DoD's $167M contract for electronics R&D with Syracuse Research Corp. shows fair value but limited competition

Contract Overview

Contract Amount: $16,720,714 ($16.7M)

Contractor: SRC Inc

Awarding Agency: Department of Defense

Start Date: 2002-03-20

End Date: 2009-09-30

Contract Duration: 2,751 days

Daily Burn Rate: $6.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: 200206!001891!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0702CL421 !A!N! !N! !20020320!20060430!063053771!063053771!063053771!N!SYRACUSE RESEARCH CORPORATION !6225 RUNNING RIDGE ROAD !NORTH SYRACUSE !NY!13212!53660!067!36!NORTH SYRACUSE !ONONDAGA !NEW YORK !+000000870000!N!N!000000000000!AC61!RDTE/ELECTRONICS & COMMUNICATION EQ-BASIC RESEARCH!A7 !ELECTRONICS AND COMMUNICATION !1000!NOT DISCERNABLE OR CLASSIFIED !541990!E! !3! ! ! ! ! !20060930!B! ! !A! !A!N!U!2!003!B! !A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: SYRACUSE, ONONDAGA County, NEW YORK, 13212

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $16.7 million to SRC INC for work described as: 200206!001891!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0702CL421 !A!N! !N! !20020320!20060430!063053771!063053771!063053771!N!SYRACUSE RESEARCH CORPORATION !6225 RUNNING RIDGE ROAD !NORTH SYRACUSE !NY!13212!53660!067!36!NORTH SYRACUSE !ONOND… Key points: 1. Contract value of $167M over 7 years suggests significant investment in R&D. 2. Full and open competition was utilized, but the number of bidders (3) indicates moderate competition. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully. 4. Performance period of over 7 years allows for long-term research and development. 5. The contract falls under R&D for electronics and communication equipment. 6. The contractor, Syracuse Research Corporation, has a track record in this domain.

Value Assessment

Rating: fair

The contract's total award value of $167,207,140 over approximately 7.5 years averages to about $22.3 million per year. This figure needs to be benchmarked against similar R&D contracts for electronics and communication equipment to assess value for money. Without specific comparable contract data, it's difficult to definitively state if the pricing is competitive or if the value is excellent. However, the duration suggests a substantial, long-term investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive sign for price discovery. However, with only three bidders, the level of competition was moderate. While more than a sole-source or limited competition, a higher number of bidders typically leads to more aggressive pricing and a wider range of innovative solutions. The agency's approach to soliciting bids and the evaluation criteria would be crucial in determining the ultimate impact of this competition level on the final price and quality.

Taxpayer Impact: A moderate level of competition means taxpayers likely received a reasonable price, but there may have been opportunities for even greater savings or better value with a more robust bidding process.

Public Impact

The primary beneficiaries are the Department of Defense and potentially U.S. military personnel who will benefit from advancements in electronics and communication equipment. The contract supports research and development in electronics and communication technologies, aiming to enhance military capabilities. The geographic impact is primarily centered in New York, where Syracuse Research Corporation is located, potentially creating or sustaining jobs in the region. The contract supports a specialized workforce in scientific and technical fields related to electronics and communications research.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to increase costs to maximize their fee, requiring robust oversight.
Moderate competition (3 bidders) might have limited the potential for achieving the lowest possible price.
The long performance period could introduce risks related to technological obsolescence or shifting research priorities.

Positive Signals

Awarded under full and open competition, indicating an effort to solicit a broad range of potential offerors.
The contract supports critical R&D in a key defense sector, potentially leading to significant technological advancements.
The contractor, Syracuse Research Corporation, is likely experienced in this specialized field, suggesting a higher probability of successful research outcomes.

Sector Analysis

This contract falls within the broader Information Technology and Defense sectors, specifically focusing on Research and Development for Electronics and Communication Equipment. The market for defense-related R&D is substantial, with significant government investment aimed at maintaining technological superiority. Comparable spending benchmarks would involve analyzing other DoD contracts for similar R&D efforts, which often involve high costs due to the specialized nature of the work and the pursuit of cutting-edge technologies.

Small Business Impact

There is no indication that this contract included small business set-asides. The nature of advanced R&D in electronics and communication equipment often involves large, specialized contractors. However, it is possible that Syracuse Research Corporation may engage small businesses as subcontractors for specific components or services, which would be a positive outcome for the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting and program management offices. Accountability measures would include regular progress reports, milestone reviews, and financial audits, especially given the Cost Plus Fixed Fee structure. Transparency is generally maintained through contract award databases, though specific R&D details might be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research, Development, Test, and Evaluation (RDT&E)
Army Communications and Electronics Command (CECOM) R&D Programs
Advanced Electronics and Communication Systems Research
Federal R&D Spending on Defense Technologies

Risk Flags

Moderate competition level
Cost Plus Fixed Fee contract type risks
Long contract duration in a rapidly evolving tech sector

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.7 million to SRC INC. 200206!001891!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0702CL421 !A!N! !N! !20020320!20060430!063053771!063053771!063053771!N!SYRACUSE RESEARCH CORPORATION !6225 RUNNING RIDGE ROAD !NORTH SYRACUSE !NY!13212!53660!067!36!NORTH SYRACUSE !ONONDAGA !NEW YORK !+000000870000!N!N!000000000000!AC61!RDTE/ELECTRONICS & COMMUNICATION EQ-BASIC RESEARCH!A7 !ELECTRONICS AND COMMUNICATION !1000!NOT DISCERNABLE OR CLASSIFIED !541990!E! !3! ! ! ! ! !20060930!B

Who is the contractor on this award?

The obligated recipient is SRC 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 $16.7 million.

What is the period of performance?

Start: 2002-03-20. End: 2009-09-30.

What is Syracuse Research Corporation's track record with the Department of Defense, particularly in electronics and communication R&D?

Syracuse Research Corporation (SRC Inc.) has a history of performing work for the Department of Defense. While specific details on all past contracts are not provided in this data snippet, their involvement in R&D for electronics and communication equipment suggests they possess the necessary expertise and clearances. SRC is known for its work in areas such as radar, electronic warfare, and command and control systems. Their ability to secure a significant R&D contract like this implies a positive performance history and a strong capability to meet the technical requirements of the Department of the Army. Further investigation into their contract performance ratings and past project outcomes would provide a more comprehensive understanding of their track record.

How does the average annual value of this contract compare to similar R&D contracts in the electronics and communication sector?

The average annual value of this contract is approximately $22.3 million ($167.2M / 7.5 years). To benchmark this effectively, one would need to compare it against other Department of Defense or federal agency contracts awarded for similar research and development in electronics and communication equipment over comparable timeframes. Factors such as the specific technological focus (e.g., basic research vs. applied research, specific hardware vs. software), the maturity of the technology, and the number of bidders can significantly influence contract values. Without access to a database of comparable contracts, it is challenging to definitively state whether this represents a high, low, or average investment for the scope of work.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D, and how are they mitigated?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is that the contractor may have less incentive to control costs, as their fee is fixed regardless of the actual costs incurred. This can lead to cost overruns if not managed diligently. For R&D, this risk is amplified because the scope of work can be inherently uncertain and subject to unforeseen technical challenges. Mitigation strategies include robust government oversight, detailed cost monitoring, regular progress reviews, and clearly defined milestones. The government must ensure that all costs claimed by the contractor are reasonable, allocable, and allowable. Furthermore, the fixed fee itself should be negotiated based on the perceived risk and complexity of the R&D effort.

Given the 'full and open competition' designation, what does the low number of bidders (3) imply for the taxpayer?

While 'full and open competition' is the preferred method, a low number of bidders (in this case, three) suggests that the market for this specific type of advanced electronics and communication R&D may be limited, or that the solicitation process did not attract a wider pool of interested and capable contractors. For the taxpayer, this implies that while competition did occur, the potential for significant price reductions or innovative solutions that might arise from a larger number of bids was likely constrained. It suggests that the government may not have achieved the full benefit of competitive pressure that could have been realized with, for example, five or more bidders. However, three bidders still provide a basis for comparison and negotiation.

What is the significance of the 'RDTE/ELECTRONICS & COMMUNICATION EQ-BASIC RESEARCH' classification for this contract?

This classification indicates that the contract is specifically for basic research in the field of electronics and communication equipment. Basic research is defined as that which 'advances fundamental knowledge and understanding' and is not directed toward a specific commercial or military application. This means the contract's objective is to explore new scientific concepts and principles rather than to develop a specific product or system. For taxpayers, this implies an investment in foundational science that could lead to future technological breakthroughs, but with a longer-term and less predictable return on investment compared to applied research or development contracts.

How does the contract's duration of over 7 years impact its overall value and risk profile?

A contract duration exceeding 7 years for R&D in electronics and communication equipment presents a mixed bag of value and risk. On the positive side, it allows for sustained effort, deep exploration of complex research questions, and the potential for significant breakthroughs that require long-term investigation. This continuity can be highly valuable for advancing fundamental knowledge. However, it also introduces substantial risks. Technological landscapes in electronics and communication evolve rapidly; research initiated today might be outdated or superseded by the time the contract concludes. Furthermore, long-term contracts can be susceptible to shifts in government priorities, funding uncertainties, and potential cost escalations over the extended period. Managing these risks requires adaptive planning and continuous re-evaluation of research objectives.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 7502 ROUND POND RD, NORTH SYRACUSE, NY, 13212

Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline