Naval Systems Inc. awarded $17.6M contract for engineering services, with 3 bidders

Contract Overview

Contract Amount: $17,587,287 ($17.6M)

Contractor: Naval Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2023-09-29

End Date: 2026-04-30

Contract Duration: 944 days

Daily Burn Rate: $18.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LABOR-O&M,N

Place of Performance

Location: PRINCE FREDERICK, CALVERT County, MARYLAND, 20678

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $17.6 million to NAVAL SYSTEMS, INC. for work described as: LABOR-O&M,N Key points: 1. Contract value appears reasonable given the scope of engineering services. 2. Full and open competition after exclusion of sources suggests a potentially competitive process. 3. Contract duration of 944 days indicates a significant, long-term engagement. 4. Cost Plus Fixed Fee pricing structure requires careful monitoring of costs. 5. Services are critical for ongoing naval system maintenance and development. 6. Maryland is the primary performance location, impacting regional economic activity.

Value Assessment

Rating: good

The contract value of $17.6 million for engineering services over approximately 2.5 years appears to be within a reasonable range for complex naval systems support. Benchmarking against similar contracts for specialized engineering services is challenging without more detailed scope information, but the number of bidders suggests a degree of market validation. The Cost Plus Fixed Fee (CPFF) structure, while common for R&D and complex services, necessitates robust oversight to ensure cost efficiency and prevent overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was intended to be broad, specific sources were initially excluded. With three bidders participating, the competition level is moderate. This suggests that the market for these specialized engineering services may not be entirely saturated, but that multiple capable firms could respond. The limited nature of the competition could potentially impact price discovery compared to a truly unrestricted full and open process.

Taxpayer Impact: A moderate level of competition means taxpayers likely benefited from some price negotiation, but a broader competition might have yielded even greater savings.

Public Impact

The Department of the Navy benefits from specialized engineering expertise for its systems. Services likely include design, analysis, testing, and integration support for naval platforms. Performance is concentrated in Maryland, supporting the regional defense industrial base. The contract supports skilled engineering jobs within the contractor's organization and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can incentivize cost overruns if not closely managed.
The 'after exclusion of sources' clause warrants scrutiny to ensure fairness and broad market access.
Long contract duration increases the risk of scope creep or evolving requirements not being adequately addressed.

Positive Signals

Award to Naval Systems, Inc. suggests a contractor with relevant expertise in naval engineering.
Three bidders indicate a degree of market interest and capability for this type of service.
The contract is for essential engineering services, indicating a clear need and strategic alignment.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting the defense industry's need for specialized technical expertise in naval systems. The market for such services is characterized by high barriers to entry due to technical complexity, security clearances, and established relationships with government agencies. Comparable spending benchmarks would typically be found within broader categories of professional, scientific, and technical services supporting defense procurement, often running into billions of dollars annually across the federal government.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications mandated by a small business set-aside. However, the prime contractor, Naval Systems, Inc., may still engage small businesses as subcontractors to fulfill parts of the contract, contributing to the broader small business ecosystem. The absence of a set-aside means the primary focus was on securing the best technical solution from the available market.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract would typically be managed by the contracting officer and the Defense Contract Management Agency (DCMA). Accountability measures would involve regular performance reviews, audits of costs incurred, and adherence to the contract's technical specifications. Transparency is facilitated through contract databases like FPDS, though detailed performance metrics and cost breakdowns are often considered sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Ship Systems Engineering Support
Defense Engineering and Technical Services
Naval Platform Modernization
Combat Systems Engineering
Naval Research and Development Support

Risk Flags

Potential for cost overruns due to CPFF structure.
Moderate competition level may limit optimal price discovery.
Long contract duration increases risk of requirement misalignment over time.
Exclusion of sources requires justification for fairness and market access.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.6 million to NAVAL SYSTEMS, INC.. LABOR-O&M,N

Who is the contractor on this award?

The obligated recipient is NAVAL 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 $17.6 million.

What is the period of performance?

Start: 2023-09-29. End: 2026-04-30.

What is the track record of Naval Systems, Inc. with the Department of Defense, particularly in engineering services?

Naval Systems, Inc. has a history of performing contracts with the Department of Defense, as indicated by this award. To fully assess their track record, a deeper dive into their past performance evaluations, contract history (including prior awards, modifications, and terminations), and any past performance issues or commendations would be necessary. Analyzing their success rate on similar Cost Plus Fixed Fee contracts, especially those involving naval systems, would provide crucial context. Information on their financial stability and capacity to handle large, complex projects is also vital. Without specific historical data beyond this single award, it's difficult to provide a comprehensive assessment, but the award itself suggests they met the necessary qualifications and demonstrated capability for this specific requirement.

How does the $17.6 million value compare to similar engineering services contracts for naval systems?

Benchmarking the $17.6 million value requires comparing it against contracts with similar scopes of work, durations, and complexity within the naval systems engineering domain. Contracts for platform design, modernization, sustainment engineering, or specialized technical analysis can vary significantly. Given the 944-day duration (approx. 2.5 years) and the Cost Plus Fixed Fee structure, this value suggests a substantial effort. If this contract involves critical system development or extensive lifecycle support, the price might be considered competitive. However, without access to detailed scope-of-work documents and specific deliverables, a precise comparison is challenging. Generally, specialized defense engineering services command premium pricing due to required expertise, security, and R&D components.

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

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. While the contractor is paid their actual allowable costs plus a predetermined fixed fee, there is less incentive for the contractor to control costs compared to fixed-price contracts. If the contractor's costs escalate beyond initial estimates, the government bears the burden of these increased costs, although the fee remains fixed. This necessitates robust government oversight, including detailed cost monitoring, auditing, and verification of all incurred expenses. Another risk is the potential for scope creep, where the project's requirements expand without corresponding adjustments to the fee, potentially leading to contractor dissatisfaction or reduced quality if not managed properly. Ensuring clear definition of work and effective change control processes are critical mitigation strategies.

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

The 'Full and Open Competition After Exclusion of Sources' (FOE) designation implies a nuanced approach to competition. It suggests that the initial solicitation was intended for broad participation, but certain potential sources were deliberately excluded, possibly due to specific requirements, past performance issues, or strategic sourcing decisions. Following this exclusion, the competition was then conducted openly among the remaining eligible sources. With three bidders, the competition level is moderate. While this method aims to balance broad access with specific needs, it inherently limits the pool of potential offerors compared to unrestricted full and open competition. The effectiveness hinges on whether the excluded sources were critical to achieving the best possible price and technical solution. A moderate number of bidders generally allows for some price discovery but might not reach the optimal level of competition seen with numerous participants.

How does the performance location in Maryland impact the local economy and defense industrial base?

Concentrating performance in Maryland has several implications for the local economy and defense industrial base. It directly supports employment within the state, particularly for highly skilled engineers and technical professionals working for Naval Systems, Inc. and potentially its local subcontractors. This spending contributes to the local tax base and stimulates economic activity through wages and procurement. Maryland is a hub for defense contracting and federal agencies, so this contract reinforces the existing ecosystem of defense-related businesses and expertise in the region. It also signifies continued investment in naval capabilities within a state that hosts significant military installations and defense industry presence.

What are the potential implications of the 944-day contract duration for program management and risk?

A contract duration of 944 days, approximately 2.5 years, presents both opportunities and risks. On the positive side, it allows for sustained focus and development on complex naval systems, providing stability for the contractor and enabling the execution of multi-phase projects. It can foster deeper collaboration and knowledge transfer between the government and the contractor. However, such a long duration also increases the risk of evolving technological landscapes, changing mission requirements, or shifts in strategic priorities that may not be fully anticipated at the outset. Managing scope creep becomes more critical, and ensuring that the contract remains aligned with current needs requires proactive oversight and potentially contract modifications. Furthermore, long-term contracts can tie up significant funding, requiring careful financial planning and forecasting by the agency.

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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0042121R0115

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 21513 GREAT MILLS RD, LEXINGTON PARK, MD, 20653

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

Financial Breakdown

Contract Ceiling: $32,987,139

Exercised Options: $18,329,484

Current Obligation: $17,587,287

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042122D0084

IDV Type: IDC

Timeline