DoD's $14.3M engineering services contract awarded to Chugach Technical Solutions shows potential value concerns

Contract Overview

Contract Amount: $14,330,547 ($14.3M)

Contractor: Chugach Technical Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2022-09-21

End Date: 2027-09-30

Contract Duration: 1,835 days

Daily Burn Rate: $7.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: RADIO COMMUNICATIONS INTEGRATED PRODUCT TEAM (RCIPT) SUPPORT

Place of Performance

Location: ANCHORAGE, ANCHORAGE County, ALASKA, 99503

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $14.3 million to CHUGACH TECHNICAL SOLUTIONS LLC for work described as: RADIO COMMUNICATIONS INTEGRATED PRODUCT TEAM (RCIPT) SUPPORT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not closely managed. 2. Limited competition raises questions about price discovery and potential for inflated costs. 3. The contract duration of 1835 days suggests a long-term need for these engineering services. 4. Performance context is limited due to the 'NOT AVAILABLE FOR COMPETITION' status. 5. Sector positioning within Engineering Services (NAICS 541330) is typical for defense support. 6. The contract is a delivery order, indicating it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle, though the base IDIQ details are not provided.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee structure necessitates rigorous oversight to ensure value for money. Without benchmark data for comparable engineering services contracts of this nature and duration, it is difficult to definitively assess pricing. The total award amount of $14.33 million over approximately five years suggests a significant investment, and the lack of competitive bidding means the government may not have secured the most advantageous pricing. Further analysis of the contractor's historical performance and cost proposals would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not competed. The 'NOT AVAILABLE FOR COMPETITION' status indicates that only one contractor, Chugach Technical Solutions LLC, was considered for this award. This lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the best possible value. It suggests that either specific capabilities were required that only this contractor possessed, or there were other circumstances preventing a broader solicitation.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to offer the lowest price. This limits the government's negotiating power and potentially leads to less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense entities requiring specialized engineering support for radio communications integrated product teams. Services delivered include engineering support, likely encompassing design, analysis, testing, and integration of radio communication systems. The geographic impact is primarily associated with the contractor's location in Alaska (ST: AK, SN: ALASKA), though the services may support operations globally. Workforce implications include the employment of engineers and technical specialists by Chugach Technical Solutions LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts carry inherent risks of cost escalation if not managed diligently.
Sole-source award limits competitive pressure, potentially leading to suboptimal pricing.
Lack of detailed performance metrics or comparison data makes value assessment challenging.
The contract's duration and cost suggest a significant, long-term commitment requiring sustained oversight.

Positive Signals

Chugach Technical Solutions LLC is a known entity within the defense contracting space.
The contract is a delivery order, implying it's part of an established contracting vehicle, potentially with pre-vetted terms.
The fixed-fee component provides some cost certainty compared to pure cost-plus-award-fee contracts.

Sector Analysis

The engineering services sector (NAICS 541330) is a critical component of the defense industrial base, providing specialized technical expertise for complex military systems. This contract falls within the broader defense IT and systems engineering market, which is characterized by high technical barriers to entry and significant government spending. Comparable spending benchmarks are difficult to establish without more specific details on the scope of work, but the overall defense engineering services market is substantial, with numerous firms competing for various contracts.

Small Business Impact

This contract does not appear to have a small business set-aside component (SS: false, SB: false). The award to Chugach Technical Solutions LLC, a mid-sized or large business, suggests that subcontracting opportunities for small businesses may exist, but this is not guaranteed or mandated by the contract terms. The impact on the small business ecosystem would depend on whether Chugach actively seeks small business partners for specialized services or supplies.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. As a sole-source award, scrutiny may be higher to ensure fair and reasonable pricing and effective performance. Transparency is limited due to the lack of competitive bidding and publicly available details on the specific statement of work. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Engineering Services
Naval Sea Systems Command (NAVSEA) Contracts
Radio Communications Systems Support
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award limits competitive pricing.
Cost-plus-fixed-fee structure requires diligent cost oversight.
Long contract duration increases risk of scope creep and technological obsolescence.
Limited public data on specific scope and performance metrics hinders full value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.3 million to CHUGACH TECHNICAL SOLUTIONS LLC. RADIO COMMUNICATIONS INTEGRATED PRODUCT TEAM (RCIPT) SUPPORT

Who is the contractor on this award?

The obligated recipient is CHUGACH TECHNICAL SOLUTIONS 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 $14.3 million.

What is the period of performance?

Start: 2022-09-21. End: 2027-09-30.

What is the specific scope of 'RADIO COMMUNICATIONS INTEGRATED PRODUCT TEAM (RCIPT) SUPPORT' and how does it align with the Department of the Navy's mission?

The specific scope of 'RADIO COMMUNICATIONS INTEGRATED PRODUCT TEAM (RCIPT) SUPPORT' likely involves providing specialized engineering and technical expertise to assist the Navy in the development, acquisition, sustainment, and modernization of its radio communication systems. This could encompass a wide range of activities, including system design, requirements analysis, technical evaluations, testing and validation, integration support, and lifecycle management. The RCIPT is a crucial entity for ensuring the Navy maintains effective and secure communication capabilities across its diverse operational platforms, from ships and submarines to shore-based facilities and personnel. The contract's objective is to ensure these critical communication systems meet operational needs and technological advancements, thereby directly supporting the Navy's mission readiness and effectiveness.

How does the cost-plus-fixed-fee (CPFF) contract type impact the government's ability to control costs for this engineering support?

The Cost-Plus-Fixed-Fee (CPFF) contract type means the government reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure provides some cost certainty regarding the contractor's profit margin, as the fee is fixed regardless of the final cost. However, it places a significant burden on the government to meticulously monitor and audit the contractor's costs to ensure they are reasonable, allocable, and allowable. Unlike fixed-price contracts, CPFF does not incentivize the contractor to control costs beyond what is necessary to complete the work, as their profit is not directly tied to cost savings. Therefore, effective government oversight, detailed cost tracking, and robust auditing are paramount to prevent cost overruns and ensure value for money under a CPFF arrangement.

Given the sole-source award, what mechanisms are in place to ensure Chugach Technical Solutions LLC provides competitive pricing and high-quality services?

Since this contract was awarded on a sole-source basis ('NOT AVAILABLE FOR COMPETITION'), competitive pricing is not achieved through market forces. Instead, the government relies on other mechanisms to ensure fair and reasonable pricing and quality. This typically involves a thorough price analysis by the contracting officer, which may include reviewing historical pricing for similar services, comparing proposed costs to independent government cost estimates, or analyzing the contractor's cost accounting data. For quality assurance, the government will assign technical monitors and quality assurance personnel to oversee the contractor's performance against the contract's requirements and deliverables. Performance metrics, regular progress reviews, and potentially award-fee provisions (though not specified here) can also incentivize high-quality service delivery.

What is the historical spending pattern for similar engineering services contracts awarded by the Department of the Navy or Department of Defense?

Historical spending on engineering services contracts by the Department of the Navy and the broader Department of Defense is substantial, reflecting the complexity and scale of military operations and acquisitions. These contracts often range from millions to billions of dollars, covering a wide array of specialized services such as systems engineering, software development, cybersecurity, naval architecture, and advanced research. Spending patterns are influenced by modernization programs, new platform development (e.g., ships, aircraft, ground vehicles), sustainment efforts, and evolving technological requirements. While specific figures for 'RADIO COMMUNICATIONS INTEGRATED PRODUCT TEAM (RCIPT) SUPPORT' are not publicly detailed, the Navy consistently awards significant contracts in the engineering and technical services domain to support its vast fleet and global operations. Analyzing past awards for similar scope and duration can provide benchmarks, but each contract's unique requirements and market conditions influence its final value.

What are the potential risks associated with a long-duration contract (1835 days) for engineering services, particularly under a sole-source award?

A long-duration contract, such as this 1835-day (approximately 5-year) award, carries several potential risks, especially when awarded sole-source. Firstly, the risk of scope creep or evolving requirements is higher over an extended period; without competition, there's less pressure to adapt efficiently. Secondly, technological obsolescence is a concern; radio communication technology can advance rapidly, and a long-term contract might lock the government into using outdated systems or services if not managed proactively. Thirdly, contractor performance degradation over time is possible, and addressing underperformance in a sole-source situation can be more challenging than switching providers. Finally, the fixed fee, while providing profit certainty, doesn't inherently incentivize cost control over the long haul, increasing the risk of the government paying more than necessary if costs escalate without corresponding value increases.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6523621R0040

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 3800 CENTERPOINT DR STE 1200, ANCHORAGE, AK, 99503

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $19,509,747

Exercised Options: $19,509,747

Current Obligation: $14,330,547

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $997,026

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6523621D8009

IDV Type: IDC

Timeline