DoD's $1.4B R&D contract for Applied Research Associates, Inc. shows mixed value and competition signals

Contract Overview

Contract Amount: $14,081,141 ($14.1M)

Contractor: Applied Research Associates, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-12-27

End Date: 2008-02-20

Contract Duration: 420 days

Daily Burn Rate: $33.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: DIRECT SUPPORT GROUP (DSG)

Place of Performance

Location: PANAMA CITY, BAY County, FLORIDA, 32403

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $14.1 million to APPLIED RESEARCH ASSOCIATES, INC. for work described as: DIRECT SUPPORT GROUP (DSG) Key points: 1. The contract's value proposition is unclear due to the Cost Plus Award Fee structure, which can incentivize cost overruns. 2. Limited competition was observed, with only two bids received, potentially impacting price discovery. 3. The contract duration of 420 days is relatively short for a research and development project of this magnitude. 4. Performance context is limited, as specific deliverables and outcomes are not detailed in the provided data. 5. The contract falls within the Research and Development sector, a critical area for defense innovation. 6. The award was made under full and open competition after exclusion of sources, suggesting a deliberate but potentially narrow bidding process.

Value Assessment

Rating: fair

The Cost Plus Award Fee (CPAF) contract type introduces uncertainty in assessing value for money, as it allows for contractor fees based on performance, potentially leading to higher costs than fixed-price contracts. Benchmarking against similar R&D contracts is difficult without more specific details on the research scope. The total award value of $1.4 billion is substantial, but its efficiency cannot be determined without performance metrics and cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was open, certain sources were initially excluded. Only two bids were received, which suggests a limited competitive landscape for this specific R&D requirement. This level of competition may not have driven the most aggressive pricing.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the full potential of competitive pricing, potentially leading to a higher overall cost for the government.

Public Impact

The primary beneficiaries are likely the Department of Defense and its research initiatives, aiming to advance technological capabilities. The services delivered are in research and development, focusing on physical, engineering, and life sciences. The geographic impact is primarily within Florida, where the contractor is based, but the R&D outcomes could have national defense implications. Workforce implications include employment for scientists, engineers, and support staff at Applied Research Associates, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee structure can lead to less predictable final costs.
Limited number of bidders may indicate barriers to entry or a niche market.
Lack of detailed performance metrics makes it hard to assess true value for money.
The 'exclusion of sources' clause warrants further investigation into its justification.

Positive Signals

Awarded under a form of full and open competition.
Contractor is Applied Research Associates, Inc., suggesting established capabilities in R&D.
The substantial award value indicates a significant project with potential for impactful research outcomes.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically NAICS code 541710. This sector is crucial for defense innovation, encompassing advancements in physical sciences, engineering, and life sciences. The market for defense R&D is characterized by high specialization, significant government investment, and often involves long development cycles. Comparable spending benchmarks are difficult to establish without knowing the specific R&D focus, but the $1.4 billion value places it among significant government R&D investments.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside. The primary contractor, Applied Research Associates, Inc., is likely a large business, and any subcontracting opportunities would depend on their procurement practices and the nature of the R&D work.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force, a component of the Department of Defense. Accountability measures would be tied to the performance objectives outlined in the Cost Plus Award Fee contract. Transparency is generally facilitated through contract award databases, but detailed project progress and spending reports are often internal to the agency and contractor. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Air Force Science and Technology Investments
Advanced Materials Research Contracts
Engineering Services Contracts
Life Sciences Research Contracts

Risk Flags

Limited competition
Cost Plus Award Fee structure
Lack of specific performance metrics
Contract awarded over 15 years ago

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.1 million to APPLIED RESEARCH ASSOCIATES, INC.. DIRECT SUPPORT GROUP (DSG)

Who is the contractor on this award?

The obligated recipient is APPLIED RESEARCH ASSOCIATES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $14.1 million.

What is the period of performance?

Start: 2006-12-27. End: 2008-02-20.

What is the specific nature of the research and development being conducted under this contract?

The provided data indicates the contract falls under NAICS code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences.' However, the specific research focus is not detailed. Applied Research Associates, Inc. (ARA) is known for work in areas such as advanced materials, energetic materials, aerospace, and defense systems. Without further documentation, it's impossible to pinpoint the exact scientific or engineering challenges being addressed, but it likely involves cutting-edge technological development for military applications.

How does the Cost Plus Award Fee (CPAF) structure impact the overall cost-effectiveness of this contract?

The CPAF structure means the contractor is reimbursed for allowable costs plus a fee that is composed of a base amount and an award amount. The award amount is earned based on meeting or exceeding certain performance objectives. While CPAF can incentivize high performance, it also introduces uncertainty regarding the final cost, as the fee can increase significantly if performance targets are met or surpassed. This contrasts with fixed-price contracts, where costs are more predictable. For taxpayers, this means the final expenditure could be higher than initially projected, depending on how effectively the contractor achieves the award criteria.

What are the potential risks associated with the limited competition (two bidders) for this substantial R&D contract?

Limited competition, especially with only two bidders, poses several risks. Firstly, it can lead to higher prices than would be achieved in a more competitive environment, as the bidders face less pressure to offer the lowest possible cost. Secondly, it may indicate a lack of market breadth or potential barriers to entry for other qualified firms. This could also suggest that the specific requirements of the contract are highly specialized, potentially limiting the pool of capable contractors. For taxpayers, this translates to a potentially reduced value for money and less assurance that the government secured the best possible terms.

What is Applied Research Associates, Inc.'s track record with similar government R&D contracts?

Applied Research Associates, Inc. (ARA) has a history of performing research and development for various government agencies, including the Department of Defense. Their work often spans complex engineering challenges, materials science, and defense technologies. While specific details on past performance metrics for contracts of this scale are not provided here, ARA is generally recognized as a capable R&D firm. A deeper dive into their contract history, including past performance evaluations and any reported issues, would be necessary for a comprehensive assessment of their track record.

How does the $1.4 billion award value compare to historical spending on similar R&D initiatives within the Department of Defense?

The $1.4 billion award value is substantial and indicates a significant investment in research and development. To contextualize this, one would need to compare it against the DoD's overall R&D budget and specific program expenditures in related fields (e.g., advanced materials, aerospace engineering, defense systems). The DoD consistently invests billions annually in R&D to maintain technological superiority. This particular contract's value suggests it addresses a critical or long-term strategic objective. Benchmarking against similar-sized, multi-year R&D efforts within the DoD would provide a clearer picture of its relative scale and importance.

What are the implications of the contract starting in late 2006 and ending in early 2008 for current technological advancements?

A contract awarded in late 2006 and ending in early 2008, with a duration of approximately 420 days (about 14 months), would have concluded over 15 years ago. The technological advancements resulting from such a contract would have been relevant to the state-of-the-art at that time. While foundational research can have long-term impacts, the direct applicability of findings from that era to current cutting-edge technologies might be limited without significant follow-on research or adaptation. The insights gained would have informed subsequent developments, but the contract itself does not represent current R&D efforts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: BASIC RESEARCH

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 4300 SAN MATEO BLVD NE STE A220, ALBUQUERQUE, NM, 01

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $15,822,796

Exercised Options: $15,822,796

Current Obligation: $14,081,141

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA481907D0001

IDV Type: IDC

Timeline