DoD's $53M Engineering Services Contract with Torch Technologies Inc. Shows Fair Value Amidst Limited Competition

Contract Overview

Contract Amount: $53,252,397 ($53.3M)

Contractor: Torch Technologies Inc

Awarding Agency: Department of Defense

Start Date: 2017-02-15

End Date: 2022-02-14

Contract Duration: 1,825 days

Daily Burn Rate: $29.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TEST PROVISIONING IGF::OT::IGF

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $53.3 million to TORCH TECHNOLOGIES INC for work described as: TEST PROVISIONING IGF::OT::IGF Key points: 1. The contract's value appears reasonable when benchmarked against similar engineering services, suggesting good value for money. 2. Competition was limited, raising questions about potential price discovery and whether taxpayers received the best possible pricing. 3. The Cost Plus Fixed Fee (CPFF) contract type introduces some cost overrun risk, though the fixed fee component provides a ceiling. 4. Performance context is crucial; understanding the specific engineering services delivered and their impact on missile defense is key to full assessment. 5. This contract falls within the Engineering Services sector, a critical component of defense procurement. 6. The contract's duration of 1825 days (5 years) indicates a significant, long-term commitment by the Missile Defense Agency.

Value Assessment

Rating: good

The total award amount of $53.25 million for 5 years of engineering services appears to be within a reasonable range when compared to similar contracts for specialized engineering support within the defense sector. While specific per-unit cost data is not available, the fixed fee component of the CPFF contract structure suggests a degree of cost control. Benchmarking against industry standards for engineering services of this complexity indicates that the pricing is likely competitive, though the limited competition may have influenced the final negotiated rate.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded, leading to a limited number of bidders. With only 3 bidders identified, the level of competition was not robust. This limited competition may have restricted price discovery and potentially led to higher costs than would have been achieved in a broader, more open bidding environment.

Taxpayer Impact: The limited competition means taxpayers may not have benefited from the most aggressive pricing strategies that a larger pool of bidders might have offered. This could translate to a less optimal use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Missile Defense Agency, receiving critical engineering support. Services delivered likely include design, analysis, testing, and integration support for missile defense systems. The geographic impact is primarily within Alabama (ST: AL, SN: ALABAMA), where the contractor is located, and potentially at various DoD installations where missile defense systems are deployed. Workforce implications include employment for engineers and technical specialists at Torch Technologies Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to higher prices for taxpayers.
The CPFF contract type carries inherent risk of cost overruns.
Exclusion of sources in the competition process warrants further investigation into justification.

Positive Signals

Torch Technologies Inc. is a known entity in defense contracting, suggesting a degree of established capability.
The contract was awarded by the Missile Defense Agency, indicating alignment with critical national security objectives.
The fixed fee component in the CPFF contract provides some cost predictability.

Sector Analysis

The engineering services sector within the defense industry is highly specialized and critical for the development and maintenance of advanced military systems. This contract, valued at over $53 million, represents a significant award within this niche. Comparable spending benchmarks for similar engineering support contracts within the DoD can vary widely based on the specific technologies and complexity involved, but this award appears substantial for specialized missile defense engineering.

Small Business Impact

There is no indication that this contract involved small business set-asides (SB: false). Consequently, the direct impact on small businesses through this specific award is likely minimal. However, Torch Technologies Inc. may engage small businesses as subcontractors, which would be a secondary channel for small business participation. Further analysis of subcontracting plans would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Missile Defense Agency's contracting officers and program managers. Accountability measures are embedded within the contract terms, including performance requirements and reporting obligations. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems Procurement
Engineering and Technical Services
Department of Defense Research and Development
Cost-Plus-Fixed-Fee Contracts
Defense Contract Management Agency

Risk Flags

Limited competition may impact price.
CPFF contract type carries cost overrun risk.
Exclusion of sources requires justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.3 million to TORCH TECHNOLOGIES INC. TEST PROVISIONING IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is TORCH TECHNOLOGIES INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $53.3 million.

What is the period of performance?

Start: 2017-02-15. End: 2022-02-14.

What is the track record of Torch Technologies Inc. in delivering engineering services for missile defense programs?

Torch Technologies Inc. has a documented history of providing engineering and technical services to the Department of Defense, including specific support for missile defense initiatives. Their presence in Alabama, a hub for defense contracting, suggests established relationships and expertise within the sector. While specific performance metrics for this particular contract (2017-2022) are not detailed in the provided data, their continued engagement in similar contracts indicates a perceived capability by awarding agencies. A deeper dive into past performance reviews and contract close-out data would offer a more comprehensive understanding of their track record.

How does the $53.25 million award compare to other engineering services contracts awarded by the Missile Defense Agency?

The $53.25 million award over five years places this contract as a moderately significant investment for the Missile Defense Agency (MDA). MDA frequently awards contracts in the tens to hundreds of millions for complex engineering, research, and development efforts related to missile defense systems. While not the largest single award, it represents a substantial commitment to specialized engineering support. Benchmarking against other CPFF contracts for similar services within MDA would provide a clearer picture of its relative value and scale within the agency's overall procurement landscape.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type used here?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is that the contractor may have less incentive to control costs once the 'cost' portion is being reimbursed, as their profit (the 'fixed fee') is predetermined. If costs escalate beyond initial projections, the government bears the burden of these increased expenses, potentially leading to the contract exceeding its initial estimated cost ceiling. However, the fixed fee does provide a ceiling on the contractor's profit, mitigating the risk of excessive profit margins compared to a pure Cost Plus Percentage of Cost (CPPC) contract. Effective oversight and robust cost accounting standards are crucial to manage these risks.

What does 'Full and Open Competition After Exclusion of Sources' imply for the procurement process?

'Full and Open Competition After Exclusion of Sources' implies that the solicitation was initially intended for broad competition, but specific sources were subsequently excluded from consideration. This exclusion must be justified based on specific criteria outlined in federal acquisition regulations, such as national security concerns, proprietary data limitations, or unique capabilities. While it aims for a degree of openness, the exclusion inherently limits the pool of potential offerors, potentially reducing the competitive pressure on price and innovation compared to unrestricted full and open competition.

What is the significance of the 'Engineering Services' (NAICS 541330) classification for this contract?

The NAICS code 541330, 'Engineering Services,' signifies that the core of this contract involves providing professional engineering services. This typically includes activities such as research, design, development, testing, and analysis related to engineering projects. For a missile defense contract, this classification suggests the work involves highly specialized technical expertise, potentially encompassing areas like aerodynamics, structural analysis, systems integration, and advanced materials science, all crucial for the effectiveness and reliability of missile defense systems.

How has spending on engineering services for missile defense evolved over the contract period (2017-2022)?

The provided data reflects a single contract award of $53.25 million spanning from February 15, 2017, to February 14, 2022. To understand spending evolution, one would need to examine the disbursement of funds throughout this period and compare it to other concurrent or subsequent engineering services contracts awarded by the Missile Defense Agency. Analyzing annual spending trends within the MDA for this specific service category would reveal whether this contract represented a consistent level of investment or a fluctuating one, potentially influenced by program priorities or budget cycles.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ014716R0011

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 4035 CHRIS DR SW STE C, HUNTSVILLE, AL, 35802

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

Financial Breakdown

Contract Ceiling: $71,426,660

Exercised Options: $60,818,242

Current Obligation: $53,252,397

Actual Outlays: $2,954,033

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline