DoD's $18.6M Engineering Services Contract Awarded to Precise Systems, Inc. for Naval Support

Contract Overview

Contract Amount: $18,638,100 ($18.6M)

Contractor: Precise Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-05-09

End Date: 2026-05-08

Contract Duration: 1,460 days

Daily Burn Rate: $12.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BASE PERIOD LABOR

Place of Performance

Location: PATUXENT RIVER, SAINT MARYS County, MARYLAND, 20670

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $18.6 million to PRECISE SYSTEMS, INC. for work described as: BASE PERIOD LABOR Key points: 1. Contract focuses on specialized engineering services, indicating a need for expert technical support. 2. Awarded to a single contractor, raising questions about the extent of competition. 3. The contract duration of 1460 days suggests a long-term requirement for these services. 4. Base period labor costs are substantial, necessitating careful performance monitoring. 5. The Cost Plus Fixed Fee (CPFF) contract type requires robust oversight to manage costs effectively. 6. Geographic focus on Maryland suggests a concentration of naval operations or research facilities.

Value Assessment

Rating: fair

The base period labor cost of $18.6 million for engineering services appears significant. Without specific benchmarks for similar naval engineering support contracts, it's difficult to definitively assess value for money. The CPFF structure means costs can escalate if not managed tightly, and the fixed fee component needs to be justified against the scope of work. Further analysis comparing this contract's unit labor rates and overhead to industry averages would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which suggests that while competition was initially sought, specific circumstances led to the exclusion of some potential bidders. The exact reasons for this exclusion are not detailed, but it implies a potentially narrower field of competition than a truly open process. This could impact price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: A limited competition may result in less competitive pricing, potentially costing taxpayers more than if a broader range of vendors had been able to bid.

Public Impact

Naval operations and readiness are directly supported by the engineering services provided. Personnel in Maryland involved in naval engineering and technical support are likely beneficiaries. The contract contributes to the technological advancement and maintenance of naval assets. Specialized engineering expertise is being leveraged to address complex defense requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the CPFF contract type if not closely monitored.
Limited competition may have resulted in a higher price than achievable in a fully open market.
Lack of transparency regarding the 'exclusion of sources' could mask underlying issues.
The long contract duration requires sustained oversight to ensure continued value and performance.

Positive Signals

Award to a single, presumably qualified, contractor ensures focused expertise.
The contract addresses a clear need for engineering services within the Department of the Navy.
The fixed fee component provides some cost certainty for the contractor's profit margin.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry supporting government operations. The market for defense engineering services is substantial, driven by the need for specialized expertise in areas like naval architecture, systems engineering, and technical support for complex military platforms. Spending in this category is often characterized by long-term relationships and high barriers to entry due to security clearances and specialized knowledge requirements.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). There is no information provided on subcontracting plans. Therefore, the direct impact on the small business ecosystem is likely minimal unless the prime contractor, Precise Systems, Inc., actively engages small businesses for subcontracting opportunities, which is not specified here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The CPFF structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable to the contract. Transparency could be enhanced by making detailed performance reports and cost breakdowns publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Engineering Support Services
Defense Engineering and Technical Services
Professional, Scientific, and Technical Services
Department of Defense Contract Vehicles

Risk Flags

Limited competition designation
CPFF contract type requires stringent cost oversight
Long contract duration necessitates sustained performance monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.6 million to PRECISE SYSTEMS, INC.. BASE PERIOD LABOR

Who is the contractor on this award?

The obligated recipient is PRECISE 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 $18.6 million.

What is the period of performance?

Start: 2022-05-09. End: 2026-05-08.

What is the track record of Precise Systems, Inc. in performing similar engineering services contracts for the Department of Defense?

A thorough review of Precise Systems, Inc.'s past performance is crucial. This would involve examining their history with similar Cost Plus Fixed Fee (CPFF) contracts, particularly those involving complex engineering services for naval applications. Key metrics to assess include on-time delivery, adherence to budget (especially considering the CPFF structure), quality of work, and any past performance evaluations or disputes. Understanding their experience with the specific technical requirements outlined in this new contract would provide significant insight into their capability and the likelihood of successful execution. Data on contract modifications, overruns, and customer satisfaction from previous DoD engagements would be highly informative.

How does the estimated labor cost of $18.6 million compare to similar engineering services contracts awarded by the Department of the Navy?

Benchmarking the $18.6 million base period labor cost against comparable contracts is essential for assessing value. This comparison should ideally focus on contracts with similar scopes of work (e.g., naval engineering, systems integration), contract types (CPFF), and durations. Factors like the number of labor hours, average labor rates, and overhead percentages should be analyzed. If this contract's projected costs are significantly higher than similar contracts, it could indicate potential overpricing or inefficiencies. Conversely, if it aligns with or is lower than benchmarks, it suggests a more competitive or efficient pricing structure. Without access to detailed comparative contract data, a definitive assessment remains challenging.

What are the specific risks associated with the 'Cost Plus Fixed Fee' (CPFF) contract type in this context?

The CPFF contract type presents inherent risks for the government, primarily related to cost control. While the fixed fee provides the contractor with a defined profit margin, the 'cost plus' portion means the government reimburses allowable costs incurred by the contractor. This structure can incentivize contractors to incur higher costs, as their fee remains constant regardless of the total cost. Effective risk mitigation requires robust government oversight to scrutinize all incurred costs, ensure they are reasonable, allocable, and allowable according to contract terms. There's also a risk that the fixed fee may not adequately compensate for unforeseen complexities, potentially leading to contractor requests for equitable adjustments or performance issues if the fee is perceived as insufficient.

What does the 'Full and Open Competition After Exclusion of Sources' designation imply for the effectiveness of the competition process?

This designation suggests that while the initial intent was full and open competition, specific circumstances led to the exclusion of certain potential bidders before the final award. The reasons for exclusion are critical; they could range from national security concerns, proprietary technology limitations, or specific capability requirements that only a limited number of firms could meet. If the exclusion was justified and based on objective criteria, the competition might still be considered reasonably effective among the remaining eligible sources. However, if the exclusions were arbitrary or overly restrictive, it could significantly limit price discovery and potentially lead to a less favorable outcome for the government in terms of cost and innovation. Understanding the rationale behind the exclusion is key to assessing the true level of competition.

What are the potential implications of the 1460-day contract duration on performance and cost management?

A contract duration of 1460 days (approximately four years) signifies a long-term requirement for the engineering services. This extended period allows for deeper integration of the contractor's expertise into naval programs and potentially fosters greater efficiency through familiarity. However, it also magnifies the importance of sustained government oversight. Risks include potential scope creep, evolving technological requirements that may not be adequately addressed by the initial contract, and the possibility of contractor performance degradation over time. From a cost perspective, a longer duration necessitates careful management of inflation, potential changes in labor rates, and ensuring the fixed fee remains appropriate throughout the contract lifecycle. Regular performance reviews and contract modifications, if necessary, are crucial.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0042118R0008

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 22290 EXPLORATION DR, STE 400, LEXINGTON PARK, MD, 20653

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

Financial Breakdown

Contract Ceiling: $25,933,926

Exercised Options: $20,249,971

Current Obligation: $18,638,100

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $11,039,145

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042118D0028

IDV Type: IDC

Timeline