DoD's $25.5M engineering services contract with SIGMATECH INC awarded via non-competitive process

Contract Overview

Contract Amount: $25,494,017 ($25.5M)

Contractor: Sigmatech Inc

Awarding Agency: Department of Defense

Start Date: 2020-05-14

End Date: 2025-05-13

Contract Duration: 1,825 days

Daily Burn Rate: $14.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PROFESSIONAL SUPPORT

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35805

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $25.5 million to SIGMATECH INC for work described as: PROFESSIONAL SUPPORT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not managed closely. 2. The contract duration of 1825 days (5 years) suggests a long-term need for these engineering services. 3. Awarded by the Department of the Navy, indicating a specific defense-related requirement. 4. The lack of competition raises concerns about potential overpricing and limited value for taxpayer money. 5. SIGMATECH INC is the sole awardee, highlighting a potential lack of market breadth for this service. 6. The contract's value of over $25 million warrants close scrutiny of performance and cost controls.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more detailed cost breakdowns and comparison to similar sole-source engineering service contracts. The cost-plus-fixed-fee structure inherently carries a higher risk of cost overruns compared to fixed-price contracts. Without competitive bids, it's difficult to ascertain if the fixed fee is reasonable or if the government is receiving optimal value for the services rendered. Further analysis of the contractor's historical performance and cost management on similar contracts would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one vendor is capable of providing the required services, or in specific circumstances where competition is deemed impractical or not in the government's best interest. The absence of multiple bidders means there was no price discovery through a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition. Without competing offers, the government cannot be assured it received the lowest possible price for these essential engineering services.

Public Impact

The Department of the Navy benefits from specialized engineering services crucial for its operations. This contract supports the development and maintenance of defense systems and infrastructure. The services are likely to impact the Navy's operational readiness and technological advancement. Workforce implications may include specialized engineering roles within SIGMATECH INC and potentially related support industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits opportunities for other capable firms and potentially increases costs.
Cost-plus-fixed-fee contract type requires robust oversight to manage costs effectively.
Lack of competition hinders price discovery and may result in suboptimal value for taxpayer funds.
Long contract duration (5 years) necessitates continuous monitoring of performance and evolving needs.

Positive Signals

Contract awarded to SIGMATECH INC, a specific entity chosen for its presumed capabilities.
The definitive contract structure provides a clear framework for service delivery and payment.
The contract is for engineering services, a critical component for defense operations.

Sector Analysis

Engineering services represent a significant segment within the broader professional services sector supporting government agencies. This contract falls under the 'Engineering Services' NAICS code (541330). The defense sector heavily relies on specialized engineering expertise for complex projects, system development, and maintenance. Comparable spending benchmarks for sole-source engineering contracts within the Department of Defense can vary widely based on project scope and complexity, but a $25.5 million award over five years indicates a substantial and ongoing requirement.

Small Business Impact

This contract does not appear to have a small business set-aside (ss=false, sb=false). As a sole-source award, it bypasses the typical competitive processes where small businesses might have opportunities to bid or subcontract. There is no explicit indication of subcontracting plans for small businesses within the provided data, suggesting that the primary focus is on the prime contractor's capabilities.

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 expenditures against the estimated costs and ensure the fixed fee remains justified. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the agency or potentially the Inspector General would be key accountability measures.

Related Government Programs

Department of Defense Engineering Services
Naval Sea Systems Command Contracts
Professional, Scientific, and Technical Services
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee structure requires diligent cost oversight.
Potential for cost overruns due to CPFF structure.
Limited transparency due to non-competitive nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.5 million to SIGMATECH INC. PROFESSIONAL SUPPORT

Who is the contractor on this award?

The obligated recipient is SIGMATECH 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 $25.5 million.

What is the period of performance?

Start: 2020-05-14. End: 2025-05-13.

What is SIGMATECH INC's track record with the Department of Defense, particularly on sole-source contracts?

Assessing SIGMATECH INC's track record requires a deep dive into their past performance with the Department of Defense (DoD). Specifically, examining previous sole-source awards would reveal patterns in their ability to deliver services within budget and schedule, and their overall performance ratings. Data on contract modifications, cost overruns, and any disputes or terminations would provide further insight. A positive history on similar sole-source contracts might partially justify the current award, while a history of issues would heighten concerns about the value and execution of this $25.5 million contract. Without specific performance data, it's difficult to definitively assess their reliability.

How does the $25.5 million value compare to similar engineering service contracts awarded by the Navy?

Comparing the $25.5 million value requires identifying comparable engineering service contracts awarded by the Department of the Navy, ideally those with similar scopes of work and durations. Benchmarking against competitively awarded contracts would provide a clearer picture of market rates. If similar services were procured competitively for significantly less, it would indicate potential overpricing in this sole-source award. Conversely, if other sole-source contracts of similar magnitude exist and were deemed necessary, it might suggest a pattern of specific needs within the Navy that necessitate non-competitive procurement. The cost-plus-fixed-fee structure also needs to be considered in any value comparison.

What are the specific engineering services being procured under this contract?

The provided data indicates the NAICS code is 541330 for Engineering Services, but the specific nature of these services is not detailed. For a comprehensive analysis, understanding the exact engineering disciplines required (e.g., naval architecture, mechanical engineering, systems engineering, cybersecurity engineering) is crucial. This context helps in evaluating the necessity of a sole-source award and assessing the reasonableness of the contract value. For instance, highly specialized or niche engineering expertise might be harder to source competitively. Knowing the specific deliverables and technical requirements would allow for a more informed assessment of risk and performance expectations.

What is the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award typically falls under specific exceptions to full and open competition, such as the existence of only one responsible source, or circumstances where the agency determines that a competitive process is not feasible or not in the public interest. For this $25.5 million contract with SIGMATECH INC, the Department of the Navy would have documented reasons, potentially related to unique technical capabilities, proprietary data, urgent needs, or specific program requirements that only SIGMATECH INC could fulfill. Understanding this justification is key to evaluating whether the non-competitive award was appropriate and served the government's best interests.

What are the potential risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?

Sole-source, cost-plus-fixed-fee (CPFF) contracts of this magnitude ($25.5 million) carry inherent risks. The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for efficiency. The CPFF structure, while allowing flexibility, shifts cost risk to the government; the contractor is reimbursed for allowable costs plus a predetermined fixed fee. This necessitates robust government oversight to ensure costs are reasonable and necessary, and that the contractor is not incentivized to incur excessive costs. Without competition, there's also a risk that the government might not be aware of more innovative or cost-effective solutions available in the market.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

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

Parent Company: Sigmatech, Inc.

Address: 4901 CORPORATE DR NW STE C, HUNTSVILLE, AL, 35805

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Subchapter S Corporation

Financial Breakdown

Contract Ceiling: $33,706,171

Exercised Options: $33,706,171

Current Obligation: $25,494,017

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $952,239

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline