DoD's $1.11B NETFIRES R&D contract awarded in 2004 shows long duration and sole-source history

Contract Overview

Contract Amount: $1,111,390,275 ($1.1B)

Contractor: Netfires, LLC

Awarding Agency: Department of Defense

Start Date: 2004-03-19

End Date: 2011-09-30

Contract Duration: 2,751 days

Daily Burn Rate: $404.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: R&D

Place of Performance

Location: DALLAS, DALLAS County, TEXAS, 75265

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $1.11 billion to NETFIRES, LLC for work described as: Key points: 1. Contract awarded as sole-source, raising questions about initial price discovery and potential for competition. 2. Long contract duration (2751 days) may indicate evolving requirements or a lack of market alternatives. 3. Cost-plus incentive fee structure can incentivize contractor performance but requires robust oversight to manage costs. 4. Research and Development focus suggests innovation and potential for future technological advancements. 5. Contractor's sole award for this specific R&D effort warrants scrutiny of their unique qualifications and market position. 6. Texas location for contract performance may have implications for regional economic impact and workforce development.

Value Assessment

Rating: questionable

The total award amount of $1.11 billion over 2751 days is substantial for a sole-source R&D contract. Without comparable sole-source contracts for similar R&D efforts, it is difficult to benchmark value. The cost-plus incentive fee (CPIF) pricing structure, while common in R&D, can lead to cost overruns if not managed tightly. The lack of competition inherently limits the government's ability to negotiate the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, NETFIRES, LLC, was considered. This typically occurs when a specific capability or technology is unique to a single provider, or in cases of urgent need where only one source can meet the requirement. The absence of a competitive bidding process means that the government did not benefit from price reductions or innovative solutions that might have emerged from multiple proposals.

Taxpayer Impact: Sole-source awards mean taxpayers may not have received the most cost-effective solution, as the government could not leverage market competition to drive down prices.

Public Impact

The primary beneficiaries are likely the Department of Defense, which gains access to specialized research and development capabilities. The contract supports the development of advanced technologies potentially for military applications. Performance is based in Texas, potentially creating or sustaining high-skilled jobs in the region. The R&D focus implies advancements that could enhance national security capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing and innovation.
Long contract duration raises concerns about potential cost creep and evolving market conditions.
CPIF contract type requires diligent oversight to ensure cost control and prevent contractor inefficiencies.
Lack of publicly available performance metrics makes it difficult to assess program effectiveness.
Absence of small business subcontracting goals on a sole-source award may limit opportunities for smaller firms.

Positive Signals

Contract supports critical R&D for the Department of Defense, potentially leading to technological advancements.
NETFIRES, LLC's sole award suggests specialized expertise in a niche R&D area.
CPIF structure incentivizes contractor to meet performance targets, potentially leading to successful outcomes.
Long-term engagement allows for deep development and refinement of complex technologies.

Sector Analysis

This contract falls within the Research and Development sector, specifically under NAICS code 541710 (Research and Development in the Physical, Engineering, and Life Sciences). This sector is characterized by innovation, long development cycles, and often high upfront investment. Government spending in this area is crucial for advancing technological capabilities, particularly in defense. Comparable spending benchmarks are difficult to establish for sole-source R&D due to the unique nature of each project and contractor.

Small Business Impact

As this contract was awarded sole-source and there is no indication of small business set-asides or subcontracting plans, it is unlikely that small businesses were directly involved in the primary performance of this contract. This limits opportunities for small businesses to participate in large-scale R&D projects and potentially deprives the ecosystem of their innovative contributions.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The cost-plus incentive fee structure necessitates rigorous financial oversight to track expenditures and ensure that incentive targets are met appropriately. Transparency is limited due to the sole-source nature and the proprietary R&D focus. Inspector General involvement would depend on specific allegations of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Contracts
Sole-Source Technology Development
Cost-Plus Incentive Fee Contracts
Advanced Technology Research

Risk Flags

Sole-source award
Long contract duration
Cost-plus contract type
Lack of transparency in R&D specifics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.11 billion to NETFIRES, LLC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is NETFIRES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $1.11 billion.

What is the period of performance?

Start: 2004-03-19. End: 2011-09-30.

What specific R&D capabilities does NETFIRES, LLC possess that justified a sole-source award for this $1.11B contract?

The justification for a sole-source award typically rests on unique capabilities, proprietary technology, or specialized expertise that no other vendor can provide. For this NETFIRES, LLC contract, the specific R&D focus would need to be highly specialized, potentially involving classified technologies or a patented process. Without access to the sole-source justification documentation, it's impossible to detail the exact capabilities. However, such awards often relate to areas like advanced materials science, complex systems engineering, or cutting-edge software development where a single entity holds critical intellectual property or has demonstrated unparalleled proficiency through prior work.

How did the Cost Plus Incentive Fee (CPIF) structure influence the final cost and performance outcomes of this contract?

The Cost Plus Incentive Fee (CPIF) structure aims to align contractor and government interests by providing incentives for meeting or exceeding performance targets while controlling costs. In this $1.11B contract, NETFIRES, LLC would have had a target cost, a target profit, and a sharing ratio for cost savings or overruns. If the contractor completed the R&D below the target cost and met performance goals, they would earn a higher profit. Conversely, exceeding costs without meeting targets would reduce profit. The effectiveness of CPIF hinges on well-defined performance metrics and robust government oversight to ensure targets are realistic and achievable, and that cost savings are genuine rather than achieved by sacrificing quality or scope.

Given the contract's sole-source nature, what mechanisms were in place to ensure fair pricing and prevent potential cost inflation?

Sole-source contracts inherently limit price discovery through competition. To mitigate this, the government typically relies on other methods to ensure fair and reasonable pricing. This can include detailed cost analyses, comparison to historical pricing for similar (though not identical) services, market research on labor rates and material costs, and negotiation based on the contractor's proposed profit margins. For this $1.11B R&D contract, the Department of the Army would have likely conducted extensive negotiations, scrutinizing NETFIRES, LLC's cost proposals and potentially bringing in independent cost estimators. However, the absence of competitive bids remains a fundamental limitation in price validation.

What were the key performance indicators (KPIs) for this R&D contract, and how was performance measured over its 2751-day duration?

Specific Key Performance Indicators (KPIs) for R&D contracts, especially sole-source ones, are often detailed in the contract's Statement of Work (SOW) and are not always publicly disclosed due to the sensitive nature of research. For this $1.11B contract, KPIs could have included milestones such as the successful development of prototypes, achievement of specific technical performance thresholds (e.g., speed, efficiency, accuracy), completion of testing phases, delivery of research reports, or the successful integration of new technologies. Performance measurement would involve regular reviews by government technical monitors, milestone reviews, and potentially independent testing and validation of deliverables against the defined KPIs.

How does the $1.11B total award value compare to typical R&D spending within the Department of Defense for similar technological advancements?

The $1.11 billion total award value for this sole-source R&D contract is significant, even within the context of Department of Defense (DoD) spending. DoD invests heavily in R&D, with annual budgets often in the tens of billions. However, the 'typical' spending for similar advancements is highly variable and depends heavily on the specific technology area. Large-scale, multi-year R&D efforts, particularly those involving complex systems or emerging technologies, can easily reach hundreds of millions or even billions of dollars. Without knowing the specific R&D domain (e.g., AI, cyber, aerospace), direct comparisons are challenging. However, the sole-source nature and long duration suggest a project of substantial scope and potentially unique technological requirements.

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: GUIDED MISSLES

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: 2400 W MARSHALL DR, GRAND PRAIRIE, TX, 75051

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline