DoD's $43.5M R&D contract with SAIC lacked competition, raising value concerns

Contract Overview

Contract Amount: $43,547,294 ($43.5M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Defense

Start Date: 2009-03-31

End Date: 2011-06-30

Contract Duration: 821 days

Daily Burn Rate: $53.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: ADVISORY AND ASSISTANCE SERVICE BRIDGE CONTRACT

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $43.5 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: ADVISORY AND ASSISTANCE SERVICE BRIDGE CONTRACT Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending without strict cost controls. 2. Lack of competition suggests potential for inflated pricing and reduced value for taxpayer dollars. 3. The contract's duration of 821 days indicates a significant, long-term commitment of resources. 4. Performance context is limited due to the 'advisory and assistance' nature of the service. 5. This contract falls within the R&D sector, specifically focusing on physical, engineering, and life sciences. 6. The absence of small business set-asides means limited direct benefit to smaller enterprises.

Value Assessment

Rating: questionable

Benchmarking the value of this $43.5 million contract is challenging due to the 'advisory and assistance' nature and the lack of competitive bidding. Cost-plus-fixed-fee contracts can sometimes lead to higher costs if not managed rigorously, as the contractor is reimbursed for expenses plus a fixed fee. Without comparable contract data or a competitive process to establish a market price, it's difficult to definitively assess if the pricing represents good value for money. The absence of a clear per-unit cost metric further complicates a precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This indicates that the Department of Defense likely identified Science Applications International Corporation (SAIC) as the only capable or appropriate source for the required advisory and assistance services. The lack of competition limits the opportunity for price discovery through a bidding process, potentially leading to less favorable pricing than if multiple vendors had vied for the contract.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding, potentially resulting in higher overall expenditure for the services rendered.

Public Impact

The primary beneficiary is the Department of Defense, which receives advisory and assistance services to support its research and development efforts. The services delivered are likely to be in the realm of technical, scientific, or management advice related to physical, engineering, and life sciences R&D. The geographic impact is centered in California, where the contract is managed by the Defense Contract Management Agency. Workforce implications may include the employment of specialized personnel by SAIC to fulfill the contract's requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee structure can incentivize increased spending if not closely monitored.
Limited transparency on specific deliverables and performance metrics for advisory services.
Absence of small business participation opportunities.

Positive Signals

Awarded to a large, established contractor (SAIC) with significant experience.
Contract supports critical R&D functions within the Department of Defense.
Fixed fee component provides some level of cost predictability for the contractor's profit.

Sector Analysis

The contract falls under the Research and Development (R&D) sector, specifically classified under NAICS code 541712 for Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology). This sector is characterized by innovation and scientific advancement, often involving significant government investment. Comparable spending in this sector can vary widely depending on the specific research area and agency. However, large-scale R&D contracts, especially those supporting defense initiatives, represent a substantial portion of federal R&D outlays.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) field is also false, suggesting no specific requirement for the prime contractor to subcontract with small businesses. This means that opportunities for small businesses to participate in this contract, either as prime contractors or subcontractors, were likely minimal or non-existent, potentially limiting the impact on the small business ecosystem for this particular award.

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 'advisory and assistance' nature of the service might imply less direct oversight of tangible outputs compared to manufacturing or construction contracts. Transparency is moderate, with basic contract details available, but specific performance metrics and detailed spending breakdowns may be less accessible to the public. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Science and Technology Support Services
Federal Advisory Services Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Contracts

Risk Flags

Lack of Competition
Cost-Plus Contract Type
Advisory and Assistance Services
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.5 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. ADVISORY AND ASSISTANCE SERVICE BRIDGE CONTRACT

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $43.5 million.

What is the period of performance?

Start: 2009-03-31. End: 2011-06-30.

What is the track record of Science Applications International Corporation (SAIC) with the Department of Defense?

Science Applications International Corporation (SAIC) is a major government contractor with a long history of serving the Department of Defense (DoD) and other federal agencies. They provide a wide range of services, including IT, engineering, cybersecurity, and logistics. SAIC has secured numerous large contracts with the DoD over the years, often in complex and specialized areas. Their track record generally indicates significant experience and capability in supporting defense missions. However, like any large contractor, they have also faced scrutiny regarding contract performance and pricing on specific awards. Analyzing their overall performance requires looking at individual contract data and reviews.

How does the cost-plus-fixed-fee (CPFF) contract type typically impact value for money compared to other contract types?

Cost-plus-fixed-fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves significant uncertainty, such as in research and development. While CPFF provides flexibility, it carries a higher risk of cost overruns compared to fixed-price contracts, as the government bears the brunt of cost increases. The fixed fee, however, provides some incentive for the contractor to control costs to maximize their profit margin relative to the fee. Value for money can be compromised if cost controls are weak or if the initial cost estimates are inaccurate. Fixed-price contracts, conversely, offer greater price certainty for the buyer but may require a more clearly defined scope and can lead to contractor risk if costs escalate unexpectedly.

What are the primary risks associated with sole-source contracts for the government?

Sole-source contracts, awarded without competition, present several risks for the government. The most significant risk is the potential for inflated pricing, as the absence of competing bids removes a key mechanism for price discovery and negotiation. This can lead to taxpayers paying more than necessary for goods or services. Another risk is reduced innovation and efficiency; without competitive pressure, contractors may have less incentive to find cost-saving measures or develop novel solutions. Furthermore, sole-source awards can create dependency on a single vendor, limiting future flexibility and potentially hindering the development of a broader market base. Ensuring fair and reasonable pricing in sole-source situations requires robust government negotiation and cost analysis capabilities.

What does the 'advisory and assistance' service classification imply about contract oversight and performance measurement?

Contracts classified as 'advisory and assistance' (A&A) typically involve providing expertise, analysis, or recommendations rather than producing tangible goods or direct operational services. This classification can make oversight and performance measurement more challenging. Instead of tracking physical deliverables or service completion rates, oversight often focuses on the quality of advice, the timeliness of reports, and the contractor's responsiveness. Performance metrics might be qualitative, such as adherence to deadlines for providing recommendations or the perceived usefulness of the guidance. This can require a higher degree of trust and subjective judgment from the government contracting officer, making it crucial to have clear statements of work and well-defined expectations for the advisory support.

How does the duration of a contract (821 days) influence its overall financial impact?

A contract duration of 821 days (approximately 2.25 years) signifies a substantial, long-term commitment of federal funds. Longer contract durations allow for more predictable resource allocation and can facilitate deeper integration of contractor support into government operations. However, they also increase the total financial exposure. For cost-reimbursement contracts like CPFF, longer durations provide more opportunities for costs to accumulate. Furthermore, extended periods increase the risk of scope creep, changes in requirements, or market shifts that might render the original contract terms less optimal. Effective management and periodic reviews are essential throughout the contract's life to ensure continued alignment with government needs and fiscal responsibility.

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: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA881009R0002

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 185 S DOUGLOUS ST, EL SEGUNDO, CA, 90245

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

Financial Breakdown

Contract Ceiling: $44,115,621

Exercised Options: $44,115,621

Current Obligation: $43,547,294

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline