DoD's $257M R&D contract with VIASAT INC shows potential for cost overruns and limited competition
Contract Overview
Contract Amount: $25,670,331 ($25.7M)
Contractor: Viasat Inc
Awarding Agency: Department of Defense
Start Date: 2007-08-13
End Date: 2012-09-12
Contract Duration: 1,857 days
Daily Burn Rate: $13.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE
Sector: R&D
Official Description: GOE I1
Place of Performance
Location: CARLSBAD, SAN DIEGO County, CALIFORNIA, 92009
Plain-Language Summary
Department of Defense obligated $25.7 million to VIASAT INC for work described as: GOE I1 Key points: 1. Contract awarded through full and open competition, but only two bids received, suggesting limited market interest or high barriers to entry. 2. Cost-plus incentive fee contract type introduces risk of cost escalation if performance targets are not met efficiently. 3. Long duration of 1857 days (over 5 years) increases exposure to changing technological landscapes and potential scope creep. 4. The contract's focus on R&D in physical, engineering, and life sciences (NAICS 541712) is a critical but complex area for government investment. 5. Awarded by the Department of Defense, indicating a focus on national security or advanced technological capabilities. 6. The contract's value of $257 million positions it as a significant investment within its research and development category.
Value Assessment
Rating: questionable
Benchmarking the value of this $257 million R&D contract is challenging due to the specialized nature of research and development. The cost-plus incentive fee (CPIF) structure, while incentivizing performance, also carries inherent risks of cost overruns if not meticulously managed. Without specific performance metrics and outcomes, it's difficult to definitively assess value for money. However, the long duration and the nature of R&D suggest that initial cost estimates may be subject to significant change.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, which is generally positive for price discovery. However, only two bids were received, which is a relatively low number for a contract of this magnitude. This could indicate that the technical requirements were highly specialized, deterring a broader range of bidders, or that the market for such services is concentrated among a few key players. The limited number of bidders may have reduced the competitive pressure on pricing.
Taxpayer Impact: While full and open competition was utilized, the low number of bidders suggests that taxpayers may not have benefited from the most aggressive pricing possible. Further analysis would be needed to determine if the government secured a fair price given the limited options.
Public Impact
The primary beneficiaries are likely the Department of Defense and potentially national security interests, through advancements in physical, engineering, or life sciences. The services delivered are research and development, aimed at creating new technologies or improving existing ones. The geographic impact is primarily centered around the contractor's location in California, though the ultimate application of the R&D could be global. Workforce implications include highly skilled R&D professionals, engineers, and scientists employed by VIASAT INC and potentially its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Risk of cost overruns due to the Cost Plus Incentive Fee (CPIF) contract type.
- Limited competition (2 bidders) may have resulted in a higher-than-optimal price.
- Long contract duration (over 5 years) increases uncertainty and potential for scope creep or obsolescence.
- Specialized R&D nature makes direct cost benchmarking difficult, potentially masking inefficiencies.
Positive Signals
- Awarded through full and open competition, adhering to principles of broad market access.
- The CPIF contract type incentivizes contractor performance towards achieving specific objectives.
- VIASAT INC is a known entity in the aerospace and defense sector, suggesting some level of established capability.
- The contract addresses critical R&D needs for the Department of Defense.
Sector Analysis
This contract falls within the Research and Development in the Physical, Engineering, and Life Sciences sector (NAICS 541712). This sector is characterized by high innovation, significant investment, and often long development cycles. The total federal spending in R&D is substantial, with defense-related R&D forming a significant portion. Comparable contracts in this space can vary widely in value and scope, but a $257 million award over five years for specialized research indicates a major project.
Small Business Impact
There is no indication that this contract included a small business set-aside. Given the specialized nature of the R&D and the prime contractor (VIASAT INC), it is possible that any small business involvement would be through subcontracting. Analysis of subcontracting plans would be necessary to determine the extent of small business participation and its impact on the broader small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The CPIF structure necessitates close monitoring of costs and performance against established targets. Transparency would depend on the agency's reporting practices and the level of detail made public regarding R&D progress and expenditures. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.
Related Government Programs
- Department of Defense Research and Development Programs
- Advanced Technology Development Contracts
- Aerospace and Defense Sector Contracts
- Information Technology Research
- Engineering Services Contracts
Risk Flags
- Potential for cost overruns due to CPIF structure.
- Limited competition may impact price and innovation.
- Long contract duration increases risk exposure.
- Specialized R&D field makes value assessment difficult.
Tags
research-and-development, department-of-defense, cost-plus-incentive-fee, full-and-open-competition, large-contract, viasat-inc, california, physical-engineering-life-sciences, definitive-contract, defense-contract-management-agency
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $25.7 million to VIASAT INC. GOE I1
Who is the contractor on this award?
The obligated recipient is VIASAT INC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $25.7 million.
What is the period of performance?
Start: 2007-08-13. End: 2012-09-12.
What is VIASAT INC's track record with similar government R&D contracts?
VIASAT INC has a significant history of contracting with the U.S. government, particularly within the Department of Defense, primarily in areas related to satellite communications, networking, and defense systems. While this specific contract focuses on broader R&D in physical, engineering, and life sciences (NAICS 541712), VIASAT's core competencies suggest a strong foundation in complex technological development. Examining past performance on cost-plus contracts, adherence to schedules, and the successful delivery of R&D outcomes would provide a clearer picture of their reliability. Publicly available data often highlights their role in delivering advanced communication solutions, but detailed performance metrics on specific R&D projects are less common.
How does the $257 million value compare to similar R&D contracts in the physical, engineering, and life sciences sector?
The $257 million value for a contract spanning over five years in the R&D sector (NAICS 541712) is substantial, placing it among significant government investments in advanced technology. However, the 'Physical, Engineering, and Life Sciences' category is broad. Contracts for fundamental research, applied research, or advanced technology development can range from a few million to hundreds of millions of dollars. For instance, major defense research initiatives or large-scale biomedical research projects funded by agencies like NIH or DARPA can easily exceed this amount. Without knowing the specific sub-field and objectives, direct comparison is difficult, but it signifies a major undertaking rather than a routine research grant.
What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for R&D?
The primary risks with a CPIF contract for R&D revolve around cost control and defining achievable performance targets. While the incentive fee structure aims to reward efficiency and success, it can also lead to cost overruns if the baseline cost estimates are inaccurate or if the performance metrics are poorly defined or overly ambitious. The contractor may incur costs beyond the target, leading to higher final prices, especially if the government is motivated to achieve the R&D outcomes. Conversely, if targets are too easily met, the incentive may not drive optimal performance. For R&D, where outcomes are inherently uncertain, establishing appropriate targets and cost ceilings is particularly challenging.
What does the limited competition (2 bidders) imply for the government's ability to secure innovative solutions?
Limited competition, such as only two bidders responding to a full and open solicitation, can have mixed implications for innovation. On one hand, it might suggest that the technical requirements were so specialized that only a few firms possessed the necessary expertise, potentially leading to highly tailored and innovative solutions from those capable bidders. On the other hand, it raises concerns about whether the government explored the full breadth of the market and potentially missed out on innovative approaches from less obvious or smaller players. Reduced competition can also lessen the pressure on bidders to differentiate through novel solutions, focusing more on meeting minimum requirements to secure the contract.
How has federal spending in NAICS code 541712 (Research and Development in Physical, Engineering, and Life Sciences) trended over the past 5-10 years?
Federal spending in NAICS code 541712 has generally shown a consistent upward trend over the past 5-10 years, driven largely by national security priorities, advancements in technology (like AI, quantum computing, biotechnology), and public health initiatives. Defense agencies (like DoD) and health agencies (like NIH) are typically the largest contributors. While specific year-over-year fluctuations occur based on budget appropriations and strategic shifts, the overall trajectory indicates sustained or increasing investment in R&D across these critical scientific domains. This suggests a continued demand for research services and a growing market for contractors in this space.
What is the significance of the contract being awarded by the Department of Defense (DoD)?
An award from the Department of Defense signifies that the R&D project is likely aligned with national security objectives, military modernization, or the development of advanced defense capabilities. DoD contracts often involve cutting-edge technologies, stringent security requirements, and rigorous testing and validation processes. The funding for such contracts typically comes from defense appropriations, reflecting strategic priorities. This context implies that the research outcomes are intended to provide a strategic advantage, enhance warfighter capabilities, or address emerging threats, often involving complex engineering, materials science, or advanced computing.
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
Solicitation ID: FA830706R0003
Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 6155 EL CAMINO REAL, CARLSBAD, CA, 92009
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: $53,445,838
Exercised Options: $42,594,186
Current Obligation: $25,670,331
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2007-08-13
Current End Date: 2012-09-12
Potential End Date: 2012-09-12 00:00:00
Last Modified: 2015-11-18
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