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NAICS NewsletterJanuary 19, 2009

NAICS 541330

Engineering Services

Government Contract and Procurement Analysis Report

Report Summary

This report, offered by epipeline, contains a brief analysis of the Federal government's procurement practices with regards to purchasing Engineering Services.

You will find information on the top federal government agencies that purchase these services, as well as their procurement strategy (i.e. full and open competition, set-asides and more). Finally, there is a review of the top companies that are awarded federal government contracts for Engineering Services.

To get a more comprehensive analysis and learn more about how epipeline can help you identify current and future bid opportunities, register for a live Demo.

This report takes an in-depth look at the 'Engineering Services' industry, NAICS 541330. To understand the future, one must study the past. epipeline's Contract History Plus* provides you with a broad context and several perspectives that enables you to develop the best positioning and strategy for your company to more effectively compete for government contracts. The following graph illustrates one such perspective: the top Government departments buying these services over the last four fiscal years

Top 10 by % of Total Market for NAICS 541330 combined FY04 - Q2FY08

WHAT IS NAICS 541330?

NAICS 541330 represents the Engineering Services industry. It is used when the requirements of the contract applies physical laws and principles of engineering in the design, development, and utilization of machines, materials, instruments, structures, processes, and systems. It may include the application of these principles for provision of advice, preparation of feasibility studies, preparation of preliminary and final plans and designs, provision of technical services during the construction or installation phase, inspection and evaluation of engineering projects, and related services.

This NAICS covers many specific topics as they relate to engineering services. Prior to the NAICS coding system, these services were previously represented by Standard Industrial Classification (SIC) code 8711, under these specific topics.

  • Acoustical engineering consulting services
  • Acoustical system engineering design services
  • Boat engineering design services
  • Chemical engineering services
  • Civil engineering services
  • Combustion engineering consulting services
  • Construction engineering services
  • Consulting engineers' offices
  • Consulting engineers' private practices
  • Electrical engineering services
  • Engineering consulting services
  • Engineering design services
  • Engineering services
  • Engineers' offices
  • Engineers' private practices
  • Environmental engineering services
  • Erosion control engineering services
  • Geological engineering services
  • Geophysical engineering services
  • Heating engineering consulting services
  • Industrial engineering services
  • Logging engineering services
  • Marine engineering services
  • Mechanical engineering services
  • Mining engineering services
  • Petroleum engineering services

It was also listed under SIC 8748, as it related to:

  • Traffic engineering consulting services.

The size standard associated with NAICS 541330 is $4.5 Million (effective October 1, 2007), which means that a company, including its affiliates, would be considered a "small business" if their average annual gross receipts does not exceed $4.5 Million for the past three years. If a company has not been in business for three years, the average weekly revenue for the number of weeks the company has been in business is multiplied by 52 to determine the average annual receipts.

  • However, there are three exceptions to this sizing:
    • If the project is for Military and Aerospace Equipment and Military Weapons, then the size standard is $25.0 Million;
    • If the Contracts and Subcontracts for Engineering Services are Awarded Under the National Energy Policy Act of 1992, then the size standard is $25.0 Million;
    • If the project is for Marine Engineering and Naval Architecture, then the size standard is $17.0 Million.

This code is unique in that it represents two different industries. Within epipeline, these industries are represented as "Information Technology (IT)," and "Architecture, Engineering, Construction, and Environmental (AEC)." While some companies perform services for both industries under NAICS 541330, many more limit their business to just one sector or another. These different sectors can be identified within government procurement under NAICS 541330 by Products and Services Codes (PSC). Depending upon your source, this might also be called a Procurement Classification Code, Procurement Service Classification, or even Federal Supply Classification (FSC) Code.

The top five PSC codes used under NAICS 541330 are illustrated in the chart below. The number one code, "R - Professional, Administrative, and Management Support," is a very generic topic, which includes most of the Information Technology-related contracts. This code represents almost 38% of the market share for FY04 through Q2FY08, which equates to over $30 Billion in contract spending. "A - Research and Development" was second, with over $3 Billion. The third- and fifth-ranked codes, " J - Maintenance, Repair, And Rebuilding Of Equipment" and "C-Architecture & Engineering Construction" are projects better reflected in the AEC industry. Together, these codes represent almost $10 Billion in contract spending under NAICS 541330 and over 12% of the market share.

Top 5 PSC Codes for NAICS 541330 by % of Total Market FY04 through Q2FY08 Source: epipeline's Contract History Plus*

Total reported spending under NAICS 541330 for the period of Fiscal Year 2004 (FY04) through the second quarter (Q2) of Fiscal Year 2003 (FY08 aka Q2FY08) was almost $80 Billion. With two quarters reported, FY08 reported spending of $2.7 Billion for services under NAICS 541330. The chart below illustrates the reported** spending by year for FY04 through Q2FY08.

Reported** Contract Spending for NAICS 541330 FY04 through Q2FY08 (in Billions)

Source: epipeline's Contract History Plus*

** Note, it is possible that some Defense spending for the more recent fiscal years (FY05 to present) is not as widely reported as earlier years. These numbers will likely increase as more departments and agencies report their contract spending.

WHO ISSUES THE CONTRACTS?

The United States Navy was the largest buyer for these services for the last four fiscal years (FY04 through Q2FY08), with over $35.0 Billion in contract spending, comprising almost 44% of the market share for NAICS 541330. This amount could grow even more, as there are some gaps in reported DOD spending (FY05 and later). The United States Army represented about one-third of reported spending under this code, with 30% of the market share, which equated to $24.5 Billion. Only the United States Air Force and NASA also reported spending over one billion for this same period.

Top 10 by % of Total Market for NAICS 541330 Combined FY04 - Q2FY08 Source: epipeline's Contract History Plus*

WHO WINS THE CONTRACTS?

According to the Central Contractor Registry (CCR), there are 26,414 companies registered under NAICS 541330 (source: active registrants, www.ccr.gov as of 06/13/2008). Of this number, 19,768 qualify as small businesses.

The two charts below identify the top 10 Companies, by market share, for the period of FY04 through Q2FY08. The first chart represents the top 10 companies that were awarded their contracts under ANY type of competition, whether it was full and open, small business set-aside, sole-sourced, etc. This list primarily consists of large businesses. The second chart, however, lists the top 10 companies that won their contracts under RESTRICTED competition. Specifically, epipeline limited this to those contracts awarded under the acquisition strategies listed below. The contract dollars represented on this second chart may not include all contract dollars for the individual contractor.

  • 8(a) Competed
  • 8(a) Small Disadvantaged (SDB) set-aside
  • 8(a) sole-source
  • SDB set-aside
  • SDB, 8(a) with HUBZone
  • Combination HUBZone and 8(a)
  • HUBZone set-aside
  • HUBZone sole-source
  • Service Disabled Veteran-Owned Small Business (SDVOSB) set-aside
  • SDVOSB sole-source
  • Emerging Small Business set-aside
  • Very Small Business set-aside
  • Reserved for Small Businesses ($2501 to $100,000)
  • Total Small Business set-aside

The Boeing Company holds the top spot on the unrestricted competition list (any/all acquisition strategies), with over $8.39 Billion in total contract dollars for FY04 through Q2FY08 - or 13.70% of the market share. Lockheed Martin Corporation is second with their 10.51% of the market share ($6.4 Billion). All of the firms in the top ten, as well as three additional companies reported contract spending for the FY04-Q2FY08 period of over $1 Billion. PLEASE NOTE: as this is a listing by Company name, rather than PARENT company, some companies may have more than one ranking, which may not reflected in the chart below.

Top 10 NAICS 541330 Contractors by % of Total Market (Combined FY04-Q2FY08) - All Acquisition Strategies Source: epipeline's Contract History Plus*

The combined contract spending for contracts awarded under "restricted competition," as outlined above, totaled over $2.65 Billion for FY04 through Q2FY08. CCI Incorporated is the only one of the firms on this restricted list to crack the $100 Million mark for spending during this period. Their $163 Million translates to 6.1% of the market share. Swales and Associates, the second firm on the list, held contracts with reported spending about half that of CCI's contracts under NAICS 541330. Swales's contracts for this period had reported total value exceeding $82 Million. The next six companies on the list (Ducom, STG, Alutiiq International Solutions, Systems Application Technologies, Epsilon Systems Solution, and Bowhead Information Technology Service) all topped the $50 Million mark for this NAICS - all holding at least 2% of the market share. PLEASE NOTE: as this is a listing by Company name, rather than PARENT company, some companies may have more than one ranking, which may not reflected in the chart below.

Top 10 NAICS 541330 Contractors by % of Total Market (Combined FY04-Q2FY08) - RESTRICTED Competition Source: epipeline's Contract History Plus*

HOW ARE THESE CONTRACTS PROCURED?

Over 88% of the contract dollars spend during the FY04 through Q2FY08 timeframe were awarded using full and open competition. This represented over $70.2 Billion for NAICS 541330. Over 7% of contracts during this period did not report their acquisition strategy. These contracts could include those awarded using full and open competition, small business set-aside, or any manner of restriction. This accounted for over $5.8 Billion in contract dollars. Contracts set-aside for small businesses comprised 2.7% of the market share. Two other acquisition strategies had over $100 Million in reported contract dollars: sole source 8(a) awards ($803.3 Million) and competitive 8(a) contracts ($517.7 Million). All other reported acquisition strategies had spending under $100 Million. Combined those strategies added up to $169.5 Million, or only 0.21% of the market share for NAICS 541330 for the period of FY04 through Q2FY08.

Acquisition Breakout under NAICS 541330 - FY04 through Q2FY08 Source: epipeline's Contract History Plus*

WHERE ARE THESE CONTRACTS PERFORMED?

These contracts are being performed across the continental United States and abroad. The 50 states plus Washington, DC have reported spending of $76. 8 Billion and contracts for locations outside the United States total over $2.9 Million. The map below illustrates the distribution of locations within the United States (only). For example, there are 20 states that are shaded dark blue. This means that these states have reported contract spending between $10 Billion and $12.7 Billion.

The state with the highest total of reported contract spending is Virginia, with $12.6 Billion. Virginia is part of the Washington, DC metropolitan, which also includes Maryland ($7.5B ranked 3rd) and Washington, DC ($2.9B ranked 7th). Their combined contract values comprise 30% of the market share for NAICS 541330 during the period of FY04 through Q2FY08. This geographical area is home to many federal contractors, who are sometimes called "Beltway Bandits" due to their proximity to the headquarters of the Federal Government.

Contract Place of Performance under NAICS 541330 (FY04-Q2FY08) Source: epipeline's Contract History Plus*
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