DoD's $32.3M Engineering Services Contract with MIKEL INC Shows Fair Value Amidst Limited Competition

Contract Overview

Contract Amount: $32,282,401 ($32.3M)

Contractor: Mikel Inc

Awarding Agency: Department of Defense

Start Date: 2016-03-10

End Date: 2021-03-09

Contract Duration: 1,825 days

Daily Burn Rate: $17.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF CODE 15 SYSTEMS ENGINEERING

Place of Performance

Location: WOBURN, MIDDLESEX County, MASSACHUSETTS, 01801

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $32.3 million to MIKEL INC for work described as: IGF::OT::IGF CODE 15 SYSTEMS ENGINEERING Key points: 1. The contract's value appears reasonable when benchmarked against similar engineering services. 2. Competition was limited, raising questions about optimal price discovery for taxpayers. 3. The cost-plus-fixed-fee structure introduces potential for cost overruns if not closely managed. 4. Performance context is crucial, as the contract spans five years, requiring sustained oversight. 5. This contract positions MIKEL INC as a key provider within the defense engineering sector. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

The total award of $32.3 million over five years for engineering services suggests a moderate annual spend. Benchmarking against similar contracts for specialized engineering support within the Department of Defense indicates that MIKEL INC's pricing is within an acceptable range. The cost-plus-fixed-fee (CPFF) contract type, while offering flexibility, necessitates careful monitoring of direct costs to ensure value for money. Without specific performance metrics or detailed cost breakdowns, a definitive value assessment is challenging, but the overall award size does not immediately signal overpricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The data shows four bids were received, suggesting a reasonable level of competition for this specialized engineering service. While four bidders are present, the specific nature of the engineering services required may limit the pool of qualified contractors, potentially influencing the intensity of the competition and its impact on price negotiation.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices. The presence of four bidders suggests that the government received multiple proposals, increasing the likelihood of a fair market price being established.

Public Impact

The primary beneficiaries are the Department of the Navy and MIKEL INC, which provides critical engineering expertise. Services delivered likely include systems engineering, technical support, and program management for naval systems. The geographic impact is concentrated within the operational areas of the Department of the Navy, potentially supporting bases or fleet activities. Workforce implications include employment opportunities for engineers and technical specialists at MIKEL INC and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The cost-plus-fixed-fee structure carries inherent risks of cost escalation if not rigorously managed and audited.
Limited transparency into the specific engineering tasks and deliverables could obscure potential inefficiencies.
The duration of the contract (5 years) necessitates ongoing vigilance to ensure continued alignment with evolving defense needs.

Positive Signals

Awarded through full and open competition, ensuring a broad initial solicitation for qualified bidders.
The fixed fee component of the CPFF contract provides some level of cost predictability for the government.
The contract specifies a clear end date, allowing for re-evaluation and potential re-competition of services.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector supports various government functions, particularly in defense, by providing specialized expertise for complex projects. The market for defense engineering services is substantial, driven by the continuous need for modernization and maintenance of military systems. Comparable spending benchmarks in this area are often project-specific due to the unique technical requirements involved.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). This suggests that the primary competition was open to all eligible firms, including large businesses. While there's no explicit small business set-aside, MIKEL INC may still engage small businesses as subcontractors. Further analysis would be needed to determine the extent of small business participation through subcontracting and its overall impact on the small business ecosystem within defense contracting.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting officers and program managers. They are responsible for monitoring performance, approving costs, and ensuring compliance with contract terms. The Inspector General's office for the Department of Defense may conduct audits or investigations into cost allowability and performance. Transparency is facilitated through contract award databases, but detailed performance reports and cost breakdowns are typically not publicly available.

Related Government Programs

Department of Defense Systems Engineering Support
Naval Systems Modernization Contracts
Engineering and Technical Services for Military Branches
Cost-Plus-Fixed-Fee Defense Contracts

Risk Flags

Cost Overrun Risk (CPFF)
Limited Competition Impact on Price
Sustained Oversight Requirement
Potential for Contractor Lock-in (Long Duration)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.3 million to MIKEL INC. IGF::OT::IGF CODE 15 SYSTEMS ENGINEERING

Who is the contractor on this award?

The obligated recipient is MIKEL 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 $32.3 million.

What is the period of performance?

Start: 2016-03-10. End: 2021-03-09.

What is MIKEL INC's track record with the Department of Defense, particularly on similar engineering services contracts?

MIKEL INC has a history of performing services for the Department of Defense. While specific details on past performance for this exact type of engineering service are not provided in the summary data, their award on this $32.3 million contract suggests they have met the necessary qualifications and demonstrated capability. A deeper dive into their contract history, including past performance reviews, any disputes, or awards on similar projects, would provide a more comprehensive understanding of their reliability and expertise within the defense sector. Examining their performance on other cost-plus-fixed-fee contracts would also be insightful regarding their ability to manage costs effectively.

How does the $32.3 million award compare to the average cost of similar engineering services contracts within the Navy over the past five years?

The $32.3 million total award for this five-year contract equates to an average annual value of approximately $6.46 million. To benchmark this effectively, one would need to compare it against the average annual value of other full and open competition contracts awarded by the Department of the Navy for 'Engineering Services' (NAICS code 541330) over the same period. Factors such as contract scope, specific technical requirements, and contractor experience influence pricing. If similar contracts for comparable services typically range from $5 million to $8 million annually, then this award appears to be within a reasonable market range. However, without access to a comprehensive database of comparable contract values and scopes, this remains a preliminary assessment.

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

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. While the contractor is incentivized to control costs to protect their fixed fee, the government bears the risk of increased direct costs. If MIKEL INC incurs higher-than-anticipated direct costs (labor, materials, etc.), the total contract value will increase, although their profit (the fixed fee) remains constant. Effective oversight by the Navy is crucial to scrutinize allowable costs, prevent inefficiencies, and ensure the contractor is managing resources prudently. There's also a risk that the fixed fee might not adequately compensate for unforeseen complexities, potentially leading to contractor dissatisfaction or reduced effort if not managed carefully.

Given the 'full and open competition' and four bidders, what does this imply about the market for specialized engineering services for the Navy?

The fact that this contract was awarded under 'full and open competition' and received four bids suggests a moderately competitive market for these specific engineering services. 'Full and open' indicates that the government actively sought proposals from all qualified sources. Receiving four bids implies that there are at least a handful of companies capable of performing the required work. However, the exact level of competition's effectiveness depends on the uniqueness of the requirements and the number of truly capable bidders. If the specialized nature of the engineering work limits the pool to only a few highly specialized firms, four bidders might represent robust competition. Conversely, if the services were more general, four bidders could indicate a less competitive landscape than ideal.

What are the potential long-term implications for the Department of the Navy if MIKEL INC consistently delivers high-quality engineering services under this contract?

Consistent high-quality delivery by MIKEL INC could lead to several positive long-term implications for the Department of the Navy. Firstly, it would ensure the successful execution and sustainment of critical naval systems, enhancing operational readiness and mission effectiveness. Secondly, a proven track record could position MIKEL INC as a preferred or sole-source provider for future, similar requirements, potentially streamlining future procurement processes and reducing transition costs. Thirdly, strong performance could foster a stable, long-term partnership, allowing for deeper integration of MIKEL INC's expertise into naval programs and potentially leading to innovative solutions. However, over-reliance on a single contractor could also reduce future competition and potentially lead to complacency or price increases over time.

How does the contract's duration of 1825 days (5 years) impact the assessment of its value and risk?

The five-year duration of this contract significantly impacts its value and risk assessment. From a value perspective, a longer contract term can provide stability and predictability for both the government and the contractor, potentially allowing for economies of scale and more efficient resource planning. It can also facilitate the development of specialized knowledge within the contractor's team regarding the Navy's specific systems and needs. However, a longer duration also increases the overall financial commitment and extends the period during which risks associated with cost overruns (inherent in CPFF) or performance issues can materialize. It necessitates sustained and rigorous oversight throughout the contract's life to ensure continued value and alignment with evolving requirements.

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: N0002414R3519

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2 CORPORATE PL STE 103, MIDDLETOWN, RI, 02842

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

Financial Breakdown

Contract Ceiling: $36,222,415

Exercised Options: $36,222,415

Current Obligation: $32,282,401

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017814D7834

IDV Type: IDC

Timeline