DoD's $35.7M Engineering Services Contract with MSE Technology Applications Raises Value and Competition Questions

Contract Overview

Contract Amount: $35,668,952 ($35.7M)

Contractor: MSE Technology Applications, Inc.

Awarding Agency: Department of Defense

Start Date: 2004-07-08

End Date: 2010-07-31

Contract Duration: 2,214 days

Daily Burn Rate: $16.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200410!004018!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04CR173 !A!N! !N! ! !20040708!20091230!045682036!601224991!010375939!N!MSE TECHNOLOGY APPLICATIONS !200 TECHNOLOGY WAY !BUTTE !MT!59701!11275!093!30!BUTTE !SILVER BOW !MONTANA !+000000022977!N!N!000000000000!2895!MISCELLANEOUS ENGINES AND COMPONENTS !A2 !MISSILE AND SPACE SYSTEMS !000 !* !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1G!A!Y!Z! ! !N!B!N!N! ! !A! !A!A!00 !A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: BUTTE, SILVER BOW County, MONTANA, 59701

State: Montana Government Spending

Plain-Language Summary

Department of Defense obligated $35.7 million to MSE TECHNOLOGY APPLICATIONS, INC. for work described as: 200410!004018!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04CR173 !A!N! !N! ! !20040708!20091230!045682036!601224991!010375939!N!MSE TECHNOLOGY APPLICATIONS !200 TECHNOLOGY WAY !BUTTE !MT!59701!11275!093!30!BUTTE !SILV… Key points: 1. Contract awarded for engineering services, potentially indicating a need for specialized technical expertise. 2. The 'Not Competed' award suggests a lack of broad market engagement, potentially impacting price. 3. A long contract duration of 2214 days (over 6 years) warrants scrutiny for sustained value. 4. The contract's value of $35.7M places it in the mid-to-large tier for federal engineering services. 5. Geographic concentration in Montana for the contractor may limit access to a wider talent pool. 6. The 'Cost Plus Fixed Fee' pricing structure can incentivize cost overruns if not tightly managed.

Value Assessment

Rating: questionable

The contract's value of $35.7 million for engineering services is substantial. Without specific deliverables or performance metrics, it's difficult to benchmark against similar contracts. The 'Cost Plus Fixed Fee' (CPFF) pricing structure, while common, can lead to higher costs compared to fixed-price contracts if the contractor's costs are not rigorously controlled. The lack of competition further complicates a direct value assessment, as there was no market pressure to drive down prices.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'Not Competed' basis, indicating that the Department of Defense did not solicit bids from multiple sources. This sole-source award means there was no formal competition to explore the market for the best price and technical solution. The absence of bidders prevents an assessment of the number of interested parties or the range of proposed solutions.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding, as there was no market pressure to ensure the most cost-effective solution was secured.

Public Impact

The primary beneficiary is MSE Technology Applications, Inc., receiving significant federal funding. The contract supports engineering services, likely contributing to missile and space systems development or maintenance. The geographic impact is concentrated in Butte, Montana, where the contractor is located. Workforce implications include potential job creation or retention at MSE Technology Applications in Montana.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and suboptimal solution selection.
Cost-plus contract type necessitates stringent oversight to prevent uncontrolled cost growth.
Long contract duration could lead to scope creep or outdated technology if not actively managed.
Limited transparency due to sole-source award makes independent value assessment challenging.

Positive Signals

Contract awarded to a specific company, potentially indicating specialized capabilities required by the DoD.
The contract is for engineering services, a critical component of defense systems.
The contractor is located in Montana, potentially supporting regional economic development.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS code 541330), a broad category encompassing various technical consulting and design services. The federal government is a major consumer of these services, particularly within the defense industry for complex systems like missiles and aerospace. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the engineering work, but large-scale defense engineering contracts can range from tens to hundreds of millions of dollars.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting goals. As a sole-source award, the focus was likely on securing a specific capability rather than distributing work to the small business ecosystem. Further analysis would be needed to determine if MSE Technology Applications, Inc. itself is a small business or if any subcontracting opportunities were mandated or voluntarily pursued.

Oversight & Accountability

Oversight mechanisms for this contract are not detailed in the provided data. However, as a Department of Defense contract, it would typically fall under the purview of the Defense Contract Management Agency (DCMA) for performance and financial oversight. Inspector General investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

Missile Systems Procurement
Aerospace Engineering Services
Department of Defense Research and Development
Cost-Plus Contract Management
Federal Engineering Services Contracts

Risk Flags

Sole-source award lacks competitive pressure on pricing.
Cost-plus contract type may lead to higher costs without strict oversight.
Long contract duration increases risk of scope creep and obsolescence.
Limited public data on specific deliverables hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.7 million to MSE TECHNOLOGY APPLICATIONS, INC.. 200410!004018!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04CR173 !A!N! !N! ! !20040708!20091230!045682036!601224991!010375939!N!MSE TECHNOLOGY APPLICATIONS !200 TECHNOLOGY WAY !BUTTE !MT!59701!11275!093!30!BUTTE !SILVER BOW !MONTANA !+000000022977!N!N!000000000000!2895!MISCELLANEOUS ENGINES AND COMPONENTS !A2 !MISSILE AND SPACE SYSTEMS !000 !* !541330!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is MSE TECHNOLOGY APPLICATIONS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $35.7 million.

What is the period of performance?

Start: 2004-07-08. End: 2010-07-31.

What specific engineering services were provided under this contract?

The contract data indicates the primary service category as 'Engineering Services' (NAICS 541330) and a secondary classification of 'MISCELLANEOUS ENGINES AND COMPONENTS' and 'MISSILE AND SPACE SYSTEMS'. This suggests the services likely involved design, development, testing, or sustainment related to missile components, engines, or overall missile and space systems. Without more granular data on the Statement of Work (SOW), the precise nature of the engineering tasks remains unspecified. However, the context points towards specialized technical support crucial for the Department of the Army's defense programs.

How does the $35.7 million contract value compare to similar engineering services contracts awarded by the DoD?

The $35.7 million value for this engineering services contract places it in the mid-to-large range for federal procurements. However, a direct comparison is challenging without knowing the specific technical scope and duration. The Department of Defense awards numerous engineering services contracts annually, with values varying significantly based on complexity, duration, and criticality. Contracts for major weapon system development can easily exceed hundreds of millions or even billions. This contract's value is substantial enough to warrant scrutiny, especially given its sole-source nature and cost-plus fee structure, which can inflate costs compared to fixed-price agreements.

What are the risks associated with a 'Cost Plus Fixed Fee' contract for engineering services?

Cost Plus Fixed Fee (CPFF) contracts carry inherent risks, primarily related to cost control and potential for overruns. The 'cost-plus' component means the government reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure can incentivize contractors to incur higher costs, as their fee remains constant regardless of the total project cost. For the government, the risk is paying more than necessary if costs are not meticulously monitored and controlled. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks and ensure value for taxpayer money in CPFF arrangements.

What does the 'Not Competed' award status imply for the effectiveness of federal procurement in this instance?

The 'Not Competed' status signifies that the contract was awarded without a full and open competition. This typically occurs when only one source is capable of meeting the requirement, or in specific emergency situations. While sometimes justified, it raises concerns about whether the government explored all available options and secured the best possible price and technical solution. A lack of competition can lead to higher prices, reduced innovation, and potentially less effective outcomes compared to a scenario where multiple bidders vie for the contract. It suggests a potential failure in market research or a unique, non-replicable capability held by the sole awardee.

What is the historical spending pattern for engineering services related to missile and space systems?

Historical spending on engineering services for missile and space systems by the Department of Defense has been consistently high, reflecting the complexity and critical nature of these programs. Billions of dollars are allocated annually across various contracts for research, development, testing, and sustainment. This specific contract, valued at $35.7 million over its lifetime, represents a portion of that broader spending. Analyzing historical data for similar sole-source awards or CPFF contracts within this domain could reveal trends in pricing, duration, and contractor performance, providing context for evaluating the current contract's efficiency and value.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Montana Economic Revitalization and Development Institute, Inc. (UEI: 010375939)

Address: 200 TECHNOLOGY WAY, BUTTE, MT, 01

Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline