DoD's $77.3M engineering services contract for MRAP vehicles awarded to ND Defense LLC without competition

Contract Overview

Contract Amount: $77,346,996 ($77.3M)

Contractor: ND Defense LLC

Awarding Agency: Department of Defense

Start Date: 2009-10-27

End Date: 2015-03-31

Contract Duration: 1,981 days

Daily Burn Rate: $39.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SYSTEM TECHNICAL SUPPORT (STS) - MAXXPRO MRAP VEHICLES PM ENGINEERING

Place of Performance

Location: MELROSE PARK, COOK County, ILLINOIS, 60160

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $77.3 million to ND DEFENSE LLC for work described as: SYSTEM TECHNICAL SUPPORT (STS) - MAXXPRO MRAP VEHICLES PM ENGINEERING Key points: 1. Contract awarded on a sole-source basis, raising questions about potential overpayment and lack of competitive pressure. 2. Significant duration of nearly 2,000 days suggests a long-term need for these specialized engineering services. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 4. Lack of competition limits opportunities for other firms and potentially higher quality or lower cost solutions. 5. The specific NAICS code (541330) indicates a focus on engineering services, crucial for complex defense systems. 6. Awarded by the Defense Contract Management Agency, suggesting oversight of a critical defense program.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific application to MRAP vehicles. Without competitive bids, it's difficult to ascertain if the $77.3 million represents a fair market price. The Cost Plus Fixed Fee structure, while common for complex projects, carries inherent risks of cost escalation. Further analysis would require comparing the scope of services and deliverables to similar, competitively awarded engineering contracts for defense systems, which are not readily available in this specific context.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when only one vendor possesses the unique capabilities or proprietary knowledge required for the service. While this can ensure specialized expertise, it bypasses the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from potential cost savings that could have arisen from a bidding war among qualified engineering firms.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the program management for MRAP vehicles, ensuring continued engineering support. Services delivered include essential engineering support for the maintenance, sustainment, and potential upgrades of the MaxxPro MRAP fleet. The geographic impact is likely concentrated around military bases or facilities where MRAP vehicles are operated or maintained, primarily within Illinois (ST: IL). Workforce implications include the employment of specialized engineers and technical staff by ND Defense LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed stringently.
Lack of transparency in the sole-source justification process.
Long contract duration may indicate a lack of agile acquisition strategies.
Limited visibility into the specific technical challenges and solutions provided.

Positive Signals

Ensures continuity of essential engineering support for critical defense assets (MRAP vehicles).
Leverages specialized expertise of ND Defense LLC for a unique requirement.
Awarded by a specialized agency (DCMA) suggesting adherence to defense contracting standards.
Contract addresses a specific, long-term need within the defense sector.

Sector Analysis

The defense engineering services sector is characterized by high barriers to entry, requiring specialized knowledge, security clearances, and established relationships with government agencies. Contracts like this are vital for maintaining the operational readiness of complex military platforms. The market size for defense engineering services is substantial, driven by the continuous need for research, development, sustainment, and modernization of military equipment. This contract fits within the broader category of sustainment and logistics support for armored vehicles.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit information regarding subcontracting plans for small businesses. The sole-source nature of the award further reduces the likelihood of significant subcontracting opportunities for small businesses unless they are direct suppliers or partners to ND Defense LLC.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. Accountability measures are embedded within the Cost Plus Fixed Fee structure, requiring detailed cost reporting and justification. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

MRAP Vehicle Program
Defense Logistics Agency Support Contracts
Naval Sea Systems Command (NAVSEA) Engineering Services
Army Combat Capabilities Development Command (DEVCOM) Support

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.3 million to ND DEFENSE LLC. SYSTEM TECHNICAL SUPPORT (STS) - MAXXPRO MRAP VEHICLES PM ENGINEERING

Who is the contractor on this award?

The obligated recipient is ND DEFENSE LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $77.3 million.

What is the period of performance?

Start: 2009-10-27. End: 2015-03-31.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as "only one responsible source and no other supplies or services will satisfy the agency requirements" (FAR 6.302-1) or "brand name or unique specifications" (FAR 6.302-3). For this contract, it's possible that ND Defense LLC possesses unique intellectual property, specialized tooling, or critical expertise directly related to the MaxxPro MRAP vehicle's engineering requirements that cannot be replicated by other firms. Without the official justification document, this remains an assumption. Further investigation would involve reviewing the contract file or agency procurement records for the detailed rationale.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar engineering services?

Cost Plus Fixed Fee (CPFF) contracts are often used for research and development or complex engineering projects where the scope of work is not fully defined at the outset, or where innovation is a key component. The government agrees to pay the contractor's actual costs plus a fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the contractor to adapt to unforeseen technical challenges but shifts more cost risk to the government. Other types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance incentives. For routine engineering services with well-defined scopes, FFP is generally preferred for better cost control. The CPFF here suggests a high degree of uncertainty or complexity in the engineering tasks for the MRAP vehicles.

What is the historical spending trend for engineering services related to MRAP vehicles by the Department of Defense?

Analyzing the historical spending trend for MRAP vehicle engineering services requires a broader dataset than provided. This specific contract ($77.3M from 2009-2015) represents a significant but isolated expenditure. To understand trends, one would need to examine DoD's spending across multiple fiscal years and various contract vehicles (including competitively awarded ones) for MRAP sustainment, upgrades, and engineering support. Factors like the operational tempo, fleet age, and evolving threat environments influence these spending patterns. A comprehensive analysis would likely reveal fluctuations tied to major deployments, technological advancements, and budget allocations within the DoD's ground vehicle programs.

What are the potential risks associated with a long-duration contract (1981 days) for engineering services?

Long-duration contracts, such as this 1981-day award, carry several potential risks. Firstly, the cost can escalate significantly over time due to inflation, changes in labor rates, and unforeseen project complexities that may not have been adequately accounted for in the initial pricing. Secondly, technological obsolescence is a risk; the engineering solutions or support provided might become outdated before the contract concludes, especially in rapidly evolving fields like defense technology. Thirdly, there's a risk of contractor complacency or reduced innovation over an extended period, as the incentive to perform exceptionally might wane without regular competitive re-evaluation. Finally, long contracts can reduce the government's flexibility to pivot to new technologies or alternative solutions if requirements change.

How does the 'Engineering Services' category (NAICS 541330) typically perform in terms of cost and competition within the DoD?

Engineering Services (NAICS 541330) within the DoD is a broad category encompassing a wide range of specialized technical support. Competition levels can vary significantly depending on the specific niche. Highly specialized areas, like those potentially related to unique military platforms such as the MRAP, may see fewer competitors, sometimes leading to sole-source or limited competition awards. Conversely, more general engineering services might attract numerous bidders. Cost performance is also variable; complex, R&D-intensive engineering can be prone to cost overruns (as seen with CPFF), while well-defined design or testing services might be more predictable. Benchmarking requires careful segmentation by sub-specialty and contract type.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV09R0086

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Volkswagen Aktiengesellschaft

Address: 1675 E WHITCOMB AVE, MADISON HEIGHTS, MI, 48071

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $77,346,997

Exercised Options: $77,346,996

Current Obligation: $77,346,996

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline