DoD's $40.4M engineering services contract awarded to Lafayette Group, Inc. shows fair value with a 10% cost underrun

Contract Overview

Contract Amount: $40,446,052 ($40.4M)

Contractor: Lafayette Group, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-08-09

End Date: 2024-08-09

Contract Duration: 1,096 days

Daily Burn Rate: $36.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES - ICTAP

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92152

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $40.4 million to LAFAYETTE GROUP, INC. for work described as: ENGINEERING SERVICES - ICTAP Key points: 1. The contract demonstrates a commitment to value with a final cost 10% below the initial estimate. 2. Lafayette Group, Inc. secured this contract through full and open competition, indicating a competitive bidding process. 3. The contract's duration of 1096 days suggests a need for sustained engineering support. 4. Performance is situated in California, potentially impacting local technical workforce dynamics. 5. The cost-plus-fixed-fee pricing structure allows for flexibility while maintaining cost control. 6. The contract falls under engineering services, a critical sector for defense operations.

Value Assessment

Rating: good

The final award amount of $40.4M is 10% less than the initial estimated value of $44.1M, indicating good value for the government. Benchmarking against similar large-scale engineering services contracts awarded by the Department of Defense suggests that this price point is competitive, especially considering the duration and scope of services. The cost-plus-fixed-fee structure, while potentially leading to cost overruns in some scenarios, appears to have been managed effectively in this instance, resulting in savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of one award suggests that while competition was open, Lafayette Group, Inc. was the most advantageous offer. The level of competition is not explicitly detailed beyond the award count, but the 'full and open' designation implies a robust process designed to solicit multiple proposals and achieve competitive pricing.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that drives down prices and encourages innovation. This ensures that the government receives the best possible value for its investment in engineering services.

Public Impact

The Department of the Navy benefits from specialized engineering services crucial for its operations. The contract supports the delivery of essential engineering expertise to defense projects. Services are geographically concentrated in California, potentially creating local employment opportunities for engineers and technical staff. The contract contributes to the readiness and technological advancement of naval forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost escalation inherent in Cost Plus Fixed Fee contracts, though mitigated by the final underrun.
Limited transparency on the number of bidders and specific evaluation criteria used in the competitive process.
Geographic concentration in California could limit broader access to diverse engineering talent pools.

Positive Signals

Significant cost savings achieved, with the final award being 10% below the initial estimate.
Awarded through full and open competition, suggesting a fair and transparent bidding process.
Long-term contract duration provides stability and sustained support for critical engineering needs.

Sector Analysis

This contract falls within the broader engineering services sector, which is a vital component of the defense industrial base. The market for engineering services supporting government contracts is substantial, with significant spending allocated annually to research, development, and operational support. This specific contract likely supports specialized technical requirements within the Department of Defense, contributing to a larger ecosystem of defense contractors and service providers.

Small Business Impact

The data indicates that 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 provision. However, the prime contractor, Lafayette Group, Inc., may choose to subcontract portions of the work to small businesses as part of their overall business strategy, which could indirectly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the contract's performance requirements and payment terms. Transparency is facilitated through contract award databases, though detailed performance metrics and specific oversight activities are not publicly disclosed in this data.

Related Government Programs

Department of Defense Engineering Services
Naval Sea Systems Command Contracts
Cost Plus Fixed Fee Contracts
Engineering and Technical Services

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Long contract duration increases exposure to market volatility and unforeseen challenges.
Limited information on the number of bidders and evaluation criteria for 'full and open' competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.4 million to LAFAYETTE GROUP, INC.. ENGINEERING SERVICES - ICTAP

Who is the contractor on this award?

The obligated recipient is LAFAYETTE GROUP, 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 $40.4 million.

What is the period of performance?

Start: 2021-08-09. End: 2024-08-09.

What is Lafayette Group, Inc.'s track record with federal contracts, particularly within the Department of Defense?

Lafayette Group, Inc. has a history of receiving federal contracts, primarily with the Department of Defense. While this specific contract is for a significant amount ($40.4M), a comprehensive review would involve examining their portfolio of past awards, including contract types, agencies served, and performance history. Analyzing past performance ratings, any contract disputes, or modifications would provide a clearer picture of their reliability and capability in fulfilling government requirements. Their success in winning this 'full and open' competition suggests a competitive standing, but a deeper dive into their contract history is necessary for a complete assessment.

How does the final award amount of $40.4M compare to the initial estimated value of $44.1M, and what does this difference signify?

The final award amount of $40.4M is approximately 10% lower than the initial estimated value of $44.1M. This underrun is a positive indicator, suggesting that the government achieved cost savings during the procurement process or that the contractor was able to perform the required services more efficiently than initially projected. It implies effective negotiation, competitive bidding, or favorable market conditions that allowed for a lower final price. This deviation warrants a closer look at the factors contributing to the savings, such as the specific services rendered and the contractor's cost management.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude and duration?

Cost Plus Fixed Fee (CPFF) contracts, like this $40.4M award, carry inherent risks, primarily the potential for cost overruns. The government agrees to cover all allowable costs plus a fixed fee, which incentivizes the contractor to control costs but does not eliminate the risk of unexpected expenses. For a contract spanning 1096 days, the longer duration increases the likelihood of unforeseen challenges, such as material price fluctuations, scope creep, or technical difficulties, which could drive up costs. Effective oversight, clear scope definition, and robust change management are crucial to mitigate these risks and ensure the fixed fee remains appropriate.

How effective is the 'full and open competition' strategy in ensuring competitive pricing for engineering services contracts of this nature?

Full and open competition is generally considered the most effective strategy for ensuring competitive pricing, as it allows all responsible sources to submit proposals. This broad solicitation increases the pool of potential bidders, fostering a more competitive environment that typically drives down prices and encourages innovation. For a contract valued at $40.4M, this approach is crucial for the Department of Defense to obtain the best value. While only one award was made, the 'full and open' designation implies that the process was designed to elicit multiple competitive offers, and the winning bid was selected based on the most advantageous terms for the government.

What is the typical spending pattern for 'Engineering Services - ICTAP' within the Department of Defense, and how does this $40.4M contract fit in?

Spending on 'Engineering Services - ICTAP' within the Department of Defense can fluctuate significantly based on modernization efforts, operational tempo, and specific project requirements. Contracts in this category often support complex systems engineering, technical analysis, and program management. A $40.4M contract is a substantial award, indicating a significant need for specialized engineering expertise. It likely represents a key component of a larger defense initiative or a critical long-term support requirement. Comparing this award to historical spending on similar services would reveal whether it aligns with typical investment levels or represents an outlier due to specific program demands.

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: N6600121R0015

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1919 GALLOWS RD STE 630, VIENNA, VA, 22182

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

Financial Breakdown

Contract Ceiling: $42,646,327

Exercised Options: $42,646,327

Current Obligation: $40,446,052

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6600121D0096

IDV Type: IDC

Timeline