DoD's $30.9M Hypersonic Testbed Contract Awarded to Generation Orbit Raises Value Questions

Contract Overview

Contract Amount: $30,921,065 ($30.9M)

Contractor: Generation Orbit Launch Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-03-27

End Date: 2023-02-28

Contract Duration: 2,164 days

Daily Burn Rate: $14.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF FLIGHT TESTING OF AN AIR LAUNCH TESTBED FOR ENDOATMOSPHERIC HYPERSONIC TRAJECTORIES

Place of Performance

Location: ATLANTA, DEKALB County, GEORGIA, 30340

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $30.9 million to GENERATION ORBIT LAUNCH SERVICES, INC. for work described as: IGF::OT::IGF FLIGHT TESTING OF AN AIR LAUNCH TESTBED FOR ENDOATMOSPHERIC HYPERSONIC TRAJECTORIES Key points: 1. The contract's value proposition is unclear given the extended performance period and the nature of R&D. 2. Competition was limited, raising concerns about optimal pricing and taxpayer value. 3. The contract's duration and cost-plus structure present potential cost overrun risks. 4. Performance context is limited, making it difficult to assess the effectiveness of the research and development. 5. This contract falls within the broader defense R&D sector, focusing on advanced aerospace technologies. 6. The lack of small business involvement suggests limited opportunities for smaller players in this specialized field.

Value Assessment

Rating: questionable

The contract's total value of $30.9 million over a nearly six-year period (March 2017 - February 2023) for R&D services warrants scrutiny. While specific deliverables are not detailed, the extended duration for a single contractor suggests a potentially high cost per unit of research output. Benchmarking against similar hypersonic R&D efforts is challenging due to the specialized nature of the work, but the cost-plus fixed fee structure, combined with the long performance period, indicates a risk of cost escalation without clear performance metrics to constrain it.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while competition was sought, certain sources were excluded, potentially limiting the pool of bidders. The presence of only two bidders suggests a concentrated market for this highly specialized technology. This limited competition may have resulted in less aggressive pricing than would be achieved in a broader, more open competition, potentially impacting the overall value for the government.

Taxpayer Impact: Limited competition means taxpayers may not have benefited from the most competitive pricing available, potentially leading to higher overall expenditure for the research and development services.

Public Impact

The primary beneficiaries are the Department of Defense's research and development initiatives aimed at advancing hypersonic capabilities. The services delivered involve the testing and development of an air launch testbed for endoatmospheric hypersonic trajectories. The geographic impact is primarily within the United States, supporting domestic aerospace research and technological advancement. Workforce implications include specialized engineering and technical roles within the contractor's organization and potentially related support industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Extended contract duration increases risk of cost overruns.
Cost-plus fixed fee structure can incentivize higher spending.
Limited competition may lead to suboptimal pricing.
Lack of detailed performance metrics makes value assessment difficult.

Positive Signals

Contract supports critical national defense research in a cutting-edge field.
Award to a specialized firm indicates access to unique capabilities.
Long-term engagement allows for sustained development and testing.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on advanced aerospace and defense technologies. The market for hypersonic research and development is highly specialized, characterized by a few key players with unique expertise and significant barriers to entry. Comparable spending benchmarks are difficult to establish due to the novelty and strategic importance of hypersonic capabilities, but investments in this area are generally substantial and driven by national security priorities.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or focus (ss: false, sb: false). This suggests that the specialized nature of hypersonic research and development may favor larger, established aerospace contractors. There is no explicit information on subcontracting plans, but the lack of small business set-asides implies limited direct opportunities for small businesses within this specific contract, potentially impacting their ability to gain experience in this high-tech sector.

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 are inherent in the cost-plus fixed fee structure, requiring the contractor to justify expenditures. Transparency is limited by the nature of defense R&D contracts, with specific details often classified or proprietary. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Hypersonic Weapons Development Programs
Advanced Aerospace Research Contracts
Department of Defense Research and Development
Air Launch Systems Development

Risk Flags

Extended performance period may indicate scope creep or inefficient execution.
Limited competition raises concerns about price reasonableness.
Cost-plus contract type shifts cost risk to the government.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.9 million to GENERATION ORBIT LAUNCH SERVICES, INC.. IGF::OT::IGF FLIGHT TESTING OF AN AIR LAUNCH TESTBED FOR ENDOATMOSPHERIC HYPERSONIC TRAJECTORIES

Who is the contractor on this award?

The obligated recipient is GENERATION ORBIT LAUNCH SERVICES, 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 $30.9 million.

What is the period of performance?

Start: 2017-03-27. End: 2023-02-28.

What is the specific technical objective of the air launch testbed for endoatmospheric hypersonic trajectories?

The specific technical objective of the air launch testbed is to provide a platform for testing and validating technologies related to hypersonic flight within the Earth's atmosphere. This involves developing and demonstrating a system capable of launching hypersonic vehicles from an airborne platform, enabling research into aerodynamics, propulsion, materials, and control systems under extreme speed and temperature conditions. The 'endoatmospheric' aspect specifically refers to flight within the atmosphere, as opposed to exoatmospheric or space-based trajectories. This capability is crucial for developing next-generation offensive and defensive hypersonic weapon systems, as well as for advanced aerospace research.

How does the 'Cost Plus Fixed Fee' (CPFF) contract type influence the risk and potential value for this R&D project?

The Cost Plus Fixed Fee (CPFF) contract type means the government reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. For R&D projects like this, CPFF is often used when the scope of work is not precisely defined, allowing flexibility to adapt to research findings. However, it shifts significant cost risk to the government. If costs escalate beyond initial estimates, the government pays more. The fixed fee provides the contractor with an incentive to control costs to some extent, as their profit is capped. The value for taxpayers hinges on whether the research outcomes justify the total expenditure, which can be difficult to ascertain upfront in R&D.

What are the implications of 'Full and Open Competition After Exclusion of Sources' for taxpayer value?

The 'Full and Open Competition After Exclusion of Sources' designation suggests that while the initial intent was open competition, specific criteria or circumstances led to the exclusion of certain potential bidders. This can occur for reasons such as proprietary technology, unique capabilities, or national security concerns. While it aims for a competitive process, excluding sources inherently limits the breadth of competition. If the excluded sources could have offered comparable services at a lower price or with better terms, then taxpayer value may be diminished. The limited number of bidders (two) further supports the idea that the competitive pressure might not have been as robust as in a truly unrestricted full and open competition.

What is the typical performance period for similar R&D contracts in the hypersonic sector, and how does this contract compare?

Performance periods for R&D contracts, especially in cutting-edge fields like hypersonics, can vary significantly based on project complexity and funding cycles. However, a performance period of nearly six years (March 2017 to February 2023) for a single definitive contract focused on developing and testing a testbed is relatively long. Many R&D efforts are structured in phases with shorter, more defined performance periods, allowing for reassessment and re-competition. This extended duration suggests a long-term, potentially evolving research objective. While not inherently negative, it necessitates robust oversight to ensure continued alignment with strategic goals and efficient use of funds throughout the project lifecycle.

What are the potential risks associated with the contractor, Generation Orbit Launch Services, Inc., based on this contract's characteristics?

Based on this contract, the primary risks associated with Generation Orbit Launch Services, Inc. revolve around cost management and timely delivery within the R&D context. The CPFF structure places the onus on the government to cover costs, so the contractor's ability to manage its expenses efficiently is crucial for taxpayer value. The extended performance period also implies a need for sustained operational capability and project management expertise over several years. While the contract itself doesn't provide a track record of past performance issues, the nature of R&D means that technical challenges are inherent, and the contractor's ability to overcome these and deliver meaningful results within the allocated budget and timeframe is a key risk factor.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Spaceworks Enterprises Inc

Address: 3353 W HOSPITAL AVE, CHAMBLEE, GA, 30341

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

Financial Breakdown

Contract Ceiling: $34,351,280

Exercised Options: $34,351,280

Current Obligation: $30,921,065

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline