DoD's $2M engineering services contract awarded to TEK FUSION GLOBAL INC. raises questions on competition and value

Contract Overview

Contract Amount: $1,998,498 ($2.0M)

Contractor: TEK Fusion Global Inc.

Awarding Agency: Department of Defense

Start Date: 2024-11-18

End Date: 2026-02-06

Contract Duration: 445 days

Daily Burn Rate: $4.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: ENGINEERING SERVICES FOR AATMSV3.

Place of Performance

Location: WILLIAMSBURG, JAMES CITY County, VIRGINIA, 23188

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $2.0 million to TEK FUSION GLOBAL INC. for work described as: ENGINEERING SERVICES FOR AATMSV3. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The duration of 445 days for engineering services warrants scrutiny for efficiency. 3. Lack of competition suggests potential risks in contractor performance and innovation. 4. The contract's value of approximately $2 million requires benchmarking against similar services. 5. The specific nature of 'All Other Professional, Scientific, and Technical Services' necessitates a clear understanding of deliverables. 6. The absence of small business set-asides or subcontracting plans needs further investigation.

Value Assessment

Rating: questionable

The contract value of approximately $2 million for engineering services is difficult to benchmark without specific details on the scope of work. Given the sole-source award, it's challenging to assess if this represents a fair market price. Comparisons to similar sole-source engineering contracts within the Department of Defense would be necessary to determine if the pricing is competitive or inflated. The cost-plus-fixed-fee structure, while common, can sometimes lead to cost overruns if not meticulously managed.

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 only one vendor possesses the unique capabilities or qualifications required for the service. However, the lack of competition limits the government's ability to solicit competitive bids, which can lead to higher prices and reduced innovation. The absence of a competitive process means that the government did not benefit from the price discovery that typically occurs in an open market.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are likely the U.S. Special Operations Command (SOCOM) and its operational units requiring specialized engineering support. The services delivered are described as 'All Other Professional, Scientific, and Technical Services,' indicating a broad range of potential engineering and technical support. The geographic impact is primarily within the United States, likely supporting DoD facilities or operations. Workforce implications may include the direct employment of engineers and technical specialists by TEK FUSION GLOBAL INC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of transparency in the justification for sole-source award.
The broad category of 'All Other Professional, Scientific, and Technical Services' could mask inefficiencies or scope creep.
No indication of small business participation or subcontracting goals.

Positive Signals

Award to a single contractor can ensure continuity of specialized services if unique capabilities are indeed required.
Fixed-fee component of the contract provides some cost certainty for the government.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, a broad category encompassing a wide array of specialized expertise. The federal government is a significant consumer of these services, particularly within defense and intelligence agencies, for tasks ranging from R&D to complex system engineering and support. The market for such services is competitive, but specific niche requirements, as potentially indicated by a sole-source award, can limit the pool of qualified vendors. Benchmarking would require identifying comparable engineering support contracts within SOCOM or similar defense entities.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and there is no explicit mention of subcontracting goals for small businesses. This suggests that opportunities for small businesses to participate in this specific contract may be limited. Further investigation into TEK FUSION GLOBAL INC.'s subcontracting plans would be necessary to understand the potential impact on the small business ecosystem. The absence of set-asides in sole-source awards is not uncommon, but it does reduce avenues for small business engagement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and U.S. Special Operations Command. Accountability measures would be defined by the contract terms, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award and the broad description of services. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Engineering Services
Special Operations Command Support Contracts
Professional, Scientific, and Technical Services
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award lacks competition.
Broad service description may obscure specific deliverables.
No stated small business subcontracting goals.
Cost-plus-fixed-fee structure requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.0 million to TEK FUSION GLOBAL INC.. ENGINEERING SERVICES FOR AATMSV3.

Who is the contractor on this award?

The obligated recipient is TEK FUSION GLOBAL INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $2.0 million.

What is the period of performance?

Start: 2024-11-18. End: 2026-02-06.

What specific engineering services are being provided under this contract, and why was a sole-source award deemed necessary?

The contract is for 'ENGINEERING SERVICES FOR AATMSV3.' The specific nature of AATMSV3 is not detailed in the provided data. A sole-source award is typically justified when only one responsible source is available or capable of meeting the agency's needs. For this contract, the justification for sole-sourcing would likely stem from unique technical expertise, proprietary knowledge, or critical integration requirements related to AATMSV3 that only TEK FUSION GLOBAL INC. possesses. Without the specific justification documentation, it is impossible to definitively state the reasons. However, common justifications include unique technological capabilities, urgent needs where competition is impractical, or follow-on work to a previous contract where the original contractor's knowledge is essential.

How does the contract's estimated value of approximately $2 million compare to similar engineering services contracts awarded by the Department of Defense or U.S. Special Operations Command?

Benchmarking this $2 million contract requires comparing it to similar engineering services contracts, ideally those awarded by SOCOM or other DoD entities for comparable scope and complexity. Without specific details on the 'AATMSV3' system and the precise engineering tasks involved, a direct comparison is challenging. However, federal procurement databases can be queried for contracts in the 'All Other Professional, Scientific, and Technical Services' category (NAICS code 541990) with similar values and award types. If comparable sole-source contracts for specialized engineering support are consistently valued in this range, it might suggest market rates. Conversely, if competitively awarded contracts for similar services are significantly lower, it would raise concerns about the value for money in this sole-source award.

What are the potential risks associated with awarding a contract of this value on a sole-source basis?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for the contractor to innovate or perform efficiently. Taxpayers may not receive the best possible value for their money. There's also a risk that the government may overlook potentially more capable or cost-effective solutions from other vendors. Furthermore, sole-source awards can sometimes be perceived as less transparent, potentially leading to scrutiny regarding fairness and the true necessity of the sole-source justification. Without competition, the government has fewer options if the contractor fails to meet performance expectations.

What is the expected performance period and duration of this contract, and are there any performance metrics or milestones outlined?

The contract has a duration of 445 days, with a start date of November 18, 2024, and an end date of February 6, 2026. This duration suggests a project of moderate length. Performance metrics and milestones would typically be detailed within the contract's statement of work (SOW) or performance work statement (PWS). These would outline the specific deliverables, quality standards, and timelines the contractor must meet. The cost-plus-fixed-fee (CPFF) contract type implies that the contractor is reimbursed for allowable costs plus a fixed fee representing profit. The CPFF structure necessitates clear definition of work and performance expectations to manage costs effectively.

What is the track record of TEK FUSION GLOBAL INC. with the Department of Defense or other federal agencies, particularly on similar engineering services contracts?

Assessing TEK FUSION GLOBAL INC.'s track record would involve reviewing their past performance on federal contracts, especially those with the Department of Defense and U.S. Special Operations Command. This includes examining contract history for on-time delivery, quality of work, adherence to budget, and any past performance issues or disputes. Information on their experience with 'AATMSV3' or similar complex engineering projects would be particularly relevant. A review of federal procurement data and past performance evaluations (if publicly available) would provide insights into their reliability and capability as a contractor for this specific type of service.

Are there any provisions for contract modifications or change orders, and how are they managed under this cost-plus-fixed-fee agreement?

Under a Cost-Plus-Fixed-Fee (CPFF) contract, modifications and change orders are common, especially in complex engineering projects where requirements may evolve. Any changes to the scope of work, deliverables, or timeline would typically be handled through a formal contract modification process. This usually involves a request for change, negotiation of the impact on costs and schedule, and issuance of a formal contract modification signed by both parties. For a CPFF contract, changes to the scope would affect the allowable costs, and potentially the fixed fee if the change significantly alters the contractor's risk or effort. Robust oversight is crucial to ensure modifications are justified and do not lead to uncontrolled cost increases.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: H9224124R0106

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 5425 DISCOVERY PARK BLVD, WILLIAMSBURG, VA, 23188

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $1,998,498

Exercised Options: $1,998,498

Current Obligation: $1,998,498

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: H9224124D0001

IDV Type: IDC

Timeline