DoD's $35.5M Peraton contract for TMPC product upgrades awarded via sole-source vehicle

Contract Overview

Contract Amount: $35,550,157 ($35.6M)

Contractor: Peraton Technology Services Inc.

Awarding Agency: Department of Defense

Start Date: 2023-11-09

End Date: 2027-06-30

Contract Duration: 1,329 days

Daily Burn Rate: $26.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY24 TMPC PRODUCT UPGRADES

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $35.6 million to PERATON TECHNOLOGY SERVICES INC. for work described as: FY24 TMPC PRODUCT UPGRADES Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant duration of 1329 days suggests a long-term need for product evolution. 3. Cost-plus-fixed-fee pricing structure may incentivize cost overruns. 4. Engineering services sector sees substantial government investment. 5. Contractor Peraton Technology Services Inc. has a history of large federal awards. 6. Virginia is a key state for federal contracting, particularly in defense.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific product focus. The cost-plus-fixed-fee (CPFF) structure, while common for complex R&D or services where costs are uncertain, can lead to higher overall expenditures compared to fixed-price contracts if not managed diligently. Without competitive bids, it's difficult to ascertain if the fixed fee represents a fair return for the contractor's effort or if the estimated costs are optimized. The contract's value of approximately $35.5 million over its term warrants scrutiny regarding cost efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This approach is typically employed when only one responsible source can provide the required supplies or services. While this can ensure access to specialized capabilities, it significantly reduces the potential for price discovery through competition. The absence of multiple bidders means the government did not benefit from a competitive bidding process that could drive down costs.

Taxpayer Impact: Taxpayers may face higher costs due to the lack of competitive pressure. Without competing offers, the government cannot be assured it is receiving the best possible price for these product upgrades.

Public Impact

The Department of the Navy benefits from upgraded TMPC products, potentially enhancing operational capabilities. The services delivered are engineering-focused, supporting the maintenance and improvement of critical defense systems. The primary geographic impact is likely within the Department of Defense's operational theaters and supporting infrastructure. The contract supports specialized engineering roles, potentially impacting the workforce within the defense technology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not closely monitored.
Lack of transparency in the sole-source justification process raises concerns about fairness and optimal resource allocation.

Positive Signals

Contract addresses critical product upgrades for the Department of the Navy, ensuring technological relevance.
Peraton Technology Services Inc. is an established contractor with experience in defense sector projects.
The extended duration suggests a commitment to long-term system support and development.

Sector Analysis

The federal government's spending on engineering services, categorized under NAICS code 541330, is substantial, reflecting the ongoing need for technical expertise in defense, infrastructure, and research. This contract for TMPC product upgrades fits within this broad sector, specifically supporting defense modernization efforts. Comparable spending benchmarks in this area often involve complex system integration, research and development, and specialized technical support, with contract values frequently reaching tens or hundreds of millions of dollars.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like Peraton Technology Services Inc. suggests that the primary focus is on the prime's capabilities. This may limit opportunities for small businesses to participate directly in this specific contract, although they might be involved in the broader defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, scrutiny may be heightened to ensure the necessity of the sole-source justification and the reasonableness of costs. Transparency regarding the specific product upgrades and performance metrics would be crucial for effective oversight. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

Department of Defense IT Modernization Programs
Navy Weapon Systems Development
Engineering and Technical Services Contracts
Defense Research and Development

Risk Flags

Sole-source award may limit cost savings.
Cost-plus-fixed-fee structure requires diligent cost oversight.
Lack of competition could impact innovation and price discovery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.6 million to PERATON TECHNOLOGY SERVICES INC.. FY24 TMPC PRODUCT UPGRADES

Who is the contractor on this award?

The obligated recipient is PERATON TECHNOLOGY SERVICES 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 $35.6 million.

What is the period of performance?

Start: 2023-11-09. End: 2027-06-30.

What is the specific nature of the TMPC product upgrades, and how do they enhance the Department of the Navy's capabilities?

The provided data does not specify the exact nature of the TMPC (which likely stands for Tactical, Mobile, or similar designation) product upgrades. However, given the context of a Department of the Navy contract awarded for engineering services, these upgrades are likely related to enhancing the functionality, performance, security, or maintainability of existing tactical or mobile systems. This could involve software enhancements, hardware component replacements or additions, or integration with newer technologies. The goal would be to ensure these systems remain effective, relevant, and capable of meeting evolving operational requirements in the field, thereby improving the Navy's overall mission readiness and effectiveness.

How does the cost-plus-fixed-fee (CPFF) pricing structure compare to other contract types for similar engineering services, and what are the associated risks?

Cost-plus-fixed-fee (CPFF) contracts are often used when the scope of work is not precisely defined, or when there is significant uncertainty about the costs involved, such as in research and development or complex system upgrades. In a CPFF contract, the government reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing the contractor's profit. Compared to fixed-price contracts, CPFF offers greater flexibility but carries a higher risk of cost overruns, as the contractor is incentivized to incur costs to achieve the fixed fee. This contrasts with fixed-price contracts, where the contractor bears the risk of cost overruns but also benefits from cost savings. For engineering services, fixed-price contracts are generally preferred when requirements are well-defined, as they provide better cost certainty for the government. The primary risk with CPFF is that the government may end up paying more than necessary if costs are not rigorously managed and controlled.

What is Peraton Technology Services Inc.'s track record with the Department of Defense, particularly on sole-source contracts?

Peraton Technology Services Inc. is a significant federal contractor with a substantial history of awards across various government agencies, including the Department of Defense (DoD). While specific details on their sole-source contract history with the DoD are not provided in this data snippet, Peraton has been awarded numerous large contracts, often in areas such as IT services, cybersecurity, and mission support. Their extensive portfolio suggests a strong working relationship and established capabilities that the DoD relies upon. However, the frequency and nature of their sole-source awards would require a deeper analysis of federal procurement databases to fully assess their track record in this specific contracting mechanism.

Given the sole-source nature, what mechanisms are in place to ensure the 'fairness' and 'reasonableness' of the contract's price and terms?

When a contract is awarded sole-source, the government relies on specific mechanisms to ensure fair and reasonable pricing and terms, even without competition. This typically involves a robust price analysis conducted by the contracting officer. This analysis may include reviewing historical pricing data for similar products or services, comparing proposed costs to independent government cost estimates, evaluating the contractor's proposed cost elements (labor, materials, overhead), and assessing the contractor's cost accounting system. For sole-source procurements exceeding certain thresholds, a formal Truth in Negotiations (TIN) certificate may be required from the contractor, obligating them to submit accurate and complete cost and pricing data. Additionally, contract clauses related to cost accounting standards and audit rights provide further oversight.

How does this $35.5 million contract compare to the Department of the Navy's overall spending on engineering services or product upgrades in recent fiscal years?

Without specific data on the Department of the Navy's total annual spending on engineering services or product upgrades, a direct comparison is difficult. However, $35.5 million represents a significant investment for a single contract, even within the large budget of the Navy. The Navy, like other branches of the DoD, consistently spends billions of dollars annually on research, development, procurement, and sustainment of its vast array of platforms and systems. This contract likely represents a portion of their broader strategy for maintaining and modernizing specific technological assets. To provide a more precise comparison, one would need to analyze historical Navy spending patterns within the engineering services (NAICS 541330) or related categories to understand if this award is typical, above, or below average for such upgrades.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 15050 CONFERENCE CTR DR, CHANTILLY, VA, 20151

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

Financial Breakdown

Contract Ceiling: $37,758,818

Exercised Options: $37,564,793

Current Obligation: $35,550,157

Actual Outlays: $13,855

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $1,205,542

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001921G0010

IDV Type: BOA

Timeline