DoD's $33.7M submarine communication systems contract awarded to R&D Solutions, Inc. shows potential value concerns

Contract Overview

Contract Amount: $33,757,220 ($33.8M)

Contractor: Research and Development Solutions, Incorporated

Awarding Agency: Department of Defense

Start Date: 2017-08-01

End Date: 2022-08-01

Contract Duration: 1,826 days

Daily Burn Rate: $18.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF CODE 34 SUBMARINE COMMUNICATION SYSTEMS ENGINEERING AND TECHNICAL SERVICES

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $33.8 million to RESEARCH AND DEVELOPMENT SOLUTIONS, INCORPORATED for work described as: IGF::OT::IGF CODE 34 SUBMARINE COMMUNICATION SYSTEMS ENGINEERING AND TECHNICAL SERVICES Key points: 1. Contract value appears high relative to duration and number of orders. 2. Limited competition may have impacted price discovery. 3. Potential for cost overruns given the Cost Plus Fixed Fee structure. 4. Performance context is limited due to lack of detailed metrics. 5. Sector positioning within R&D services for defense is notable. 6. Contract duration of 5 years is substantial for specialized engineering services.

Value Assessment

Rating: fair

The contract's total value of $33.7 million over five years, with two delivery orders, suggests an average annual spend of approximately $6.7 million. While specific deliverables are not detailed, this amount for specialized engineering services warrants comparison with similar contracts for submarine communication systems. The Cost Plus Fixed Fee (CPFF) pricing structure, while common for R&D, can sometimes lead to higher costs if not tightly managed, as the contractor is reimbursed for all allowable costs plus a fixed fee. Benchmarking against industry standards for similar engineering support would be crucial to assess true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. However, with only two delivery orders issued, it's unclear if the initial competition resulted in the most advantageous pricing or if subsequent tasking was also broadly competed. The level of competition at the task order level is not specified, which could influence price negotiation.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers, as it aims to drive down prices through market forces. However, the ultimate benefit depends on the effectiveness of the bidding process and the number of responsive, capable bidders.

Public Impact

The Department of Defense benefits from specialized engineering and technical services for critical submarine communication systems. This contract supports the maintenance and advancement of naval communication capabilities. The primary geographic impact is likely within the United States, supporting naval operations and research facilities. Workforce implications include employment for specialized engineers and technical staff within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) pricing can incentivize cost-plus behavior if not rigorously overseen.
Limited information on performance metrics makes it difficult to assess efficiency and effectiveness.
The long contract duration (5 years) could lead to complacency or reduced innovation if not actively managed.
Lack of detail on the number of bidders for specific delivery orders raises questions about sustained competition.

Positive Signals

Awarded under full and open competition, suggesting a broad initial search for qualified contractors.
The contractor, RESEARCH AND DEVELOPMENT SOLUTIONS, INCORPORATED, has a track record that can be reviewed for performance history.
The contract is for specialized engineering services, indicating a need for specific expertise.
The fixed fee component of CPFF provides some level of cost predictability for the government.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader Research and Development (R&D) industry. The defense sector heavily relies on specialized engineering firms to design, develop, and maintain complex systems, particularly for naval applications. The market for defense engineering services is substantial, driven by continuous modernization and sustainment requirements for military assets. Comparable spending benchmarks would involve analyzing other contracts for similar engineering support for naval platforms or communication systems.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. However, the prime contractor may choose to subcontract portions of the work to small businesses as part of their overall business strategy, which would need to be assessed separately.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, including reporting requirements and the potential for penalties or termination for non-performance. Transparency is facilitated through contract databases like FPDS, although detailed performance reports are often not publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Submarine Warfare Systems
Naval Communication Systems
Defense Research and Development Contracts
Engineering Services for Military Applications
Department of Defense IT and Communications Procurement

Risk Flags

Potential for cost overruns due to CPFF structure.
Limited competition at task order level may impact price.
Long contract duration with few orders could indicate underutilization or inefficiency.
Lack of detailed performance metrics hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.8 million to RESEARCH AND DEVELOPMENT SOLUTIONS, INCORPORATED. IGF::OT::IGF CODE 34 SUBMARINE COMMUNICATION SYSTEMS ENGINEERING AND TECHNICAL SERVICES

Who is the contractor on this award?

The obligated recipient is RESEARCH AND DEVELOPMENT SOLUTIONS, INCORPORATED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $33.8 million.

What is the period of performance?

Start: 2017-08-01. End: 2022-08-01.

What is the track record of RESEARCH AND DEVELOPMENT SOLUTIONS, INCORPORATED with the Department of Defense?

To assess the track record of RESEARCH AND DEVELOPMENT SOLUTIONS, INCORPORATED (R&D Solutions), a review of their past performance on Department of Defense (DoD) contracts is necessary. This would involve examining contract databases for previous awards, their values, durations, and the types of services rendered. Key indicators include on-time delivery, adherence to budget, quality of work, and any past performance reviews or disputes. A history of successful contract completion, particularly in complex engineering or R&D areas, would suggest a lower risk profile. Conversely, a pattern of cost overruns, missed deadlines, or negative performance evaluations would raise concerns. Without specific historical data on R&D Solutions' performance within this JSON, a comprehensive assessment is not possible, but such a review is a standard part of evaluating contractor reliability.

How does the $33.7 million contract value compare to similar submarine communication system engineering contracts?

Benchmarking the $33.7 million contract value requires comparing it against similar contracts for submarine communication systems engineering and technical services. This involves identifying contracts with comparable scope, complexity, duration, and agency (e.g., other DoD branches or naval commands). Factors to consider include the number of bidders, the pricing structure (e.g., CPFF, FFP), and the specific technical requirements. If similar five-year contracts for comparable systems were awarded for significantly less, or if this contract's value appears disproportionately high given the deliverables, it could indicate a potential value concern. Conversely, if the complexity and specialized nature of submarine communication systems inherently drive higher costs, the value might be justified. A detailed market research report or analysis of historical contract data would be needed for a precise comparison.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D services?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to R&D Solutions, is the potential for cost escalation. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee. While the fee is fixed, the total cost to the government is not. This can incentivize contractors to incur higher costs, as their profit (the fixed fee) remains constant regardless of the total expenditure. Effective oversight, stringent cost controls, and clear definitions of allowable costs are crucial to mitigate this risk. Without robust management, CPFF contracts can become more expensive than fixed-price alternatives, especially if the scope of work is not well-defined or if unforeseen technical challenges arise, leading to increased costs.

How effective is the 'full and open competition' strategy in ensuring competitive pricing for specialized defense engineering services?

Full and open competition is designed to maximize the pool of potential bidders, thereby fostering a competitive environment that ideally leads to better pricing and innovation. For specialized defense engineering services, its effectiveness hinges on several factors. Firstly, the market for highly specialized skills can be limited, meaning that even with open competition, the number of truly capable bidders might be small. Secondly, the complexity of the requirements can deter some potential bidders. Thirdly, the evaluation criteria used by the agency play a significant role; if price is heavily weighted, it can drive down bids. However, if technical merit or past performance are prioritized, the price advantage might be less pronounced. The fact that this contract had only two delivery orders suggests that while initial competition may have been broad, subsequent tasking might not have maintained the same level of competitive pressure, potentially impacting price discovery over the contract's life.

What are the implications of the 5-year duration and 2 delivery orders on contract management and value?

A 5-year contract duration with only two delivery orders issued over that period (1826 days) raises questions about the pace of execution and potential inefficiencies. Such a long period with infrequent tasking could indicate that the work is highly specialized, project milestones are long, or that the contract has been underutilized. From a value perspective, a long duration with low order volume might mean the government is paying administrative or readiness costs for the contractor's availability without commensurate immediate output. It could also suggest that the initial scope was overestimated or that subsequent needs have shifted. Effective contract management would involve ensuring the contractor remains engaged, innovative, and cost-conscious throughout the extended period, and that the pricing structure remains appropriate for the actual level of effort and risk.

What is the significance of the 'Engineering Services' (NAICS 541330) classification for this contract?

The classification of 'Engineering Services' (NAICS 541330) signifies that the contract is for professional services involving the application of engineering principles and knowledge to provide consulting, design, and technical support. For submarine communication systems, this typically encompasses a wide range of activities, including system design, integration, testing, analysis, and lifecycle support. This classification indicates a need for highly skilled personnel with specialized technical expertise. Companies in this sector often work on complex, high-stakes projects where precision, reliability, and adherence to stringent standards are paramount. The classification also helps in benchmarking against other contracts for similar professional engineering services within the federal government and the private sector.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002416R3299

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 7921 JONES BRANCH DR, SUIT, MC LEAN, VA, 22102

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $34,906,662

Exercised Options: $34,695,122

Current Obligation: $33,757,220

Actual Outlays: $4,278,240

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4113

IDV Type: IDC

Timeline