DoD's $18.5M R&D Contract with PTC Therapeutics: A Cost-Plus Fixed Fee Analysis
Contract Overview
Contract Amount: $18,554,392 ($18.6M)
Contractor: PTC Therapeutics, Inc.
Awarding Agency: Department of Defense
Start Date: 2006-09-22
End Date: 2009-09-21
Contract Duration: 1,095 days
Daily Burn Rate: $16.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 130
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: PROGRAM FUNDING
Place of Performance
Location: SOUTH PLAINFIELD, MIDDLESEX County, NEW JERSEY, 07080
Plain-Language Summary
Department of Defense obligated $18.6 million to PTC THERAPEUTICS, INC. for work described as: PROGRAM FUNDING Key points: 1. Contract awarded for Research and Development in Physical, Engineering, and Life Sciences. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 4. The award value is $18.55 million over a 3-year period. 5. The contractor is PTC Therapeutics, Inc., located in New Jersey.
Value Assessment
Rating: fair
The Cost Plus Fixed Fee (CPFF) contract type carries inherent risk for cost overruns. Without detailed cost breakdowns and robust oversight, it's difficult to assess if the fixed fee is appropriate for the effort. Benchmarking against similar R&D contracts is challenging without more specific performance data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete. This method generally promotes price discovery and can lead to more competitive pricing, although the CPFF structure can complicate direct price comparisons.
Taxpayer Impact: Taxpayer funds are being used for R&D. The CPFF structure necessitates careful oversight to ensure cost efficiency and prevent unnecessary expenditure, maximizing the value derived from the investment.
Public Impact
Investment in advanced research and development by the Department of Defense. Potential for breakthroughs in physical, engineering, or life sciences relevant to defense threats. Economic impact in New Jersey through contract award to a local company. Transparency in the procurement process due to full and open competition.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee structure can incentivize higher costs.
- Contract duration of 3 years may not be sufficient for complex R&D.
- Lack of specific performance metrics makes value assessment difficult.
Positive Signals
- Awarded through full and open competition.
- Focus on critical R&D for defense.
- Contractor located in a US state.
Sector Analysis
This contract falls under the Research and Development sector, specifically NAICS code 541710. Spending in this sector is crucial for technological advancement and national security. Benchmarks for R&D contracts vary widely based on complexity and scope, but $18.55 million is a significant investment.
Small Business Impact
The data indicates this contract was not awarded to a small business (ss: false). Therefore, there is no direct benefit to small businesses from this specific award, though subcontractors could potentially be involved.
Oversight & Accountability
The use of a Cost Plus Fixed Fee contract requires diligent oversight from the Defense Threat Reduction Agency to monitor costs, ensure progress, and verify that the fixed fee remains justified throughout the contract's lifecycle. Accountability rests on the agency's ability to manage contractor performance effectively.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences
- Department of Defense Contracting
- Defense Threat Reduction Agency Programs
Risk Flags
- Potential for cost overruns due to CPFF structure.
- Lack of specific performance metrics for R&D.
- Contract duration may be insufficient for complex research.
- No indication of small business participation.
Tags
research-and-development-in-the-physical, department-of-defense, nj, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $18.6 million to PTC THERAPEUTICS, INC.. PROGRAM FUNDING
Who is the contractor on this award?
The obligated recipient is PTC THERAPEUTICS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Threat Reduction Agency).
What is the total obligated amount?
The obligated amount is $18.6 million.
What is the period of performance?
Start: 2006-09-22. End: 2009-09-21.
How does the fixed fee compare to the estimated costs and the complexity of the R&D effort?
Assessing the appropriateness of the fixed fee without detailed cost breakdowns and performance milestones is challenging. The CPFF structure means the fee is set, but the government bears the cost risk. A thorough review would involve comparing the fee against industry standards for similar R&D projects and evaluating the contractor's historical performance and cost management.
What are the specific R&D objectives and how will their achievement be measured to ensure value for money?
The contract's effectiveness hinges on clearly defined R&D objectives and measurable outcomes. Without specific performance metrics or deliverables outlined in the provided data, it's difficult to gauge the potential return on investment. The Defense Threat Reduction Agency must have robust systems in place to track progress against these objectives and ensure taxpayer funds are used efficiently.
What is the potential for cost overruns given the CPFF contract type and the nature of R&D?
The Cost Plus Fixed Fee structure inherently carries a risk of cost overruns, as the government is responsible for all allowable costs. For R&D, which is often unpredictable, this risk is amplified. Effective oversight, stringent cost controls, and clear communication channels between the agency and PTC Therapeutics are critical to mitigating these risks and ensuring the project stays within budget expectations.
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 › N – Health R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 130
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 100 CORPORATE CT, SOUTH PLAINFIELD, NJ, 07080
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $18,613,510
Exercised Options: $18,613,510
Current Obligation: $18,554,392
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2006-09-22
Current End Date: 2009-09-21
Potential End Date: 2009-09-21 00:00:00
Last Modified: 2024-02-23
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