Leidos awarded $35.9M for R&D services, raising questions about competition and value
Contract Overview
Contract Amount: $35,903,192 ($35.9M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2015-06-30
End Date: 2020-12-31
Contract Duration: 2,011 days
Daily Burn Rate: $17.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: GETS
Place of Performance
Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20879
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $35.9 million to LEIDOS, INC. for work described as: GETS Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Research and Development focus in Physical, Engineering, and Life Sciences. 3. Long contract duration (over 5 years) with a Cost Plus Fixed Fee structure. 4. Potential for cost overruns given the contract type. 5. Significant spending in Maryland, a hub for defense and R&D. 6. Contractor has a substantial presence in the federal contracting space.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, can lead to higher costs for the government if not closely managed. Without competitive bidding, it's difficult to benchmark the pricing against market rates or similar contracts. The total award of $35.9 million over five years suggests a significant investment, but the lack of competition makes a definitive value-for-money assessment challenging. Further analysis of the fixed fee and indirect cost rates would be necessary to understand the contractor's profit margin.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits the government's ability to solicit bids from multiple vendors and secure the most favorable pricing. The absence of competition suggests potential barriers to entry for other firms or specific capabilities required that only Leidos could provide. This approach can reduce administrative burden but often comes at the cost of potentially higher prices.
Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no market pressure to drive down costs. This can lead to less efficient use of public funds.
Public Impact
Benefits the Department of the Army through specialized research and development. Services delivered likely contribute to advancements in physical, engineering, and life sciences. Geographic impact concentrated in Maryland, a key area for federal R&D. Workforce implications include highly skilled researchers and technical personnel.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated costs for taxpayers.
- Cost-plus contract type carries inherent risk of cost overruns.
- Long-term nature of the contract could reduce flexibility for future needs.
- Limited transparency due to sole-source award.
Positive Signals
- Contract awarded to a large, established federal contractor (Leidos).
- Focus on R&D aligns with strategic government objectives.
- Contract duration suggests a stable, long-term need for these services.
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for government innovation and technological advancement. The federal R&D market is substantial, with significant investments made annually across various agencies. Leidos, as a major government contractor, operates within this competitive landscape, though this specific award bypassed that competition. Comparable spending benchmarks are difficult to establish without knowing the specific R&D focus, but overall federal R&D spending is in the billions.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the size of the award, it is unlikely that significant subcontracting opportunities for small businesses were mandated. This contract primarily benefits large, established prime contractors like Leidos, with limited direct impact on the small business ecosystem unless Leidos voluntarily engages them.
Oversight & Accountability
Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) and potentially an Inspector General (IG) if fraud or waste is suspected. However, the sole-source nature and CPFF structure necessitate robust internal controls and regular reporting from the contractor to ensure costs are reasonable and allocable. Transparency is limited due to the lack of competitive proposals being made public.
Related Government Programs
- Department of Defense Research and Development Contracts
- Cost Plus Fixed Fee Contracts
- Sole Source Research Contracts
- Leidos Federal Contracts
Risk Flags
- Sole-source award limits competition.
- Cost-plus contract type increases risk of cost overruns.
- Lack of transparency in pricing due to sole-source nature.
Tags
research-and-development, department-of-defense, department-of-the-army, leidos-inc, definitive-contract, cost-plus-fixed-fee, sole-source, maryland, large-business, r&d-services
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $35.9 million to LEIDOS, INC.. GETS
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $35.9 million.
What is the period of performance?
Start: 2015-06-30. End: 2020-12-31.
What is Leidos's track record with Cost Plus Fixed Fee (CPFF) contracts with the Department of Defense?
Leidos has a substantial history of performing CPFF contracts with the Department of Defense (DoD). CPFF contracts are common for research and development efforts where the scope of work can be uncertain or evolve. While CPFF contracts offer flexibility, they also carry a higher risk of cost overruns if not managed diligently. Leidos's experience suggests they are capable of managing the administrative and reporting requirements associated with this contract type. However, the government's oversight and auditing of these contracts are crucial to ensure cost efficiency and prevent potential abuses. Analyzing Leidos's past performance on similar CPFF contracts, including any audit findings or cost variances, would provide further insight into their reliability and the government's ability to control costs.
How does the $35.9 million award compare to similar R&D contracts in the physical, engineering, and life sciences sector?
Benchmarking this $35.9 million award against similar R&D contracts in the physical, engineering, and life sciences sector is challenging without more specific details on the scope of work. However, this figure represents a significant investment for a single contract, especially one awarded sole-source. The federal government spends billions annually on R&D across various agencies. Contracts of this magnitude often involve complex, long-term projects. If this contract is for basic research, it might be considered high. If it's for advanced development or prototyping, it could be within a typical range, though the lack of competition makes direct comparison difficult. Analyzing the duration (over 5 years) and the CPFF structure suggests a project with evolving requirements, which can inflate costs compared to fixed-price contracts for well-defined R&D.
What are the primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for R&D?
The primary risks associated with a sole-source, CPFF contract for R&D are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices and reduced innovation as the contractor faces no direct market incentive to be cost-efficient. Secondly, the CPFF structure, while providing flexibility for R&D, carries a significant risk of cost overruns. The contractor is reimbursed for allowable costs plus a fixed fee, which can incentivize spending rather than cost control. Without robust government oversight, the contractor might incur unnecessary expenses. Lastly, the lack of competition can lead to a lack of transparency, making it harder for the government and taxpayers to assess the true value and necessity of the expenditures. This combination requires stringent contract management and oversight to mitigate.
What is the historical spending pattern for this type of R&D service by the Department of the Army?
Historical spending patterns for R&D services by the Department of the Army (DoA) in the physical, engineering, and life sciences sector are substantial and varied. The DoA consistently invests heavily in research to maintain technological superiority and address evolving threats. Spending in this area often involves contracts with large defense contractors, research institutions, and universities. Contracts can range from basic scientific inquiry to applied research and advanced technology development. The use of sole-source and CPFF contracts, while not the norm for all R&D, does occur when specific expertise or capabilities are required. Analyzing past DoA budgets and contract awards for similar R&D categories would reveal trends in funding levels, contract types utilized, and key performers, providing context for this $35.9 million award.
What are the implications of the contract being awarded in Maryland, a known hub for defense and R&D?
Awarding this R&D contract to a contractor based in Maryland has several implications. Maryland is a major center for federal government contracting, particularly in defense and technology, due to its proximity to Washington D.C., numerous military installations, and federal research agencies. This concentration of activity fosters a skilled workforce and a robust ecosystem of supporting industries. For this specific contract, it likely means Leidos can readily access specialized talent and potentially collaborate with other entities in the region. However, it also means a significant portion of taxpayer funds is being spent within a region that already has a high concentration of federal spending, potentially impacting local economies and competition dynamics within that specific geographic area.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
Product/Service Code: GUIDED MISSLES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q14R0084
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 700 N FREDERICK AVE, GAITHERSBURG, MD, 20879
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $78,805,033
Exercised Options: $35,903,192
Current Obligation: $35,903,192
Subaward Activity
Number of Subawards: 2
Total Subaward Amount: $124,057
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2015-06-30
Current End Date: 2020-12-31
Potential End Date: 2025-09-27 12:09:00
Last Modified: 2023-09-28
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