DoD's $35.5M Engineering Readiness Contract Awarded to McHenry Management Group for Navy Support

Contract Overview

Contract Amount: $35,495,692 ($35.5M)

Contractor: THE Mchenry Management Group, LLC

Awarding Agency: Department of Defense

Start Date: 2019-06-18

End Date: 2024-07-31

Contract Duration: 1,870 days

Daily Burn Rate: $19.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING READINESS ASSISTANCE TEAM (ERAT) AND COMBAT SYSTEM READINESS ASSISTANCE TEAM (CSRAT)

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23511

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $35.5 million to THE MCHENRY MANAGEMENT GROUP, LLC for work described as: ENGINEERING READINESS ASSISTANCE TEAM (ERAT) AND COMBAT SYSTEM READINESS ASSISTANCE TEAM (CSRAT) Key points: 1. Contract focuses on critical engineering and combat system readiness for the Navy. 2. Awarded through full and open competition, suggesting a competitive bidding process. 3. The contract duration of 1870 days indicates a long-term need for these services. 4. McHenry Management Group, LLC is the sole awardee for this specific contract. 5. The contract type is Cost Plus Fixed Fee, which can shift risk to the government. 6. The contract is categorized under Engineering Services (NAICS 541330).

Value Assessment

Rating: fair

The contract's value of approximately $35.5 million over five years for specialized engineering readiness support appears within a reasonable range for complex defense services. Benchmarking against similar contracts for combat system readiness and engineering support is challenging without more specific service details. However, the Cost Plus Fixed Fee (CPFF) structure, while common in defense, can lead to cost overruns if not meticulously managed, potentially impacting overall value for money compared to fixed-price contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 4 bids suggests a moderate level of competition for this specialized service. While full and open competition is generally preferred, the specific number of bidders can influence price discovery. A higher number of bidders typically leads to more competitive pricing.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it aims to secure the best possible pricing and quality by allowing a wide range of qualified contractors to compete.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving critical engineering and combat system readiness support. Services delivered are expected to enhance the operational effectiveness and reliability of naval assets. The geographic impact is likely focused on naval bases and operational areas where the Navy deploys. Workforce implications include the potential for skilled engineers and technical personnel employed by the contractor and potentially government personnel overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize contractor to incur costs, potentially increasing the final price.
Long contract duration (1870 days) may reduce flexibility to adapt to changing technological needs or market conditions.
Limited public information on specific performance metrics makes it difficult to assess contractor efficiency and effectiveness.
The specific nature of 'readiness assistance' can be broad, potentially leading to scope creep if not tightly managed.

Positive Signals

Awarded through full and open competition, indicating a robust and fair bidding process.
The contractor, McHenry Management Group, LLC, has secured a significant contract, suggesting a level of trust and capability.
The contract addresses critical defense needs related to engineering and combat system readiness, vital for national security.
The contract duration implies a stable, long-term partnership focused on sustained support.

Sector Analysis

The defense engineering services sector is a significant market driven by the need for specialized technical expertise to support complex military platforms and systems. This contract falls within the broader engineering services industry (NAICS 541330), which includes firms providing design, consulting, and project management for various engineering disciplines. The Department of Defense is a major consumer of these services, often requiring highly specialized knowledge for naval, aviation, and ground systems. Spending in this sector is influenced by geopolitical factors, modernization programs, and the operational tempo of military forces.

Small Business Impact

This contract was awarded to The McHenry Management Group, LLC and does not appear to have a small business set-aside component (sb: false). There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem for this particular contract is unclear, though large prime contractors are often encouraged or required to engage small businesses in their supply chains.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the Cost Plus Fixed Fee structure, requiring detailed cost reporting and justification from the contractor. Transparency is facilitated through contract award databases, but detailed performance reports and cost breakdowns are often considered sensitive or proprietary. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Combat Systems Engineering Support
Defense Engineering Services
Readiness and Sustainment Programs
Department of Defense IT and Engineering Services

Risk Flags

Cost Plus Fixed Fee contract type may lead to higher costs for the government.
Long contract duration could reduce adaptability to future needs.
Limited public data on performance metrics hinders full assessment.
Potential for scope creep in specialized service contracts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.5 million to THE MCHENRY MANAGEMENT GROUP, LLC. ENGINEERING READINESS ASSISTANCE TEAM (ERAT) AND COMBAT SYSTEM READINESS ASSISTANCE TEAM (CSRAT)

Who is the contractor on this award?

The obligated recipient is THE MCHENRY MANAGEMENT GROUP, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $35.5 million.

What is the period of performance?

Start: 2019-06-18. End: 2024-07-31.

What is the track record of The McHenry Management Group, LLC in performing similar defense contracts?

Assessing The McHenry Management Group, LLC's track record requires a deeper dive into their contract history beyond this single award. While securing a $35.5 million contract with the Department of the Navy indicates a certain level of capability and trustworthiness, it's crucial to examine past performance on similar contracts. This includes evaluating their success in meeting cost, schedule, and performance requirements on previous engineering readiness or combat system support contracts. Information on past performance, including any awards, penalties, or contract terminations, would provide a more comprehensive understanding of their reliability and expertise in delivering complex defense services. Without this historical data, it's difficult to definitively gauge their proven ability to execute this specific type of critical support.

How does the pricing structure (Cost Plus Fixed Fee) compare to other similar defense readiness contracts?

The Cost Plus Fixed Fee (CPFF) pricing structure is common in defense contracts, particularly for services where the scope of work may evolve or is difficult to precisely define upfront, such as engineering readiness. In a CPFF contract, the government reimburses the contractor for allowable costs plus a fixed fee representing profit. This structure shifts some of the cost risk to the government compared to fixed-price contracts. When compared to similar defense readiness contracts, CPFF can sometimes result in higher overall costs if not managed rigorously, as there is less incentive for the contractor to control expenses beyond what is necessary to achieve the fixed fee. However, it allows for flexibility and ensures that critical services are performed even with evolving requirements. Benchmarking requires comparing the fee percentages and the total cost growth trends of comparable CPFF contracts.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include potential cost overruns due to the CPFF structure, scope creep if requirements are not tightly managed, and performance issues that could impact Navy readiness. The CPFF structure inherently carries a risk of increased costs for the government, as the contractor is reimbursed for actual expenses. Scope creep is a risk in any long-term service contract where evolving needs might lead to expanded work beyond the original agreement. Performance risk exists if the contractor fails to deliver the expected level of engineering and combat system readiness support, potentially impacting naval operations. Mitigation strategies likely involve robust government oversight, detailed performance work statements, regular progress reviews, and strict adherence to contract terms and conditions to manage costs and ensure quality.

How effective is the competition level (4 bidders) in ensuring value for taxpayer money?

A competition level of four bidders for this contract suggests a moderately competitive environment. While more bidders generally lead to greater price discovery and potentially better value, four offers indicate that the market for these specialized engineering readiness services is not overly concentrated. This level of competition is often sufficient to encourage contractors to submit competitive proposals to secure the award. To fully assess value for taxpayer money, one would need to compare the awarded price against independent government cost estimates and benchmark pricing for similar services. The full and open competition framework itself is designed to maximize opportunities for competitive pricing, and four bids represent a reasonable outcome within that framework.

What is the historical spending trend for similar engineering readiness and combat system support services within the Department of the Navy?

Analyzing historical spending trends for similar services within the Department of the Navy is crucial for context. While specific data for 'Engineering Readiness Assistance Team (ERAT) and Combat System Readiness Assistance Team (CSRAT)' contracts isn't readily available in aggregate, the Navy consistently invests significant funds in readiness, sustainment, and engineering support for its vast fleet. Spending in this area is influenced by fleet modernization programs, operational tempo, and the aging of existing platforms. Historically, such specialized engineering and technical services represent a substantial portion of the Navy's operational and maintenance budgets. Understanding the year-over-year spending on comparable service contracts, including their average values and durations, would help determine if the $35.5 million award is consistent with historical patterns or represents an outlier.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0018918R3034

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 600 INDEPENDENCE PKWY STE 105, CHESAPEAKE, VA, 23320

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

Financial Breakdown

Contract Ceiling: $50,666,159

Exercised Options: $46,531,632

Current Obligation: $35,495,692

Actual Outlays: $1,110,070

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $17,004,799

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017810D6163

IDV Type: IDC

Timeline