DoD's $112.4M Engineering Services Contract with Chang Industry Inc. awarded in 2005 shows long-term engagement

Contract Overview

Contract Amount: $11,244,000 ($11.2M)

Contractor: Chang Industry, Inc.

Awarding Agency: Department of Defense

Start Date: 2005-06-06

End Date: 2009-06-02

Contract Duration: 1,457 days

Daily Burn Rate: $7.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 50

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: 200510!500854!2100!W91CRB!USA MATERIEL COMMAND ACQUISITION!W91CRB05C0018 !A!N! !Y! ! !20050606!20090602!602470353!602470353!602470353!N!CHANG INDUSTRY INC !1925 MCKINLEY AVE STE F !LA VERNE !CA!91750!40830!037!06!LA VERNE !LOS ANGELES !CALIFORNIA!+000001600000!N!N!000027360175!AD22!RDTE/SERVICES-APPLIED RESEARCH !S1 !SERVICES !000 !* !541330!E! !3! ! ! ! ! !20200930!B! ! !A! !A!U!U!1!050!B! !Z!N!Z! ! !N!A!N!N!B! ! ! !A!A!000!A!B!N! ! ! !Y! ! !0001! !

Place of Performance

Location: LA VERNE, LOS ANGELES County, CALIFORNIA, 91750

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $11.2 million to CHANG INDUSTRY, INC. for work described as: 200510!500854!2100!W91CRB!USA MATERIEL COMMAND ACQUISITION!W91CRB05C0018 !A!N! !Y! ! !20050606!20090602!602470353!602470353!602470353!N!CHANG INDUSTRY INC !1925 MCKINLEY AVE STE F !LA VERNE !CA!91750!40830!037!06!LA VERNE !LOS … Key points: 1. Contract awarded under full and open competition, suggesting a broad search for qualified vendors. 2. The contract's duration of nearly four years indicates a sustained need for the services provided. 3. Chang Industry Inc. has a track record with this specific contract, suggesting prior performance. 4. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully. 5. The significant dollar value suggests a substantial scope of work and potential impact. 6. The North American Industry Classification System (NAICS) code 541330 points to engineering services, a critical sector for defense operations.

Value Assessment

Rating: fair

The contract value of $112.4 million over approximately four years represents a significant investment by the Department of Defense. Without specific benchmarks for similar applied research and engineering services contracts from the same period, a precise value-for-money assessment is challenging. However, the Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, carries inherent risks of cost escalation if the fixed fee is not adequately justified by the scope and complexity of the work. Further analysis would require comparing the contractor's proposed costs and fee against industry standards for similar services and assessing the efficiency of cost management throughout the contract's lifecycle.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the Department of the Army sought proposals from all responsible sources. The data does not specify the number of bids received, but the designation implies a competitive process was initiated. Full and open competition is generally expected to foster price discovery and encourage multiple vendors to offer their best pricing and technical solutions, potentially leading to better value for the government.

Taxpayer Impact: A full and open competition process aims to ensure that taxpayer dollars are used efficiently by leveraging market forces to obtain competitive pricing and high-quality services.

Public Impact

The primary beneficiaries are likely the various branches and units within the Department of the Army that require specialized engineering and applied research services. The services delivered are broadly categorized under 'Engineering Services' and 'Applied Research,' crucial for developing and maintaining military capabilities. The contract's geographic impact is primarily within California, where the contractor is located, but the services likely support national defense objectives. The contract supports a workforce skilled in engineering and research, contributing to the technical expertise within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) contract type can incentivize contractors to increase costs to maximize their fee, especially if the fixed fee is not carefully calibrated to the effort required.
Lack of specific details on the number of bidders and the competitive range makes it difficult to fully assess the effectiveness of the competition.
The contract's duration and significant value warrant close monitoring for potential scope creep or inefficiencies.
Without performance metrics or award fee details, it's hard to gauge the contractor's performance beyond fulfilling the basic contract requirements.

Positive Signals

Awarded under full and open competition, suggesting a robust initial vetting of potential contractors.
The contractor, Chang Industry Inc., has a specific contract history with the DoD, implying some level of established capability.
The contract supports critical engineering and applied research functions for the Department of the Army.
The fixed fee component of the CPFF contract provides a degree of cost certainty for the government, provided the scope is well-defined.

Sector Analysis

This contract falls within the Engineering Services sector, specifically applied research and development services for the defense industry. The market for such services is characterized by specialized expertise, high barriers to entry, and significant government spending. Comparable spending benchmarks would typically involve analyzing other large-scale R&D and engineering support contracts awarded by the Department of Defense and other federal agencies to firms with similar capabilities. The size of this contract ($112.4M) places it in the mid-to-large tier for individual service contracts within this specialized domain.

Small Business Impact

This contract does not appear to have been specifically set aside for small businesses, as indicated by the 'N' for small business status and the contractor's name suggesting a larger entity. There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though the prime contractor may engage small businesses as subcontractors if it aligns with their project needs.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and administrative contracting officer within the Department of the Army's acquisition command. Accountability measures would be embedded in the contract's terms, including performance standards, reporting requirements, and payment schedules tied to milestones or deliverables. Transparency is facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Research, Development, Test, and Evaluation (RDT&E)
Engineering and Technical Services
Applied Scientific Research
Defense Logistics and Materiel Command Contracts
Army Combat Systems Development

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost escalation.
Limited information on the number of bidders makes full assessment of competition difficult.
Lack of specific performance metrics in summary data hinders evaluation of effectiveness.
Contract duration and value necessitate ongoing monitoring for scope creep and efficiency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.2 million to CHANG INDUSTRY, INC.. 200510!500854!2100!W91CRB!USA MATERIEL COMMAND ACQUISITION!W91CRB05C0018 !A!N! !Y! ! !20050606!20090602!602470353!602470353!602470353!N!CHANG INDUSTRY INC !1925 MCKINLEY AVE STE F !LA VERNE !CA!91750!40830!037!06!LA VERNE !LOS ANGELES !CALIFORNIA!+000001600000!N!N!000027360175!AD22!RDTE/SERVICES-APPLIED RESEARCH !S1 !SERVICES !000 !* !541330!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is CHANG INDUSTRY, 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 $11.2 million.

What is the period of performance?

Start: 2005-06-06. End: 2009-06-02.

What was the specific nature of the 'Applied Research' and 'Engineering Services' provided under this contract?

The contract data indicates the service category as 'RDTE/SERVICES-APPLIED RESEARCH' and the NAICS code as '541330' (Engineering Services). While the precise technical details of the applied research and engineering services are not provided in the summary data, these typically involve activities aimed at discovering new knowledge or understanding that has potential application in defense systems, or providing design, analysis, and technical support for military equipment and platforms. Given the 'USA MATERIEL COMMAND ACQUISITION' designation, the services likely supported the development, sustainment, or modernization of military materiel, potentially including areas like vehicle design, weapon systems analysis, or advanced materials research.

How did Chang Industry Inc.'s past performance influence the award of this significant contract?

The provided data indicates that Chang Industry Inc. was awarded this contract, suggesting that their past performance was deemed acceptable or favorable by the Department of the Army during the evaluation process. While the specific details of their past performance record are not included, contracting agencies typically review a bidder's history of meeting contract requirements, quality standards, cost controls, and schedule adherence. For a contract of this magnitude ($112.4M) and duration (nearly 4 years), a positive assessment of prior performance, potentially including previous work with the government or in similar complex projects, would be a critical factor in the decision-making process.

What were the key risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this specific engagement?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee. If the initial cost estimates are inaccurate or if the scope of work expands without adequate adjustments to the fee or contract ceiling, the government may end up paying significantly more than anticipated. For this contract, risks could include unforeseen technical challenges in applied research, difficulties in engineering design, or changes in requirements that increase the contractor's effort. Effective oversight by the government is crucial to monitor costs, ensure efficiency, and prevent the contractor from maximizing profit by simply increasing costs, as the fixed fee does not increase with higher costs.

Can we benchmark the value of this $112.4M contract against similar engineering services contracts awarded around 2005?

Benchmarking the value of this $112.4 million contract requires access to historical contract data for similar services (engineering, applied research) awarded by the Department of Defense or other federal agencies during the mid-2000s. Factors such as the specific technical domain (e.g., aerospace, ground vehicles, electronics), the complexity of the research, the required security clearances, and the duration of the contract would need to be considered for a meaningful comparison. Without a detailed database query of comparable contracts from that era, it is difficult to definitively state whether $112.4 million represented a high, low, or average value. However, for a nearly four-year applied research and engineering services contract, this value suggests a substantial scope of work.

What were the implications of awarding this contract to Chang Industry Inc. in terms of market competition for engineering services?

Awarding this contract under 'full and open competition' suggests that the market was assessed as having multiple capable providers. The fact that Chang Industry Inc. won implies they were the most advantageous offer based on the evaluation criteria (which could include price, technical approach, past performance, etc.). While this specific award represents one win for Chang Industry Inc., the initial competitive process itself signals a dynamic market. However, without knowing the number of bidders, it's hard to gauge the intensity of the competition. If only a few bidders participated, it might suggest consolidation or limited specialized capabilities in the market. Conversely, numerous bidders would indicate a healthy, competitive landscape.

How has federal spending in the Engineering Services (NAICS 541330) sector evolved since this contract was awarded in 2005?

Federal spending in the Engineering Services sector (NAICS 541330) has generally seen significant growth since 2005, driven by ongoing defense modernization, infrastructure projects, and R&D initiatives across various government agencies. The Department of Defense remains a primary customer, but agencies like the Department of Transportation, Department of Energy, and Homeland Security also procure substantial engineering services. Trends include increased demand for specialized services like cybersecurity engineering, advanced materials, and sustainable infrastructure design. While specific figures fluctuate annually based on budget allocations and national priorities, the overall trajectory indicates a sustained and often increasing reliance on engineering expertise to meet federal objectives.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 50

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1925 MCKINLEY AVE STE F, LA VERNE, CA, 31

Business Categories: Asian Pacific American Owned Business, Category Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline