DoD's $41.8M Applied Research contract for target assessment tech shows strong competition but high R&D costs

Contract Overview

Contract Amount: $41,765,037 ($41.8M)

Contractor: Applied Research Associates, Inc.

Awarding Agency: Department of Defense

Start Date: 2023-04-01

End Date: 2026-03-02

Contract Duration: 1,066 days

Daily Burn Rate: $39.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: TARGET ASSESSMENT TECHNOLOGIES SUPPORT

Place of Performance

Location: ALBUQUERQUE, BERNALILLO County, NEW MEXICO, 87110

State: New Mexico Government Spending

Plain-Language Summary

Department of Defense obligated $41.8 million to APPLIED RESEARCH ASSOCIATES, INC. for work described as: TARGET ASSESSMENT TECHNOLOGIES SUPPORT Key points: 1. Contract awarded via full and open competition, indicating a robust market. 2. High cost per day suggests significant investment in specialized R&D. 3. Performance period of nearly three years allows for substantial project development. 4. Contract type (Cost Plus Fixed Fee) is common for R&D but can lead to cost overruns. 5. Focus on physical, engineering, and life sciences R&D aligns with defense modernization needs. 6. Sole awardee suggests specialized capabilities required for this specific target assessment technology.

Value Assessment

Rating: fair

The total contract value of $41.8 million over 1066 days results in a daily cost of approximately $39,179. This daily rate is high, reflecting the specialized nature of Research and Development in physical, engineering, and life sciences. Benchmarking against similar R&D contracts is challenging due to the unique technical requirements, but the cost appears to be within a reasonable range for cutting-edge defense technology development. The Cost Plus Fixed Fee structure, while allowing flexibility, necessitates close monitoring to ensure cost efficiency.

Cost Per Unit: Approximately $39,179 per day

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple capable vendors were able to bid. The presence of a single awardee, despite open competition, indicates that Applied Research Associates, Inc. likely possesses unique or highly specialized expertise required for this particular target assessment technology. The competitive bidding process should have helped in establishing a fair market price, although the specialized nature of the work might limit the number of truly competitive proposals.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it fosters a competitive environment that can drive down prices and encourage innovation. However, for highly specialized R&D, the number of truly competitive bids may be limited, potentially impacting the full benefit of price discovery.

Public Impact

The Department of Defense benefits from advancements in target assessment technologies, enhancing its operational capabilities. The contract supports research and development in physical, engineering, and life sciences, potentially leading to new defense applications. The primary geographic impact is likely within the United States, where the research and development activities will be conducted. The contract may have implications for a specialized scientific and engineering workforce, requiring expertise in advanced technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize cost overruns if not closely managed.
The specialized nature of R&D may limit the pool of truly competitive bidders.
High daily cost warrants scrutiny to ensure value for taxpayer money.

Positive Signals

Awarded through full and open competition, indicating a healthy market for these services.
The long performance period allows for thorough development and testing of new technologies.
Focus on R&D aligns with strategic defense modernization goals.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences (NAICS 541712). This sector is critical for defense modernization, enabling the development of advanced capabilities. Spending in this area is often characterized by high upfront investment, long development cycles, and significant intellectual property generation. Comparable spending benchmarks are difficult to establish precisely due to the unique technical requirements of target assessment technologies, but significant government investment in defense R&D is a consistent trend.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the specialized nature of advanced R&D in defense, it is common for prime contracts to be awarded to larger, established firms with the necessary infrastructure and expertise. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to engage the small business ecosystem in supporting roles.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Threat Reduction Agency (DTRA) within the Department of Defense. The Cost Plus Fixed Fee (CPFF) contract type necessitates rigorous financial oversight to monitor expenditures against the fixed fee and ensure compliance with the contract terms. Transparency is typically maintained through regular reporting requirements from the contractor and periodic reviews by the contracting officer. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Threat Reduction Agency Research and Development Programs
Advanced Technology Development Contracts
Department of Defense Research and Engineering
Physical and Engineering Sciences Research

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
High daily cost warrants close monitoring for value for money.
Specialized R&D may limit the number of truly competitive bidders.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.8 million to APPLIED RESEARCH ASSOCIATES, INC.. TARGET ASSESSMENT TECHNOLOGIES SUPPORT

Who is the contractor on this award?

The obligated recipient is APPLIED RESEARCH ASSOCIATES, 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 $41.8 million.

What is the period of performance?

Start: 2023-04-01. End: 2026-03-02.

What is the track record of Applied Research Associates, Inc. with the Department of Defense, particularly in R&D contracts?

Applied Research Associates, Inc. (ARA) has a history of working with the Department of Defense on various research and development projects. While specific details on their track record for this exact type of target assessment technology are not provided in this data snippet, ARA is known for its expertise in areas such as advanced materials, structural engineering, and simulation. Their past performance with DoD agencies would typically be assessed during the procurement process, looking at their ability to deliver on time, within budget, and to the required technical specifications. A review of federal procurement databases would likely reveal numerous other contracts awarded to ARA by various branches of the military and defense agencies, providing a broader picture of their capabilities and reliability in supporting defense research initiatives.

How does the daily cost of this contract compare to other similar R&D efforts within the DoD?

The daily cost of approximately $39,179 for this contract is substantial, reflecting the specialized and often cutting-edge nature of Research and Development in physical, engineering, and life sciences. Benchmarking this figure against 'similar' contracts is inherently challenging because R&D projects vary widely in complexity, scope, and required expertise. However, for advanced defense R&D, particularly involving novel technologies like target assessment systems, such daily rates are not uncommon. Contracts focused on basic research or less complex engineering tasks would likely have lower daily costs. Conversely, projects requiring highly specialized personnel, unique facilities, or extensive testing might incur even higher daily expenditures. The Cost Plus Fixed Fee (CPFF) structure also means that while the fixed fee is set, the 'cost' portion can fluctuate, making direct daily cost comparisons less straightforward than fixed-price contracts.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, especially for Research and Development (R&D), revolve around cost control and contractor incentives. For the government, the main risk is that the contractor may have less incentive to control costs rigorously because the government agrees to reimburse allowable costs. While the fixed fee provides some incentive for efficiency, it's primarily tied to completing the work rather than minimizing its cost. This can lead to cost overruns if the contractor's actual costs exceed initial estimates significantly. For the contractor, the risk lies in accurately estimating the costs to ensure the fixed fee is profitable. If costs are underestimated, the contractor may incur losses. Effective oversight, clear definition of allowable costs, and robust progress monitoring are crucial to mitigate these risks for the government.

What is the expected impact of this contract on the development of future defense technologies?

This contract is expected to have a significant impact on the development of future defense technologies by advancing the capabilities in target assessment. Improved target assessment is crucial for enhancing the precision, effectiveness, and safety of various military operations, from intelligence gathering to weapons deployment. The research funded under this contract could lead to breakthroughs in sensor technology, data analysis algorithms, or integrated systems that provide more accurate and timely information about potential threats or targets. These advancements can influence the design of next-generation platforms, munitions, and command-and-control systems, thereby shaping the future operational landscape and maintaining a technological edge for the U.S. military.

How has federal spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' category evolved over recent years?

Federal spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' category (NAICS 541712) has generally seen consistent or increasing investment, particularly driven by national security and technological advancement priorities. Agencies like the Department of Defense, Department of Energy, and National Science Foundation are major contributors to this spending. Over recent years, there has been a growing emphasis on areas such as artificial intelligence, advanced materials, cybersecurity, and biotechnology, all of which fall under this broad category. While specific year-over-year fluctuations can occur due to budget cycles and shifting policy priorities, the overall trend indicates a sustained commitment to funding scientific and engineering research deemed critical for economic competitiveness and national security. This particular contract aligns with that ongoing trend of investing in advanced R&D.

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

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HDTRA123R0034

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 4300 SAN MATEO BLVD NE STE A220, ALBUQUERQUE, NM, 87110

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

Financial Breakdown

Contract Ceiling: $98,904,238

Exercised Options: $79,637,478

Current Obligation: $41,765,037

Actual Outlays: $5,560,128

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $20,113,712

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDTRA114D0003

IDV Type: IDC

Timeline