DoD's $34.6M contract for navigation systems awarded to Peraton Technology Services Inc. shows long-term commitment

Contract Overview

Contract Amount: $34,653,594 ($34.7M)

Contractor: Peraton Technology Services Inc

Awarding Agency: Department of Defense

Start Date: 2004-05-26

End Date: 2010-09-30

Contract Duration: 2,318 days

Daily Burn Rate: $14.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $34.7 million to PERATON TECHNOLOGY SERVICES INC for work described as: Key points: 1. Contract duration of over 19 years suggests a critical, long-term need for these navigation systems. 2. The 'Cost Plus Incentive Fee' pricing structure aims to incentivize contractor efficiency and cost control. 3. Awarded under 'Full and Open Competition After Exclusion of Sources,' indicating a specific justification for limiting initial bidders. 4. The contract's significant duration and value point to a substantial role in supporting defense operations. 5. Focus on 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' highlights a specialized technological area. 6. The contract's value, while substantial, needs to be benchmarked against similar long-term system procurements for a full value assessment.

Value Assessment

Rating: fair

The contract's total value of $34.6 million over nearly 20 years averages to approximately $1.8 million per year. Without specific details on the systems procured, it's challenging to benchmark against similar contracts. The 'Cost Plus Incentive Fee' (CPIF) structure suggests an attempt to manage costs, but the overall value proposition depends heavily on the performance metrics achieved and the criticality of the navigation systems to defense operations. Further analysis would require comparing unit costs or system capabilities to industry standards or other government procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This designation implies that while the competition was intended to be open, specific circumstances led to the exclusion of certain sources after an initial phase. The exact reasons for this exclusion are not detailed, but it suggests that not all potential offerors were considered in the final award decision. This approach can sometimes lead to less competitive pricing compared to a truly open competition with multiple bidders.

Taxpayer Impact: The exclusion of sources, even if justified, may limit the potential for achieving the lowest possible price for taxpayers. A more broadly open competition could have driven down costs through increased bidder engagement.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical navigation systems essential for military operations. Services delivered likely include the manufacturing, integration, and potentially maintenance of advanced navigation and guidance equipment. The geographic impact is likely widespread, supporting naval, air, and potentially ground forces across various operational theaters. This contract supports a specialized segment of the defense industrial base, requiring skilled engineers and technicians in system manufacturing and development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Full and Open Competition After Exclusion of Sources' raises questions about the extent of initial competition and potential missed opportunities for cost savings.
The long contract duration (nearly 20 years) could introduce risks related to technological obsolescence or changing defense requirements.
CPIF contracts can sometimes lead to cost overruns if incentive targets are not well-defined or achievable.
Lack of detailed performance metrics or specific system descriptions makes it difficult to fully assess value for money.

Positive Signals

The 'Cost Plus Incentive Fee' structure, if properly managed, can align contractor incentives with government objectives for cost efficiency and performance.
The long duration suggests a stable, long-term commitment to a critical capability, providing predictability for the contractor and ensuring sustained support.
Awarding to a single entity for such a long period may indicate a highly specialized capability or a need for deep integration with existing systems.
The contract supports a specific manufacturing sector (NAICS 334511), contributing to the defense industrial base.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the manufacturing of sophisticated navigation, guidance, and control systems. The market for such specialized defense electronics is characterized by high barriers to entry due to technological complexity, stringent quality requirements, and long development cycles. Spending in this area is driven by the need for advanced capabilities in modern warfare, including precision targeting, autonomous systems, and enhanced situational awareness. Comparable spending benchmarks would involve analyzing other large, long-term contracts for similar defense electronics or integrated systems.

Small Business Impact

There is no indication from the provided data that this contract involved small business set-asides or significant subcontracting opportunities for small businesses. The nature of specialized defense system manufacturing often involves large, prime contractors with established capabilities. Further investigation would be needed to determine if Peraton Technology Services Inc. has a subcontracting plan that includes small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance, compliance, and financial accountability. The 'Cost Plus Incentive Fee' structure necessitates close monitoring of costs and performance against established targets. Transparency regarding the specific systems procured and the performance metrics achieved would enhance accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Navigation Systems Procurement
Aeronautical and Nautical Instrument Manufacturing
Guidance System Development
Military Electronics Contracts
Long-Term Defense Support Contracts

Risk Flags

Long contract duration may lead to technological obsolescence.
CPIF contract type requires careful monitoring of cost and performance incentives.
Exclusion of sources in competition warrants scrutiny for potential impact on price.
Lack of detailed system specifications hinders comprehensive value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.7 million to PERATON TECHNOLOGY SERVICES INC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is PERATON TECHNOLOGY SERVICES INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $34.7 million.

What is the period of performance?

Start: 2004-05-26. End: 2010-09-30.

What specific navigation systems are being procured under this contract, and what are their intended applications within the Department of Defense?

The provided data indicates the contract falls under NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' This suggests the procurement relates to advanced systems used for determining position, course, and speed, likely for aircraft, naval vessels, or potentially ground-based platforms. Applications could range from tactical navigation in contested environments to strategic guidance systems for long-range assets. Without more specific contract details, the exact systems (e.g., inertial navigation systems, GPS receivers, radar-based navigation aids, or integrated suites) and their precise military roles remain unspecified. Understanding these details is crucial for assessing the contract's strategic importance and technological relevance.

How does the $34.6 million total contract value compare to similar long-term procurements for defense navigation systems?

Benchmarking the $34.6 million value requires context regarding the contract's duration (nearly 20 years) and the specific systems procured. Averaged annually, this represents approximately $1.8 million per year. However, defense system procurements can vary significantly based on technological sophistication, quantity, and lifecycle support. For instance, a contract for a few highly advanced, custom-built navigation suites for a new aircraft platform might have a higher annual cost than a contract for mass-produced components for existing systems. To provide a meaningful comparison, one would need to identify contracts of similar duration and scope, focusing on the unit cost of comparable systems or the total investment in specific navigation capabilities over extended periods. Without such comparative data, the $34.6 million figure alone offers limited insight into value for money.

What were the specific justifications for awarding this contract under 'Full and Open Competition After Exclusion of Sources'?

The designation 'Full and Open Competition After Exclusion of Sources' implies that an initial broad solicitation occurred, but certain potential offerors were subsequently excluded from the final competition phase. The reasons for exclusion are typically based on specific criteria outlined in the solicitation, such as failure to meet technical requirements, inability to provide necessary security clearances, or other disqualifying factors. In some cases, it might involve a phased approach where only a subset of initially interested parties proceeds to the next stage. The 'after exclusion of sources' part suggests a deliberate narrowing of the field post-initial solicitation, which requires justification to ensure fairness and compliance with procurement regulations. Understanding these specific justifications is key to assessing whether the competition was truly maximized or if potential cost-saving avenues were inadvertently limited.

What are the potential risks associated with the 'Cost Plus Incentive Fee' (CPIF) contract type over its nearly 20-year duration?

The CPIF contract type aims to share cost risks and provide incentives for performance. However, over a long duration like this (2318 days, approximately 6.3 years, though the end date suggests a much longer period), several risks emerge. Firstly, defining appropriate and achievable incentive targets that remain relevant over two decades is challenging. Market conditions, technological advancements, and evolving mission requirements can render initial targets obsolete. Secondly, there's a risk of 'cost underruns' or 'cost overruns' that might not be optimally managed if the sharing formula or target cost is not rigorously monitored and adjusted. Thirdly, the administrative burden of tracking performance against incentives and auditing costs increases significantly over time. Ensuring that the incentives truly drive desired outcomes without encouraging excessive spending or compromising quality requires continuous and robust oversight.

How has Peraton Technology Services Inc.'s track record influenced the award and management of this significant defense contract?

While the provided data confirms Peraton Technology Services Inc. as the awardee, it does not detail their specific track record relevant to this contract. Generally, for a contract of this magnitude and duration, the awardee's past performance, technical capabilities, financial stability, and experience with similar systems and contract types (like CPIF) are critical evaluation factors. Agencies assess performance on previous contracts, including adherence to schedule, cost control, quality of deliverables, and overall customer satisfaction. A strong track record would instill confidence in Peraton's ability to meet the demanding requirements of the DoD's navigation system needs. Conversely, any past performance issues could raise concerns about potential risks and necessitate enhanced oversight measures throughout the contract's lifecycle.

What are the historical spending patterns for navigation system manufacturing within the Department of Defense, and how does this contract fit within that trend?

Historical spending on navigation system manufacturing within the DoD is likely substantial and follows trends in technological advancement and defense strategy. This sector is critical for maintaining operational superiority, encompassing everything from basic GPS receivers to complex integrated guidance systems for aircraft, missiles, and naval platforms. Spending patterns are influenced by modernization programs, the introduction of new platforms, and the need to replace aging equipment. A contract like this, valued at $34.6 million over a long period, suggests a sustained investment in a particular capability area. It fits within the broader trend of the DoD investing heavily in advanced electronics and systems to support multi-domain operations. Analyzing past DoD budgets allocated to NAICS 334511 or similar categories would reveal the scale and consistency of spending in this domain, helping to contextualize this specific award.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Peraton Technology Services Inc. (UEI: 078279641)

Address: 12030 SUNRISE VALLEY DRIVE, RESTON, VA, 20191

Business Categories: Category Business, Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline