Naval Air Systems Command awards $18M engineering support contract to SG2 LLC, with 4 years remaining

Contract Overview

Contract Amount: $18,002,585 ($18.0M)

Contractor: SG2 LLC

Awarding Agency: Department of Defense

Start Date: 2023-11-28

End Date: 2026-11-30

Contract Duration: 1,098 days

Daily Burn Rate: $16.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THIS REQUIREMENT IS IN SUPPORT OF THE NAVAL AIR SYSTEMS COMMAND (NAVAIR) AIR COMBAT ELECTRONICS (ACE) PROGRAM OFFICE, (PMA209) FUNCTIONAL TEAMS FOR ENGINEERING, LOGISTICS AND OTHER TECHNICAL CONTRACTOR SUPPORT SERVICES (CSS).

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $18.0 million to SG2 LLC for work described as: THIS REQUIREMENT IS IN SUPPORT OF THE NAVAL AIR SYSTEMS COMMAND (NAVAIR) AIR COMBAT ELECTRONICS (ACE) PROGRAM OFFICE, (PMA209) FUNCTIONAL TEAMS FOR ENGINEERING, LOGISTICS AND OTHER TECHNICAL CONTRACTOR SUPPORT SERVICES (CSS). Key points: 1. Contract provides essential technical support services for the Air Combat Electronics program office. 2. The contract type is Cost Plus Fixed Fee, which can incentivize cost overruns if not closely monitored. 3. Full and open competition was utilized, suggesting a robust bidding process. 4. The contract duration is substantial, spanning over 1000 days, indicating a long-term need. 5. The award is a Delivery Order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 6. The contractor, SG2 LLC, is performing work in Maryland, a key hub for defense contracting.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee (CPFF) structure requires careful oversight to ensure value for money, as it can lead to higher costs if not managed effectively. Benchmarking the fixed fee against industry standards for similar engineering support services would be crucial. Without specific details on the scope of work and the fixed fee percentage, a precise value-for-money assessment is challenging. However, the total award amount of $18 million over approximately three years suggests a significant investment in specialized technical expertise.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This competitive process is generally expected to drive down prices and ensure the government receives the best value. The number of bidders is not specified, but the 'full and open' designation implies a broad solicitation.

Taxpayer Impact: Taxpayers benefit from the competitive nature of this award, which should lead to more efficient use of funds and potentially lower overall costs compared to a sole-source or limited competition scenario.

Public Impact

The primary beneficiaries are the Naval Air Systems Command (NAVAIR) and its Air Combat Electronics (ACE) Program Office, receiving critical engineering, logistics, and technical support. Services delivered include vital support for the development, sustainment, and enhancement of combat electronics systems for naval aviation. The geographic impact is concentrated in Maryland, a significant defense industry hub, potentially supporting local technical workforce employment. Workforce implications include the employment of skilled engineers, logisticians, and technical specialists by SG2 LLC to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize contractor to increase costs to maximize profit if not properly managed.
Lack of specific performance metrics or KPIs makes it difficult to assess the effectiveness of the services provided.
The duration of the contract (over 3 years) necessitates ongoing vigilance to ensure continued alignment with evolving naval aviation needs.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
Contract supports a critical defense program (Air Combat Electronics), indicating strategic importance.
The contractor, SG2 LLC, is performing work in a key defense contracting region (Maryland).

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting naval aviation's complex electronic warfare and combat systems. The Department of Defense is a major consumer of such specialized engineering services, with significant annual spending in this area. Comparable spending benchmarks would involve analyzing other contracts for similar technical support services provided to NAVAIR or other military branches for advanced aerospace systems.

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 for small businesses stemming from a set-aside requirement. However, the prime contractor, SG2 LLC, may choose to subcontract portions of the work to small businesses as part of its overall business strategy, which could indirectly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Naval Air Systems Command (NAVAIR) contracting and program management offices. Accountability measures are typically embedded within the Cost Plus Fixed Fee structure, requiring detailed reporting and justification of costs. Transparency is facilitated through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Air Systems Command (NAVAIR) Contracts
Air Combat Electronics (ACE) Program
Department of Defense Engineering Services
Cost Plus Fixed Fee Contracts
Technical Contractor Support Services

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Potential for scope creep in engineering services contracts.
Dependence on contractor's technical expertise necessitates robust performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.0 million to SG2 LLC. THIS REQUIREMENT IS IN SUPPORT OF THE NAVAL AIR SYSTEMS COMMAND (NAVAIR) AIR COMBAT ELECTRONICS (ACE) PROGRAM OFFICE, (PMA209) FUNCTIONAL TEAMS FOR ENGINEERING, LOGISTICS AND OTHER TECHNICAL CONTRACTOR SUPPORT SERVICES (CSS).

Who is the contractor on this award?

The obligated recipient is SG2 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 $18.0 million.

What is the period of performance?

Start: 2023-11-28. End: 2026-11-30.

What is SG2 LLC's track record with similar defense contracts, particularly within NAVAIR?

Assessing SG2 LLC's track record requires a review of their past performance on contracts with the Department of Defense, especially NAVAIR. This would involve examining contract databases for previous awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or contract modifications. A strong history of successful delivery on complex technical support contracts would indicate a lower risk profile for this current award. Conversely, a history of performance issues or cost overruns on similar CPFF contracts could raise concerns about the value and reliability of their services for the ACE program.

How does the fixed fee for SG2 LLC compare to industry benchmarks for similar engineering support services?

Determining the competitiveness of the fixed fee requires access to detailed contract line item data and industry benchmarking reports. The fixed fee is a critical component of the Cost Plus Fixed Fee (CPFF) structure, representing the contractor's profit. A fee that is significantly higher than the average for comparable services could indicate a lack of competitive pressure or an inflated profit margin. Conversely, a fee within the typical range suggests fair pricing. Without specific fee percentages or access to proprietary benchmarking data, it is difficult to definitively assess the value. However, the overall award amount of $18 million provides a context for the scale of the services being procured.

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

The primary risk with a CPFF contract is that the contractor has less incentive to control costs compared to fixed-price contracts, as their fee is fixed regardless of the actual costs incurred. This can lead to cost overruns if not rigorously managed. For engineering support services, risks also include potential scope creep, delays in deliverables, and ensuring the quality and relevance of the technical expertise provided. Effective oversight, clear performance metrics, and proactive risk management by the government are crucial to mitigate these risks and ensure the program stays within budget and meets its objectives.

How effective has NAVAIR's procurement process been in securing competitive pricing for engineering support services like this one?

NAVAIR's utilization of 'full and open competition' for this $18 million contract suggests a commitment to competitive pricing. Historically, full and open competition is the preferred method for maximizing price discovery and ensuring value for taxpayer dollars. However, the effectiveness can vary depending on the specific market dynamics for specialized engineering services. If the market is highly concentrated or requires very niche expertise, even full and open competition might result in fewer bidders than ideal. Analyzing NAVAIR's broader contracting history for similar services, including the number of bids received and the variance between initial proposals and final award prices, would provide a more comprehensive assessment of their procurement effectiveness.

What is the historical spending trend for engineering and technical support services by NAVAIR's Air Combat Electronics program office?

To understand historical spending trends, one would need to analyze NAVAIR's budget allocations and contract awards specifically for the ACE program office over several fiscal years. This would involve looking at the total obligated amounts, the number and types of contracts awarded (e.g., CPFF, fixed-price), and the primary contractors involved. Significant year-over-year increases or decreases in spending could indicate shifts in program priorities, evolving technological needs, or changes in contracting strategies. Understanding these trends provides context for the current $18 million award and helps in forecasting future requirements and potential budget impacts.

Are there any specific performance metrics or Key Performance Indicators (KPIs) associated with this contract that are publicly available?

Publicly available contract award data typically does not include detailed performance metrics or Key Performance Indicators (KPIs). These are usually specified in the contract's Statement of Work (SOW) and are used for internal government oversight and contractor performance evaluation. While the contract award notice confirms the value and duration, the specific KPIs related to engineering quality, timeliness of deliverables, or technical problem resolution are not generally disclosed. Accessing such details would likely require a Freedom of Information Act (FOIA) request or be available through internal government reporting systems.

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: N0042123R3003

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 26725 RADIO STATION WAY, LEONARDTOWN, MD, 20650

Business Categories: Category Business, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $49,682,441

Exercised Options: $29,011,556

Current Obligation: $18,002,585

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017821D9339

IDV Type: IDC

Timeline