DoD's $47.2M contract for naval undersea warfare support awarded to MIKEL INC

Contract Overview

Contract Amount: $47,242,423 ($47.2M)

Contractor: Mikel Inc

Awarding Agency: Department of Defense

Start Date: 2021-03-10

End Date: 2025-12-30

Contract Duration: 1,756 days

Daily Burn Rate: $26.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING, SHIP ALTERATION (SHIPALT), TEMPORARY ALTERATION (TEMPALT), CYBERSECURITY, AND LOGISTICS SUPPORT FOR NAVAL UNDERSEA WARFARE CENTER DIVISION NEWPORT, SENSORS AND SONAR SYSTEMS DEPARTMENT (CODE 15).

Place of Performance

Location: NEWPORT, NEWPORT County, RHODE ISLAND, 02840

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $47.2 million to MIKEL INC for work described as: ENGINEERING, SHIP ALTERATION (SHIPALT), TEMPORARY ALTERATION (TEMPALT), CYBERSECURITY, AND LOGISTICS SUPPORT FOR NAVAL UNDERSEA WARFARE CENTER DIVISION NEWPORT, SENSORS AND SONAR SYSTEMS DEPARTMENT (CODE 15). Key points: 1. Contract focuses on critical engineering, cybersecurity, and logistics for naval undersea warfare. 2. Awarded via full and open competition, suggesting a competitive bidding process. 3. The contract duration of 1756 days indicates a long-term need for these services. 4. The cost-plus-fixed-fee structure allows for flexibility but requires careful oversight. 5. The contract is a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle. 6. The primary performance location is Rhode Island, aligning with naval operations in the region.

Value Assessment

Rating: good

The contract's total value of $47.2 million over approximately 4.8 years suggests a significant investment in naval undersea warfare capabilities. Benchmarking this against similar contracts for specialized engineering and logistics support is challenging without more specific data on the scope of services. However, the cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or service contracts, necessitates robust oversight to ensure cost control and value for money. The fixed fee component provides some predictability for the contractor's profit, but the variable cost component requires diligent monitoring.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this specialized service. While two bidders are better than one, a higher number of bidders typically leads to more aggressive pricing and a wider range of innovative solutions. The specific details of the bidding process and evaluation criteria would provide further insight into the effectiveness of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve service quality. The presence of multiple bidders suggests that the government likely received competitive pricing, although the exact number of bidders limits the extent to which this can be definitively stated.

Public Impact

The primary beneficiaries are the U.S. Navy's Naval Undersea Warfare Center Division Newport, specifically its Sensors and Sonar Systems Department. The contract delivers essential engineering, ship alteration, temporary alteration, cybersecurity, and logistics support services. Geographic impact is concentrated in Rhode Island, where the Naval Undersea Warfare Center is located. Workforce implications include potential employment opportunities for engineers, cybersecurity specialists, and logistics personnel in the Rhode Island area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to cost overruns if not managed diligently.
Limited competition (two bidders) may have resulted in less aggressive pricing than a more robust competition.
The long contract duration requires sustained oversight to ensure continued performance and value.

Positive Signals

Awarded through full and open competition, indicating a fair and transparent process.
The contract addresses critical national defense needs in undersea warfare.
The fixed fee component provides some cost certainty for the government.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense-related R&D and operational capabilities. The market for specialized naval engineering, cybersecurity, and logistics support is highly concentrated among a few key defense contractors. Spending in this area is driven by the need to maintain and modernize the U.S. Navy's advanced undersea systems, including sonar and sensor technologies, which are crucial for national security. Comparable spending benchmarks would typically be found within broader defense procurement data for similar specialized technical services.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is also no explicit mention of subcontracting goals for small businesses. This suggests that the primary awardee, MIKEL INC, is expected to perform the majority of the work, and there may be limited direct opportunities for small businesses to participate as subcontractors on this specific contract, unless MIKEL INC voluntarily engages them.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Naval Undersea Warfare Center Division Newport. As a cost-plus-fixed-fee contract, rigorous financial oversight is crucial to monitor expenditures against the estimated costs and ensure the fixed fee is earned appropriately. Transparency is facilitated through contract reporting mechanisms. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Naval Warfare Systems Command (NAVWAR) Contracts
Department of Defense Research and Development Contracts
Defense Logistics Agency Support Contracts
Naval Undersea Warfare Center (NUWC) Division Newport Operations

Risk Flags

Cost Overrun Risk (CPFF)
Limited Competition Impact
Contractor Performance Monitoring
Cybersecurity Vulnerability Management

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.2 million to MIKEL INC. ENGINEERING, SHIP ALTERATION (SHIPALT), TEMPORARY ALTERATION (TEMPALT), CYBERSECURITY, AND LOGISTICS SUPPORT FOR NAVAL UNDERSEA WARFARE CENTER DIVISION NEWPORT, SENSORS AND SONAR SYSTEMS DEPARTMENT (CODE 15).

Who is the contractor on this award?

The obligated recipient is MIKEL 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 $47.2 million.

What is the period of performance?

Start: 2021-03-10. End: 2025-12-30.

What is MIKEL INC's track record with the Department of the Navy and similar contracts?

MIKEL INC has a history of performing contracts for the Department of Defense, including work related to naval systems and engineering support. While specific details on past performance for the Naval Undersea Warfare Center Division Newport are not provided in this data snippet, their award on this significant contract suggests they have met the necessary qualifications and demonstrated capability. A deeper dive into their contract history, past performance reviews, and any prior awards for similar services would provide a more comprehensive understanding of their reliability and expertise in this specialized domain. Examining their financial stability and any past disputes or contract terminations would also be relevant for assessing their track record.

How does the value of this contract compare to similar engineering and logistics support contracts for naval systems?

The $47.2 million value over approximately 4.8 years for specialized engineering, cybersecurity, and logistics support for naval undersea warfare is substantial. To benchmark effectively, one would need to compare it against contracts with similar scopes of work, complexity, and duration awarded by the Navy or other branches of the DoD. Contracts for sonar systems development, cybersecurity integration for naval platforms, or complex ship alteration projects could serve as comparators. The cost-plus-fixed-fee (CPFF) structure also influences the comparison, as it differs from fixed-price contracts. Without access to a database of comparable contracts, it's difficult to definitively state if this represents a high, low, or average value, but it signifies a significant investment in a critical capability area.

What are the primary risks associated with this cost-plus-fixed-fee contract structure?

The primary risks associated with a Cost-Plus-Fixed-Fee (CPFF) contract structure revolve around cost control and potential for cost overruns. While the fixed fee provides a predictable profit margin for the contractor, the 'cost' portion is subject to actual expenses incurred. If the contractor's costs exceed initial estimates, the government bears that additional expense, provided the costs are allowable, allocable, and reasonable. This necessitates robust government oversight to scrutinize all expenditures, ensure efficiency, and prevent scope creep that could inflate costs without commensurate benefit. The risk for the government is paying more than anticipated if costs are not managed effectively by both parties.

How effective is the competition level (2 bidders) in ensuring optimal value for taxpayers?

A competition level with only two bidders presents a moderate risk to optimal value for taxpayers. While it is 'full and open,' indicating a fair process, the limited number of participants restricts the potential for aggressive price competition. With more bidders, the government typically benefits from a wider range of pricing proposals, potentially leading to lower overall costs and greater innovation. Two bidders suggest that the market for this highly specialized service may be limited, or that other potential bidders were deterred for various reasons. Therefore, while the government likely received competitive offers, the value achieved might not be as optimized as it could have been with a larger pool of interested and capable companies vying for the contract.

What are the historical spending patterns for engineering and logistics support at NUWC Division Newport?

Historical spending patterns at NUWC Division Newport for engineering and logistics support would likely show a consistent need for these services, given its role in developing and maintaining advanced naval technologies. Annual expenditures can fluctuate based on specific program requirements, modernization efforts, and budget allocations. The total amount awarded over multiple years for similar support functions would provide context. For instance, if NUWC Newport has historically awarded tens of millions annually for such services, then this $47.2 million contract over nearly five years aligns with a sustained investment. Analyzing trends in contract types (e.g., CPFF vs. fixed-price) and competition levels over time would also reveal shifts in procurement strategies and market dynamics.

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: N6660420R3002

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2 CORPORATE PL STE 103, MIDDLETOWN, RI, 02842

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

Financial Breakdown

Contract Ceiling: $52,324,093

Exercised Options: $52,324,093

Current Obligation: $47,242,423

Actual Outlays: $478,028

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017819D8122

IDV Type: IDC

Timeline