DoD's $13.38M R&D contract for missile systems awarded to Neumann Information Systems shows potential value concerns

Contract Overview

Contract Amount: $13,381,230 ($13.4M)

Contractor: Neumann Systems Group, Inc.

Awarding Agency: Department of Defense

Start Date: 2004-09-30

End Date: 2011-05-31

Contract Duration: 2,434 days

Daily Burn Rate: $5.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200412!000092!5700!GU92 !ASC/TMK !FA863204C2456 !A!N! !N! ! !20040930!20051231!016194875!016194875!016194875!N!NEUMANN INFORMATION SYSTEMS, I!14230 TIMBEREDGE LANE !COLORADO SPRIN !CO!80921!16000!041!08!COLORADO SPRINGS !EL PASO !COLORADO !+000001553398!N!N!000004854558!AC22!RDTE/MISSILE AND SPACE SYSTEMS-APPLIED RESEARCH !C9E!ALL OTHER SUPPLIES AND EQUIPMENT !362 !BMDS !541710!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1G!Z!Y!Z! ! !N!B!N!N! ! !A! !A!A!00 !A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80907

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $13.4 million to NEUMANN SYSTEMS GROUP, INC. for work described as: 200412!000092!5700!GU92 !ASC/TMK !FA863204C2456 !A!N! !N! ! !20040930!20051231!016194875!016194875!016194875!N!NEUMANN INFORMATION SYSTEMS, I!14230 TIMBEREDGE LANE !COLORADO SPRIN !CO!80921!16000!041!08!COLORADO SPRINGS !EL P… Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize overspending. 2. Limited competition raises questions about price discovery and taxpayer value. 3. The extended period of performance (over 6 years) warrants scrutiny for ongoing necessity. 4. The contractor's track record and past performance are critical for assessing future value. 5. This contract falls within the broader R&D sector for missile and space systems. 6. The lack of small business involvement needs further investigation for broader economic impact.

Value Assessment

Rating: questionable

The total award amount of $13.38 million for Research and Development in Physical, Engineering, and Life Sciences is difficult to benchmark without comparable contracts. The cost-plus-fixed-fee (CPFF) contract type, while allowing for flexibility in R&D, can sometimes lead to higher costs if not managed tightly. The extended performance period of over six years (from 2004 to 2011) suggests a long-term project, but the value for money needs to be assessed against the achieved technological advancements and their impact on missile and space systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one vendor was considered capable of fulfilling the requirement. This significantly limits competition and may result in less favorable pricing for the government compared to a fully competed contract. The absence of multiple bidders means there was no direct price comparison or incentive for vendors to offer their best pricing.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive bidding, potentially leading to higher costs for the government and less efficient use of public funds.

Public Impact

The primary beneficiaries are likely the Department of Defense's missile and space systems programs, which receive advanced research and development. The contract supports applied research in missile and space systems, contributing to technological advancements in defense capabilities. The geographic impact is centered around the contractor's location in Colorado Springs, Colorado, potentially supporting local employment in the aerospace and defense sector. The contract's focus on R&D may lead to the development of specialized skills within the contractor's workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee structure can incentivize higher costs if not rigorously managed.
Long performance period (over 6 years) requires ongoing justification for continued spending.
Lack of transparency regarding the justification for sole-source award.
No indication of small business participation or subcontracting goals.

Positive Signals

Contract supports critical R&D for national defense in missile and space systems.
Contractor is located in Colorado Springs, potentially benefiting the local economy.
Applied research aims to advance technological capabilities.

Sector Analysis

This contract falls under the Research and Development (R&D) sector, specifically focusing on missile and space systems. The North American Industry Classification System (NAICS) code 541710, 'Research and Development in Physical, Engineering, and Life Sciences,' encompasses a broad range of scientific and technical services. Spending in this area is crucial for maintaining a technological edge in defense. Comparable spending benchmarks would typically involve other R&D contracts for advanced defense technologies, often awarded by agencies like the Department of Defense.

Small Business Impact

There is no indication that this contract included a small business set-aside. Furthermore, the sole-source nature of the award suggests that small businesses were likely not considered as primary contractors. The implications for the small business ecosystem are minimal in terms of direct award, but it highlights a potential gap in opportunities for small businesses in this specific R&D niche.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the contracting agency (Department of Defense) and potentially the Defense Contract Management Agency (DCMA). The effectiveness of oversight depends on the rigor of performance monitoring, financial reviews, and adherence to the terms of the cost-plus-fixed-fee structure. Transparency regarding the sole-source justification and ongoing project milestones would be key accountability measures. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Missile Defense Systems
Space Systems Research
Applied Research and Development
Department of Defense Research Contracts
Aerospace Engineering Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Extended period of performance
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.4 million to NEUMANN SYSTEMS GROUP, INC.. 200412!000092!5700!GU92 !ASC/TMK !FA863204C2456 !A!N! !N! ! !20040930!20051231!016194875!016194875!016194875!N!NEUMANN INFORMATION SYSTEMS, I!14230 TIMBEREDGE LANE !COLORADO SPRIN !CO!80921!16000!041!08!COLORADO SPRINGS !EL PASO !COLORADO !+000001553398!N!N!000004854558!AC22!RDTE/MISSILE AND SPACE SYSTEMS-APPLIED RESEARCH !C9E!ALL OTHER SUPPLIES AND EQUIPMENT !362 !BMDS !541710!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is NEUMANN SYSTEMS GROUP, 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 $13.4 million.

What is the period of performance?

Start: 2004-09-30. End: 2011-05-31.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a sole-source action. A detailed justification would typically be documented by the procuring agency, outlining why only Neumann Information Systems, Inc. was deemed capable of meeting the requirement. This could be due to proprietary technology, unique expertise, or a critical need that could not be fulfilled through a competitive process within the required timeframe. Without access to the official justification document (e.g., a Justification and Approval or J&A), the specific reasons remain unknown, but sole-source awards are generally reserved for situations where competition is not feasible or not in the government's best interest.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for R&D in this sector?

Cost-plus-fixed-fee (CPFF) contracts are common in research and development (R&D) because R&D inherently involves uncertainty regarding costs and outcomes. In a CPFF contract, the government reimburses the contractor for allowable costs plus a fixed fee representing profit. This structure incentivizes the contractor to control costs to maximize their profit margin, as the fee is fixed. However, it can also lead to higher overall costs for the government compared to fixed-price contracts if cost overruns occur. Other R&D contract types include Cost-Plus-Incentive-Fee (CPIF), which adjusts the fee based on performance against targets, and Firm-Fixed-Price (FFP) contracts, which are less common for early-stage R&D due to cost uncertainties but offer the most price certainty for the government if scope is well-defined.

What were the key performance milestones and deliverables for this contract?

The provided data does not detail the specific performance milestones or deliverables associated with this contract. For a Research and Development contract, especially one with a CPFF structure and a long performance period, milestones often include phases of research, prototype development, testing, analysis, and reporting. Deliverables would typically consist of technical reports, data packages, prototypes, or demonstrations of new capabilities. The success of the contract would be measured against the achievement of these milestones and the quality and utility of the final deliverables in advancing missile and space systems technology.

What is the track record of Neumann Information Systems, Inc. with government contracts, particularly in R&D?

The provided data identifies Neumann Information Systems, Inc. as the contractor. To assess their track record, one would need to examine their contract history, including past performance evaluations, any contract disputes or terminations, and the types of projects they have successfully completed. Information on their specific expertise in missile and space systems R&D would be crucial. A deeper dive into contract databases (like FPDS or SAM.gov) and performance assessment reports would be necessary to provide a comprehensive view of their capabilities and reliability as a government contractor in this specialized field.

How does the $13.38 million award compare to typical R&D spending for similar missile and space systems projects?

Benchmarking this $13.38 million award against 'typical' R&D spending for similar missile and space systems projects is challenging without more specific details on the project's scope and objectives. R&D costs in this sector can vary dramatically, from a few million dollars for exploratory research to hundreds of millions or even billions for advanced development and prototyping of complex systems. This award appears to be in the mid-range for applied research or specific component development. To provide a meaningful comparison, one would need to identify contracts with similar NAICS codes (541710), performing similar research (missile and space systems), and potentially awarded by the same or similar agencies (DoD components).

What were the primary risks identified for this contract, and how were they managed?

For a sole-source, CPFF R&D contract in missile and space systems, primary risks could include technical risks (failure to achieve desired technological outcomes), cost risks (exceeding budget due to R&D uncertainties), schedule risks (delays in research or development), and performance risks (deliverables not meeting specifications). Given the sole-source nature, the government likely relied heavily on the contractor's proposed risk mitigation plan. Effective management would involve close monitoring of technical progress, rigorous financial oversight of incurred costs, regular reviews of milestones, and clear communication channels to address emerging issues promptly. The lack of competition means the government bore a significant portion of the risk.

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 › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 14230 TIMBEREDGE LANE, COLORADO SPRIN, CO

Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline