DoD's $1.97B LTRS Contract with Range Generation Next LLC Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $1,973,469,363 ($2.0B)

Contractor: Range Generation Next LLC

Awarding Agency: Department of Defense

Start Date: 2014-11-06

End Date: 2026-01-31

Contract Duration: 4,104 days

Daily Burn Rate: $480.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE INCENTIVE

Sector: Other

Official Description: IGF::CT::IGF OPERATE, MAINTAIN, AND SUSTAIN LAUNCH AND TEST RANGE SYSTEM (LTRS)

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $1.97 billion to RANGE GENERATION NEXT LLC for work described as: IGF::CT::IGF OPERATE, MAINTAIN, AND SUSTAIN LAUNCH AND TEST RANGE SYSTEM (LTRS) Key points: 1. The contract's substantial value raises questions about cost-effectiveness given the fixed-price incentive structure. 2. While awarded under full and open competition, the long duration and specific nature of the services may limit future competitive opportunities. 3. Potential risks include cost overruns if incentives are not structured to align with taxpayer interests. 4. The Engineering Services sector is characterized by complex, long-term contracts, making benchmarks difficult but essential.

Value Assessment

Rating: questionable

The contract's total value of $1.97 billion over its potential duration is significant. While a fixed-price incentive structure aims to control costs, the effectiveness of these incentives in ensuring optimal value for taxpayer money requires further analysis, especially given the long performance period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, which is a positive indicator for price discovery. However, the long-term nature and specialized requirements of the Launch and Test Range System (LTRS) operations could present challenges for robust competition in future procurements.

Taxpayer Impact: The significant investment in LTRS operations necessitates careful oversight to ensure that the contract delivers necessary capabilities at a reasonable cost, maximizing the return on taxpayer investment.

Public Impact

Ensures critical infrastructure for space launch and testing operations. Supports national security and scientific research through reliable range services. Long-term commitment to a single contractor may impact innovation and cost reduction opportunities. Potential for cost growth exists if incentive clauses are not effectively managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration
Potential for cost overruns
Limited future competition
Lack of clear performance metrics

Positive Signals

Awarded under full and open competition
Fixed-price incentive structure
Essential national security service

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting critical infrastructure for launch and test ranges. Spending in this sector often involves long-term, high-value contracts due to the specialized nature of the services and the significant capital investment required for facilities and expertise.

Small Business Impact

The data provided does not indicate any specific provisions or set-asides for small businesses in this contract. Analysis of subcontracting opportunities for small businesses would be necessary to assess their participation and benefit.

Oversight & Accountability

The contract's long duration and substantial value warrant robust oversight from the Department of the Air Force and potentially the Inspector General to ensure performance standards are met and costs are managed effectively. Regular reviews of incentive clause performance are crucial.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Potential for cost overruns due to incentive structure
Risk of technological obsolescence over contract duration
Limited future competition due to specialized services
Need for strong oversight due to long-term, high-value nature
Uncertainty regarding small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.97 billion to RANGE GENERATION NEXT LLC. IGF::CT::IGF OPERATE, MAINTAIN, AND SUSTAIN LAUNCH AND TEST RANGE SYSTEM (LTRS)

Who is the contractor on this award?

The obligated recipient is RANGE GENERATION NEXT LLC.

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 $1.97 billion.

What is the period of performance?

Start: 2014-11-06. End: 2026-01-31.

How effectively are the incentive clauses structured to drive cost savings and performance improvements for the taxpayer, given the fixed-price incentive contract type?

The effectiveness of incentive clauses hinges on their specific design and the baseline targets set. Fixed-price incentive contracts aim to share cost savings and overruns between the government and contractor. For this contract, a detailed review of the target cost, incentive sharing ratio, and ceiling price is needed to determine if they adequately motivate Range Generation Next LLC to achieve optimal performance and cost efficiency, thereby maximizing taxpayer value.

What are the primary risks associated with the long-term nature (potentially through 2026) of this contract for maintaining and sustaining the Launch and Test Range System?

The primary risks of a long-term contract include potential technological obsolescence, reduced flexibility to adapt to evolving mission requirements, and diminished opportunities for competitive innovation. Furthermore, extended periods can increase the likelihood of cost creep if not meticulously managed, and contractor performance degradation over time is also a concern. Ensuring robust contract management and periodic reviews is vital to mitigate these risks.

How does the awarded price compare to industry benchmarks for similar launch and test range system operations and maintenance services?

Benchmarking this contract's price against industry standards is challenging due to the unique and specialized nature of launch and test range systems. However, a comparative analysis of the per-unit costs for key services (e.g., launch support, range operations, system maintenance) against publicly available data for similar, albeit less complex, aerospace or defense infrastructure contracts could provide some insight. The significant total value suggests a need for detailed cost breakdowns and justification.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 22265 PACIFIC BLVD, STERLING, VA, 20166

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,010,300,283

Exercised Options: $2,010,300,283

Current Obligation: $1,973,469,363

Actual Outlays: $59,835,749

Subaward Activity

Number of Subawards: 283

Total Subaward Amount: $398,639,348

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline