DoD's $41.5M Engineering Services Contract for Tactical Networks Shows Fair Competition and Moderate Risk

Contract Overview

Contract Amount: $41,452,557 ($41.5M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Defense

Start Date: 2018-04-12

End Date: 2024-10-11

Contract Duration: 2,374 days

Daily Burn Rate: $17.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TACTICAL NETWORKS (TACNET) TECHNICAL AND PRODUCTION SUPPORT.

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23503

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $41.5 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: TACTICAL NETWORKS (TACNET) TECHNICAL AND PRODUCTION SUPPORT. Key points: 1. Value for money appears reasonable given the long-term nature and specialized engineering services required. 2. Competition dynamics indicate a healthy level of engagement for this type of specialized defense contract. 3. Risk indicators are moderate, suggesting standard oversight for a long-duration, cost-plus contract. 4. Performance context is within the expected range for complex technical support services for the Navy. 5. Sector positioning places this contract within the broader defense IT and engineering services market.

Value Assessment

Rating: good

The contract's total value of approximately $41.5 million over its lifespan suggests a moderate investment for specialized engineering and production support. Benchmarking against similar long-term, complex defense IT and engineering service contracts indicates that the pricing structure, while cost-plus, is within typical ranges for the level of expertise and duration. The value proposition hinges on the continued operational readiness and technological advancement of the Navy's tactical networks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of three bidders (no=3) suggests a competitive environment for this specialized engineering service. While specific details on the bidding process are limited, full and open competition generally promotes price discovery and encourages contractors to offer competitive terms.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which aims to secure the best possible price and value for the services rendered. Full and open competition helps prevent inflated costs and ensures that public funds are used efficiently.

Public Impact

The U.S. Department of the Navy benefits through enhanced capabilities and support for its tactical networks. Services delivered include technical and production support crucial for maintaining and improving operational readiness. The geographic impact is primarily within the operational theaters and support bases of the U.S. Navy. Workforce implications include the employment of specialized engineers and technical personnel by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus contracts inherently carry a risk of cost overruns if not managed diligently.
Long contract durations can sometimes lead to scope creep or evolving requirements that impact final costs.
Reliance on a single contractor for extended periods may reduce flexibility in adopting new technologies or approaches.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
The contract supports critical defense infrastructure, aligning with national security objectives.
The contractor, Science Applications International Corporation (SAIC), has a significant track record in defense contracting.

Sector Analysis

This contract falls within the defense engineering services sector, a critical component of the broader aerospace and defense industry. The market for specialized engineering and technical support for military systems is substantial, driven by continuous modernization and operational demands. Comparable spending benchmarks in this sector often involve multi-year, high-value contracts for complex systems integration and sustainment, reflecting the intricate nature of defense technology.

Small Business Impact

There is no indication that this contract included specific small business set-asides (sb=false). However, large prime contractors like SAIC are often required to meet subcontracting goals with small businesses. The extent to which small businesses will participate as subcontractors will influence their engagement within this segment of the defense industry.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of the Navy's contracting and program management offices. Accountability measures would include performance reviews, milestone tracking, and financial audits, particularly given the cost-plus fixed fee structure. Transparency is generally maintained through contract reporting mechanisms, though specific operational details may be sensitive.

Related Government Programs

Tactical Data Links
Command and Control Systems
Network Centric Warfare
Naval Systems Engineering
Defense IT Services

Risk Flags

Cost Overruns Risk (CPFF Structure)
Scope Creep Potential
Long-Term Dependency on Single Contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.5 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. TACTICAL NETWORKS (TACNET) TECHNICAL AND PRODUCTION SUPPORT.

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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $41.5 million.

What is the period of performance?

Start: 2018-04-12. End: 2024-10-11.

What is the historical spending trend for Tactical Networks (TACNET) Technical and Production Support contracts awarded by the Department of the Navy?

Analyzing historical spending for TACNET support reveals a consistent need for these services within the Department of the Navy. While this specific contract (ID: N00178-04-D-4000-FFP3) represents a significant portion of recent spending, the Navy has historically allocated substantial resources to maintaining and upgrading its tactical communication and network infrastructure. Spending patterns are influenced by evolving threats, technological advancements, and strategic priorities. Fluctuations in annual spending can be observed, often correlating with major defense initiatives or budget cycles. The total obligated amount for this particular contract, $41,452,557.42, reflects a sustained investment over its period of performance, indicating the ongoing importance of these support services to naval operations.

How does the cost-plus fixed fee (CPFF) pricing structure of this contract compare to other similar engineering service contracts for the Navy?

The Cost-Plus Fixed Fee (CPFF) pricing structure is common for complex engineering and R&D efforts where the scope of work may evolve or is not precisely defined at the outset. For the Navy, CPFF contracts are utilized when the government needs specialized expertise but cannot pre-define all technical requirements or anticipate all costs. Compared to fixed-price contracts, CPFF offers flexibility but requires robust oversight to manage costs effectively. Other similar contracts for advanced engineering services or system integration within the Navy often employ CPFF or variations like Cost Plus Incentive Fee (CPIF) to balance risk and reward between the government and the contractor. The 'fixed fee' component provides the contractor with a guaranteed profit margin, incentivizing efficient performance within the estimated cost.

What is Science Applications International Corporation's (SAIC) track record with similar Department of Defense contracts, particularly in network engineering?

Science Applications International Corporation (SAIC) has an extensive and well-established track record with the Department of Defense, including numerous contracts related to network engineering, IT services, and technical support. SAIC is a major defense contractor known for its capabilities in areas such as command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR), and network modernization. Their past performance often includes large-scale system integration, sustainment, and development projects for various branches of the military. Reviews of SAIC's contract history typically show a pattern of successfully managing complex, long-term engagements. While specific performance metrics for every contract are not publicly detailed, their continued success in winning competitive bids for critical defense programs suggests a generally positive performance history in network-centric operations and engineering services.

What are the primary risks associated with this specific contract, and how are they being mitigated?

The primary risks associated with this contract, given its Cost-Plus Fixed Fee (CPFF) structure and long duration (2018-2024), include potential cost overruns and scope creep. CPFF contracts, by nature, allow for costs to exceed initial estimates, and the fixed fee is earned regardless of the final cost, which can reduce the contractor's incentive to control expenses unless strong oversight is in place. Scope creep is also a risk, as evolving tactical network requirements might lead to expanded work not fully accounted for in the original agreement. Mitigation strategies typically involve rigorous government oversight, including detailed cost tracking, regular performance reviews, and strict change control processes. The Department of the Navy's program management office would be responsible for monitoring expenditures, ensuring adherence to the SOW, and approving any modifications to the contract scope, thereby managing these inherent risks.

How does the level of competition (3 bidders) for this contract influence the overall value and taxpayer cost?

Having three bidders for this contract suggests a moderate level of competition within the specialized field of tactical network engineering and support. While more bidders could potentially drive prices lower, three competitors often indicate a healthy market where established firms can realistically bid. This level of competition generally provides the government with options and encourages contractors to offer competitive pricing and technical solutions to win the award. It helps ensure that the selected contractor is not operating in a vacuum, which could lead to inflated costs or reduced service quality. For taxpayers, this means a greater likelihood of receiving good value for the approximately $41.5 million investment, as the bidding process likely pressured SAIC to propose a fair price and demonstrate strong capabilities to secure the contract.

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: N6523618R3021

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

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: $87,872,119

Exercised Options: $87,567,022

Current Obligation: $41,452,557

Actual Outlays: $3,268,787

Subaward Activity

Number of Subawards: 35

Total Subaward Amount: $11,833,620

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4143

IDV Type: IDC

Timeline