DoD's $602M R&D contract for missile and space systems saw significant cost growth over its extended lifespan
Contract Overview
Contract Amount: $60,205,354 ($60.2M)
Contractor: Peraton Inc.
Awarding Agency: Department of Defense
Start Date: 2005-11-29
End Date: 2016-04-19
Contract Duration: 3,794 days
Daily Burn Rate: $15.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: R&D
Official Description: 200602!600137!2100!W9113M!USA SPACE AND STRATEGIC DEF CDR !W9113M05C0219 !A!N! !N! ! !20051129!20061128!120731484!120731484!001216845!N!ITT INDUSTRIES, INC !2560 HUNTINGTON AVE 200 !ALEXANDRIA !VA!22303!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000000152000!N!N!000000000000!AC23!RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV !A2 !MISSILE AND SPACE SYSTEMS !CAA !MDA SUPPORT !541710!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!R!2!002!B! !Z!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!B!N! ! ! !Y! ! !0001! !
Place of Performance
Location: HERNDON, FAIRFAX County, VIRGINIA, 20170
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $60.2 million to PERATON INC. for work described as: 200602!600137!2100!W9113M!USA SPACE AND STRATEGIC DEF CDR !W9113M05C0219 !A!N! !N! ! !20051129!20061128!120731484!120731484!001216845!N!ITT INDUSTRIES, INC !2560 HUNTINGTON AVE 200 !ALEXANDRIA !VA!22303!37000!089!01!HUNTSVILLE !MADI… Key points: 1. The contract experienced substantial cost increases from its initial award value, indicating potential scope creep or unforeseen development challenges. 2. While the contract was fully competed, the final award value significantly exceeded initial estimates, raising questions about pricing accuracy and negotiation. 3. The extended duration and multiple modifications suggest a complex and evolving project, potentially increasing management and oversight risks. 4. The contractor, ITT Industries, Inc., was awarded this contract for advanced technology development in missile and space systems. 5. The contract's performance context is within the highly specialized and rapidly advancing field of missile and space technology. 6. This contract represents a significant investment in defense R&D, positioning the contractor within a critical sector for national security.
Value Assessment
Rating: questionable
The initial award value was $12,073,148.40, but the final cost reached $60,205,354.13, representing a nearly 400% increase. This substantial growth over the contract's life, which was extended significantly beyond its original end date, suggests potential issues with initial cost estimation, scope management, or unforeseen technical challenges. Comparing this to similar R&D contracts, such a large percentage increase warrants scrutiny to understand the drivers and ensure value for taxpayer 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 had the opportunity to submit proposals. However, the significant cost growth and the fact that the contract was modified multiple times suggest that the initial competition may not have fully captured the eventual scope or cost of the work. The number of bidders is not specified, but the outcome implies a need for robust oversight throughout the contract lifecycle.
Taxpayer Impact: While full and open competition is generally beneficial for price discovery, the substantial cost growth in this instance suggests that taxpayers may have paid more than initially anticipated due to evolving requirements or estimation challenges.
Public Impact
The primary beneficiaries are entities within the U.S. defense industrial base involved in advanced missile and space systems research and development. The services delivered include research, development, testing, and evaluation of advanced technologies for missile and space systems. The geographic impact is likely concentrated around the contractor's facilities and relevant defense research centers, with potential implications for the national aerospace and defense workforce. This contract supports the development of critical defense capabilities, contributing to national security objectives.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Significant cost growth from initial award to final expenditure.
- Extended contract duration beyond original end date, suggesting potential for scope creep or evolving requirements.
- Lack of clarity on the specific drivers for the substantial cost increase.
- Potential for cost overruns in complex R&D projects if not managed tightly.
Positive Signals
- Contract was awarded through full and open competition, promoting a competitive environment.
- Contractor is involved in advanced technology development, contributing to critical defense capabilities.
- The contract supported research and development in a key strategic area for national security.
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on missile and space systems. This is a highly specialized and capital-intensive area within the broader aerospace and defense industry. The market is characterized by significant government investment, long development cycles, and a need for cutting-edge technological innovation. Comparable spending benchmarks would typically involve other large-scale R&D contracts awarded by the Department of Defense for advanced weapon systems or space technologies.
Small Business Impact
There is no indication that this contract involved small business set-asides. Given the nature of advanced missile and space systems R&D, the prime contract was likely awarded to a large defense contractor. Subcontracting opportunities for small businesses may exist, but they are not explicitly detailed in the provided data. The focus appears to be on prime contractor capabilities in highly specialized technological domains.
Oversight & Accountability
Oversight for this contract would typically fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would include performance reviews, milestone tracking, and financial audits. Transparency is facilitated through contract databases like FPDS, though detailed operational oversight specifics are not provided.
Related Government Programs
- Missile Defense Systems
- Space Systems Development
- Advanced Technology Research
- Department of Defense R&D Programs
- Aerospace Engineering Services
Risk Flags
- Significant Cost Growth
- Extended Contract Duration
- Potential for Scope Creep
- Complex R&D Project
Tags
defense, department-of-defense, research-and-development, missile-systems, space-systems, definitive-contract, cost-plus-award-fee, full-and-open-competition, advanced-technology, virginia, itt-industries, rdte
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $60.2 million to PERATON INC.. 200602!600137!2100!W9113M!USA SPACE AND STRATEGIC DEF CDR !W9113M05C0219 !A!N! !N! ! !20051129!20061128!120731484!120731484!001216845!N!ITT INDUSTRIES, INC !2560 HUNTINGTON AVE 200 !ALEXANDRIA !VA!22303!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000000152000!N!N!000000000000!AC23!RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV !A2 !MISSILE AND SPACE SYSTEMS !CAA !MDA SUPPORT !541710!E! !3! ! ! ! ! !999
Who is the contractor on this award?
The obligated recipient is PERATON INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $60.2 million.
What is the period of performance?
Start: 2005-11-29. End: 2016-04-19.
What were the primary technical challenges or scope changes that led to the significant cost growth from the initial award to the final expenditure?
The provided data indicates a substantial increase from an initial award value of $12,073,148.40 to a final cost of $60,205,354.13 over the contract's extended period. While the specific technical challenges or scope changes are not detailed, such significant growth in a Cost Plus Award Fee (CPAF) contract for Research, Development, Test, and Evaluation (RDTE) often stems from evolving requirements, unforeseen technical hurdles in advanced development, or the incorporation of new technological objectives. The extended duration (original end date 2006-11-28, final completion 2016-04-19) further suggests that the project's trajectory diverged considerably from initial projections, necessitating additional funding to achieve its objectives or adapt to new strategic needs within the missile and space domain.
How does the final cost of this contract compare to similar R&D contracts for missile and space systems awarded by the DoD during the same period?
Benchmarking this contract's final cost of $60.2 million requires comparison with similar RDTE contracts for missile and space systems. The DoD awards numerous contracts in this domain, ranging from component development to full system integration. Contracts with similar scope and complexity, especially those involving cutting-edge technologies and extended development cycles, can also incur significant costs. However, the nearly 400% increase from the initial award value is a notable deviation. Without access to a detailed database of comparable contracts, including their initial estimates, modifications, and final costs, a precise comparison is difficult. Nevertheless, such a substantial cost overrun warrants investigation to ensure it aligns with industry norms for high-risk, high-reward R&D or indicates potential inefficiencies.
What was the contractor's performance history with the DoD prior to and during this contract, and did it influence the contract's modifications or cost trajectory?
ITT Industries, Inc. (later part of Exelis, then acquired by Harris Corporation, now L3Harris Technologies) has a long history of contracting with the U.S. Department of Defense, particularly in areas related to aerospace, defense electronics, and information technology. While the provided data does not detail ITT's specific performance metrics on this particular contract (W9113M05C0219), their established presence suggests a capacity to handle complex R&D projects. Performance history is a critical factor in CPAF contracts, influencing award fees and potentially the decision to modify or extend contracts. If ITT demonstrated strong performance, it might have supported contract extensions and modifications to pursue evolving technological goals. Conversely, performance issues could lead to stricter oversight or limitations, though the significant cost growth here suggests the project's demands likely outstripped initial planning regardless of performance.
What are the implications of the contract's extended duration (nearly 11 years from award to final completion) for program effectiveness and technological relevance?
An extended duration of nearly 11 years for an R&D contract in missile and space systems has significant implications. On the positive side, it allowed for sustained development and adaptation to evolving technological landscapes and strategic requirements, potentially leading to more mature and relevant end-products. However, such long timelines in rapidly advancing fields like aerospace and defense also carry risks. Technologies developed early in the contract might become obsolete by its conclusion, or the program's objectives might shift so dramatically that its original purpose is diluted. Ensuring program effectiveness requires continuous alignment with current and future defense needs, robust project management to maintain focus, and a clear strategy for transitioning developed technologies into operational use before they lose their strategic advantage.
How did the 'Cost Plus Award Fee' (CPAF) contract type influence the final cost and contractor incentives for this project?
The Cost Plus Award Fee (CPAF) contract type is designed to incentivize contractor performance by allowing the contractor to recover allowable costs plus a fee that is composed of a base fee plus a potential award amount. This structure aims to balance the government's need for flexibility in R&D projects with the contractor's motivation to achieve specific performance targets. For this contract (W9113M05C0219), the CPAF structure likely encouraged ITT Industries, Inc. to pursue the project's objectives diligently. The significant cost growth to $60.2 million suggests that allowable costs were substantial. The 'award fee' component would have been contingent on meeting pre-defined performance criteria, potentially related to technical milestones, schedule adherence (within modifications), and quality. The final fee amount would reflect the government's assessment of ITT's performance against these criteria.
What is the significance of the NAICS code 541710 (Research and Development in the Physical, Engineering, and Life Sciences) in the context of this contract's spending?
The NAICS code 541710 signifies that this contract was primarily for research and development activities within the physical, engineering, and life sciences. For a missile and space systems contract, this code accurately reflects the nature of the work, which involves scientific discovery, experimental development, and the application of research findings to create new or improved materials, devices, systems, or processes. Spending under this code by the Department of Defense is substantial and represents a critical investment in maintaining technological superiority and developing future defense capabilities. It encompasses a wide range of activities, from basic research to applied research and experimental development, all aimed at advancing the state-of-the-art in relevant scientific and engineering fields.
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 › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 12975 WORLDGATE DR STE 7322, HERNDON, VA, 20170
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Consolidated Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2005-11-29
Current End Date: 2016-04-19
Potential End Date: 2016-04-19 00:00:00
Last Modified: 2025-12-31
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