DoD's $70.7M contract for engineering services awarded to Engility LLC shows potential value concerns

Contract Overview

Contract Amount: $70,664,520 ($70.7M)

Contractor: Engility LLC

Awarding Agency: Department of Defense

Start Date: 2004-02-10

End Date: 2009-04-30

Contract Duration: 1,906 days

Daily Burn Rate: $37.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: 200405!002925!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0702DP001 !A!N! !Y!0036 ! !20040210!20061031!808357131!008898884!008898843!N!L-3 COMMUNICATIONS ILEX SYSTEM!1413 CANTILLION BLVD, SUIT!MAYS LANDING !NJ!08330!24480!025!34!FORT MONMOUTH !MONMOUTH !NEW JERSEY!+000001413500!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !541330!E! !5!B!M! !A! !99990909!B! ! !A! !A!N!Y!2!004!B! !C!N!Z! ! !N!C!N! ! ! !D!D!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $70.7 million to ENGILITY LLC for work described as: 200405!002925!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0702DP001 !A!N! !Y!0036 ! !20040210!20061031!808357131!008898884!008898843!N!L-3 COMMUNICATIONS ILEX SYSTEM!1413 CANTILLION BLVD, SUIT!MAYS LANDING !NJ!08330!24480!025!34!FORT MONMOUTH !MONM… Key points: 1. Contract value appears high relative to duration and scope. 2. Limited competition may have impacted pricing. 3. Potential for cost overruns given Time and Materials contract type. 4. Contractor has a track record with the Department of Defense. 5. Services align with broader Army modernization efforts. 6. Small business participation appears minimal.

Value Assessment

Rating: questionable

The total award amount of $70.7 million over approximately 5 years (2004-2009) for engineering services warrants scrutiny. While specific performance metrics are not detailed, the duration and the Time and Materials (T&M) contract type suggest a higher risk of cost escalation compared to fixed-price contracts. Benchmarking against similar engineering services contracts for the Department of the Army during that period would be necessary to definitively assess value for money, but the initial figures raise flags.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. However, the number of actual bidders is not specified in the provided data. Full and open competition generally promotes price discovery and can lead to more competitive pricing for the government. The specific details of the bidding process would be needed to confirm the extent of competition.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best possible pricing through a competitive process, potentially saving taxpayer dollars.

Public Impact

The primary beneficiary is the Department of the Army, receiving engineering and technical support. Services likely support the development, testing, or maintenance of electronic and communication equipment. The contract's geographic impact is centered around Fort Monmouth, New Jersey, a significant Army installation. Workforce implications include the potential employment of engineers and technical specialists by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type increases risk of cost overruns.
Lack of specific performance metrics makes value assessment difficult.
Contract duration of over 5 years could lead to scope creep or evolving requirements.
Limited data on the number of bidders in the full and open competition.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Contractor (L-3 Communications ILEX SYSTEM) is a known entity in defense contracting.
Services align with critical defense needs for electronics and communication equipment.
Contract duration provides stability for essential engineering support.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting the Department of Defense's needs for electronics and communication equipment. The market for defense engineering services is substantial, driven by continuous modernization and maintenance requirements. Comparable spending benchmarks would involve analyzing other contracts for similar technical support services awarded to various defense contractors by agencies like the Army, Navy, and Air Force.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, L-3 Communications ILEX SYSTEM, would be responsible for any subcontracting efforts. Analysis of subcontracting plans and actual performance would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The Time and Materials nature of the contract necessitates robust oversight to monitor labor hours, costs, and deliverables to prevent overspending. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse. Transparency would depend on the public availability of contract performance reports and modifications.

Related Government Programs

Department of the Army Engineering Services Contracts
Defense Electronics and Communication Equipment Procurement
Time and Materials Contracts in DoD
Fort Monmouth Support Contracts
L-3 Communications Contracts

Risk Flags

Potential for cost overruns due to T&M contract type.
Lack of detailed performance metrics hinders value assessment.
Limited information on the number of bidders in full and open competition.
Contract duration may exceed the need for the original scope.
Geographic concentration at Fort Monmouth could indicate specific program support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.7 million to ENGILITY LLC. 200405!002925!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0702DP001 !A!N! !Y!0036 ! !20040210!20061031!808357131!008898884!008898843!N!L-3 COMMUNICATIONS ILEX SYSTEM!1413 CANTILLION BLVD, SUIT!MAYS LANDING !NJ!08330!24480!025!34!FORT MONMOUTH !MONMOUTH !NEW JERSEY!+000001413500!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !541330!E! !5!B!M! !A! !999

Who is the contractor on this award?

The obligated recipient is ENGILITY LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $70.7 million.

What is the period of performance?

Start: 2004-02-10. End: 2009-04-30.

What was the specific nature of the engineering and technical services provided under this contract?

The contract data indicates the primary service category as 'ENGINEERING TECHNICAL SERVICES' (nd: Engineering Services) and the Product/Service Code (PSC) as 'R425', which typically covers Engineering and Technical Services. While the specific tasks are not detailed, given the agency (Department of the Army) and the broader context of electronics and communication equipment, these services likely encompassed areas such as system design, development, integration, testing, maintenance, and technical support for various Army communication and electronic systems. This could range from tactical radios to command and control systems, requiring specialized engineering expertise.

How does the awarded amount compare to similar engineering services contracts for the Department of the Army during the 2004-2009 period?

Without access to a comprehensive database of historical Department of the Army contracts for engineering services from 2004-2009, a precise comparison is challenging. However, $70.7 million over five years represents an average annual value of approximately $14.14 million. This figure would need to be benchmarked against contracts for similar scope and complexity, considering factors like the specific systems supported, the level of technical expertise required, and the number of bidders. Generally, large-scale engineering support for major defense systems could reach these figures, but a detailed analysis of contract ceilings, task orders, and competitive pricing for comparable services is essential for a true value assessment.

What were the key risks associated with the Time and Materials (T&M) contract type for this specific engagement?

The primary risk associated with a Time and Materials (T&M) contract, like this one, is the potential for cost overruns. Unlike fixed-price contracts, T&M contracts reimburse the contractor for direct labor hours at specified rates and for the actual cost of materials. This structure provides less incentive for the contractor to control costs efficiently. For the government, it necessitates rigorous oversight to ensure that labor hours are reasonable and allocable to the contract, and that material costs are fair and reasonable. Without strong oversight, the total cost can exceed initial estimates, especially over a multi-year period like this contract's duration.

What is the track record of L-3 Communications ILEX SYSTEM (the contractor) with the Department of Defense?

L-3 Communications ILEX SYSTEM, as part of the larger L3Harris Technologies (or its predecessors/subsidiaries), has a significant history of contracting with the Department of Defense. Companies within the L3Harris umbrella are major defense contractors involved in a wide array of programs, including aerospace, communications, electronic systems, and information technology. Their track record generally involves delivering complex systems and services to various military branches. Specific performance details for this particular contract would require further investigation into contract performance reports and any associated award or termination data.

How did the competition level (full and open) potentially influence the final price paid by the government?

Awarding a contract under 'full and open competition' theoretically allows any interested and capable source to submit an offer. This broad competition is intended to drive down prices as contractors vie for the award by offering their best value proposals. In this case, it suggests that multiple companies were able to bid on the engineering services requirement. The extent to which this competition was effective in securing the lowest possible price depends on factors not fully detailed here, such as the number of actual bids received, the technical complexity of the requirement, and the government's evaluation criteria. However, compared to sole-source or limited competition, full and open competition generally provides a stronger basis for price reasonableness.

What is the significance of the PSC code 'R425' and the NAICS code '541330' in understanding this contract's scope?

The Product/Service Code (PSC) 'R425' signifies 'Engineering and Technical Services'. This broad category indicates that the contract involved professional services related to engineering, design, analysis, and technical support. The North American Industry Classification System (NAICS) code '541330' corresponds to 'Engineering Services'. This classification further solidifies that the contractor was providing specialized engineering expertise. Together, these codes suggest the contract was for high-level technical support, likely involving skilled engineers and technicians working on complex defense systems, rather than simple labor or manufacturing.

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

Offers Received: 4

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Engility Corporation (UEI: 783837672)

Address: 3750 CENTERVIEW DR, CHANTILLY, VA, 20151

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAB0702DP001

IDV Type: IDC

Timeline