DoD's $25.3M R&D contract with ATK Launch Systems shows cost-plus structure and full competition

Contract Overview

Contract Amount: $25,326,706 ($25.3M)

Contractor: ATK Launch Systems LLC

Awarding Agency: Department of Defense

Start Date: 2013-10-18

End Date: 2017-05-01

Contract Duration: 1,291 days

Daily Burn Rate: $19.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::CT::IGF MCS III R&D

Place of Performance

Location: CORINNE, BOX ELDER County, UTAH, 84307

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $25.3 million to ATK LAUNCH SYSTEMS LLC for work described as: IGF::CT::IGF MCS III R&D Key points: 1. Contract awarded to ATK Launch Systems LLC for Research and Development in Physical, Engineering, and Life Sciences. 2. The contract utilized a 'full and open competition' procurement method. 3. Awarded as a Definitive Contract with a Cost Plus Fixed Fee pricing structure. 4. The contract duration was 1291 days, spanning from October 2013 to May 2017. 5. The contract value was approximately $25.3 million. 6. The North American Industry Classification System (NAICS) code is 541712, indicating R&D services.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee (CPFF) structure can lead to cost overruns if not managed tightly, as the contractor is reimbursed for all allowable costs plus a fixed fee. Benchmarking the value is difficult without specific deliverables and performance metrics. However, the fixed fee component provides some incentive for cost control. The initial award amount of $25.3 million for a multi-year R&D effort appears within a reasonable range for specialized defense research, but a detailed cost breakdown and comparison to similar R&D contracts would be necessary for a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a 'full and open competition' procurement, suggesting that all responsible sources were permitted to submit a bid. The number of bidders is not specified, but this method generally promotes a competitive environment. Full and open competition is intended to ensure the government receives the best value by allowing a wide range of contractors to participate, fostering price discovery and innovation.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and access to a broader range of innovative solutions, as multiple companies vie for the contract.

Public Impact

The primary beneficiary is the Department of Defense, which receives advanced research and development services. The contract supports advancements in physical, engineering, and life sciences, potentially leading to new technologies or improved existing ones. The contract was awarded to ATK Launch Systems LLC, located in Utah, suggesting potential localized economic impact. The workforce implications include employment for scientists, engineers, and support staff involved in the R&D activities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) pricing can incentivize higher costs if not rigorously overseen.
Lack of specific performance metrics makes it difficult to assess the true value and effectiveness of the R&D conducted.
The contract duration and phased nature of R&D can introduce uncertainty in final outcomes and costs.

Positive Signals

Awarded through full and open competition, indicating a robust and fair bidding process.
The fixed fee component provides a degree of cost certainty for the government compared to pure cost-plus contracts.
The contractor, ATK Launch Systems LLC, likely possesses specialized expertise in R&D relevant to defense applications.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. The R&D market for defense is substantial, with significant government investment aimed at maintaining technological superiority. Comparable spending benchmarks would involve analyzing other DoD R&D contracts awarded under similar NAICS codes and to companies with comparable capabilities. The market size for defense R&D is driven by evolving threats and the need for advanced technological solutions.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. As a definitive contract awarded through full and open competition, it is possible that small businesses could have participated as prime contractors or subcontractors. However, without explicit set-aside clauses, the direct impact on the small business ecosystem is not quantifiable from this data alone. Further investigation into subcontracting plans would be needed to assess the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions. Accountability measures would be tied to the Cost Plus Fixed Fee structure, requiring detailed reporting of costs and progress towards research objectives. Transparency is generally facilitated through contract award databases and reporting requirements, though specific R&D details might be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Cost Plus Fixed Fee Contracts
Definitive Contracts

Risk Flags

Cost Plus Fixed Fee (CPFF) pricing structure requires diligent oversight to mitigate cost overruns.
Lack of specific performance metrics makes it challenging to evaluate R&D effectiveness and contractor performance.
The extended duration of the contract necessitates continuous monitoring to ensure continued relevance and progress.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.3 million to ATK LAUNCH SYSTEMS LLC. IGF::CT::IGF MCS III R&D

Who is the contractor on this award?

The obligated recipient is ATK LAUNCH SYSTEMS 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 $25.3 million.

What is the period of performance?

Start: 2013-10-18. End: 2017-05-01.

What was the specific nature of the R&D conducted under this contract?

The contract, awarded to ATK Launch Systems LLC under NAICS code 541712, focused on 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. While the exact nature of the R&D is not detailed in the provided data, it implies work on fundamental scientific research, applied research, and experimental development aimed at advancing technologies relevant to defense applications. This could encompass areas such as materials science, propulsion systems, aerospace engineering, or other specialized fields critical to national security. The Cost Plus Fixed Fee (CPFF) structure suggests that the scope might have been exploratory or subject to evolving requirements, common in early-stage R&D where precise outcomes are not fully predictable at the outset.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other R&D contracts?

The Cost Plus Fixed Fee (CPFF) structure is a common, though often scrutinized, pricing model for R&D contracts, particularly when the scope of work is uncertain or subject to change. In a CPFF contract, the government reimburses the contractor for all allowable costs incurred during the performance of the contract, plus a predetermined fixed fee representing profit. This differs from fixed-price contracts, where the price is set regardless of the actual costs incurred, and from cost-plus-incentive-fee (CPIF) contracts, which include mechanisms to adjust the fee based on performance against targets. For R&D, CPFF can be advantageous as it allows for flexibility in exploring new avenues without the contractor bearing the full financial risk of cost overruns. However, it places a significant burden on the government to meticulously audit costs and ensure efficiency, as the contractor has less inherent incentive to control expenses compared to fixed-price arrangements.

What are the potential risks associated with a CPFF contract for R&D?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract for Research and Development (R&D) is the potential for cost escalation. Since the contractor is reimbursed for all allowable costs, there is a reduced incentive to minimize expenditures, especially if oversight is not rigorous. This can lead to the project exceeding its initial budget. Another risk is scope creep, where the research objectives may expand beyond the original intent, further increasing costs. Furthermore, defining 'allowable costs' and ensuring they are reasonable and allocable requires robust government auditing and contract administration. The fixed fee, while providing some profit certainty for the contractor, does not directly tie their ultimate reward to the efficiency or success of the R&D effort, unlike performance-based incentives.

What does 'full and open competition' imply for the value received by the government?

Awarding a contract under 'full and open competition' implies that the government sought proposals from all responsible sources, allowing for the widest possible range of potential contractors to compete. This process is designed to foster a competitive environment, which theoretically leads to better price discovery and encourages contractors to offer their most competitive terms and innovative solutions to win the award. For the government, this typically translates into receiving better overall value, encompassing not just the lowest price but also superior technical capabilities and a higher likelihood of meeting program objectives. The absence of restrictions on participation means the government can select the offer that best meets its needs, rather than being limited to a pre-qualified or sole-source vendor.

How does the contract's duration (1291 days) impact the R&D effort?

A contract duration of 1291 days (approximately 3.5 years) is substantial for a Research and Development (R&D) effort. This extended timeframe suggests that the R&D project was likely complex, requiring significant investigation, experimentation, and potentially multiple phases. Such a duration allows for deeper exploration of scientific principles, iterative development of prototypes, and thorough testing and validation. It also provides the contractor with a stable period to invest resources and personnel. However, long durations in R&D can also introduce risks, such as the potential for technological obsolescence if the field advances rapidly, or shifts in government priorities that might render the research less relevant by the time it is completed. Effective program management and clear milestones are crucial to ensure progress and relevance throughout the contract's life.

Industry Classification

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

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: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 9160 N HWY 83, CORINNE, UT, 84307

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

Financial Breakdown

Contract Ceiling: $25,448,654

Exercised Options: $25,448,654

Current Obligation: $25,326,706

Actual Outlays: $361,567

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline