DoD's $21.8M Engineering Services Contract with Delphinus Engineering Shows Fair Value Amidst Limited Competition

Contract Overview

Contract Amount: $21,830,770 ($21.8M)

Contractor: Delphinus Engineering, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-02-08

End Date: 2020-10-30

Contract Duration: 2,821 days

Daily Burn Rate: $7.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MAINTENANCE ENGINEERING AND INDUSTRIAL OPERATIONS SUPPORT SERVICES

Place of Performance

Location: KEYPORT, KITSAP County, WASHINGTON, 98345

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $21.8 million to DELPHINUS ENGINEERING, INC. for work described as: MAINTENANCE ENGINEERING AND INDUSTRIAL OPERATIONS SUPPORT SERVICES Key points: 1. Contract value represents a moderate investment in specialized engineering support. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. Performance duration of over 7 years suggests a stable, long-term need. 4. The contract type (Cost Plus Fixed Fee) requires careful oversight to manage costs. 5. Focus on maintenance engineering and industrial operations indicates critical infrastructure support. 6. Geographic concentration in Washington state may limit broader economic impact.

Value Assessment

Rating: fair

The contract's total value of approximately $21.8 million over its 7-year period is moderate for specialized engineering services. Benchmarking against similar contracts is challenging without more specific service details, but the Cost Plus Fixed Fee (CPFF) structure necessitates close monitoring to ensure costs remain reasonable and do not escalate beyond initial estimates. The fixed fee component provides some cost control, but the overall value proposition hinges on efficient execution and effective management of direct costs by Delphinus Engineering.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under full and open competition, but the data indicates only 3 bidders participated. While not a sole-source award, a limited number of bidders can sometimes lead to less aggressive pricing than a more robustly competed scenario. The Department of the Navy's approach to competition for this specific requirement would need further examination to understand if barriers to entry existed for other potential bidders or if the market for these specialized services is inherently limited.

Taxpayer Impact: With only three bidders, taxpayers may not have benefited from the most competitive pricing possible. This level of competition suggests that the government might have paid a premium compared to a scenario with a larger pool of interested and capable contractors.

Public Impact

The Department of the Navy benefits from specialized engineering and industrial operations support, ensuring the readiness and maintenance of critical assets. Services delivered likely include technical expertise, planning, and execution of maintenance and operational tasks within naval facilities. The geographic impact is concentrated in Washington state, supporting local employment and businesses within that region. Workforce implications include the potential for skilled engineering jobs and support roles within Delphinus Engineering and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type requires diligent oversight to prevent cost overruns.
Limited competition (3 bidders) may have resulted in suboptimal pricing for taxpayers.
Contract duration of over 7 years necessitates ongoing performance monitoring to ensure sustained quality.
Geographic concentration in Washington state limits broader national economic benefits.

Positive Signals

Award to Delphinus Engineering, Inc. suggests a track record of meeting the Navy's specific engineering needs.
The contract's long duration indicates a stable and valued service provider.
Full and open competition, even with limited bidders, provides a baseline for accountability.
The specific NAICS code (541330) points to specialized engineering expertise being acquired.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader professional, scientific, and technical services industry. This sector supports a wide range of government and private-sector activities, from defense and infrastructure to research and development. Spending in this area is often driven by complex project requirements and the need for specialized technical expertise. Comparable spending benchmarks would depend on the specific nature of the engineering support provided, but the $21.8 million over seven years suggests a significant, ongoing requirement for specialized maintenance and industrial operations.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While Delphinus Engineering, Inc. may be a small business itself, the contract was not structured to prioritize small business prime contractors. There is no explicit information on subcontracting plans, so the extent to which small businesses will benefit from subcontracting opportunities remains unclear. This contract may not significantly impact the small business ecosystem unless Delphinus actively engages small businesses for specialized support.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to ensure that costs are allowable, allocable, and reasonable, and that the fixed fee is earned appropriately. Transparency is facilitated through contract reporting mechanisms, though specific details on public accessibility of performance reports are not provided. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Engineering Support Services
Military Base Maintenance and Operations Contracts
Defense Industrial Base Support Services

Risk Flags

Cost Plus Fixed Fee contract type requires enhanced oversight.
Limited competition may impact price realization.
Geographic concentration limits broader economic impact.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.8 million to DELPHINUS ENGINEERING, INC.. MAINTENANCE ENGINEERING AND INDUSTRIAL OPERATIONS SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is DELPHINUS ENGINEERING, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $21.8 million.

What is the period of performance?

Start: 2013-02-08. End: 2020-10-30.

What is Delphinus Engineering, Inc.'s track record with the Department of Defense?

Delphinus Engineering, Inc. has a history of securing contracts with the Department of Defense, including this significant award for maintenance engineering and industrial operations support services. Their ability to win and perform on contracts of this duration and value suggests a demonstrated capability to meet the Navy's requirements. Further analysis would involve examining past performance reviews, any documented issues or commendations on previous DoD contracts, and their overall portfolio of government work to fully assess their track record. This specific contract, awarded in 2013 and ending in 2020, indicates a sustained relationship and likely successful performance over a considerable period.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar engineering services?

The CPFF structure is common for complex projects where the scope of work is not precisely defined at the outset, allowing for flexibility as the project evolves. It involves reimbursing the contractor for allowable costs plus a fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government but can be advantageous when innovation or adaptation is required. Cost-Reimbursement contracts without a fixed fee (e.g., Cost Plus Incentive Fee) might offer better alignment of incentives if performance metrics are well-defined. For specialized engineering services, CPFF is often chosen to balance the need for technical expertise with cost management, though it requires robust government oversight to prevent cost escalation.

What are the primary risks associated with a CPFF contract of this magnitude and duration?

The primary risks associated with this CPFF contract include potential cost overruns if the contractor's direct costs are not managed efficiently or if unforeseen technical challenges arise. There's also a risk of scope creep, where the project expands beyond its original intent without adequate adjustments to the fee or schedule. Ensuring the 'allowability' and 'reasonableness' of costs requires diligent government oversight. Furthermore, the fixed fee, while providing some predictability, might not adequately incentivize exceptional performance if not tied to specific metrics. The long duration (over 7 years) amplifies these risks, necessitating sustained vigilance from the contracting agency.

How does the $21.8 million spending compare to historical trends for similar engineering support services within the Navy?

Without specific historical data for comparable Navy engineering support services, a direct comparison is difficult. However, $21.8 million spread over approximately 7 years equates to an average annual spend of roughly $3.1 million. This figure is moderate for specialized engineering support within a large organization like the Department of the Navy, which manages extensive infrastructure and complex systems. Annual spending on such services can fluctuate significantly based on modernization efforts, maintenance cycles, and specific project requirements. To provide a more precise benchmark, one would need to analyze spending patterns for similar NAICS codes (e.g., 541330) awarded by the Navy over comparable periods.

What are the implications of awarding this contract in Washington state for workforce development?

Awarding this contract in Washington state has positive implications for local workforce development, particularly in areas requiring specialized engineering and technical skills. Delphinus Engineering, Inc. likely hires or utilizes local talent for project execution, contributing to job creation and skill enhancement within the region's engineering sector. The sustained nature of the contract over several years provides job stability for those employed. However, the geographic concentration means that the direct economic benefits and workforce impact are localized, potentially limiting broader national workforce development opportunities in this specific instance.

Could the limited competition (3 bidders) indicate a lack of qualified contractors in the market for these services?

A limited number of bidders (3 in this case) for a federal contract can suggest several possibilities. It might indicate a genuinely niche market with few companies possessing the required specialized expertise, security clearances, or geographic presence. Alternatively, the solicitation process itself might have inadvertently deterred potential bidders through overly restrictive requirements, complex proposal instructions, or insufficient outreach. Without further information on the solicitation's details and market research conducted by the agency, it's difficult to definitively conclude whether the limited competition reflects market scarcity or potential shortcomings in the procurement strategy. This warrants further investigation into the barriers faced by potential bidders.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002411R3339

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 650 BALDWIN TOWER BLVD, EDDYSTONE, PA, 19022

Business Categories: Category Business, Minority Owned Business, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,552,383

Exercised Options: $22,544,056

Current Obligation: $21,830,770

Subaward Activity

Number of Subawards: 37

Total Subaward Amount: $4,481,601

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4033

IDV Type: IDC

Timeline