GSA's $340M R&D contract with Kratos S2, Inc. for physical sciences research shows potential value concerns

Contract Overview

Contract Amount: $340,355,663 ($340.4M)

Contractor: Kratos S2, Inc

Awarding Agency: General Services Administration

Start Date: 2020-06-11

End Date: 2026-06-10

Contract Duration: 2,190 days

Daily Burn Rate: $155.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: COSMIC AES SBIR III CONTRACT 47QFCA20C0019. THIS CONTRACT IS FOR OTHER FUNCTIONS.

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80915

State: Colorado Government Spending

Plain-Language Summary

General Services Administration obligated $340.4 million to KRATOS S2, INC for work described as: COSMIC AES SBIR III CONTRACT 47QFCA20C0019. THIS CONTRACT IS FOR OTHER FUNCTIONS. Key points: 1. The contract's large value suggests significant R&D investment, requiring close monitoring for effective resource utilization. 2. Limited competition raises questions about price discovery and potential overpayment. 3. The cost-plus-fixed-fee structure necessitates careful oversight to manage contractor incentives and prevent cost overruns. 4. Performance context is crucial, as R&D outcomes are inherently uncertain and depend on successful innovation. 5. This contract falls within the broad R&D sector, specifically focusing on physical and engineering sciences. 6. The duration of the contract (2190 days) indicates a long-term commitment to the research objectives.

Value Assessment

Rating: questionable

Benchmarking the value of this $340 million contract is challenging without specific deliverables or comparable projects. The cost-plus-fixed-fee (CPFF) pricing structure, while common in R&D, can lead to higher costs if not managed diligently. The absence of a clear per-unit cost makes direct value-for-money assessment difficult, emphasizing the need for robust performance metrics and milestone tracking to ensure taxpayer funds are used efficiently towards achieving research goals.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. Sole-source procurements limit the opportunity for market forces to drive down prices and ensure the best value is obtained. Without a competitive bidding process, it is difficult to ascertain if Kratos S2, Inc. offered the most cost-effective solution available in the market. The rationale for this sole-source award would need to be thoroughly documented to justify the lack of competition.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from competitive pricing, potentially leading to higher overall expenditure for the government.

Public Impact

The primary beneficiaries are likely the research and development community, including scientists and engineers employed by Kratos S2, Inc. The contract supports advanced research in physical, engineering, and life sciences, potentially leading to technological advancements. The geographic impact is centered in Colorado, where Kratos S2, Inc. is located, potentially creating local economic benefits. Workforce implications include the creation or sustainment of high-skilled jobs in the R&D sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
CPFF contract type requires stringent oversight to control spending.
Long contract duration increases exposure to potential scope creep or changing research needs.
R&D outcomes are inherently uncertain, posing a risk to achieving desired results.
Limited public information on specific research objectives hinders performance assessment.

Positive Signals

Contract supports critical R&D in physical and engineering sciences.
Kratos S2, Inc. is a known entity in the aerospace and defense sector.
The contract has a defined end date, providing a timeframe for deliverables.
The award is managed by the General Services Administration, a central procurement agency.

Sector Analysis

The contract falls under the Research and Development (R&D) sector, specifically NAICS code 541715, which covers R&D in the Physical, Engineering, and Life Sciences. This is a significant area of federal spending, with agencies like DoD, NASA, and DOE investing heavily in scientific advancement. The market for R&D services is competitive, but specific niche areas can sometimes lead to limited competition. Benchmarking requires comparing to similar large-scale, long-term R&D contracts within the physical sciences.

Small Business Impact

The data indicates that small business participation (ss and sb fields) is false for this contract. This suggests that small businesses were not a primary focus of this specific award, either as the prime contractor or through explicit set-aside provisions. There is no information provided regarding subcontracting plans, so the extent to which small businesses might be involved in supporting Kratos S2, Inc. remains unclear. Further investigation into subcontracting goals would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the General Services Administration (GSA), specifically the Federal Acquisition Service. As a cost-plus-fixed-fee contract, rigorous financial oversight and performance monitoring are essential. This includes regular reviews of incurred costs, progress reports, and milestone achievements. Transparency would depend on GSA's reporting practices and the availability of contract performance data. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Research and Development Contracts
General Services Administration Contracts
Cost-Plus-Fixed-Fee Contracts
Physical Sciences Research
Engineering Research

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee structure requires robust oversight.
R&D outcomes are inherently uncertain.
Limited public information on specific research objectives.

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $340.4 million to KRATOS S2, INC. COSMIC AES SBIR III CONTRACT 47QFCA20C0019. THIS CONTRACT IS FOR OTHER FUNCTIONS.

Who is the contractor on this award?

The obligated recipient is KRATOS S2, INC.

Which agency awarded this contract?

Awarding agency: General Services Administration (Federal Acquisition Service).

What is the total obligated amount?

The obligated amount is $340.4 million.

What is the period of performance?

Start: 2020-06-11. End: 2026-06-10.

What is the specific research Kratos S2, Inc. is conducting under this contract, and what are the expected outcomes?

The provided data indicates the contract is for 'Other Functions' and falls under NAICS code 541715 (Research and Development in the Physical, Engineering, and Life Sciences). However, specific details about the research objectives, methodologies, or expected scientific breakthroughs are not included. To assess the contract's value and impact, a detailed understanding of the research scope is necessary. This would involve reviewing the Statement of Work (SOW) or Performance Work Statement (PWS) associated with the contract. Without this information, it's difficult to evaluate the potential return on the $340 million investment or to benchmark its progress against similar R&D initiatives.

How does the $340 million contract value compare to similar R&D contracts awarded by GSA or other agencies for physical sciences research?

Directly comparing the $340 million value requires identifying contracts with similar scope, duration, and scientific focus. GSA's Federal Acquisition Service manages a wide array of contracts, but large-scale, long-term R&D in specialized physical sciences can be unique. Agencies like the Department of Defense (DoD), National Science Foundation (NSF), and Department of Energy (DOE) often award substantial R&D grants and contracts. Benchmarking would involve analyzing the average cost per research year, the number of personnel funded, and the complexity of the research areas. Given the sole-source nature and significant funding, it's crucial to ensure this contract represents a fair price for the specialized research being undertaken, potentially exceeding typical R&D contract values due to its specific focus or duration.

What are the key performance indicators (KPIs) and milestones for this contract, and how is Kratos S2, Inc. performing against them?

The provided data does not specify the Key Performance Indicators (KPIs) or milestones established for this contract. For a Cost-Plus-Fixed-Fee (CPFF) R&D contract of this magnitude, well-defined KPIs and regular milestone reviews are critical for effective oversight and performance management. These indicators should align with the research objectives outlined in the Statement of Work. Performance assessment would typically involve tracking progress against these milestones, evaluating the quality of research outputs (e.g., reports, prototypes, data), and ensuring adherence to the research plan. Without access to these performance metrics and progress reports, it is impossible to objectively assess Kratos S2, Inc.'s performance and the contract's overall effectiveness.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive approaches considered?

The data explicitly states the contract was 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. The justification for such an award typically rests on factors like unique capabilities, urgent needs, or the unavailability of other sources. For a contract valued at $340 million, the justification would need to be exceptionally strong, likely involving proprietary technology, specialized expertise held exclusively by Kratos S2, Inc., or a critical national security requirement that precludes a lengthy competitive process. Agencies are generally required to document these justifications thoroughly. Without access to this documentation, it's difficult to ascertain if competitive alternatives were adequately explored or if the sole-source decision was fully warranted, which is a key factor in ensuring fair pricing and optimal value for taxpayers.

What is the historical spending pattern for Kratos S2, Inc. with the federal government, particularly in R&D contracts?

The provided data does not include historical spending patterns for Kratos S2, Inc. with the federal government. To assess the contractor's track record and experience, a review of their past federal contract awards, performance history, and any reported issues (e.g., past performance evaluations, contract disputes) would be necessary. Understanding their history, especially in similar R&D projects, can provide insights into their capabilities, reliability, and cost management practices. This context is crucial for evaluating the risk associated with awarding a large, sole-source contract and for determining if their past performance justifies the current investment.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 985 SPACE CENTER DR STE 200, COLORADO SPRINGS, CO, 80915

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $466,324,812

Exercised Options: $423,698,456

Current Obligation: $340,355,663

Actual Outlays: $271,958,111

Subaward Activity

Number of Subawards: 453

Total Subaward Amount: $293,163,320

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline