Army awards $73.2M engineering services contract to SIGMATECH INC, highlighting firm fixed-price structure

Contract Overview

Contract Amount: $73,227,870 ($73.2M)

Contractor: Sigmatech Inc

Awarding Agency: Department of Defense

Start Date: 2010-07-06

End Date: 2015-08-01

Contract Duration: 1,852 days

Daily Burn Rate: $39.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ENGINEERING SERVICES

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $73.2 million to SIGMATECH INC for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The firm fixed-price contract type generally shifts risk to the contractor. 3. The contract duration of 1852 days indicates a long-term need for engineering services. 4. The contract was awarded as a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle. 5. The primary NAICS code 541330 points to a focus on engineering services. 6. The contract was awarded to SIGMATECH INC, a single entity. 7. The contract was awarded in Alabama, indicating a specific geographic focus for the services.

Value Assessment

Rating: fair

Benchmarking the value of this specific $73.2 million contract is challenging without more context on the scope of engineering services provided. However, the firm fixed-price (FFP) nature of the award is a positive indicator for cost control, as it places the financial risk on the contractor. Comparing this to similar large-scale engineering service contracts would require detailed analysis of service scope, duration, and performance metrics. The absence of specific performance data makes a definitive value assessment difficult.

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 a bid. The specific number of bidders is not provided, but this method generally fosters a competitive environment, which can lead to better pricing and innovation. The open competition suggests that the Army sought the best value proposition from the market, rather than being limited to a pre-selected group of contractors.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and a wider array of qualified contractors vying for their tax dollars. This process aims to ensure that the government receives the most advantageous terms possible.

Public Impact

The primary beneficiaries are likely the Department of the Army, which receives essential engineering services for its operations and infrastructure. The services delivered are categorized under 'Engineering Services,' which could encompass a wide range of activities such as design, analysis, testing, and consulting. The contract's geographic impact is centered in Alabama (AL), suggesting that local or regional projects are being supported. Workforce implications could include employment opportunities for engineers, technicians, and support staff within SIGMATECH INC and potentially its subcontractors in the Alabama region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to assess the true value and effectiveness of the engineering services provided.
The broad category of 'Engineering Services' could mask significant variations in scope and complexity, making direct comparisons challenging.
Without knowing the number of bidders, it's hard to definitively gauge the intensity of competition and its impact on pricing.
The contract's duration of nearly five years (1852 days) means that potential cost overruns or performance issues could have a prolonged impact.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
The firm fixed-price contract type generally aligns incentives and transfers risk to the contractor.
The contract is for a defined period, allowing for structured service delivery and oversight.
The primary NAICS code is specific to Engineering Services, suggesting a clear focus for the contract.

Sector Analysis

The engineering services sector is a critical component of the broader professional, scientific, and technical services industry. This contract falls under the "Engineering Services" category (NAICS 541330), which includes establishments primarily engaged in providing architectural, engineering, and related services. The market for federal engineering services is substantial, driven by infrastructure projects, defense needs, and research and development across various government agencies. Comparable spending benchmarks would typically involve analyzing the average cost per contract, average contract duration, and typical pricing structures for similar engineering services procured by the Department of Defense or other large federal entities.

Small Business Impact

The provided data indicates that this contract was not awarded as a small business set-aside (ss: false, sb: false). Therefore, there are no direct implications for small business set-asides. However, SIGMATECH INC, as the prime contractor, may engage small businesses as subcontractors to fulfill portions of the contract requirements. The extent of subcontracting to small businesses would depend on SIGMATECH's own business practices and any specific subcontracting goals or requirements that may have been part of the original contract vehicle, which are not detailed here.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting agency, the Department of the Army, and specifically the contracting officer and their representatives. Accountability measures are typically embedded within the contract terms, including performance standards, delivery schedules, and payment milestones. Transparency is facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse related to this contract were to arise.

Related Government Programs

Army Corps of Engineers Contracts
Department of Defense Engineering Services
Professional, Scientific, and Technical Services Contracts
Federal Infrastructure Support Contracts
Defense Logistics Agency Contracts

Risk Flags

Potential for scope creep given the long contract duration.
Lack of specific performance metrics makes value assessment difficult.
Competition level details (number of bidders) are missing.
Contract is a delivery order, suggesting it's part of a larger IDIQ; overall IDIQ performance needs monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.2 million to SIGMATECH INC. ENGINEERING SERVICES

Who is the contractor on this award?

The obligated recipient is SIGMATECH 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 $73.2 million.

What is the period of performance?

Start: 2010-07-06. End: 2015-08-01.

What is the typical profit margin for engineering services contracts awarded by the Department of Defense?

Determining the typical profit margin for engineering services contracts awarded by the Department of Defense is complex, as it varies significantly based on contract type, scope, risk, and competition. Firm Fixed Price (FFP) contracts, like this one, generally allow contractors to retain profits if they manage costs effectively, but also expose them to losses if costs exceed estimates. Industry benchmarks for profit margins in professional services can range from 5% to 15% or higher, depending on specialization and value-added services. However, specific government contract profit margins are often influenced by negotiated rates, overhead structures, and competitive pressures. Without detailed cost breakdowns or profit reports for this specific contract, providing an exact figure is not possible. Data from sources like the Defense Contract Audit Agency (DCAA) or industry analyses might offer broader insights into average profit rates for similar service categories.

How does the firm fixed-price contract type impact risk allocation compared to other contract types?

The firm fixed-price (FFP) contract type significantly shifts the risk of cost overruns from the government to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to manage expenses efficiently and control project scope. In contrast, cost-reimbursement contracts place more risk on the government, as the contractor is reimbursed for allowable costs incurred, plus a fee. Other types, like fixed-price incentive fee (FPIF), share risk and reward between the parties based on performance targets. For the Army's $73.2M engineering services contract, the FFP structure means SIGMATECH INC bears the primary financial risk, which can lead to more predictable final costs for the government, assuming the scope is well-defined and the contractor is competent.

What are the potential implications of a delivery order award within a larger IDIQ contract?

A delivery order award, such as the one for SIGMATECH INC's engineering services, typically signifies that this contract is a task order issued under a broader Indefinite Delivery/Indefinite Quantity (IDIQ) contract. IDIQ contracts establish terms and conditions for services over a period, but the specific quantities and delivery schedules are defined by individual task or delivery orders. This structure offers flexibility to the government, allowing them to procure services as needed without establishing a new contract for each requirement. For taxpayers, this can mean more efficient procurement and potentially better pricing due to pre-negotiated rates. However, it also necessitates careful management of the overall IDIQ ceiling and individual order values to ensure cost control and prevent scope creep across multiple orders.

How does the duration of this contract (1852 days) compare to typical engineering services contracts?

A contract duration of 1852 days, approximately five years, is relatively long for a single delivery order but can be typical for larger, more complex engineering services requirements, especially if it falls under an IDIQ vehicle. Many federal engineering service contracts range from one to five years, with options for extensions. Longer durations often indicate a sustained need for services, such as ongoing support for major infrastructure projects, system development, or long-term research initiatives. Shorter contracts might be used for specific, well-defined tasks or studies. The extended period for this SIGMATECH INC contract suggests a significant and ongoing requirement for their engineering expertise, necessitating robust oversight to ensure continued value and performance throughout its lifespan.

What does the NAICS code 541330 specifically encompass in terms of engineering services?

The North American Industry Classification System (NAICS) code 541330, 'Engineering Services,' encompasses establishments primarily engaged in providing architectural, engineering, and related services. This includes activities such as designing, planning, and managing construction projects; providing engineering consulting services; performing engineering analyses and testing; and offering specialized engineering services like civil, mechanical, electrical, industrial, and environmental engineering. Firms under this code typically employ engineers, architects, and related professionals. For the Department of the Army contract awarded to SIGMATECH INC, this NAICS code indicates the core business activity is the provision of professional engineering expertise, which could range from conceptual design and feasibility studies to detailed design, construction oversight, and operational support.

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: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 689 DISCOVERY DR NW, HUNTSVILLE, AL, 35806

Business Categories: Category Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Financial Breakdown

Contract Ceiling: $73,227,870

Exercised Options: $73,227,870

Current Obligation: $73,227,870

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W31P4Q05A0026

IDV Type: IDC

Timeline