DoD's $40.8M Engineering Services Contract with KBR Wyle Shows Moderate Competition and Fair Value

Contract Overview

Contract Amount: $40,834,981 ($40.8M)

Contractor: KBR Wyle Services, LLC

Awarding Agency: Department of Defense

Start Date: 2016-09-30

End Date: 2020-03-15

Contract Duration: 1,262 days

Daily Burn Rate: $32.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CL::IGF TASK ORDER IS FOR SYSTEMS ENGINEERING AND TECHNICAL ASSISTANCE, PROGRAMMATIC, LOGISTICS AND BUSINESS SUPPORT (SETA). R2-3G.

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $40.8 million to KBR WYLE SERVICES, LLC for work described as: IGF::CL::IGF TASK ORDER IS FOR SYSTEMS ENGINEERING AND TECHNICAL ASSISTANCE, PROGRAMMATIC, LOGISTICS AND BUSINESS SUPPORT (SETA). R2-3G. Key points: 1. The contract, valued at $40.8 million, was awarded under full and open competition, suggesting a competitive bidding process. 2. With three bidders, the competition level appears moderate, potentially impacting price discovery. 3. The cost-plus-fixed-fee contract type introduces some risk regarding final cost escalation. 4. The contract duration of 1262 days indicates a significant, long-term need for these services. 5. The services provided fall under engineering services, a broad category with diverse applications. 6. The contract was awarded to KBR Wyle Services, LLC, a known entity in government contracting.

Value Assessment

Rating: fair

The contract's value of $40.8 million over approximately 3.5 years averages to about $11.6 million annually. Benchmarking this against similar large-scale engineering and technical assistance contracts is challenging without more specific service details. However, the cost-plus-fixed-fee structure, while common, can lead to costs exceeding initial estimates if not managed tightly. The fixed fee component provides some cost certainty for the contractor's profit, but the cost reimbursement aspect requires diligent oversight to ensure efficiency and prevent overspending.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. Three bids were received, indicating a moderate level of competition. While more than one bidder is positive, a higher number of bidders typically leads to more robust price discovery and potentially lower prices for the government. The moderate competition suggests that while the government likely received competitive offers, there may have been opportunities for even greater savings with a more crowded field.

Taxpayer Impact: The full and open competition, despite receiving only three bids, suggests that taxpayers likely benefited from a degree of price competition. However, the limited number of bidders may have prevented the government from securing the absolute lowest possible price.

Public Impact

The Department of the Army benefits from specialized systems engineering, technical assistance, programmatic, logistics, and business support. These services are crucial for the effective management and execution of complex defense programs. The contract supports operations within Alabama, indicating a geographic focus for service delivery. The contract likely supports a workforce of engineers, logisticians, and program managers, contributing to specialized employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not closely monitored.
Moderate competition (3 bidders) may have limited the potential for achieving the lowest possible price.
The long duration of the contract (1262 days) requires sustained oversight to ensure continued value and performance.
Lack of specific performance metrics in the provided data makes it difficult to assess contractor efficiency.
The broad nature of 'Engineering Services' could mask inefficiencies if not clearly defined and managed.

Positive Signals

Awarded under full and open competition, ensuring a broad initial pool of potential contractors.
KBR Wyle Services, LLC is an established government contractor with experience in similar support services.
The contract addresses critical support functions (SETA, logistics, programmatic) essential for defense operations.
The fixed fee component provides some predictability in contractor profit margins.
The contract is geographically focused within Alabama, potentially supporting regional economic activity.

Sector Analysis

The Engineering Services sector (NAICS 541330) is a significant component of government contracting, particularly within the Department of Defense. This sector encompasses a wide range of technical and advisory services essential for complex projects. Spending in this area often reflects the government's need for specialized expertise in areas like systems design, program management, and technical support. Comparable spending benchmarks would typically be found within large-scale defense support contracts, where multi-million dollar awards for engineering and technical assistance are common.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The prime contractor, KBR Wyle Services, LLC, is likely a large business, and any subcontracting opportunities would be at their discretion, not mandated by a small business set-aside.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight is necessary to monitor expenditures against the cost ceiling and ensure the fixed fee is earned appropriately. Transparency is typically managed through contract reporting mechanisms and performance reviews. While specific Inspector General (IG) jurisdiction isn't detailed, the DoD IG generally has oversight over defense spending, including potential audits or investigations into contract performance and financial management.

Related Government Programs

Defense Engineering Services
Systems Engineering and Technical Assistance (SETA)
Logistics Support Services
Program Management Support
Department of Defense IT and Professional Services

Risk Flags

Cost-plus-fixed-fee contract type
Moderate competition level
Long contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.8 million to KBR WYLE SERVICES, LLC. IGF::CL::IGF TASK ORDER IS FOR SYSTEMS ENGINEERING AND TECHNICAL ASSISTANCE, PROGRAMMATIC, LOGISTICS AND BUSINESS SUPPORT (SETA). R2-3G.

Who is the contractor on this award?

The obligated recipient is KBR WYLE SERVICES, 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 $40.8 million.

What is the period of performance?

Start: 2016-09-30. End: 2020-03-15.

What is the historical spending trend for KBR Wyle Services, LLC with the Department of Defense?

Analyzing the historical spending trend for KBR Wyle Services, LLC with the Department of Defense requires access to comprehensive contract databases. However, KBR (including its subsidiaries like Wyle) is a well-established government contractor that has consistently secured significant awards across various defense and civilian agencies. Their portfolio typically includes engineering, technical services, logistics, and base operations support. Without specific data on this particular contract's predecessors or other related awards to KBR Wyle, it's difficult to pinpoint a precise trend. Generally, large incumbent contractors like KBR often show consistent, substantial spending over multiple contract cycles, reflecting long-term relationships and broad capabilities. Fluctuations might occur based on specific program needs, budget cycles, and competitive procurements.

How does the average annual cost of this contract compare to similar engineering services contracts awarded by the DoD?

The average annual cost of this contract is approximately $11.6 million ($40.8M / 3.5 years). Comparing this to similar engineering services contracts requires a detailed analysis of the DoD's contract database, filtering for contracts with similar scope (Systems Engineering and Technical Assistance, Programmatic, Logistics, Business Support) and award values. Contracts for large-scale, complex defense programs often involve annual costs ranging from several million to tens of millions of dollars. Given the broad nature of the services, $11.6 million annually could be considered moderate to high, depending on the specific deliverables and the criticality of the support. Contracts for highly specialized R&D or advanced systems engineering might command higher annual values, while more routine logistics support might be lower.

What are the primary risks associated with the cost-plus-fixed-fee (CPFF) contract type used here?

The primary risk associated with the Cost-Plus-Fixed-Fee (CPFF) contract type is the potential for cost escalation. While the 'fixed fee' component provides a defined profit margin for the contractor, the 'cost-plus' element means the government reimburses the contractor's allowable costs. If the contractor's costs exceed initial estimates due to inefficiencies, scope creep, or unforeseen circumstances, the total contract price can increase significantly. This necessitates robust government oversight to scrutinize costs, ensure they are reasonable and allocable, and prevent wasteful spending. The contractor also faces the risk of not being able to cover all allowable costs if their estimates are too low, though the fixed fee provides a baseline profit.

What does the moderate competition level (3 bidders) imply for the government's ability to manage contractor performance?

A moderate competition level, such as three bidders, implies that while the government likely received competitive proposals, the leverage to dictate terms or achieve the absolute lowest price might be somewhat limited compared to a situation with numerous bidders. For managing contractor performance, this means the government must rely heavily on clearly defined performance standards, robust contract administration, and effective communication. The government still holds leverage through contract clauses related to performance, quality, and delivery schedules. However, with fewer alternatives, the government might be more inclined to work collaboratively with the incumbent contractor to resolve performance issues rather than immediately seeking a replacement, which could be more disruptive and costly.

How does the geographic location (Alabama) influence the potential impact or oversight of this contract?

The geographic location of Alabama for this contract primarily influences the local economic impact and potentially the ease of on-site oversight. Awarding the contract to a company operating in or near Alabama could stimulate local employment and business activity within the state. From an oversight perspective, having the contractor's operations located within the state might facilitate physical site visits, performance inspections, and direct communication between government representatives and contractor personnel. This proximity can enhance the government's ability to monitor progress, address issues promptly, and ensure compliance with contract terms, although modern communication technologies often mitigate the need for physical proximity.

What are the potential long-term implications of awarding a 1262-day contract for engineering services?

Awarding a long-term contract, such as this 1262-day (approximately 3.5 years) agreement, suggests a sustained and critical need for the engineering and technical support services being procured. The implications include providing stability and predictability for both the government program and the contractor. For the government, it ensures continuity of essential services without the constant burden of frequent re-procurement. For the contractor, it allows for resource planning, investment in personnel and capabilities, and potentially a stronger return on investment. However, long-term contracts also carry risks, such as the potential for the services to become outdated if technology or requirements evolve rapidly, or for costs to escalate if not managed effectively over the extended period. Regular performance reviews and potential for contract modifications are crucial.

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: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: KBR, Inc. (UEI: 784072626)

Address: 100 QUALITY CIR NW, HUNTSVILLE, AL, 35806

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,295,580

Exercised Options: $41,295,580

Current Obligation: $40,834,981

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15P7T10DD412

IDV Type: IDC

Timeline