DoD's $64M Predictive Engineering Contract with Torch Technologies Faces Scrutiny for Cost and Competition

Contract Overview

Contract Amount: $64,049,839 ($64.0M)

Contractor: Torch Technologies Inc

Awarding Agency: Department of Defense

Start Date: 2017-10-19

End Date: 2023-03-15

Contract Duration: 1,973 days

Daily Burn Rate: $32.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: PREDICTIVE ENGINEERING IGF::OT::IGF

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $64.0 million to TORCH TECHNOLOGIES INC for work described as: PREDICTIVE ENGINEERING IGF::OT::IGF Key points: 1. The contract awarded to Torch Technologies Inc. for predictive engineering services is a significant expenditure within the R&D sector. 2. Competition was initially full and open after exclusion of sources, but the final award details warrant further examination. 3. Potential risks include cost overruns given the Cost Plus Fixed Fee structure and the contract's extended duration. 4. The R&D sector, particularly in defense, often involves complex projects where cost efficiency can be challenging to maintain.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, can lead to higher costs if not managed tightly. The awarded amount of $64M over nearly 2000 days suggests a substantial investment, and without clear benchmarks for similar predictive engineering projects, assessing value is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating an initial broad competition that was later narrowed. This method can sometimes limit the pool of potential bidders, potentially impacting price discovery and overall cost-effectiveness.

Taxpayer Impact: The significant taxpayer investment of $64M necessitates robust oversight to ensure efficient use of funds and delivery of intended research and development outcomes.

Public Impact

Taxpayers are funding advanced research and development in missile defense, aiming to enhance national security capabilities. The contract supports a specific company, Torch Technologies Inc., contributing to economic activity within its operational region. The extended duration of the contract suggests a long-term commitment to a particular technological development path.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee structure can incentivize higher spending.
Extended contract duration may lead to scope creep or evolving requirements.
Limited details on specific deliverables and success metrics.
Potential for cost overruns given the nature of R&D.

Positive Signals

Awarded under full and open competition, suggesting initial market engagement.
Contract supports critical defense capabilities for the Missile Defense Agency.
Torch Technologies Inc. is a known entity in the defense sector.

Sector Analysis

This contract falls under Research and Development in the Physical, Engineering, and Life Sciences. Spending in this sector, especially for defense applications like missile defense, is often characterized by high costs, long development cycles, and significant technological uncertainty.

Small Business Impact

The data indicates this contract was awarded to Torch Technologies Inc., a specific company. There is no explicit information provided regarding subcontracting opportunities for small businesses within this contract's scope.

Oversight & Accountability

The contract's duration and CPFF structure necessitate strong oversight from the Department of Defense and the Missile Defense Agency to ensure cost control, adherence to scope, and achievement of research objectives. Regular performance reviews and audits would be crucial.

Related Government Programs

Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
Department of Defense Contracting
Missile Defense Agency Programs

Risk Flags

Cost Plus Fixed Fee contract type.
Extended contract duration (1973 days).
Potential for limited competition due to 'exclusion of sources'.
Lack of specific performance metrics in provided data.
Nature of R&D contracts can lead to cost uncertainty.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $64.0 million to TORCH TECHNOLOGIES INC. PREDICTIVE ENGINEERING IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is TORCH TECHNOLOGIES INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $64.0 million.

What is the period of performance?

Start: 2017-10-19. End: 2023-03-15.

What specific predictive engineering capabilities were developed or enhanced under this contract, and how do they demonstrably improve missile defense systems?

The contract aimed to advance predictive engineering techniques for missile defense applications. While specific capabilities are not detailed, the goal is likely to improve system reliability, reduce maintenance costs, and enhance threat response through advanced modeling and simulation. Demonstrable improvements would be measured by reduced system failures, faster detection times, or more accurate targeting predictions in operational environments.

Given the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause, what was the rationale for excluding specific sources initially, and did this impact the final pricing?

The 'exclusion of sources' clause typically implies that certain potential bidders were identified and then excluded from the initial solicitation phase, possibly due to specific technical requirements, security clearances, or prior performance. The rationale behind this exclusion is critical for understanding if it limited competition and potentially led to less competitive pricing. Without further details on the excluded parties and the justification, it's difficult to definitively assess the pricing impact.

How effectively were costs managed under the Cost Plus Fixed Fee structure, and were there significant deviations from the projected budget or fixed fee?

The Cost Plus Fixed Fee (CPFF) structure means the contractor is reimbursed for allowable costs plus a predetermined fixed fee. Effectiveness in cost management hinges on the government's ability to audit and control the 'costs' portion. Significant deviations would indicate potential inefficiencies or scope changes. Analyzing the final cost versus the estimated cost, and the fixed fee earned relative to performance, is essential to gauge cost management effectiveness.

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ014716R0002

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 4090 MEMORIAL PARKWAY S, HUNTSVILLE, AL, 35802

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

Financial Breakdown

Contract Ceiling: $97,895,258

Exercised Options: $74,645,324

Current Obligation: $64,049,839

Actual Outlays: $3,300,475

Subaward Activity

Number of Subawards: 148

Total Subaward Amount: $202,365,191

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline