DoD's $81M engineering services contract awarded to RAM-SYSTEM GMBH shows limited competition and raises value concerns

Contract Overview

Contract Amount: $80,990,851 ($81.0M)

Contractor: Ram-System Gmbh

Awarding Agency: Department of Defense

Start Date: 2017-06-23

End Date: 2021-06-01

Contract Duration: 1,439 days

Daily Burn Rate: $56.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF

Plain-Language Summary

Department of Defense obligated $81.0 million to RAM-SYSTEM GMBH for work described as: IGF::OT::IGF Key points: 1. The contract's value of $81 million over nearly four years suggests a significant investment in engineering services. 2. Awarded on a sole-source basis, the lack of competition limits price discovery and potentially inflates costs. 3. The firm fixed-price contract type offers some cost certainty but doesn't mitigate the risk of overpayment due to limited competition. 4. Performance duration of 1439 days indicates a long-term need for these engineering services. 5. The absence of small business set-aside flags raises questions about opportunities for smaller firms in this procurement. 6. The engineering services sector is broad, and understanding the specific niche of this contract is crucial for benchmarking.

Value Assessment

Rating: questionable

Benchmarking the value of this $81 million contract is challenging without specific details on the engineering services provided. However, the sole-source award mechanism inherently limits the government's ability to secure the best possible price. Compared to potentially competitively bid contracts for similar engineering services, this award may represent a higher cost to taxpayers due to the lack of market pressure. Further analysis of the specific deliverables and market rates for comparable services is needed to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not openly competed. This indicates that only one source, RAM-SYSTEM GMBH, was deemed capable or available to fulfill the requirement. The lack of multiple bidders means there was no competitive pressure to drive down prices or encourage innovative solutions. This approach is typically reserved for unique capabilities or urgent needs where competition is not feasible.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically seen in competitive bidding processes. This limits the efficient use of public funds.

Public Impact

The Department of the Navy benefits from specialized engineering services essential for its operations. The contract supports the maintenance and development of critical naval infrastructure and systems. The geographic impact is likely concentrated around naval bases or facilities where these engineering services are required. The contract may support a specialized engineering workforce, potentially including highly skilled professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source award requires further scrutiny.
Absence of small business participation raises concerns about equitable distribution of federal contracting opportunities.
The significant dollar value warrants close monitoring of performance and deliverables to ensure value.

Positive Signals

Firm fixed-price contract provides cost certainty for the government once awarded.
Long-term duration suggests a stable and ongoing need for the services.
Award to a specific company implies a potentially unique or specialized capability meeting a defined requirement.

Sector Analysis

Engineering services represent a broad sector encompassing design, consulting, and technical support across various industries. The Department of Defense is a major consumer of these services, particularly for complex defense systems and infrastructure. Benchmarking this $81 million contract would involve comparing it to other large-scale engineering service contracts within the defense sector, considering the specific technical requirements and the competitive landscape for such specialized expertise.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). There is no information provided regarding subcontracting plans. The sole-source nature of the award further suggests limited opportunities for small businesses to participate, either as prime contractors or subcontractors, unless specifically included by the prime contractor. This procurement approach may not contribute to the government's small business utilization goals.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The Inspector General's office for the Department of Defense may also conduct audits or investigations into the contract's execution and financial management. Transparency is limited by the sole-source nature, but contract performance reports and payment data should be available through federal procurement databases.

Related Government Programs

Department of Defense Engineering Services
Naval Facilities and Infrastructure Support
Sole-Source Defense Contracts
Firm Fixed-Price Defense Contracts

Risk Flags

Sole-source award
Potential for overpayment due to lack of competition
Limited transparency on justification for sole-source
No indication of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $81.0 million to RAM-SYSTEM GMBH. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is RAM-SYSTEM GMBH.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $81.0 million.

What is the period of performance?

Start: 2017-06-23. End: 2021-06-01.

What specific engineering services were procured under this contract?

The provided data classifies this contract under NAICS code 541330, which corresponds to 'Engineering Services.' This broad category can encompass a wide range of activities, including design, consulting, research, and development related to engineering projects. For this specific contract awarded to RAM-SYSTEM GMBH by the Department of the Navy, the exact nature of the engineering services is not detailed. However, given the significant value ($81 million) and the duration (nearly four years), it likely involves complex and critical engineering support for naval systems, infrastructure, or platforms. Further investigation into contract line item numbers (CLINs) or associated documentation would be necessary to ascertain the precise technical scope of work.

How does the $81 million cost compare to similar engineering service contracts within the Department of Defense?

Directly comparing the $81 million cost without knowing the specific engineering services rendered is difficult. However, the Department of Defense frequently awards large contracts for engineering services, often in the tens or hundreds of millions of dollars, particularly for major weapon systems, shipbuilding, or infrastructure projects. The key differentiator here is the sole-source award. Competitively procured, similar-scope engineering services might yield lower prices due to market competition. The fact that this contract was sole-source suggests either a highly specialized need that only RAM-SYSTEM GMBH could meet, or a potential lack of robust market research to identify alternative sources. Without comparative data on competitively bid contracts for identical or highly similar services, it's challenging to definitively state if $81 million is high or low, but the procurement method raises concerns about achieving optimal value.

What are the risks associated with a sole-source award of this magnitude?

A sole-source award of $81 million carries several significant risks. Firstly, the primary risk is the potential for overpayment. Without competition, there's no market pressure to ensure the government receives the best possible price for the services. This can lead to inflated costs compared to what might be achieved through a competitive process. Secondly, there's a risk of reduced innovation. When only one contractor is involved, there may be less incentive to develop novel or more efficient solutions. Thirdly, it raises concerns about the government's acquisition strategy – was adequate market research conducted to ensure a sole-source award was truly necessary? Finally, it limits opportunities for other capable firms, potentially impacting the broader industrial base and future sourcing options.

What is the track record of RAM-SYSTEM GMBH with the federal government, particularly the Department of Defense?

The provided data indicates that RAM-SYSTEM GMBH has received this $81 million definitive contract from the Department of the Navy. This suggests a prior relationship and likely successful past performance, as agencies typically award significant contracts to contractors with a proven track record. However, the limited data does not provide a comprehensive overview of their entire federal contracting history, including the number of previous awards, their total value, or specific performance reviews. A deeper dive into federal procurement databases like SAM.gov or FPDS would be necessary to fully assess RAM-SYSTEM GMBH's track record, including any other contracts they may hold or have held with the DoD or other federal agencies, and to identify any potential performance issues or commendations.

How does the firm fixed-price contract type mitigate or exacerbate risks in this sole-source scenario?

The firm fixed-price (FFP) contract type is generally favored by the government as it shifts the risk of cost overruns to the contractor. This means RAM-SYSTEM GMBH is obligated to complete the work for the agreed-upon price, regardless of their actual costs. In this sole-source scenario, the FFP structure provides cost certainty for the government *once the price is set*. However, it does not inherently guarantee that the initial fixed price was the best possible price achievable. The risk here is that the 'fixed price' itself might be inflated due to the lack of competition. So, while the FFP protects the government from cost increases during performance, it doesn't protect against paying a potentially non-competitive price from the outset.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002417R5430

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: DAIMLERSTR. 11, OTTOBRUNN

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $80,990,851

Exercised Options: $80,990,851

Current Obligation: $80,990,851

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline