DoD awards $38.8M engineering support contract to SAIC, raising questions about competition and value

Contract Overview

Contract Amount: $38,760,087 ($38.8M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Defense

Start Date: 2015-02-27

End Date: 2025-01-17

Contract Duration: 3,612 days

Daily Burn Rate: $10.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: IGF::OT::IGF PEO IWS 1.0, 4.0, 7.0 AND 9.0 ENGINEERING SUPPORT SERVICES (ESS)

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $38.8 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: IGF::OT::IGF PEO IWS 1.0, 4.0, 7.0 AND 9.0 ENGINEERING SUPPORT SERVICES (ESS) Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract duration of 10 years suggests long-term reliance on a single provider. 3. Cost-plus contract type introduces risk of cost overruns without strong oversight. 4. Engineering services sector is competitive, making sole-source award notable. 5. Lack of competition may hinder innovation and access to specialized expertise. 6. Contract value is substantial, warranting close scrutiny of performance and pricing.

Value Assessment

Rating: questionable

The contract's cost-plus incentive fee structure, combined with a sole-source award, raises concerns about value for money. Without competitive bidding, it is difficult to benchmark pricing against market rates or similar contracts. The long duration of the contract (10 years) further amplifies these concerns, as it locks the government into a potentially suboptimal pricing arrangement for an extended period. The total award value of $38.8 million over this timeframe necessitates rigorous performance monitoring to ensure costs remain justified.

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. This approach limits the opportunity for multiple vendors to bid, which typically drives down prices and encourages innovation. The absence of competition means that the government did not benefit from a marketplace evaluation of capabilities and pricing. This raises questions about whether the government obtained the best possible value and whether alternative solutions were adequately explored.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. Without competing the requirement, there is a risk that the selected contractor's pricing is not as aggressive as it might have been under a competitive scenario.

Public Impact

The Department of Defense benefits from specialized engineering support services crucial for its operations. The contract supports the development and maintenance of critical defense systems. Services are likely concentrated in Virginia, where the Defense Contract Management Agency is located. The contract supports highly skilled engineering jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost-plus contract type can incentivize spending without strict cost controls.
Long contract duration (10 years) reduces flexibility and opportunities for re-competition.
Lack of transparency in the sole-source justification process.
Potential for vendor lock-in and reduced innovation over the contract's life.

Positive Signals

Contract awarded to a known entity (SAIC) with existing defense sector experience.
Cost-plus incentive fee structure aims to align contractor and government interests.
Long-term nature of the contract provides stability for critical engineering support.
Potential for deep institutional knowledge and specialized expertise from SAIC.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector is characterized by specialized expertise and often involves complex project management. The market size for engineering services supporting the federal government, particularly the Department of Defense, is substantial. This contract represents a significant investment in maintaining and advancing defense capabilities through specialized engineering support, fitting within a landscape of numerous similar contracts for technical and engineering expertise.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This suggests that the primary awardee, Science Applications International Corporation (SAIC), is likely a large business. The absence of small business set-asides or explicit subcontracting goals means that the direct economic impact on the small business ecosystem for this specific contract may be limited, unless SAIC voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense, specifically the Defense Contract Management Agency (DCMA), which is listed as the servicing agency. The cost-plus incentive fee (CPIF) structure implies that performance metrics and cost controls will be monitored to incentivize efficiency. However, the sole-source nature of the award and the cost-plus element necessitate robust oversight to prevent cost overruns and ensure accountability. Transparency regarding the justification for the sole-source award and ongoing performance reporting would be key oversight mechanisms.

Related Government Programs

Department of Defense Engineering Services Contracts
Defense Contract Management Agency Support Services
Science Applications International Corporation (SAIC) Contracts
Cost-Plus Incentive Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award lacks competition.
Cost-plus contract type carries inherent cost overrun risk.
Long contract duration may lead to obsolescence.
Limited transparency on justification for sole-source award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.8 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. IGF::OT::IGF PEO IWS 1.0, 4.0, 7.0 AND 9.0 ENGINEERING SUPPORT SERVICES (ESS)

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $38.8 million.

What is the period of performance?

Start: 2015-02-27. End: 2025-01-17.

What is the specific justification provided by the Department of Defense for awarding this significant engineering support contract on a sole-source basis to Science Applications International Corpora

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as urgency, unique capabilities possessed by only one vendor, or when competition is deemed not to be in the government's best interest. For a contract of this duration and value in the engineering services sector, the justification would likely need to demonstrate why no other qualified source could meet the requirement. Without this official justification, it is difficult to assess the validity of the sole-source decision and its potential impact on cost and competition.

How does the total contract value of $38.8 million over approximately 10 years compare to similar engineering support contracts awarded by the Department of Defense?

Comparing this $38.8 million contract over 10 years (approximately $3.88 million annually) requires context on the scope and nature of the engineering services. The Department of Defense awards numerous engineering support contracts, ranging from small, specialized tasks to large, comprehensive programs. Without knowing the specific technical requirements, complexity, and geographic scope of this SAIC contract, a direct comparison is challenging. However, for long-term, broad engineering support, this annual value appears moderate, but the sole-source nature and 10-year duration are significant factors that warrant scrutiny against potentially more competitively priced, shorter-term contracts for similar services.

What are the primary risks associated with the Cost Plus Incentive Fee (CPIF) contract type used for this award, especially given the sole-source nature?

The primary risk with a CPIF contract is that the government may end up paying more than necessary if cost controls are not rigorously enforced. While the 'incentive fee' component aims to reward the contractor for meeting or exceeding targets (cost, schedule, performance), the 'cost plus' aspect means the government guarantees to cover all allowable costs. In a sole-source scenario, the baseline cost targets might be less aggressively negotiated than in a competitive environment. This combination requires robust government oversight to ensure the contractor is motivated to control costs effectively and that the incentive structure truly drives desired outcomes without simply inflating the final price.

What is Science Applications International Corporation's (SAIC) track record with the Department of Defense, particularly concerning engineering support services?

Science Applications International Corporation (SAIC) is a major defense contractor with a long history of providing a wide range of services to the Department of Defense, including extensive engineering, IT, and technical support. They have a significant presence in the defense sector and have held numerous large contracts across various military branches and agencies. Their track record generally includes experience with complex systems engineering, program management, and lifecycle support for defense platforms. However, like any large contractor, specific contract performance can vary, and a detailed review of their past performance on similar engineering contracts would be necessary to fully assess their suitability and reliability for this specific requirement.

Given the 10-year duration, what are the potential implications for technological obsolescence or the need for future innovation in the engineering services provided?

A 10-year contract duration presents a significant risk of technological obsolescence and can stifle innovation. Over a decade, technology landscapes, particularly in engineering and defense, can change dramatically. If the contract is not structured with flexibility for incorporating new technologies or adapting to evolving requirements, the services provided may become outdated. Furthermore, a long-term sole-source arrangement can reduce the incentive for the contractor to proactively introduce cutting-edge solutions, as they may feel less pressure from potential competitors. The government must ensure contract clauses allow for modernization and incorporate mechanisms to foster innovation throughout the contract's extended term.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002415R5103

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 12010 SUNSET HILLS RD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $50,424,236

Exercised Options: $39,445,762

Current Obligation: $38,760,087

Actual Outlays: $-47,412

Subaward Activity

Number of Subawards: 104

Total Subaward Amount: $92,258,889

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline