Defense contract for engineering services awarded to Science Applications International Corporation exceeds $12.9 million

Contract Overview

Contract Amount: $12,936,883 ($12.9M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Defense

Start Date: 2006-09-26

End Date: 2024-01-25

Contract Duration: 6,330 days

Daily Burn Rate: $2.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: N00178-04-D-4119-N407

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $12.9 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: N00178-04-D-4119-N407 Key points: 1. Contract value indicates significant investment in specialized engineering capabilities. 2. Awarded under full and open competition, suggesting a robust bidding process. 3. The contract's long duration implies a sustained need for these services. 4. The cost-plus award fee structure incentivizes performance but requires careful oversight. 5. The specific engineering services provided are crucial for ongoing defense operations. 6. The contractor has a substantial presence in the federal contracting landscape.

Value Assessment

Rating: good

The contract value of over $12.9 million for engineering services appears reasonable given the long performance period of over 17 years. Benchmarking against similar large-scale engineering contracts within the Department of Defense suggests that pricing is likely competitive, especially considering the full and open competition. The cost-plus award fee structure allows for flexibility and performance incentives, which can lead to good value if managed effectively, though it necessitates diligent oversight to control costs and ensure fair pricing.

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 bids. The specific number of bidders is not provided, but the designation suggests a competitive environment that should drive price discovery and potentially lead to more favorable terms for the government. The extensive duration of the contract implies that the initial competition was thorough and that the chosen contractor was deemed best suited to meet the long-term requirements.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better quality services, maximizing the value of federal spending.

Public Impact

The Department of Defense benefits from specialized engineering expertise to support its complex operational needs. Services delivered likely include design, analysis, testing, and integration of defense systems. The geographic impact is primarily within the United States, supporting defense infrastructure and readiness. The contract supports a workforce of engineers and technical specialists, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus award fee contracts can lead to cost overruns if not managed meticulously.
The long contract duration may present risks if technology or requirements evolve significantly.
Reliance on a single contractor for extended periods could limit future innovation or flexibility.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
The contractor, Science Applications International Corporation, is a well-established entity with significant experience.
The contract's long performance period indicates a stable and ongoing requirement, ensuring continuity of essential 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 is characterized by high demand from government agencies, particularly in defense, aerospace, and infrastructure development. The market size for federal engineering services is substantial, with significant annual spending. This specific contract represents a portion of the Department of Defense's investment in maintaining and advancing its technological capabilities, fitting within a landscape of similar large-scale, long-term service agreements.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded through full and open competition, it is unlikely to have specific small business subcontracting goals mandated unless explicitly included in the contract terms. The primary beneficiaries of subcontracting opportunities would likely be other large or specialized engineering firms, though there may be indirect opportunities for small businesses supplying materials or niche services.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. Accountability measures would be embedded within the cost-plus award fee structure, requiring the contractor to meet performance metrics to earn full fees. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Engineering Services
Professional, Scientific, and Technical Services
Department of Defense IT and Support Services
Aerospace Engineering Contracts

Risk Flags

Long contract duration may increase risk of obsolescence or changing requirements.
Cost-plus award fee structure requires diligent oversight to manage costs effectively.
Potential for contractor lock-in due to specialized knowledge and long-term engagement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.9 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. N00178-04-D-4119-N407

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $12.9 million.

What is the period of performance?

Start: 2006-09-26. End: 2024-01-25.

What is the historical spending trend for this specific contract vehicle (N00178-04-D-4119-N407) over its lifespan?

The provided data indicates a total award amount of $12,936,883.26 for contract N00178-04-D-4119-N407, with an award date of 2006-09-26 and an estimated completion date of 2024-01-25. This suggests a long-term engagement. To analyze the spending trend, one would need access to the annual or quarterly disbursement data associated with this contract. Without that granular data, we can infer that spending has been distributed over approximately 17.3 years. If the total award amount represents the cumulative spending, the average annual spending would be roughly $747,800. However, cost-plus award fee contracts often have variable spending based on performance and task orders. A detailed trend analysis would require examining the actual expenditure reports year over year to identify periods of high or low spending and correlate them with specific contract phases or deliverables.

How does the cost-plus award fee (CPAF) structure compare to other contract types for similar engineering services in the defense sector?

The Cost-Plus Award Fee (CPAF) structure is common for complex defense contracts where the scope of work may evolve or where performance incentives are critical. Unlike fixed-price contracts, CPAF allows the government to reimburse the contractor for allowable costs plus a fee that is composed of a base amount and an award amount, determined by the contractor's performance against defined metrics. Compared to Cost Plus Fixed Fee (CPFF), CPAF offers greater incentive for the contractor to exceed performance expectations. Compared to Cost Plus Incentive Fee (CPIF), the award determination in CPAF is often more subjective, relying on government evaluation rather than a pre-defined formula for sharing cost savings or overruns. For engineering services, CPAF is often chosen when technical performance, innovation, and timely delivery are paramount, and where precise cost estimation upfront is difficult. However, it requires robust government oversight to ensure the award fee is justified and costs remain reasonable.

What are the key performance indicators (KPIs) typically associated with engineering services contracts like this one?

For engineering services contracts, particularly those with a Cost-Plus Award Fee (CPAF) structure, Key Performance Indicators (KPIs) are crucial for determining the award fee. These typically revolve around technical performance, schedule adherence, cost control, and management effectiveness. Examples include: * **Technical Performance:** Meeting or exceeding specified technical requirements, system reliability, accuracy of analyses, quality of designs, and successful integration of components. * **Schedule Adherence:** Completing milestones and final deliverables by the agreed-upon dates. This could be measured by on-time completion rates for task orders or project phases. * **Cost Management:** Demonstrating efficient use of resources and staying within projected cost ceilings for task orders, even within a cost-reimbursable framework. This might involve variance analysis and proactive identification of potential cost overruns. * **Management Effectiveness:** Quality of project management, responsiveness to government requests, effectiveness of communication, and proactive risk management. * **Deliverable Quality:** Ensuring all reports, designs, prototypes, and documentation meet established quality standards and are free from errors. The specific KPIs for this contract would be detailed in the contract's Performance Work Statement (PWS) and the criteria for the award fee determination.

What is the typical profit margin for engineering services contractors like Science Applications International Corporation in the federal market?

Profit margins for federal engineering services contractors can vary significantly based on contract type, competition level, specific services offered, and the contractor's overhead structure. For Cost-Plus Award Fee (CPAF) contracts, the profit is embedded within the 'fee' component. While not a direct profit margin calculation in the same way as fixed-price contracts, the total fee (base fee plus award fee) aims to compensate the contractor for their costs and provide a reasonable return. Historically, profit margins in the federal contracting space for professional and engineering services have ranged from 5% to 15% of the contract value, with award fees potentially pushing this higher for exceptional performance. However, these are gross figures before corporate taxes and other indirect expenses. Science Applications International Corporation (SAIC), as a large, established defense contractor, likely operates within this general range, but specific margins are proprietary and depend heavily on the negotiated terms and achieved performance for each contract.

How does the PSC code '541330' (Engineering Services) relate to the overall defense spending in this category?

The Product Service Code (PSC) '541330' specifically designates 'Engineering Services'. This category encompasses a wide array of services, including research, design, development, testing, and analysis related to engineering disciplines. In the context of overall defense spending, engineering services are fundamental. They are required for the conceptualization, design, acquisition, sustainment, and modernization of virtually all defense systems, from aircraft and ships to communication networks and weapons platforms. Federal agencies, particularly the Department of Defense, are major consumers of these services. Spending under PSC 541330 represents a significant portion of the defense budget allocated to research, development, testing, and evaluation (RDT&E) as well as sustainment and operational support. Contracts like the one awarded to Science Applications International Corporation are representative of the substantial investment the DoD makes in specialized engineering expertise to maintain its technological edge and operational readiness.

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: N0002406R3328

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 12010 SUNSET HILLS RD, RESTON, VA, 20190

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $13,210,567

Exercised Options: $13,210,567

Current Obligation: $12,936,883

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4119

IDV Type: IDC

Timeline