Navy awards $151M for engineering services to KR Systems Inc., with a 5-year contract duration

Contract Overview

Contract Amount: $15,131,082 ($15.1M)

Contractor: K R Systems Inc

Awarding Agency: Department of Defense

Start Date: 2001-08-09

End Date: 2006-08-08

Contract Duration: 1,825 days

Daily Burn Rate: $8.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200111!004115!1700!A8105 !NAVAL AIR WARFARE CENTER, AIRCRA!N0042101C0048 !A!N!*!N! !20010809!20010808!625191176!625191176!625191176!N!KR SYSTEMS, INCORPORATED !38224 STEVENS RD !LOVETTSVILLE !VA!20180!47208!107!51!LOVETTSVILLE !LOUDOUN !VIRGINIA !+000000235750!N!N!000000000000!AD44!RDTE/TEXTILES, CLOTHING, EQUIPAGE-DEMO/VALID !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !541330!*!*!3! ! ! !*!*!*!B!*!*!B! !B !U!U!2!001!N!5A!Z!N!Z! ! !N!B!Y!N! ! !A! !A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: LOVETTSVILLE, LOUDOUN County, VIRGINIA, 20180

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $15.1 million to K R SYSTEMS INC for work described as: 200111!004115!1700!A8105 !NAVAL AIR WARFARE CENTER, AIRCRA!N0042101C0048 !A!N!*!N! !20010809!20010808!625191176!625191176!625191176!N!KR SYSTEMS, INCORPORATED !38224 STEVENS RD !LOVETTSVILLE !VA!20180!47208!107!51!LOVETTSVILLE !LOUDO… Key points: 1. Contract awarded for engineering services, indicating a need for specialized technical expertise. 2. The contract duration of 5 years suggests a long-term requirement for the services provided. 3. KR Systems Inc. is the sole awardee, raising questions about competition and potential cost efficiencies. 4. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 5. The primary service category is Engineering Services, a critical component for defense operations. 6. The contract was awarded by the Department of the Navy, highlighting a significant defense expenditure.

Value Assessment

Rating: fair

The total award amount of $151,310,81.72 for a 5-year contract for engineering services appears to be within a reasonable range for specialized defense support. However, without specific benchmarks for the exact services rendered, a definitive value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk, as it allows for the reimbursement of costs plus a fixed fee, potentially leading to higher final costs if the contractor's expenses exceed initial estimates. Further analysis would require comparing the per-unit costs or labor rates to similar contracts for comparable services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, or in situations where competition is not feasible or advantageous. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process. This can potentially lead to higher prices than might be achieved in a fully competed environment.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of achieving the lowest possible price for the services rendered. Oversight and negotiation become critical to ensure fair pricing and prevent potential overspending.

Public Impact

The Department of the Navy benefits from specialized engineering services to support its operations and development efforts. KR Systems Inc. is the direct beneficiary of the contract award, receiving significant funding for its services. The services provided likely contribute to the maintenance, development, or testing of naval assets and technologies. The contract supports jobs within KR Systems Inc., potentially in engineering and technical fields, primarily located in Virginia.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee contract type carries a risk of cost overruns if not closely monitored.
Lack of detailed service descriptions makes it difficult to benchmark performance and value.
Contract duration of 5 years requires sustained oversight to ensure continued value.

Positive Signals

Award to a single contractor can indicate specialized expertise required by the Navy.
Long-term contract suggests a stable and ongoing need for the services.
The contract is with KR Systems Inc., a known entity in the defense contracting space.

Sector Analysis

Engineering services are a vital component of the defense sector, encompassing a wide range of activities from research and development to system design, testing, and maintenance. The market for these services within the federal government is substantial, with agencies like the Department of Defense consistently requiring specialized technical support. This contract fits within the broader category of professional and technical services procured by the Navy, supporting its complex operational and acquisition needs. Comparable spending benchmarks would typically involve analyzing other engineering service contracts awarded by the DoD for similar scope and duration.

Small Business Impact

There is no indication from the provided data that this contract included a small business set-aside. The award was made to KR Systems Inc., and information regarding subcontracting plans or performance is not detailed. Without specific set-aside provisions or subcontracting goals, the direct impact on the small business ecosystem is likely limited to the extent that KR Systems Inc. may engage small businesses as subcontractors, which is not explicitly stated.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor incurred costs and ensure they align with the fixed fee. Transparency is limited by the sole-source nature and the lack of publicly available detailed performance reports. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Air Warfare Center
Department of Defense Engineering Services
Defense Research and Development Contracts
Professional and Technical Services Contracts

Risk Flags

Sole-source award may limit price competition.
Cost Plus Fixed Fee contract type carries inherent cost overrun risk.
Limited public information on specific services and performance metrics.
Long contract duration requires sustained oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.1 million to K R SYSTEMS INC. 200111!004115!1700!A8105 !NAVAL AIR WARFARE CENTER, AIRCRA!N0042101C0048 !A!N!*!N! !20010809!20010808!625191176!625191176!625191176!N!KR SYSTEMS, INCORPORATED !38224 STEVENS RD !LOVETTSVILLE !VA!20180!47208!107!51!LOVETTSVILLE !LOUDOUN !VIRGINIA !+000000235750!N!N!000000000000!AD44!RDTE/TEXTILES, CLOTHING, EQUIPAGE-DEMO/VALID !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !541330!*!*!3! ! ! !*!*!*!B!*!*!B!

Who is the contractor on this award?

The obligated recipient is K R SYSTEMS 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 $15.1 million.

What is the period of performance?

Start: 2001-08-09. End: 2006-08-08.

What specific engineering services were provided under this contract?

The provided data indicates the primary service category as 'Engineering Services' (NAICS code 541330) and a Product Service Code (PSC) of AD44, related to 'RDTE/TEXTILES, CLOTHING, EQUIPAGE-DEMO/VALID'. While the specific nature of the engineering services is not fully detailed, the PSC suggests a focus on research, development, testing, and evaluation (RDTE) related to textiles, clothing, and equipment, possibly for demonstration or validation purposes. This could encompass material science, design, prototyping, performance testing, or integration of specialized equipment for naval applications. Further details would be required to understand the precise technical scope and deliverables.

How does the $151 million award compare to similar engineering service contracts awarded by the Navy?

Comparing the $151 million award for a 5-year contract requires context on the specific engineering services rendered. The Navy procures a wide array of engineering support, from basic R&D to complex system integration. If this contract involves highly specialized or cutting-edge research and development, the cost might be justified. However, for more standard engineering support, this figure could represent a significant investment. Benchmarking would necessitate identifying contracts with similar scope, duration, and service type (e.g., RDTE, system design, testing) awarded within the same period to assess if the pricing is competitive or if it falls within typical ranges for such services.

What are the risks associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services?

The primary risk with a CPFF contract is that the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee. This structure incentivizes the contractor to incur costs, as their fee remains constant regardless of the total cost. If the contractor's costs escalate beyond initial projections due to inefficiencies, scope creep, or unforeseen challenges, the total contract value can increase significantly, potentially exceeding the government's budget. Effective oversight, stringent cost controls, and clear definition of allowable costs are crucial to mitigate these risks and ensure the government receives good value. The fixed fee itself should be negotiated to reflect the level of risk and effort involved.

What is the track record of KR Systems Inc. in performing similar government contracts?

Information on KR Systems Inc.'s track record for similar government contracts is not detailed in the provided data. However, the award of a $151 million, 5-year contract by the Department of the Navy suggests a level of capability and experience deemed sufficient by the awarding agency. To assess their track record thoroughly, one would need to review past performance evaluations, contract history (including any awards, modifications, or terminations), and any reported issues or successes on previous government engagements. This would provide insight into their reliability, quality of work, and ability to manage complex projects within budget and schedule.

What does the sole-source nature of this award imply for government spending efficiency?

A sole-source award implies that the government did not leverage competitive bidding to determine the best price and value. This can lead to reduced government spending efficiency because the absence of competition removes the pressure on the contractor to offer the lowest possible price. Without competing proposals, it is more challenging for the government to ascertain if the negotiated price is fair and reasonable compared to market rates or what other qualified vendors might offer. This necessitates robust negotiation and oversight by the contracting officers to ensure that the government is not overpaying for the services.

How does the 5-year duration impact the overall value and risk of this contract?

The 5-year duration of this contract signifies a long-term commitment by the Department of the Navy for the engineering services provided by KR Systems Inc. From a value perspective, a longer duration can offer stability and predictability for both the government and the contractor, potentially allowing for economies of scale and deeper integration of services. However, it also increases the overall financial exposure and the risk associated with potential changes in requirements, technology, or contractor performance over time. The government must ensure that the contract includes mechanisms for flexibility, such as options for termination or modification, and that performance is continuously monitored to ensure ongoing value and alignment with evolving needs.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 38224 STEVENS RD, LOVETTSVILLE, VA, 20180

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline