DoD's $28.4M Contract with Arsenal Medical for Pre-FDA Approval Research Raises Questions on Value and Competition
Contract Overview
Contract Amount: $28,358,509 ($28.4M)
Contractor: Arsenal Medical, Inc.
Awarding Agency: Department of Defense
Start Date: 2015-09-28
End Date: 2023-07-31
Contract Duration: 2,863 days
Daily Burn Rate: $9.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: IGF::OT::IGF PRE-FDA APPROVAL
Place of Performance
Location: WATERTOWN, MIDDLESEX County, MASSACHUSETTS, 02472
Plain-Language Summary
Department of Defense obligated $28.4 million to ARSENAL MEDICAL, INC. for work described as: IGF::OT::IGF PRE-FDA APPROVAL Key points: 1. The contract awarded to Arsenal Medical, Inc. for $28.4 million focuses on pre-FDA approval research, a critical but often complex area. 2. The 'NOT COMPETED' award raises immediate concerns about the lack of competitive bidding and potential price discovery limitations. 3. The 'Research and Development in the Physical, Engineering, and Life Sciences' sector is prone to high costs and uncertain outcomes. 4. The contract's duration of 2863 days (over 7 years) suggests a long-term commitment with significant taxpayer exposure.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee (CPFF) structure can incentivize cost overruns, especially in R&D. Without competitive benchmarks, assessing the value for $28.4 million is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The 'NOT COMPETED' designation indicates a sole-source award, bypassing the standard competitive process. This limits price discovery and may result in a higher price than if multiple vendors had bid.
Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition, with funds potentially not being used in the most cost-effective manner.
Public Impact
Significant taxpayer funds are allocated to a single vendor for research with potentially uncertain outcomes. The lack of transparency in the procurement process limits public understanding of how this contract was justified. The long contract duration means sustained financial commitment from the government.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of Competition
- Cost-Plus Contract Type
- Long Contract Duration
- R&D Uncertainty
Positive Signals
- Supports critical pre-FDA approval research
- Long-term partnership with a single vendor
Sector Analysis
This contract falls under the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This sector often involves high risk and high reward, with significant investment required before tangible results are achieved.
Small Business Impact
The contract was not awarded to a small business. Further analysis would be needed to determine if small businesses were considered or had the capability to perform this specialized research.
Oversight & Accountability
The 'NOT COMPETED' status warrants closer oversight to ensure the justification for sole-sourcing was robust and that the pricing is fair and reasonable. The long duration also necessitates ongoing monitoring.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
- Department of Defense Contracting
- Defense Health Agency Programs
Risk Flags
- Lack of competitive bidding raises concerns about price fairness.
- Cost-Plus Fixed Fee structure can lead to cost overruns in R&D.
- Long contract duration increases taxpayer exposure over time.
- Uncertainty inherent in R&D projects makes outcome prediction difficult.
- Potential for contractor to prioritize profit over cost efficiency due to sole-source award.
Tags
research-and-development-in-the-physical, department-of-defense, ma, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $28.4 million to ARSENAL MEDICAL, INC.. IGF::OT::IGF PRE-FDA APPROVAL
Who is the contractor on this award?
The obligated recipient is ARSENAL MEDICAL, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $28.4 million.
What is the period of performance?
Start: 2015-09-28. End: 2023-07-31.
What specific justification was provided for not competing this contract, and how was the $28.4 million price determined to be fair and reasonable?
The justification for a sole-source award typically involves factors like unique capabilities, urgent needs, or lack of available sources. Without access to the contract file, the specific justification remains unknown. The determination of fair and reasonable pricing for a Cost Plus Fixed Fee contract in R&D often relies on historical data, cost analysis, and negotiation, but the absence of competition makes independent verification challenging.
What are the key performance indicators and milestones for this contract, and how will the government measure the success of the pre-FDA approval research?
Key performance indicators and milestones are crucial for tracking progress in R&D contracts, especially those with long durations. These would typically be outlined in the contract's Statement of Work. Success measurement would likely involve achieving specific research objectives, data generation, and ultimately, readiness for FDA submission, though the inherent uncertainty of R&D means outcomes cannot be guaranteed.
Given the CPFF structure and lack of competition, what mechanisms are in place to control costs and ensure efficient use of taxpayer funds throughout the contract's duration?
Cost control in CPFF contracts relies heavily on robust government oversight, including regular audits, review of incurred costs, and strict adherence to the contract's scope. The fixed fee component provides some incentive for the contractor to manage costs efficiently to maximize profit. However, the absence of competition inherently reduces the pressure to minimize costs compared to a competitive bidding environment.
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: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W81XWH15R0042
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 480 ARSENAL ST, WATERTOWN, MA, 02472
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $34,151,051
Exercised Options: $28,358,509
Current Obligation: $28,358,509
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2015-09-28
Current End Date: 2023-07-31
Potential End Date: 2024-12-27 00:00:00
Last Modified: 2024-03-06
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