DoD's $16.3M Engineering Services Contract Awarded to EMCUBE INC. with Limited Competition

Contract Overview

Contract Amount: $16,280,375 ($16.3M)

Contractor: Emcube Inc

Awarding Agency: Department of Defense

Start Date: 2021-10-01

End Date: 2026-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $8.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE LEVEL OF EFFORT

Sector: Defense

Official Description: FACILITY ENGINEERING TECHNICAL SERVICES

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22311

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $16.3 million to EMCUBE INC for work described as: FACILITY ENGINEERING TECHNICAL SERVICES Key points: 1. The contract value of $16.3M over five years suggests a significant investment in specialized engineering support. 2. Awarded as 'NOT COMPETED', this contract raises questions about the extent of market research and potential for cost savings through competition. 3. The fixed-price-level-of-effort contract type aims to control costs while ensuring necessary services are delivered. 4. The duration of 1825 days (5 years) indicates a long-term need for these engineering services. 5. The contract's focus on engineering services (NAICS 541330) places it within a critical sector for defense infrastructure and operations. 6. The absence of small business set-aside flags suggests this contract was not specifically targeted to support small businesses.

Value Assessment

Rating: questionable

Benchmarking the value of this $16.3M contract is challenging without more specific details on the scope of engineering services provided. However, awarding a large contract without competition inherently limits the government's ability to ensure it is receiving the best possible price. The fixed-price-level-of-effort structure provides some cost control, but the lack of competitive bidding means there's no market validation of the pricing. Further analysis would require understanding the specific deliverables and comparing them to industry standards for similar engineering support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification ('NOT COMPETED'). This indicates that the Department of the Navy determined that only one source, EMCUBE INC., was capable of meeting the requirement. The lack of competition means that potential cost savings that could arise from a competitive bidding process were not realized. It also limits the government's ability to explore innovative solutions or pricing from a broader range of vendors.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. Without a competitive process, there is less assurance that the price reflects fair market value.

Public Impact

The Department of the Navy benefits from specialized engineering technical services crucial for its operations and infrastructure. This contract supports the maintenance, development, or enhancement of naval facilities and systems. The services are likely concentrated in Virginia, where the contract is registered. The contract may indirectly support a specialized engineering workforce, though direct job creation figures are not provided.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and missed opportunities for innovation.
The sole-source award requires a strong justification to ensure it was truly necessary and in the government's best interest.
Transparency regarding the rationale for the sole-source award is crucial for public trust.

Positive Signals

The fixed-price-level-of-effort contract type provides a degree of cost certainty for the government.
The five-year duration suggests a stable, long-term need for these critical engineering services.
The award to EMCUBE INC. indicates a reliance on their specialized expertise.

Sector Analysis

The engineering services sector (NAICS 541330) is a vital component of the federal procurement landscape, particularly for agencies like the Department of Defense that require complex technical expertise. This sector encompasses a wide range of services, from civil and mechanical engineering to specialized defense-related design and analysis. Federal spending in this area often supports national security, infrastructure development, and research and development initiatives. The market is characterized by both large, established firms and smaller, specialized consultancies. The value of this contract, approximately $16.3 million over five years, falls within a moderate range for specialized engineering support, but its sole-source nature warrants scrutiny.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' flag is also false, meaning it was not awarded under the Small Business Administration's programs. This suggests that the primary contractor, EMCUBE INC., is likely not a small business, and there is no explicit requirement for subcontracting to small businesses mandated within this specific award. Consequently, the direct impact on the small business ecosystem from this particular contract is likely minimal, unless EMCUBE INC. voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight. The Inspector General for the Department of Defense may also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency regarding the contract's performance and any modifications would be key to assessing accountability. However, the lack of competition might reduce the inherent transparency typically provided by a competitive bidding process.

Related Government Programs

Naval Facilities Engineering Command (NAVFAC) Contracts
Department of Defense Engineering Services
Fixed-Price Level of Effort Contracts
Sole-Source Defense Contracts
Engineering and Technical Services

Risk Flags

Sole-source award without clear justification
Potential for inflated pricing due to lack of competition
Limited transparency in the procurement process

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.3 million to EMCUBE INC. FACILITY ENGINEERING TECHNICAL SERVICES

Who is the contractor on this award?

The obligated recipient is EMCUBE 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 $16.3 million.

What is the period of performance?

Start: 2021-10-01. End: 2026-09-30.

What specific engineering services are encompassed by this $16.3M contract?

The provided data indicates the contract falls under NAICS code 541330, which is 'Engineering Services'. This broad category can include a wide array of specialized services such as architectural, mechanical, electrical, civil, and structural engineering, as well as systems engineering, technical analysis, and design support. For this specific contract with the Department of the Navy, the services likely pertain to naval infrastructure, vessels, or related defense systems. Without access to the contract's statement of work (SOW), the precise nature of the engineering tasks, deliverables, and technical requirements remains unspecified. Understanding the exact scope is crucial for evaluating the contract's value and performance.

What is the justification for awarding this contract on a sole-source basis to EMCUBE INC.?

The data explicitly states the contract was 'NOT COMPETED', signifying a sole-source award. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for competitive acquisitions and the limited circumstances under which sole-source procurements are permissible. Common justifications include unique capabilities, urgent needs where only one source can respond, or when a follow-on contract is awarded to the original source under specific conditions. For this contract, the Department of the Navy would have had to document a specific justification, such as EMCUBE INC. possessing unique technical expertise, proprietary data, or specific security clearances essential for the required engineering services that no other vendor could provide. This justification is critical for ensuring the award was made appropriately and in the government's best interest.

How does the fixed-price-level-of-effort (FPLE) contract type function in this context, and what are its implications for cost control?

A Fixed-Price Level-of-Effort (FPLE) contract, like the one awarded to EMCUBE INC., obligates the contractor to expend a specified level of effort (typically in terms of direct labor hours) over a specified period. The government agrees to pay a fixed price for this effort. This contract type is used when the government cannot precisely define the scope of work or the level of effort required beforehand, but wants to maintain cost certainty. The contractor is reimbursed for the agreed-upon effort, up to the fixed price. While it provides cost predictability for the government compared to cost-reimbursement contracts, it doesn't offer the same cost savings potential as a firm-fixed-price contract if the contractor is highly efficient. The government pays for the effort expended, making effective oversight of the contractor's labor hours and efficiency crucial for value.

What is the typical market size and competitive landscape for engineering services (NAICS 541330) procured by the Department of Defense?

The market for engineering services under NAICS 541330, particularly within the Department of Defense (DoD), is substantial and highly specialized. The DoD is one of the largest federal buyers of engineering services, requiring expertise for everything from weapons system design and lifecycle support to infrastructure development and environmental compliance. The competitive landscape includes a mix of large, diversified defense contractors, specialized engineering firms, and smaller niche providers. While many contracts are competed, sole-source awards do occur when specific capabilities are required. The overall federal spending on engineering services is in the billions annually, reflecting the critical role these services play in national security and government operations. The value of individual contracts can range from thousands to hundreds of millions of dollars.

What are the potential risks associated with awarding a $16.3M contract without competition?

The primary risk of awarding a contract of this magnitude without competition is the potential for the government to pay a higher price than necessary. Competitive bidding typically drives down costs as contractors vie for the award. Without this pressure, EMCUBE INC. may not have been incentivized to offer the most competitive pricing. Another risk is the potential lack of innovation; a competitive process can surface novel approaches or technologies from various bidders. Furthermore, a sole-source award can raise concerns about fairness and equal opportunity for other capable businesses. It also places a greater burden on the government to ensure the contractor's performance and pricing are reasonable through robust oversight, as there is no market benchmark from competing bids.

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: N0003022R2018

Offers Received: 1

Pricing Type: FIXED PRICE LEVEL OF EFFORT (B)

Evaluated Preference: NONE

Contractor Details

Address: 1900 N BEAUREGARD ST STE 105, ALEXANDRIA, VA, 22311

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

Financial Breakdown

Contract Ceiling: $19,404,571

Exercised Options: $17,985,431

Current Obligation: $16,280,375

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline