DoD's $50M guidance development contract awarded to Charles Stark Draper Laboratory raises questions on competition and value

Contract Overview

Contract Amount: $50,259,257 ($50.3M)

Contractor: THE Charles Stark Draper Laboratory, Inc.

Awarding Agency: Department of Defense

Start Date: 2014-09-30

End Date: 2017-09-29

Contract Duration: 1,095 days

Daily Burn Rate: $45.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: FIGF::OT::IGF FY15 GUIDANCE DEVELOPMENT

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02139

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $50.3 million to THE CHARLES STARK DRAPER LABORATORY, INC. for work described as: FIGF::OT::IGF FY15 GUIDANCE DEVELOPMENT Key points: 1. The contract's value, while significant, lacks clear justification for its sole-source award. 2. Performance risk appears moderate given the nature of guidance development. 3. The contractor has a history of significant federal awards, suggesting established capabilities. 4. The contract's duration and cost-plus structure warrant scrutiny for potential cost overruns. 5. Sector positioning is within specialized engineering services for defense applications. 6. The absence of competition limits price discovery and potentially inflates costs.

Value Assessment

Rating: questionable

The contract's total value of $50.26 million over three years for guidance development services is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus incentive fee (CPIF) structure, while common for R&D, can lead to higher costs if not tightly managed. The obligated amount of $45.9 million suggests significant upfront commitment. Further analysis is needed to determine if the pricing reflects fair and reasonable value given the lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This significantly limits the opportunity for other qualified contractors to bid, which can stifle innovation and lead to higher prices. The justification for a sole-source award, if provided, would be critical to understanding why full and open competition was not pursued. The lack of bidders means there is no direct comparison of capabilities or pricing from multiple sources.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, the government cannot be assured it received the best possible price or value for these critical engineering services.

Public Impact

The primary beneficiary is the Department of the Navy, receiving specialized engineering services for guidance development. The services delivered are crucial for the advancement and maintenance of defense systems. The geographic impact is likely concentrated within the contractor's facilities and relevant Navy installations. Workforce implications include specialized engineering roles at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs for taxpayers.
Cost-plus incentive fee structure can incentivize cost growth if not rigorously managed.
Lack of transparency in the sole-source justification hinders public scrutiny.
Significant contract value without competitive benchmarking raises value-for-money concerns.

Positive Signals

Contract awarded to a known entity, The Charles Stark Draper Laboratory, Inc., suggesting established expertise.
The contract addresses a critical need for specialized engineering services within the Department of Defense.
The CPIF structure aims to incentivize contractor performance and cost control, though its effectiveness varies.

Sector Analysis

This contract falls within the specialized engineering services sector, specifically supporting defense applications. The market for such highly technical and specialized services is often concentrated among a few key players. The total federal spending on engineering services (NAICS 541330) is substantial, but contracts of this nature, particularly those involving sensitive defense guidance systems, are often awarded through limited or sole-source channels due to unique capabilities required.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'st': 'MA' and 'sn': 'MASSACHUSETTS' likely refer to the state where the contractor is located, not a small business designation. There is no information provided regarding subcontracting plans for small businesses. Given the specialized nature and sole-source award, the direct impact on the small business ecosystem is likely minimal unless the prime contractor actively engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The Inspector General (IG) for the Department of Defense would have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is limited due to the sole-source nature of the award; however, contract modifications, performance reports, and payment data should be available through federal procurement databases, subject to classification or proprietary restrictions.

Related Government Programs

Department of Defense Research and Development Contracts
Naval Sea Systems Command (NAVSEA) Contracts
Engineering and Technical Services
Guidance, Navigation, and Control Systems

Risk Flags

Sole-source award without clear justification
Potential for inflated costs due to lack of competition
Cost-plus contract type requires diligent oversight to prevent cost overruns
Limited transparency regarding the procurement process

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.3 million to THE CHARLES STARK DRAPER LABORATORY, INC.. FIGF::OT::IGF FY15 GUIDANCE DEVELOPMENT

Who is the contractor on this award?

The obligated recipient is THE CHARLES STARK DRAPER LABORATORY, 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 $50.3 million.

What is the period of performance?

Start: 2014-09-30. End: 2017-09-29.

What specific guidance development services are being procured under this contract?

The contract, identified as 'FIGF::OT::IGF FY15 GUIDANCE DEVELOPMENT', indicates the procurement of services related to the development of guidance systems. While the specific technical details are not fully elaborated in the provided data, guidance development typically involves the design, analysis, simulation, testing, and refinement of systems that control the trajectory and behavior of vehicles, missiles, or other platforms. This can include software, hardware, algorithms, and integration efforts critical for mission success in defense applications. The contract's focus on 'guidance development' suggests a need for advanced engineering expertise in areas like inertial navigation, GPS integration, control theory, and sensor fusion.

What is the justification for awarding this contract on a sole-source basis?

The provided data explicitly states 'CT: NOT COMPETED', indicating a sole-source award. Federal procurement regulations typically require full and open competition unless specific exceptions apply, such as the availability of only one responsible source, or a national security concern. For a sole-source award of this magnitude ($50.26 million), a detailed justification and approval (J&A) document would normally be required. This document would outline the specific reasons why competition is not feasible or practicable, often citing unique capabilities, proprietary technology, or urgent requirements that only a specific contractor can meet. Without access to the J&A, the rationale behind this sole-source decision remains unclear and warrants further investigation.

How does the Cost Plus Incentive Fee (CPIF) structure compare to other contract types for similar services?

Cost Plus Incentive Fee (CPIF) contracts are often used when the final cost is uncertain, such as in research and development or complex engineering projects. They establish a target cost, a target profit, and a fee-sharing arrangement between the government and the contractor. If the final cost is below the target, both share in the savings; if above, both share in the excess cost, up to certain limits. Compared to Firm-Fixed-Price (FFP) contracts, CPIF offers more flexibility for the government if requirements evolve but carries a higher risk of cost overrun. Compared to Cost Plus Fixed Fee (CPFF), CPIF adds an incentive for the contractor to control costs. For specialized engineering services like guidance development, CPIF can be appropriate, but it necessitates robust government oversight to manage performance and cost targets effectively.

What is the historical spending pattern with The Charles Stark Draper Laboratory, Inc. for similar services?

The Charles Stark Draper Laboratory, Inc. is a well-established entity with a significant history of receiving federal contracts, particularly within the Department of Defense. While the provided data only shows this specific $50.26 million contract, a broader analysis of federal procurement databases (like FPDS or SAM.gov) would reveal extensive past performance. This includes numerous awards for research, development, engineering, and technical services related to guidance, navigation, and control (GNC) systems, missile technology, and aerospace applications. Understanding the volume, value, and types of previous contracts awarded to Draper Laboratory would provide context for assessing the reasonableness of this current award and the contractor's established role in this specialized sector.

What are the potential risks associated with a sole-source award of this size and duration?

The primary risks associated with a sole-source award of this magnitude ($50.26 million over three years) include lack of price competition, potentially leading to inflated costs for the government. Without competing bids, there's less incentive for the contractor to offer the lowest possible price. Additionally, it limits the government's ability to explore alternative solutions or innovative approaches that other contractors might offer. The duration of the contract (1095 days) combined with a CPIF structure increases the risk of cost growth if not meticulously managed and overseen. There's also a risk of contractor complacency or reduced urgency due to the guaranteed award without competitive pressure. Finally, the lack of transparency inherent in sole-source justifications can raise concerns about fairness and potential favoritism.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 555 TECHNOLOGY SQ, CAMBRIDGE, MA, 02139

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

Financial Breakdown

Contract Ceiling: $68,954,687

Exercised Options: $53,300,467

Current Obligation: $50,259,257

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $151,364

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline