering firms.

Positive Signals

Contract awarded to a single entity suggests a potentially strong, established relationship or specialized capability.
The significant award amount indicates a substantial project requiring considerable engineering expertise.
The contract was performed in New York, potentially benefiting the local economy through employment and resource utilization.

Sector Analysis

Engineering services represent a critical sector supporting various government functions, including defense, infrastructure, and research. The market for these services is diverse, ranging from large, established firms to specialized niche providers. This contract, valued at nearly $79 million, falls into the mid-to-large range for a single engineering services award. Comparable spending benchmarks would typically involve analyzing other large-scale engineering contracts within the Department of Defense or other federal agencies for similar scope and duration.

Small Business Impact

This contract did not include a small business set-aside, nor is there an indication of significant subcontracting to small businesses. This means that opportunities for small engineering firms to participate in this substantial project were likely limited. The absence of a set-aside for this large contract could mean that the full scope of work was handled by the prime contractor, potentially impacting the broader small business ecosystem within the engineering services sector.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the sole-source nature and 'COST NO FEE' type, rigorous financial and performance oversight would be crucial to ensure accountability and prevent cost creep. Transparency is limited by the lack of competitive bidding documentation. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Engineering Services Contracts
Army Corps of Engineers Contracts
Sole-Source Defense Contracts
Cost-Plus Contracts
Engineering and Architectural Services

Risk Flags

Sole-source award
Lack of competition
Potential for inflated costs
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.8 million to SRC INC. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is SRC INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $78.8 million.

What is the period of performance?

Start: 2017-01-31. End: 2019-09-28.

What specific engineering services were provided under this contract?

The provided data indicates the contract was for 'Engineering Services' (NAICS 541330) awarded to SRC INC by the Department of the Army. While the specific nature of the engineering services is not detailed in the provided data, this NAICS code typically encompasses services such as civil engineering, mechanical engineering, electrical engineering, and structural engineering. These services are often related to the design, development, and implementation of infrastructure, systems, or equipment. For this particular contract, given the awarding agency, the services likely pertained to military installations, defense systems, or related projects requiring specialized engineering expertise.

How does the $78.7 million award compare to other engineering services contracts awarded by the Department of the Army?

The $78.7 million award is a substantial sum for a single engineering services contract. The Department of the Army procures a vast array of engineering services, with contract values ranging from small, specialized task orders to multi-billion dollar programs. Contracts of this magnitude are typically for major projects, long-term support, or complex system development. Without access to a comprehensive database of all Army engineering contracts, a precise comparison is difficult. However, a contract of this size suggests a significant undertaking, likely involving extensive design, planning, or technical support for critical defense infrastructure or capabilities.

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

Sole-source awards, especially for large dollar amounts like $78.7 million, carry inherent risks. The primary risk is the lack of price competition, which can lead to the government paying more than necessary. Without multiple bids, there's less incentive for the contractor to offer the most competitive pricing. Another risk is that the government may not be exposed to the full range of innovative solutions or capabilities available in the market, as only one vendor's approach is considered. Furthermore, sole-source contracts require robust justification and oversight to ensure they are truly necessary and that the selected contractor is the best possible choice, mitigating risks of vendor lock-in or suboptimal performance.

What does the 'COST NO FEE' contract type imply for contractor performance and government oversight?

A 'COST NO FEE' (Cost, No Fee - CNF) contract type means the contractor is reimbursed for all allowable costs incurred in performing the contract, but receives no fee or profit. This type of contract is typically used when the government has a strong interest in having the work performed, but the potential for profit is uncertain or minimal, or when the contractor is a non-profit entity or government agency. For the government, it implies a focus on cost control and efficient performance, as the contractor has no direct financial incentive to maximize profit. However, it places a greater burden on government oversight to meticulously audit costs and ensure that all expenditures are reasonable, allocable, and necessary for contract performance. Without a fee, the contractor's primary motivation is cost recovery and fulfilling the contract requirements.

What is the historical spending pattern for engineering services by the Department of the Army?

The Department of the Army is a consistent and significant spender on engineering services, reflecting its vast infrastructure, research and development needs, and global operations. Historical spending patterns show a continuous demand for a wide range of services, from base construction and maintenance to advanced weapons systems design and environmental engineering. The Army frequently utilizes various contract types, including fixed-price, cost-reimbursement, and time-and-materials, depending on the nature of the requirement and the level of uncertainty. Spending can fluctuate based on defense budgets, geopolitical events, and specific modernization initiatives. The aggregate annual spending on engineering services by the Army typically runs into billions of dollars, underscoring its critical reliance on these professional services.

Industry Classification

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

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 7502 ROUND POND RD, NORTH SYRACUSE, NY, 13212

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

Financial Breakdown

Contract Ceiling: $113,355,478

Exercised Options: $78,760,973

Current Obligation: $78,760,973

Subaward Activity

Number of Subawards: 71

Total Subaward Amount: $29,750,394

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline