DoD's $34.4M Research Contract with Schafer Corp Raises Questions on Competition and Value

Contract Overview

Contract Amount: $34,429,685 ($34.4M)

Contractor: Schafer Government Services, LLC

Awarding Agency: Department of Defense

Start Date: 2002-10-29

End Date: 2009-09-30

Contract Duration: 2,528 days

Daily Burn Rate: $13.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200301!000183!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0103CR047 !A!N! !N! !20021029!20031031!069341303!069341303!069341303!N!SCHAFER CORPORATION !321 BILLERICA ROAD !CHELMSFORD !MA!01824!13135!017!25!CHELMSFORD !MIDDLESEX !MASS !+000001043391!N!N!000000000000!AD92!RDTE/OTHER DEFENSE-APPLIED RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !1000!NOT DISCERNABLE OR CLASSIFIED !541710!E! !3! ! ! ! ! !99990909!B! ! !N!A!D!N!U!1!001!N!2A!Z!Y!Z! ! !N!B!N!N! ! !Z! !A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: NORTH BILLERICA, MIDDLESEX County, MASSACHUSETTS, 01862, UNITED STATES OF AMERICA

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $34.4 million to SCHAFER GOVERNMENT SERVICES, LLC for work described as: 200301!000183!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0103CR047 !A!N! !N! !20021029!20031031!069341303!069341303!069341303!N!SCHAFER CORPORATION !321 BILLERICA ROAD !CHELMSFORD !MA!01824!13135!017!25!CHELMSFORD !MIDDL… Key points: 1. The contract awarded to Schafer Corporation for missile and space systems research appears to lack robust competition, potentially impacting price discovery. 2. With a total value of $34.4 million over a significant duration, the cost-plus-fixed-fee structure warrants scrutiny for potential cost overruns. 3. The 'NOT COMPETED' award type and the absence of small business participation raise concerns about market access and broader economic impact. 4. The sector, Defense Applied Research, is critical, but the procurement method here may not yield the best value for taxpayer funds.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of clear competition, makes a direct pricing assessment difficult. Benchmarking against similar R&D contracts is challenging without more transparency on Schafer's cost drivers and profit margins.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, indicating a sole-source or limited competition scenario. This significantly limits price discovery and potentially leads to higher costs for the government compared to a fully competitive process.

Taxpayer Impact: The lack of competition suggests that taxpayers may be paying a premium for the services rendered, as the government did not leverage market forces to secure the best possible price.

Public Impact

Taxpayers may be overpaying due to the absence of competitive bidding for critical defense research. Limited opportunities for other qualified firms, including small businesses, to compete for this significant contract. Potential for less innovation and efficiency if alternative solutions were not explored through a competitive process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Cost-Plus-Fixed-Fee Structure
No Small Business Participation

Positive Signals

Awarded to a known entity (Schafer Corporation)
Contract supports critical Defense Applied Research

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on missile and space systems for the Department of Defense. Spending in this area is crucial for national security, but procurement methods significantly influence cost-effectiveness and innovation.

Small Business Impact

The data indicates no small business participation in this contract. This is a missed opportunity to foster growth and innovation within the small business sector, particularly in specialized R&D fields.

Oversight & Accountability

The 'NOT COMPETED' award type suggests limited justification for bypassing competitive procedures. Further oversight is needed to ensure such awards are truly necessary and that fair pricing was achieved.

Related Government Programs

Research and Development in the Physical, Engineering, and Life Sciences
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competitive bidding raises concerns about potential overpricing.
Cost-plus-fixed-fee structure may lead to uncontrolled cost growth.
Absence of small business participation limits economic opportunity.
Limited transparency on the justification for sole-source award.
Potential for missed innovation from alternative solutions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.4 million to SCHAFER GOVERNMENT SERVICES, LLC. 200301!000183!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0103CR047 !A!N! !N! !20021029!20031031!069341303!069341303!069341303!N!SCHAFER CORPORATION !321 BILLERICA ROAD !CHELMSFORD !MA!01824!13135!017!25!CHELMSFORD !MIDDLESEX !MASS !+000001043391!N!N!000000000000!AD92!RDTE/OTHER DEFENSE-APPLIED RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !1000!NOT DISCERNABLE OR CLASSIFIED !541710!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is SCHAFER GOVERNMENT SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $34.4 million.

What is the period of performance?

Start: 2002-10-29. End: 2009-09-30.

What specific factors justified the 'NOT COMPETED' award for this missile and space systems research contract, and were alternatives thoroughly explored?

The justification for a 'NOT COMPETED' award typically involves unique capabilities, urgent needs, or lack of sources. For this contract, the specific rationale needs to be detailed in the contract file. Without this information, it's difficult to assess if alternatives were adequately explored or if the government missed opportunities to engage a broader range of innovative companies.

How does the cost-plus-fixed-fee structure impact the government's ability to control costs and ensure value for money in this long-term R&D project?

Cost-plus-fixed-fee contracts can incentivize contractors to incur costs, as the government reimburses them plus a predetermined fixed fee. While providing flexibility for R&D, this structure requires robust government oversight to prevent cost overruns and ensure the fixed fee adequately compensates the contractor for their effort without being excessive, especially over a long duration.

What is the long-term strategic benefit of awarding this critical defense research contract solely to Schafer Corporation without exploring broader market capabilities?

Sole-sourcing critical research may ensure continuity with an established performer but risks stifling innovation from emerging companies or alternative approaches. A competitive process could have potentially identified more cost-effective solutions or novel technologies, ultimately enhancing the long-term strategic advantage and technological superiority of the defense capabilities.

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 › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Citigroup Inc. (UEI: 197329691)

Address: 3811 NORTH FAIRFAX DR STE 400, ARLINGTON, VA, 22203

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline