Leidos Inc. awarded $77.8M for EDM-1 NRE, with a 2697-day duration and Cost Plus Incentive Fee contract type
Contract Overview
Contract Amount: $77,860,869 ($77.9M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2018-08-13
End Date: 2025-12-31
Contract Duration: 2,697 days
Daily Burn Rate: $28.9K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: NRE FOR EDM-1
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $77.9 million to LEIDOS, INC. for work described as: NRE FOR EDM-1 Key points: 1. The contract's NRE (Non-Recurring Engineering) focus suggests investment in foundational development rather than ongoing services. 2. A Cost Plus Incentive Fee (CPIF) structure incentivizes the contractor to manage costs while meeting performance targets. 3. The long duration of 2697 days (over 7 years) indicates a significant, long-term project with potential for evolving requirements. 4. The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' suggesting a specific justification for limiting initial bidders. 5. The North American Industry Classification System (NAICS) code 334511 points to the manufacturing of search, detection, navigation, guidance, and aeronautical/nautical systems. 6. The award to Leidos, Inc., a major defense contractor, places this within the context of established industry players. 7. The contract's value of $77.8 million is substantial, reflecting the complexity and scope of the NRE effort.
Value Assessment
Rating: fair
Benchmarking the value of NRE contracts is challenging due to their unique, non-recurring nature. The $77.8 million award over nearly 7 years suggests a significant investment in development. Without specific deliverables or performance metrics, a direct comparison to similar contracts is difficult. The CPIF contract type implies that the final cost could deviate from the initial estimate based on performance outcomes, making a definitive value assessment premature.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This specific procurement method indicates that while the initial solicitation was open, certain sources were excluded, possibly due to specific technical capabilities, prior work, or security requirements. The number of bidders is not specified, but the exclusion suggests a narrowed field from the outset, potentially impacting the breadth of price discovery compared to a truly unrestricted full and open competition.
Taxpayer Impact: The limited competition may have resulted in a higher price for taxpayers than if a broader range of potential offerors had been considered. However, the exclusion might have been justified by the need for specialized expertise, potentially leading to a more effective solution.
Public Impact
The primary beneficiaries are likely the Department of the Navy and potentially other branches of the Department of Defense requiring advanced navigation and guidance systems. The services delivered involve the Non-Recurring Engineering (NRE) for the EDM-1 system, focusing on initial design, development, and testing. The geographic impact is primarily within the United States, supporting defense operations and potentially impacting the supply chain for specialized components. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in the development and production of advanced systems.
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 true competition and potential missed opportunities for other capable vendors.
- The Cost Plus Incentive Fee (CPIF) contract type, while incentivizing performance, can lead to cost overruns if not closely monitored, especially over a long contract duration.
- The NRE nature of the contract means the initial investment is high, and the ultimate value realization depends on the successful integration and deployment of the EDM-1 system.
- The long contract duration (2697 days) increases the risk of scope creep, changing technological landscapes, and potential cost escalations.
Positive Signals
- The CPIF contract structure aims to align contractor and government interests by providing incentives for cost savings and performance improvements.
- Awarding to a known entity like Leidos, Inc. may leverage existing expertise and established relationships, potentially streamlining development.
- The focus on NRE suggests a strategic investment in developing critical, potentially proprietary, technology for national defense.
- The contract's value and duration indicate a significant commitment to advancing naval systems technology.
Sector Analysis
This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of advanced navigation, guidance, and detection systems. The market for such specialized defense electronics is characterized by high barriers to entry, significant R&D investment, and a limited customer base, primarily government agencies. Comparable spending benchmarks would involve other large-scale NRE contracts for complex defense systems, often awarded through competitive processes that may include source exclusions based on unique technical requirements.
Small Business Impact
The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large-value contract for specialized defense systems, it is unlikely that small businesses would be primary awardees, though they may participate as subcontractors. The implications for the small business ecosystem depend on Leidos, Inc.'s subcontracting plans, which are not detailed here. Without specific set-aside goals or reporting, the direct impact on small businesses is uncertain.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates robust financial oversight to track costs and verify performance against incentive targets. Transparency is typically managed through contract reporting mechanisms and program reviews. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.
Related Government Programs
- Naval Systems Development
- Defense Electronics Manufacturing
- Navigation and Guidance Systems
- Advanced Sensor Technology
- Cost Plus Incentive Fee Contracts
- Non-Recurring Engineering Contracts
Risk Flags
- Limited Competition Justification
- Long Contract Duration Risk
- Cost Plus Incentive Fee Oversight Needs
- NRE Investment Value Realization
Tags
defense, department-of-the-navy, leidos-inc, cost-plus-incentive-fee, definitive-contract, non-recurring-engineering, navigation-guidance-systems, limited-competition, virginia, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $77.9 million to LEIDOS, INC.. NRE FOR EDM-1
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $77.9 million.
What is the period of performance?
Start: 2018-08-13. End: 2025-12-31.
What is the specific nature of the 'EDM-1' system being developed, and what are its intended operational capabilities?
The provided data does not specify the exact nature or intended capabilities of the 'EDM-1' system. However, the NAICS code 334511 ('Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing') strongly suggests that EDM-1 is a component or system related to naval operations, likely involving advanced sensors, navigation, or guidance technology. The 'NRE' (Non-Recurring Engineering) designation indicates that this contract is for the initial research, design, development, and testing phases, rather than the production of a fully realized system. Further details on the system's purpose would typically be found in the contract's Statement of Work (SOW) or technical exhibits, which are not included in the provided data.
How does the 'Full and Open Competition After Exclusion of Sources' procurement method typically impact pricing and innovation compared to unrestricted full and open competition?
The 'Full and Open Competition After Exclusion of Sources' method, while still a form of competition, inherently limits the pool of potential bidders. This exclusion is usually based on specific justifications, such as unique technical capabilities, proprietary knowledge, or security requirements. Compared to unrestricted full and open competition, this method may lead to less aggressive price competition because fewer vendors are vying for the contract. However, it can also foster innovation by allowing specialized firms with unique expertise to compete, potentially leading to more tailored and advanced solutions. The impact on taxpayers is a trade-off between potentially higher initial costs due to reduced competition and the benefit of acquiring highly specialized capabilities that might not be available otherwise.
What are the key performance indicators (KPIs) and incentive targets associated with the Cost Plus Incentive Fee (CPIF) structure for this contract?
The provided data does not detail the specific Key Performance Indicators (KPIs) or incentive targets for this Cost Plus Incentive Fee (CPIF) contract. In a CPIF contract, the government and contractor agree on a target cost, a target profit, and a price ceiling. The final profit is adjusted based on the contractor's performance relative to predetermined targets, which could include factors like meeting technical specifications, adhering to schedules, or achieving cost efficiencies. The incentive fee is designed to motivate the contractor to perform better than the target. Without access to the contract's Statement of Work (SOW) and the specific incentive clauses, it's impossible to identify the precise KPIs or the structure of the incentive fees.
What is Leidos, Inc.'s track record with similar large-scale NRE contracts, particularly within the Department of the Navy?
Leidos, Inc. has a significant track record as a major defense contractor, frequently engaging in large-scale research, development, and engineering (NRE) contracts across various military branches, including the Department of the Navy. They are known for their work in areas such as command and control, intelligence, surveillance, reconnaissance, and complex systems integration. While specific details on their performance for 'EDM-1 NRE' are not provided, their history suggests they possess the technical expertise and capacity to handle such complex projects. Past performance evaluations and contract awards databases would offer more granular insights into their specific successes and challenges with similar NRE efforts for the Navy.
How does the $77.8 million award compare to historical spending on similar navigation and guidance system development contracts by the Department of the Navy?
The $77.8 million award for NRE of the EDM-1 system is a substantial figure, reflecting the complexity and long-term nature of developing advanced defense technology. To compare this to historical spending, one would need to analyze the Department of the Navy's procurement history for similar systems, such as radar, sonar, inertial navigation units, or fire control systems, particularly during their NRE phases. The market for such specialized defense electronics is characterized by high R&D costs and long development cycles. Without specific comparable contract data (e.g., contract type, scope, duration, and specific system function), it's difficult to definitively state whether $77.8 million is high or low. However, it aligns with the typical investment required for cutting-edge defense systems development.
What are the potential risks associated with the 2697-day contract duration, and what mitigation strategies are likely in place?
A contract duration of 2697 days (over 7 years) presents several risks, including technological obsolescence, scope creep, evolving requirements, and potential cost increases due to inflation or unforeseen challenges. Mitigation strategies typically involve robust contract management, including regular performance reviews, phased development approaches, and mechanisms for formally managing changes to the scope of work. The CPIF structure itself can help mitigate cost risks by incentivizing efficiency. Furthermore, the Department of the Navy likely employs program managers and technical experts to continuously assess the project's alignment with strategic goals and technological advancements, allowing for adaptive management throughout the contract's lifecycle.
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: COMM/DETECT/COHERENT RADIATION
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: ALTERNATIVE SOURCES
Solicitation ID: N0002416R6247
Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 11955 FREEDOM DR, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $78,182,310
Exercised Options: $78,182,310
Current Obligation: $77,860,869
Actual Outlays: $3,304,838
Subaward Activity
Number of Subawards: 61
Total Subaward Amount: $18,106,168
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2018-08-13
Current End Date: 2025-12-31
Potential End Date: 2026-08-25 00:00:00
Last Modified: 2025-11-17
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