NASA's $238.7M PHOENIX contract to Caltech for R&D shows a lack of competition and high cost
Contract Overview
Contract Amount: $238,711,247 ($238.7M)
Contractor: California Institute of Technology
Awarding Agency: National Aeronautics and Space Administration
Start Date: 2005-06-28
End Date: 2011-03-31
Contract Duration: 2,102 days
Daily Burn Rate: $113.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 51
Pricing Type: COST PLUS AWARD FEE
Sector: R&D
Official Description: PHOENIX: PHASE C/D
Place of Performance
Location: PASADENA, LOS ANGELES County, CALIFORNIA, 91125
Plain-Language Summary
National Aeronautics and Space Administration obligated $238.7 million to CALIFORNIA INSTITUTE OF TECHNOLOGY for work described as: PHOENIX: PHASE C/D Key points: 1. The contract was awarded on a sole-source basis, raising concerns about price discovery and potential overspending. 2. The cost-plus-award-fee structure can incentivize cost growth if not managed tightly. 3. The contract duration of over 2100 days suggests a long-term, complex research and development effort. 4. The primary recipient, California Institute of Technology, is a well-regarded research institution, but the lack of competition is a key risk indicator. 5. The contract falls under the R&D sector, specifically physical, engineering, and life sciences, indicating specialized scientific work. 6. The absence of small business set-asides suggests this contract was not designed to specifically benefit smaller enterprises.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to its sole-source nature and specialized R&D focus. However, the lack of competitive bidding inherently limits the government's ability to secure the best possible price. The cost-plus-award-fee (CPAF) contract type, while offering flexibility for R&D, can lead to higher costs if performance incentives are not perfectly aligned with cost control. Without comparable sole-source R&D contracts of similar scope and duration, it's difficult to definitively assess if the pricing is fair, but the absence of competition is a significant red flag for value for money.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning NASA did not conduct a competitive procurement. This typically occurs when only one responsible source is available or in cases of urgent need. The lack of competition means that NASA did not benefit from the price discovery and innovation that typically arises from multiple bidders vying for the contract. This significantly limits the government's leverage in negotiating terms and pricing.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, there is a reduced likelihood of achieving the most cost-effective outcome for this significant research and development investment.
Public Impact
The primary beneficiary is the California Institute of Technology, which receives substantial funding for its research capabilities. The contract supports advanced research and development in physical, engineering, and life sciences, potentially leading to scientific breakthroughs. The geographic impact is concentrated in California, where Caltech is located, but the scientific advancements could have global implications. The contract supports a highly specialized workforce of scientists, engineers, and researchers at Caltech.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and taxpayer value.
- Cost-plus-award-fee structure can lead to cost overruns if not managed rigorously.
- Lack of transparency in the procurement process due to sole-source award.
- Long contract duration increases the risk of scope creep and cost escalation over time.
Positive Signals
- Awarded to a reputable research institution (Caltech) with a strong track record.
- Supports critical R&D in advanced scientific fields.
- Potential for significant scientific and technological advancements.
Sector Analysis
This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. This is a highly specialized area where government funding often supports fundamental scientific inquiry and technological innovation that may not be pursued by the private sector alone. Comparable spending in this sector can vary widely depending on the specific scientific domain and agency. NASA's R&D spending is crucial for space exploration and scientific discovery, often involving long-term, high-risk, high-reward projects.
Small Business Impact
The contract details do not indicate any specific small business set-aside provisions. Given the sole-source nature of the award to a large research institution like Caltech, it is unlikely that small businesses were directly involved as prime contractors. Subcontracting opportunities for small businesses may exist, but they are not explicitly detailed in the provided data. The absence of set-asides means this contract does not directly contribute to the government's goals for small business participation.
Oversight & Accountability
Oversight for this contract would primarily fall under NASA's internal contract management and program offices. The cost-plus-award-fee structure necessitates robust oversight to ensure that costs are reasonable and that performance meets award criteria. Transparency is limited due to the sole-source award. Inspector General jurisdiction would apply to investigate any potential fraud, waste, or abuse related to the contract's execution.
Related Government Programs
- NASA Research and Development Contracts
- Grants to Educational Institutions
- Cost-Plus-Award-Fee Contracts
- Sole-Source Procurements
Risk Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns (CPAF structure)
- Limited transparency in procurement
Tags
research-and-development, nasa, california, sole-source, cost-plus-award-fee, large-contract, science, physical-sciences, engineering, life-sciences, university-contractor
Frequently Asked Questions
What is this federal contract paying for?
National Aeronautics and Space Administration awarded $238.7 million to CALIFORNIA INSTITUTE OF TECHNOLOGY. PHOENIX: PHASE C/D
Who is the contractor on this award?
The obligated recipient is CALIFORNIA INSTITUTE OF TECHNOLOGY.
Which agency awarded this contract?
Awarding agency: National Aeronautics and Space Administration (National Aeronautics and Space Administration).
What is the total obligated amount?
The obligated amount is $238.7 million.
What is the period of performance?
Start: 2005-06-28. End: 2011-03-31.
What is the track record of the California Institute of Technology as a government contractor, particularly with NASA?
The California Institute of Technology (Caltech) has a long and distinguished history of receiving significant federal funding, particularly from NASA, for its cutting-edge research. As a premier research university, Caltech has consistently demonstrated expertise in various scientific and engineering disciplines relevant to space exploration and aeronautics. Its track record includes managing complex research projects, operating major scientific facilities (like JPL, which it manages for NASA), and producing groundbreaking scientific discoveries. While specific contract performance metrics are not detailed here, Caltech's overall reputation and its deep, long-standing relationship with NASA suggest a high level of capability and reliability in executing research and development tasks. However, the sole-source nature of this particular contract, regardless of the contractor's reputation, warrants scrutiny regarding the procurement process itself.
How does the cost-plus-award-fee (CPAF) structure typically impact contract costs compared to other contract types for R&D?
The Cost-Plus-Award-Fee (CPAF) contract type is often used for research and development efforts where the scope of work is uncertain or evolving. It reimburses the contractor for allowable costs incurred and provides a base fee plus an award fee, which is earned based on performance against pre-defined criteria. Compared to fixed-price contracts, CPAF generally leads to higher potential costs for the government because it shifts cost risk to the government. However, it offers flexibility and incentivizes contractor performance towards specific goals, which can be beneficial for complex R&D. In contrast, a firm-fixed-price contract would offer greater cost certainty but might stifle innovation or lead to contractor reluctance to deviate from the original scope. For R&D, CPAF can be a reasonable choice if the award criteria are well-defined and performance is rigorously monitored, but it requires diligent oversight to prevent cost overruns and ensure value.
What are the primary risks associated with sole-source R&D contracts awarded to large research institutions?
Sole-source R&D contracts awarded to large research institutions like Caltech carry several primary risks. Firstly, the lack of competition means the government may not achieve the best possible price, potentially leading to higher costs for taxpayers. This absence of competitive pressure can reduce the incentive for the contractor to be highly cost-efficient. Secondly, without competing proposals, there's a risk that alternative approaches or innovative solutions that other potential contractors might have offered are overlooked. Thirdly, sole-source awards can sometimes indicate a lack of adequate market research or planning by the procuring agency. While institutions like Caltech are highly capable, the procurement process itself should ideally involve competition to ensure fairness, transparency, and optimal value for the government's investment. Finally, the long duration often associated with such R&D efforts can increase the risk of scope creep and cost escalation over time.
Can the PHOENIX contract's performance period (2005-2011) provide insights into historical spending patterns for similar NASA R&D initiatives?
The PHOENIX contract's performance period from 2005 to 2011 offers a snapshot of NASA's R&D spending patterns during that era. Contracts of this duration and value (over $238 million) were not uncommon for major scientific research initiatives undertaken by NASA. This period reflects a time when significant investments were being made in areas like space exploration, earth science, and fundamental physics research. The use of sole-source awards for specialized R&D, particularly with established research institutions, was also a prevalent practice, though it has faced increasing scrutiny over the years regarding competition requirements. Analyzing spending patterns from this period can help benchmark costs and understand the types of research NASA prioritized. However, it's important to note that R&D needs, technological capabilities, and procurement regulations have evolved since then, so direct comparisons to current spending must be made with caution.
What are the potential implications of the 'NOT COMPETED' status on the overall efficiency and cost-effectiveness of this NASA contract?
The 'NOT COMPETED' status, indicating a sole-source award, has significant implications for the efficiency and cost-effectiveness of this NASA contract. Primarily, it means that NASA did not leverage the power of competition to drive down prices or encourage innovative solutions from multiple vendors. Without competing bids, there is less pressure on the contractor (Caltech) to minimize costs, as they are the only option. This can lead to higher prices than might be achieved in a competitive environment. Furthermore, the absence of competition reduces transparency in the procurement process, making it harder for external observers and even internal auditors to ascertain if the government received the best possible value. While sole-source awards are sometimes necessary for highly specialized R&D, they inherently carry a higher risk of inefficiency and inflated costs compared to competitively awarded contracts.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences
Product/Service Code: RESEARCH AND DEVELOPMENT › Space R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 51
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 4800 OAK GROVE DR, PASADENA, CA, 91109
Business Categories: Category Business, Government, U.S. National Government, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $239,683,150
Exercised Options: $239,683,150
Current Obligation: $238,711,247
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: NAS703001
IDV Type: IDC
Timeline
Start Date: 2005-06-28
Current End Date: 2011-03-31
Potential End Date: 2011-03-31 00:00:00
Last Modified: 2021-02-17
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