DoD's $31.6M engineering services contract awarded to Peraton Inc. lacked competition, raising value concerns
Contract Overview
Contract Amount: $31,580,827 ($31.6M)
Contractor: Peraton Inc.
Awarding Agency: Department of Defense
Start Date: 2009-10-01
End Date: 2012-09-30
Contract Duration: 1,095 days
Daily Burn Rate: $28.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: HERNDON, FAIRFAX County, VIRGINIA, 20170
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $31.6 million to PERATON INC. for work described as: ENGINEERING SERVICES Key points: 1. The contract's value proposition is questionable due to the absence of a competitive bidding process. 2. Limited competition for this significant engineering services award may have led to suboptimal pricing. 3. The sole-source nature of the award presents a potential risk to achieving best value for taxpayer funds. 4. Performance context is limited as the contract was not competed, making direct performance comparisons difficult. 5. This contract falls within the broad 'Engineering Services' sector, a common area for government procurement. 6. The lack of competition suggests potential market failures or specific justifications for sole-source awards.
Value Assessment
Rating: questionable
Awarded without competition, it's difficult to benchmark this contract against similar procurements to assess value for money. The pricing structure (Cost Plus Fixed Fee) can sometimes lead to higher costs if not managed rigorously, especially without competitive pressure to drive efficiency. The total value of $31.6 million for three years of engineering services requires closer scrutiny to ensure it aligns with market rates for comparable services, which is challenging given the procurement method.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. The justification for this approach is not provided in the data, but it implies that only one contractor was deemed capable or available to meet the requirement. The lack of multiple bidders significantly limits price discovery and may result in higher costs for the government compared to a fully competed contract.
Taxpayer Impact: Taxpayers may have paid a premium for these engineering services due to the absence of competitive bidding, which typically drives down prices and encourages innovation.
Public Impact
The Department of Defense benefits from specialized engineering services essential for its operations. The contract supports critical defense infrastructure and technological development. Geographic impact is likely concentrated around the contracting agency's operational areas, primarily Virginia. The contract supports a workforce of engineers and technical specialists.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated costs.
- Sole-source awards can reduce accountability for performance and pricing.
- Absence of competitive pressure might hinder innovation in service delivery.
Positive Signals
- Contract awarded to an established entity (Peraton Inc.) potentially ensuring continuity of services.
- Definitive contract type suggests a clear scope and duration.
- Fixed fee component provides some cost certainty for the government.
Sector Analysis
Engineering services are a critical component of government procurement, supporting a wide array of functions from infrastructure development to advanced research and development. The market for these services is diverse, with numerous firms capable of providing specialized expertise. This contract, valued at approximately $31.6 million over three years, falls within the typical range for significant engineering support contracts. Benchmarking requires comparison with other sole-source or limited-competition engineering contracts within the defense sector, which often have unique requirements driving specific vendor selections.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. The prime contractor, Peraton Inc., is a large business, and any subcontracting opportunities would be at their discretion, not mandated by a small business set-aside requirement.
Oversight & Accountability
Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to manage costs effectively. Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and payment data should be accessible through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.
Related Government Programs
- Defense Engineering Services
- Department of Defense IT Services
- Professional Services Contracts
- Cost-Plus Contracts
- Sole-Source Procurements
Risk Flags
- Lack of Competition
- Potential for Overpricing
- Limited Transparency
- Cost Control Risk (CPFF)
Tags
defense, engineering-services, department-of-defense, definitive-contract, cost-plus-fixed-fee, sole-source, peraton-inc, virginia, large-contract, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $31.6 million to PERATON INC.. ENGINEERING SERVICES
Who is the contractor on this award?
The obligated recipient is PERATON INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $31.6 million.
What is the period of performance?
Start: 2009-10-01. End: 2012-09-30.
What is Peraton Inc.'s track record with the Department of Defense, particularly on similar engineering services contracts?
Peraton Inc. has a significant history of contracting with the Department of Defense across various service areas. While specific details on their performance for this particular $31.6 million engineering services contract are not fully detailed in the provided data, their broader portfolio includes complex IT, mission support, and intelligence services. Analyzing Peraton's past performance ratings, any contract disputes, or awards on similar large-scale engineering projects within DoD would provide further context. However, without direct performance metrics for this specific contract, a comprehensive assessment of their track record remains limited. The fact that this contract was sole-sourced suggests a pre-existing relationship or a specific capability perceived to be unique to Peraton by the agency.
How does the $31.6 million value compare to similar engineering services contracts awarded by the DoD?
The $31.6 million value for three years of engineering services is a substantial amount, placing it in the mid-to-large tier for such contracts. Direct comparison is challenging due to the sole-source nature of this award, which inherently bypasses the competitive benchmarking process. However, similar engineering services contracts, especially those that are competitively procured, can range widely based on scope, duration, and specialization. Competitively awarded contracts for comparable services might see lower per-year costs due to market pressures. Without knowing the specific engineering disciplines or the criticality of the services provided, it's difficult to definitively state if $31.6 million is high or low. However, the lack of competition is a primary indicator that the government may not have achieved the best possible price.
What are the primary risks associated with a sole-source award for engineering services?
The primary risks associated with a sole-source award for engineering services include inflated costs due to the absence of competitive pressure, potential for reduced innovation as the contractor faces no direct market threat, and a diminished incentive to optimize performance or efficiency. Taxpayers may overpay for services that could have been procured at a lower cost through a competitive bidding process. Furthermore, sole-source awards can sometimes mask underlying issues, such as inadequate market research by the agency or a lack of available qualified vendors, which could indicate systemic procurement challenges. Ensuring robust oversight and performance management becomes even more critical in sole-source situations to mitigate these inherent risks.
What is the typical duration and value range for engineering services contracts within the Defense sector?
Engineering services contracts within the Defense sector exhibit a wide range in duration and value, heavily dependent on the specific services required, the complexity of the projects, and the agency's long-term needs. Durations can vary from short-term, project-specific engagements lasting a few months to multi-year indefinite-delivery/indefinite-quantity (IDIQ) contracts that can extend for five or more years, often with option periods. Values can range from tens of thousands of dollars for specialized consulting to billions for large-scale system design and integration. A $31.6 million contract over three years, as seen here, is a significant but not uncommon investment for specialized engineering support critical to defense operations. The 'definitive contract' type suggests a fixed scope and duration, which is typical for well-defined engineering tasks.
How does the Cost Plus Fixed Fee (CPFF) contract type influence cost control and value for money in this context?
The Cost Plus Fixed Fee (CPFF) contract type aims to provide a balance between flexibility and cost control. In this structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined at the outset or involves a high degree of uncertainty, making fixed-price contracts unsuitable. For the government, the fixed fee provides some predictability regarding profit margins. However, the primary risk lies in the 'cost' component; if costs escalate, the total contract value increases. Without robust oversight and a competitive environment, there's less incentive for the contractor to minimize costs, potentially impacting value for money. The CPFF structure necessitates diligent monitoring of expenditures by the contracting agency.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › OTHER QUALITY, TEST, INSPECT SVCS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0003010Q0014
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 12975 WORLDGATE DR STE 7322, HERNDON, VA, 20170
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $35,862,826
Exercised Options: $31,862,826
Current Obligation: $31,580,827
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2009-10-01
Current End Date: 2012-09-30
Potential End Date: 2012-09-30 00:00:00
Last Modified: 2024-04-16
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