DoD's $25M contract for re-entry material testing support awarded to Kratos SRE, Inc. without competition

Contract Overview

Contract Amount: $25,131,629 ($25.1M)

Contractor: Kratos SRE, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-06-20

End Date: 2023-06-30

Contract Duration: 1,836 days

Daily Burn Rate: $13.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: INCREMENT OF FUNDS FOR RE-ENTRY MATERIAL TESTING SUPPORT

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92131

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $25.1 million to KRATOS SRE, INC. for work described as: INCREMENT OF FUNDS FOR RE-ENTRY MATERIAL TESTING SUPPORT Key points: 1. The contract's value of $25.1 million over five years suggests a significant investment in specialized testing capabilities. 2. Awarded on a cost-plus-fixed-fee basis, this contract structure may incentivize cost overruns if not closely monitored. 3. The lack of competition raises concerns about potential overpayment and the absence of market-driven price discovery. 4. This contract falls under the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' NAICS code, indicating a niche but critical support function. 5. The extended duration of 1836 days (approximately 5 years) points to a long-term need for these specialized re-entry material testing services. 6. The sole-source award suggests potential barriers to entry for other firms or a specific, unique capability held by Kratos SRE, Inc.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its specialized nature and sole-source award. Without competitive bids, it's difficult to ascertain if the $25.1 million represents a fair market price. The cost-plus-fixed-fee structure requires diligent oversight to ensure costs remain reasonable and that the fixed fee is appropriate for the services rendered. Comparing this to similar, competed contracts for specialized testing services would be necessary for a more robust value assessment.

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 among multiple vendors. This typically occurs when a single source possesses unique capabilities, proprietary technology, or when urgent circumstances preclude a competitive process. The absence of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Taxpayers may not be receiving the best value due to the lack of competitive pressure on pricing. Without competing offers, the government cannot be certain it secured the most cost-effective solution for these critical re-entry material testing services.

Public Impact

This contract directly supports the Department of Defense's missile and space vehicle programs by ensuring the integrity and performance of re-entry materials. The services provided are crucial for national security, contributing to the reliability of defense systems. The contract's impact is primarily within the defense industrial base, supporting specialized manufacturing and testing capabilities. Workforce implications may include the need for highly skilled engineers and technicians specializing in materials science and aerospace testing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts require robust oversight to prevent cost creep.
Sole-source awards can stifle innovation by limiting market entry.
Limited transparency into the justification for sole-source award.

Positive Signals

Supports critical national security functions related to missile and space vehicle testing.
Awarded to a company with a specific focus in this niche area.
Long-term contract duration suggests a stable, ongoing requirement.

Sector Analysis

This contract operates within the aerospace and defense manufacturing sector, specifically focusing on specialized testing for re-entry materials. This is a niche area within the broader guided missile and space vehicle manufacturing industry. The market for such specialized testing is likely limited, with a few key players possessing the necessary expertise and facilities. Comparable spending benchmarks would likely be found within other government contracts for advanced materials testing and aerospace component qualification.

Small Business Impact

There is no indication that this contract included small business set-asides or subcontracting goals. As a sole-source award to a specific large contractor, the direct impact on the small business ecosystem is likely minimal unless Kratos SRE, Inc. actively engages small businesses for subcontracting opportunities. Further investigation into Kratos SRE, Inc.'s subcontracting plan would be needed to assess its impact on small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits should be standard oversight mechanisms. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations.

Related Government Programs

Missile Defense Systems
Space Vehicle Development
Advanced Materials Research
Aerospace Component Testing
National Security Space Program

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee requires diligent cost oversight.
Potential for limited transparency in sole-source justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.1 million to KRATOS SRE, INC.. INCREMENT OF FUNDS FOR RE-ENTRY MATERIAL TESTING SUPPORT

Who is the contractor on this award?

The obligated recipient is KRATOS SRE, 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 $25.1 million.

What is the period of performance?

Start: 2018-06-20. End: 2023-06-30.

What specific re-entry materials is Kratos SRE, Inc. testing under this contract, and what are the key performance metrics?

The contract details 'RE-ENTRY MATERIAL TESTING SUPPORT' but does not specify the exact types of re-entry materials. These could range from thermal protection systems for hypersonic vehicles to heat shields for ballistic missiles. Key performance metrics would likely include material durability under extreme temperatures and pressures, resistance to ablation, and structural integrity post-exposure. Specifics would be detailed in the Statement of Work (SOW) and subsequent task orders, which are not publicly available in this data extract. The contract's focus on 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' suggests a broad scope within this domain.

What is the justification for awarding this $25.1 million contract on a sole-source basis?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available or possesses unique capabilities. For this contract, the justification likely stems from Kratos SRE, Inc. possessing specialized facilities, proprietary testing methodologies, or unique expertise essential for re-entry material testing that other contractors cannot replicate. The Department of the Navy would have documented this justification, often requiring approval from higher authorities, especially for contracts of this magnitude. Without access to the Justification and Approval (J&A) document, the precise reasons remain speculative but are rooted in the perceived uniqueness of the contractor's offering.

How does the cost-plus-fixed-fee (CPFF) structure influence cost control and contractor incentives for this contract?

The Cost-Plus-Fixed-Fee (CPFF) structure means the contractor (Kratos SRE, Inc.) is reimbursed for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to complete the work efficiently to maximize their profit margin, as the fee is fixed regardless of the final cost. However, it also places a significant burden on the government to meticulously monitor and audit costs to ensure they are reasonable, allocable, and necessary. If oversight is lax, the CPFF structure can potentially lead to cost overruns, as the contractor is guaranteed cost recovery plus a profit. Effective management and stringent cost controls are paramount for CPFF contracts to ensure value for the government.

What is Kratos SRE, Inc.'s track record with similar government contracts, particularly in specialized testing services?

Kratos SRE, Inc. has a history of performing work related to aerospace and defense, including services that align with specialized testing. While this specific data point focuses on a single large contract, Kratos has been involved in various defense programs. Their experience likely includes engineering, integration, and testing services for complex systems. A deeper dive into their contract history, including past performance evaluations and any reported issues on previous government contracts, would provide a more comprehensive understanding of their reliability and capability in delivering specialized testing services. Information on prior contracts, especially those with similar technical requirements or agencies, would be crucial for a full assessment.

What is the historical spending trend for re-entry material testing support within the Department of Defense?

Historical spending data for 're-entry material testing support' specifically is not readily available in aggregated public databases without more granular searching by specific program or sub-category. However, overall spending on missile defense, space systems, and related R&D within the Department of Defense has been substantial and generally increasing, particularly in areas related to advanced threat capabilities and countermeasures. Contracts for specialized testing services are often embedded within larger program budgets. The $25.1 million awarded to Kratos SRE, Inc. represents a significant, albeit potentially singular, investment in this specific niche over a five-year period, suggesting a consistent or growing need for such capabilities within the DoD's strategic programs.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0017817R4011

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 10680 TREENA ST STE 600, SAN DIEGO, CA, 92131

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

Financial Breakdown

Contract Ceiling: $33,444,862

Exercised Options: $33,444,862

Current Obligation: $25,131,629

Actual Outlays: $871,668

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline