DoD awards $981M contract for software engineering verification, with 23 bids received

Contract Overview

Contract Amount: $9,810,315 ($9.8M)

Contractor: Galois, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-03-25

End Date: 2027-11-24

Contract Duration: 1,339 days

Daily Burn Rate: $7.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 23

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: VERIFICATION ENGINEERING FOR REAL-WORLD SOFTWARE ENGINEERS

Place of Performance

Location: PORTLAND, MULTNOMAH County, OREGON, 97204

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $9.8 million to GALOIS, INC. for work described as: VERIFICATION ENGINEERING FOR REAL-WORLD SOFTWARE ENGINEERS Key points: 1. The contract value of $981 million over approximately 3.7 years suggests a significant investment in specialized engineering services. 2. A high number of bids (23) indicates robust market interest and potential for competitive pricing. 3. The cost-plus-fixed-fee (CPFF) contract type introduces some cost risk for the government, as contractor profit is fixed regardless of final costs. 4. This award falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. 5. The geographic focus appears to be Oregon, based on the state code provided. 6. The contractor, GALOIS, INC., is positioned to deliver critical verification engineering services for the Department of the Air Force.

Value Assessment

Rating: good

Benchmarking the $981 million value requires more granular data on similar verification engineering contracts. However, the high number of bidders (23) suggests that the pricing was likely competitive. The CPFF structure means the government pays for allowable costs plus a fixed fee, which can be efficient if well-managed, but carries inherent risk if costs escalate beyond initial projections. Further analysis of the fixed fee percentage relative to industry standards would provide a clearer picture of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with 23 distinct bids received. This high level of competition is a positive indicator, suggesting that the solicitation was broadly accessible and that multiple capable firms vied for the work. A large number of bidders generally leads to better price discovery and can drive down costs for the government.

Taxpayer Impact: The extensive competition for this $981 million contract is beneficial for taxpayers, as it likely resulted in more favorable pricing and a wider range of innovative solutions being considered, maximizing the return on investment for these critical engineering services.

Public Impact

The Department of the Air Force is the primary beneficiary, receiving advanced verification engineering services crucial for software development. This contract supports the development and assurance of complex software systems, potentially impacting national security. The geographic impact is concentrated in Oregon, where the contractor is located, potentially creating or sustaining high-skilled jobs in the region. Workforce implications include the employment of specialized software engineers, verification experts, and related technical personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not closely monitored, as the contractor's profit is fixed regardless of the final cost.
The duration of the contract (over 3 years) necessitates ongoing oversight to ensure performance remains aligned with objectives and budget.
Lack of specific performance metrics in the provided data makes it difficult to assess the quality and effectiveness of the services delivered.
The specialized nature of verification engineering means that ensuring contractor expertise and preventing knowledge gaps requires diligent management.

Positive Signals

The award to GALOIS, INC. for a significant sum suggests confidence in their capabilities and past performance.
The high number of bids (23) indicates a competitive environment that likely drove favorable terms and pricing.
The contract's focus on verification engineering addresses a critical need for ensuring software reliability and security.
The long-term nature of the contract (over 3 years) allows for sustained focus and development of specialized expertise.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically NAICS code 541715, which covers R&D in the physical, engineering, and life sciences. The market for specialized software verification and validation services is robust, driven by the increasing complexity and criticality of software in defense and other high-stakes applications. Comparable spending benchmarks would typically look at the total R&D spending by the DoD and specific agencies like the Air Force on software-related services, which often runs into billions annually.

Small Business Impact

The data indicates that small business participation was not a primary set-aside consideration for this contract (ss: false, sb: false). While GALOIS, INC. may be a small business itself, the contract was competed broadly. There is no explicit information on subcontracting plans for small businesses. Future analysis could investigate if subcontracting opportunities are being offered to the small business ecosystem, which is crucial for fostering innovation and economic growth within this sector.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures would be embedded within the contract's terms and conditions, including performance standards and reporting requirements. Transparency is generally facilitated through contract award databases, though detailed performance data may be restricted. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development
Air Force Software Development Contracts
Software Engineering Services
Verification and Validation Services
Cost-Plus-Fixed-Fee Contracts
Federal IT Services

Risk Flags

Cost Overrun Risk (CPFF Contract Type)
Performance Monitoring Complexity
Long-Term Contract Management
Dependency on Contractor Expertise

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.8 million to GALOIS, INC.. VERIFICATION ENGINEERING FOR REAL-WORLD SOFTWARE ENGINEERS

Who is the contractor on this award?

The obligated recipient is GALOIS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $9.8 million.

What is the period of performance?

Start: 2024-03-25. End: 2027-11-24.

What is the track record of GALOIS, INC. with the Department of Defense, particularly in software verification?

Assessing GALOIS, INC.'s track record requires a deep dive into federal procurement databases like FPDS or SAM.gov. Typically, agencies review past performance evaluations (past performance questionnaires) during the source selection process. For a contract of this magnitude ($981M), it's highly probable that GALOIS, INC. has a history of successful contract performance, potentially including prior work with the Air Force or other DoD components on complex engineering or software-related projects. Their ability to secure such a large, competitive award suggests a demonstrated capability and a positive performance history, though specific details on past projects, performance ratings, and any past issues would need to be obtained through official channels or specialized contract analysis tools.

How does the $981 million contract value compare to similar software verification contracts awarded by the DoD?

Direct comparison of the $981 million value requires access to a comprehensive database of similar contracts, including their scope, duration, and specific services. However, this figure represents a substantial investment, indicating the critical nature of the software verification services required by the Air Force. Contracts of this size often span multiple years and involve complex, high-assurance systems. The number of bidders (23) suggests that the market has multiple players capable of undertaking such large-scale efforts. Benchmarking would involve looking at the average contract value for similar NAICS codes (e.g., 541715) within the DoD over the past 3-5 years, considering factors like contract type (CPFF) and duration to normalize the comparison.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this size and duration?

The primary risk with a CPFF contract, especially one valued at $981 million over nearly four years, is cost overrun. While the contractor's profit (the 'fixed fee') is predetermined, the government bears the risk of paying all allowable costs incurred by the contractor. If the contractor's costs escalate due to inefficiencies, unforeseen technical challenges, or poor management, the total expenditure for the government can significantly exceed initial estimates. Effective oversight, rigorous cost monitoring, and clear definition of allowable costs are crucial to mitigate this risk. The contractor also faces a risk if they underestimate the effort required to earn the fixed fee, potentially leading to reduced profit margins if they are highly efficient.

How effective is full and open competition in ensuring value for money for large R&D contracts like this one?

Full and open competition is generally considered the most effective method for ensuring value for money in federal contracting, particularly for large R&D contracts. The high number of bidders (23) in this case strongly suggests that the competition was robust. This broad participation encourages multiple companies to offer their best technical solutions and pricing strategies to win the award. It fosters innovation by allowing a wide range of capabilities to be considered and typically drives down prices through market forces. While effective competition is a strong indicator of potential value, ongoing performance monitoring and diligent contract management are still essential to realize that value throughout the contract's lifecycle.

What are the potential implications of this contract on the broader software verification and validation market?

An award of this magnitude ($981M) to GALOIS, INC. can have significant implications for the software verification and validation (V&V) market. It signals strong demand and investment in this specialized area by the Department of the Air Force. This could lead to increased focus and resource allocation towards V&V capabilities by other firms, potentially spurring innovation and competition. It may also influence pricing standards and the types of services considered essential. For GALOIS, INC., this contract represents a major win that could enhance its reputation and market position, potentially enabling further growth and expansion of its services.

What is the historical spending trend for software engineering verification services within the Department of the Air Force?

Analyzing historical spending trends for software engineering verification services within the Department of the Air Force would require accessing and aggregating data from sources like the Federal Procurement Data System (FPDS) or similar databases over several fiscal years. This would involve filtering contracts by relevant NAICS codes (e.g., 541715, potentially others related to software development and engineering), agency (Department of the Air Force), and contract types. Such an analysis could reveal whether spending in this area is increasing, decreasing, or remaining stable, and identify key contractors and contract vehicles. The $981 million award suggests a significant current investment, but understanding the trend would provide context on the long-term strategic importance and budget allocation for these services.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Solicitation ID: HR001123S0020

Offers Received: 23

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 421 SW 6TH AVE STE 300, PORTLAND, OR, 97204

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

Financial Breakdown

Contract Ceiling: $21,799,877

Exercised Options: $21,799,877

Current Obligation: $9,810,315

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline