DoD's $57.7M R&D contract with UT Austin shows limited competition and raises value questions

Contract Overview

Contract Amount: $57,672,523 ($57.7M)

Contractor: University of Texas AT Austin

Awarding Agency: Department of Defense

Start Date: 2008-09-09

End Date: 2015-10-08

Contract Duration: 2,585 days

Daily Burn Rate: $22.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: RESEARCH & DEV.

Place of Performance

Location: AUSTIN, TRAVIS County, TEXAS, 78758

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $57.7 million to UNIVERSITY OF TEXAS AT AUSTIN for work described as: RESEARCH & DEV. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Long contract duration of over 7 years suggests a sustained need for the research. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Research area falls under physical, engineering, and life sciences, a broad category. 5. Performance is in Texas, indicating a specific geographic focus for the R&D. 6. No small business set-aside was utilized, potentially excluding smaller entities from participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized R&D focus. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D where costs are uncertain, can lead to higher overall spending compared to fixed-price contracts if not managed closely. Without competitive bids, it's difficult to ascertain if the fixed fee and reimbursed costs represent a fair market price for the services rendered. The total award amount of $57.7 million over its duration suggests a significant investment, and the lack of comparative data makes a definitive value assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple potential contractors. This approach is typically used when a specific entity possesses unique capabilities or when circumstances prevent full and open competition. The lack of competition means that taxpayers did not benefit from the price reductions and innovation that can arise from a competitive bidding process. It also limits the government's ability to explore alternative solutions or contractors.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no competitive pressure to drive down costs. This can lead to higher overall expenditure for the government.

Public Impact

The University of Texas at Austin is the primary beneficiary, receiving substantial funding for research activities. The contract supports research and development in physical, engineering, and life sciences, potentially leading to advancements in defense technology. The geographic impact is concentrated in Texas, where the university is located and where the research is likely conducted. The contract supports academic researchers and potentially graduate students, contributing to the scientific workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not rigorously overseen.
Long contract duration may indicate a lack of flexibility or potential for scope creep.
Lack of small business participation means potential exclusion of innovative smaller firms.

Positive Signals

Award to a reputable university suggests a focus on high-quality research.
R&D contracts are crucial for technological advancement and national security.
The specific research area may yield significant long-term benefits.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. The R&D sector is critical for innovation and maintaining a technological edge, particularly for defense applications. Government spending in this area is substantial, with significant portions allocated to universities and research institutions. Comparable spending benchmarks are difficult to establish due to the highly specialized nature of R&D, but contracts of this magnitude indicate a significant investment in a particular research domain.

Small Business Impact

This contract did not include a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses. The award to a large university suggests that the primary focus was on leveraging institutional research capabilities rather than fostering small business participation. This approach may limit opportunities for smaller, agile firms to contribute to this specific research effort and potentially gain valuable experience.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and research management offices. Given the sole-source nature and CPFF structure, rigorous oversight of expenditures, progress reports, and adherence to research objectives would be critical. Transparency may be limited due to the lack of competitive disclosures. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract funds.

Related Government Programs

Department of Defense Research and Development
University Research Grants
Navy Science and Technology Programs
Physical Sciences Research Contracts
Engineering Research Contracts
Life Sciences Research Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.7 million to UNIVERSITY OF TEXAS AT AUSTIN. RESEARCH & DEV.

Who is the contractor on this award?

The obligated recipient is UNIVERSITY OF TEXAS AT AUSTIN.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $57.7 million.

What is the period of performance?

Start: 2008-09-09. End: 2015-10-08.

What is the specific research being conducted under this contract, and what are its intended outcomes?

The data provided does not specify the exact nature of the research beyond the broad categories of 'Research and Development in the Physical, Engineering, and Life Sciences.' The intended outcomes are also not detailed but are presumed to align with the Department of the Navy's strategic objectives in advancing scientific and technological capabilities. Such research could encompass areas like materials science, advanced propulsion, biomedical applications for service members, or novel sensor technologies. Without further documentation, the precise goals and expected deliverables remain unspecified, making it difficult to assess the direct impact or success criteria.

How does the fixed fee in this Cost Plus Fixed Fee contract compare to industry standards for similar R&D efforts?

Determining the 'fairness' of the fixed fee in a Cost Plus Fixed Fee (CPFF) contract without access to detailed pricing breakdowns and specific R&D scope is challenging. CPFF contracts aim to provide the contractor with reimbursement for allowable costs plus a predetermined fixed fee representing profit. Industry standards for fixed fees can vary widely based on contract complexity, risk, duration, and the uniqueness of the required expertise. For R&D, fixed fees typically range from 5% to 15% of the estimated cost. Without knowing the total estimated cost and the specific fee negotiated, a direct comparison to industry benchmarks is not possible from the provided data. Rigorous negotiation and oversight by the contracting agency are crucial to ensure the fee is reasonable.

What are the potential risks associated with a sole-source award for a contract of this magnitude and duration?

A sole-source award for a $57.7 million contract spanning over seven years carries several risks. Primarily, the lack of competition means the government may not have secured the most cost-effective solution or the best value proposition available in the market. This can lead to inflated prices and reduced innovation. Furthermore, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single contractor, potentially creating vendor lock-in. There's also a risk that the government's needs might evolve over the long duration, and a sole-source contract might be less adaptable to changes compared to a competitively procured one. Transparency and accountability are also more critical in sole-source situations to ensure public funds are used appropriately.

What is the track record of the University of Texas at Austin in managing large federal R&D contracts?

The University of Texas at Austin is a major research institution with extensive experience in managing large federal research and development contracts across various agencies, including the Department of Defense. As a leading public university, it has a well-established infrastructure for research administration, including grant management, financial oversight, and compliance. While specific performance metrics for all past contracts are not detailed here, universities of this caliber typically have robust internal controls and a history of successful project execution. Their track record generally involves securing significant funding, conducting cutting-edge research, and producing valuable scientific and technological outputs, often in collaboration with government sponsors.

How does this contract's spending compare to other R&D contracts within the Department of the Navy or Department of Defense?

The $57.7 million total award for this contract over approximately 7 years places it as a significant, but not exceptionally large, R&D investment within the broader Department of Defense (DoD) and Department of the Navy (DoN). The DoD alone spends tens of billions of dollars annually on R&D. Contracts for major weapon systems development or large-scale scientific initiatives can easily reach hundreds of millions or even billions of dollars. This contract, while substantial for a specific research area, is likely one of many R&D efforts funded by the DoN. Its size is more indicative of a focused, long-term research project rather than a program-of-record acquisition.

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 › C – National Defense R&D Services

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: University of Texas System (UEI: 042000273)

Address: 10000 BURNET ROAD, AUSTIN, TX, 78758

Business Categories: Category Business, Educational Institution, Government, Higher Education, Not Designated a Small Business, U.S. Regional/State Government

Financial Breakdown

Contract Ceiling: $57,672,523

Exercised Options: $57,672,523

Current Obligation: $57,672,523

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002407D6200

IDV Type: IDC

Timeline