DoD's $36M engineering services contract with General Dynamics IT shows fair value, but limited competition concerns

Contract Overview

Contract Amount: $36,121,446 ($36.1M)

Contractor: General Dynamics Information Technology Inc.

Awarding Agency: Department of Defense

Start Date: 2007-07-21

End Date: 2012-08-31

Contract Duration: 1,868 days

Daily Burn Rate: $19.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MGMT, ENGINEER, ADMIN, ANALYSIS, CONFIG, DEPLOYMENT AND MAINT SUPPORT SERVICES

Place of Performance

Location: PENSACOLA, ESCAMBIA County, FLORIDA, 32508, UNITED STATES OF AMERICA

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $36.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY INC. for work described as: MGMT, ENGINEER, ADMIN, ANALYSIS, CONFIG, DEPLOYMENT AND MAINT SUPPORT SERVICES Key points: 1. Contract awarded for engineering, analysis, and IT support services. 2. Significant duration of over 5 years indicates long-term need. 3. Awarded under a Cost Plus Fixed Fee pricing structure. 4. No small business set-aside, potentially limiting opportunities for smaller firms. 5. Geographic focus on Florida suggests regional operational support. 6. High number of bids (5) indicates some level of market interest. 7. Contract type suggests potential for cost overruns if not managed closely.

Value Assessment

Rating: fair

The contract's total value of $36.1 million over approximately five years averages to about $7.2 million annually. Benchmarking this against similar large-scale engineering and IT support contracts within the Department of Defense is challenging without more granular service details. However, the Cost Plus Fixed Fee structure, while common, can sometimes lead to higher costs than fixed-price contracts if not meticulously managed. The number of bidders (5) suggests a competitive process, but the final price relative to the services rendered warrants careful scrutiny to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. Five bids were received, suggesting a moderate level of competition for this requirement. While five bidders is a reasonable number, it is not exceptionally high for a contract of this magnitude and duration, which could imply that the market for such specialized services is somewhat concentrated or that the bidding requirements were stringent.

Taxpayer Impact: The full and open competition process is generally favorable for taxpayers as it aims to solicit the best possible pricing and technical solutions from a wide range of potential contractors, fostering a competitive environment that can drive down costs.

Public Impact

Provides critical engineering, analysis, and IT support services to the Department of the Navy. Supports Department of Defense operations, likely enhancing military readiness and technological capabilities. Services are concentrated in Florida, impacting the local economy and workforce in that region. Benefits military personnel and potentially civilian employees who rely on these support functions. Contributes to the technological infrastructure and operational efficiency of naval forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can incentivize contractors to increase costs to maximize profit, requiring robust oversight.
The long duration (1868 days) increases the risk of scope creep and potential for cost escalation over time.
Lack of specific performance metrics in the provided data makes it difficult to assess the quality and effectiveness of services delivered.
No small business participation noted, potentially missing opportunities to leverage specialized capabilities of smaller firms and meet socio-economic goals.

Positive Signals

Awarded through full and open competition, suggesting a broad search for qualified contractors.
Received 5 bids, indicating a healthy level of interest and a competitive process.
General Dynamics Information Technology is a large, established contractor with significant experience in government IT services.
Contract supports critical Department of Defense functions, indicating a high-priority requirement.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a significant segment of the federal contracting market. The federal government is a major consumer of engineering services, particularly for defense, infrastructure, and research and development projects. Spending in this sector often involves complex technical requirements, long-term support, and substantial investment. General Dynamics Information Technology is a prominent player in the IT and engineering services market, competing with other large defense contractors for similar government contracts.

Small Business Impact

This contract was not set aside for small businesses, nor does the provided data indicate any specific subcontracting requirements for small businesses. As a large prime contract awarded to a major corporation, it may offer subcontracting opportunities, but these are not explicitly detailed. The absence of a small business set-aside means that opportunities for smaller, specialized firms to directly compete for this work were limited, potentially impacting the broader small business ecosystem that supports defense contracting.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy contracting officers and program managers. The Cost Plus Fixed Fee structure necessitates close monitoring of costs and performance to ensure that the fixed fee remains appropriate and that the contractor operates efficiently. Transparency is typically managed through contract reporting requirements and performance reviews. While specific Inspector General (IG) involvement isn't detailed, the DoD IG has broad jurisdiction over defense contracts and could investigate if performance or cost issues arise.

Related Government Programs

Department of Defense IT Support Services
Engineering and Technical Services Contracts
Naval Operations Support
Information Technology Professional Services
Defense Contract Management

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Long contract duration increases risk of scope creep and technological obsolescence.
Limited competition (5 bidders) may not yield the lowest possible price.
No explicit small business subcontracting requirements noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY INC.. MGMT, ENGINEER, ADMIN, ANALYSIS, CONFIG, DEPLOYMENT AND MAINT SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY 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 $36.1 million.

What is the period of performance?

Start: 2007-07-21. End: 2012-08-31.

What is the historical spending trend for similar engineering and IT support services by the Department of the Navy?

Historical spending data for similar services by the Department of the Navy reveals a consistent and substantial investment in engineering, IT, and administrative support. Over the past decade, the Navy has awarded billions of dollars annually across various contract vehicles for these types of services. Spending often fluctuates based on modernization efforts, operational tempo, and specific platform support requirements. Contracts like this one, with values in the tens of millions and durations of several years, are typical for sustaining complex systems and providing essential technical expertise. Analysis of past awards indicates a preference for large, established contractors like General Dynamics IT, but also shows a growing trend towards task orders under larger indefinite-delivery/indefinite-quantity (IDIQ) contracts, which can offer more flexibility and potentially better pricing through competition on individual task orders.

How does the pricing structure (Cost Plus Fixed Fee) compare to other contract types for similar services, and what are the implications for value?

The Cost Plus Fixed Fee (CPFF) pricing structure used for this contract is common for services where the scope of work is not precisely defined at the outset or is expected to evolve, such as research and development or complex engineering projects. In a CPFF contract, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to control costs to some extent, as the fee is fixed, but it can also lead to higher overall costs compared to fixed-price contracts if cost overruns occur. For taxpayers, CPFF contracts require diligent oversight from the government to ensure costs are reasonable and allocable, and that the fixed fee represents fair value for the services rendered. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility but less cost certainty. Best-value trade-off procurements often weigh technical approach and past performance more heavily than price, making the CPFF structure suitable when technical expertise is paramount.

What is General Dynamics Information Technology's track record with similar government contracts, particularly with the Department of Defense?

General Dynamics Information Technology (GDIT), a business unit of General Dynamics, has an extensive track record of performing IT and engineering services for the Department of Defense (DoD) and other federal agencies. They are a major incumbent contractor across numerous defense programs, providing a wide range of services including systems engineering, software development, cybersecurity, and enterprise IT support. GDIT has historically secured large, complex contracts, often winning through full and open competition. Their performance on previous DoD contracts generally indicates a capability to manage large programs and deliver complex technical solutions. However, like any large contractor, they have experienced both successes and challenges, including contract disputes or performance issues on specific projects, which are publicly documented in contract databases and watchdog reports. A thorough review of their past performance ratings and any associated corrective actions would be necessary for a complete assessment.

What are the potential risks associated with a contract of this duration (over 5 years) and value ($36M)?

Contracts with a duration exceeding five years and a value of $36 million carry several inherent risks. Firstly, the extended timeline increases the potential for scope creep, where the requirements may evolve significantly beyond the original statement of work, leading to cost increases and schedule delays. Secondly, maintaining consistent performance quality over such a long period can be challenging, requiring continuous government oversight and contractor adaptation. Technological obsolescence is another risk; systems and solutions implemented early in the contract may become outdated by the end. Furthermore, the long duration can reduce flexibility for the government to adapt to changing mission needs or to incorporate new technologies or contractors. Finally, the significant financial commitment makes the government reliant on the incumbent contractor, potentially reducing leverage in future negotiations or recompetes.

How does the number of bidders (5) influence price discovery and overall value for this specific contract?

Receiving five bids for this contract suggests a moderate level of competition. While more than a single bid, it is not an exceptionally high number for a contract of this size and scope, which could indicate a specialized market or high barriers to entry. A higher number of bidders generally leads to more robust price discovery, as contractors are compelled to offer more competitive pricing to win the contract. With five bidders, there is a reasonable chance that the government received competitive offers, but it also means that the market might not be fully saturated with capable providers. This level of competition is generally considered adequate to provide some downward pressure on prices, but it may not achieve the same level of cost savings as a procurement with ten or more bidders. The government's evaluation criteria, beyond just price, also play a crucial role in determining the ultimate value.

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: N0002407R3328

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Computer Sciences Corporation (UEI: 009581091)

Address: 3160 FAIRVIEW PARK DRIVE, FALLS CHURCH, VA, 22042

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $260,971,710

Exercised Options: $83,955,115

Current Obligation: $36,121,446

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4030

IDV Type: IDC

Timeline