DoD's $911M Engineering Services Contract with PAE Applied Technologies Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $911,313,725 ($911.3M)
Contractor: PAE Applied Technologies LLC
Awarding Agency: Department of Defense
Start Date: 2005-01-28
End Date: 2022-02-04
Contract Duration: 6,216 days
Daily Burn Rate: $146.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 5
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Other
Official Description: TAS::97 4930::TAS
Plain-Language Summary
Department of Defense obligated $911.3 million to PAE APPLIED TECHNOLOGIES LLC for work described as: TAS::97 4930::TAS Key points: 1. Significant contract value ($911M) awarded to a single vendor. 2. Full and open competition was utilized, but long duration raises questions about sustained market responsiveness. 3. Cost-plus incentive fee structure can lead to cost overruns if not managed tightly. 4. Engineering services sector is critical but prone to scope creep and complex pricing.
Value Assessment
Rating: fair
The contract's total value is substantial, and the cost-plus incentive fee structure necessitates careful oversight to ensure costs remain reasonable. Benchmarking against similar long-term engineering service contracts is difficult due to unique project scopes.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the long duration (2005-2022) may have limited the impact of ongoing competition over time.
Taxpayer Impact: While competition was employed, the significant total value means taxpayers are exposed to substantial costs over the contract's lifespan, emphasizing the need for efficient execution.
Public Impact
Taxpayers funded over $911 million for engineering services over 17 years. Long-term contracts can impact the availability of work for other small and large businesses. The nature of engineering services can be complex, making direct cost comparisons challenging.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration may reduce competitive pressure over time.
- Cost-plus incentive fee can incentivize higher costs if not managed.
- Lack of specific performance metrics makes value assessment difficult.
Positive Signals
- Awarded under full and open competition.
- Contract served a critical defense need for an extended period.
Sector Analysis
This contract falls within the engineering services sector, which is vital for government operations, particularly in defense. Spending in this sector can vary widely based on project complexity and duration, making direct benchmarks challenging.
Small Business Impact
The contract data indicates that small business participation was not a stated factor (ss: false, sb: false). Long-term, large-value contracts like this can sometimes limit opportunities for smaller businesses if they are not specifically included or if the prime contractor does not subcontract effectively.
Oversight & Accountability
The long duration of this contract necessitates robust oversight to ensure continued value and prevent cost creep. Monitoring performance metrics and adherence to the incentive fee structure are key accountability measures.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Significant contract value ($911M).
- Long contract duration (2005-2022).
- Cost-plus incentive fee structure.
- Lack of specific performance data for value assessment.
- Potential for reduced competition over time despite initial full and open award.
Tags
engineering-services, department-of-defense, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $911.3 million to PAE APPLIED TECHNOLOGIES LLC. TAS::97 4930::TAS
Who is the contractor on this award?
The obligated recipient is PAE APPLIED TECHNOLOGIES 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 $911.3 million.
What is the period of performance?
Start: 2005-01-28. End: 2022-02-04.
What specific engineering services were provided, and how did their value align with industry standards over the contract's 17-year span?
The contract covered 'Engineering Services' (NAICS 541330), a broad category. Without detailed task orders and deliverables, assessing specific value against industry benchmarks is challenging. The cost-plus incentive fee structure suggests performance targets were set, but their achievement and impact on overall value require deeper analysis of the contract's execution history.
Given the full and open competition, why was a single vendor awarded a contract spanning nearly two decades?
Awarding a single contract for such an extended period under full and open competition suggests either a highly specialized need that PAE APPLIED TECHNOLOGIES LLC consistently met or a lack of sustained competitive bidding over the contract's lifecycle. It raises questions about whether subsequent re-competitions or task order competitions were adequately pursued to ensure optimal pricing and innovation.
How effectively did the cost-plus incentive fee structure control costs and incentivize desired performance for this extensive engineering services contract?
The cost-plus incentive fee (CPIF) structure aims to balance cost control with performance incentives. For a contract of this magnitude and duration, its effectiveness hinges on clearly defined performance metrics and realistic target costs. Without access to specific incentive payouts and cost variances, it's difficult to definitively assess if the CPIF structure successfully delivered optimal value and controlled expenditures for the government.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 5
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: PAE Government Services Inc.
Address: 6500 WEST FWY STE 600, FORT WORTH, TX, 76116
Business Categories: Category Business, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $961,828,276
Exercised Options: $908,760,361
Current Obligation: $911,313,725
Actual Outlays: $6,735,727
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2005-01-28
Current End Date: 2022-02-04
Potential End Date: 2022-02-04 00:00:00
Last Modified: 2025-10-30
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