DoD's $518M R&D contract with Kwajalein Range Services, LLC, awarded in 2015, faced a unique award term transfer

Contract Overview

Contract Amount: $518,365,802 ($518.4M)

Contractor: Kwajalein Range Services, LLC

Awarding Agency: Department of Defense

Start Date: 2015-03-01

End Date: 2019-04-30

Contract Duration: 1,521 days

Daily Burn Rate: $340.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: IGF::OT::IGF SHELL CONTRACT TO TRANSFER UNEXERCISED AWARD TERM CLIN FROM CONTRACT DASG60-02-C-0074 DUE TO LIMITATIONS WITHIN THE DFARS AND PD REGARDING ACCOUNTING REFERENCE CLASSIFICATION NUMBERS.

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $518.4 million to KWAJALEIN RANGE SERVICES, LLC for work described as: IGF::OT::IGF SHELL CONTRACT TO TRANSFER UNEXERCISED AWARD TERM CLIN FROM CONTRACT DASG60-02-C-0074 DUE TO LIMITATIONS WITHIN THE DFARS AND PD REGARDING ACCOUNTING REFERENCE CLASSIFICATION NUMBERS. Key points: 1. The contract involved a complex transfer of an unexercised award term due to accounting classification limitations. 2. Research and Development in Physical, Engineering, and Life Sciences (except Biotechnology) was the primary NAICS code. 3. The contract was awarded under full and open competition, suggesting a robust bidding process. 4. The definitive contract type indicates a clear scope of work and pricing structure. 5. The contract duration was over 4 years, spanning from March 2015 to April 2019. 6. The contract was not set aside for small businesses, nor did it involve small business subcontracting. 7. The contract was awarded to Kwajalein Range Services, LLC, a single entity. 8. The contract's value of over $518 million positions it as a significant investment in R&D.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging due to the unique circumstances of the award term transfer and the specialized nature of R&D services. The total award value of $518,365,802.41 over approximately 4 years suggests a substantial investment. Without detailed performance metrics or comparable contracts for similar R&D activities at Kwajalein, a precise value-for-money assessment is difficult. The cost-plus award fee structure implies that contractor performance directly influenced the final payment, which can incentivize efficiency but also requires careful oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple bidders were likely considered. This approach is generally preferred as it fosters price discovery and allows the government to select the most advantageous offer. The presence of 3 bidders suggests a competitive landscape, though the specific details of the bidding process and the evaluation criteria are not provided. The competition level is a positive indicator for achieving fair market prices.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces and ensuring that the government receives the best value for its investment.

Public Impact

The primary beneficiaries are likely the Department of Defense and its research arms, which gain access to specialized R&D capabilities. The contract supports research and development activities crucial for advancing physical, engineering, and life sciences. The geographic impact is centered around Kwajalein Atoll, a key location for testing and research operations. The contract likely supports a specialized workforce in scientific and technical fields, contributing to the R&D ecosystem.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The complexity of the award term transfer due to accounting limitations may indicate potential administrative or regulatory challenges.
The cost-plus award fee structure, while incentivizing, can lead to higher costs if not managed with rigorous oversight.
The specialized nature of the R&D services may limit the pool of potential contractors, potentially impacting future competition.
The lack of small business involvement could mean missed opportunities for economic development and innovation within the small business sector.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should yield fair pricing.
The definitive contract type provides a clear framework for the scope of work and expected outcomes.
The contract's substantial value indicates a significant commitment to critical R&D activities.
The long duration of the contract suggests a stable and ongoing need for the services provided.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This sector is characterized by innovation, long-term investment, and often requires specialized facilities and expertise. The value of this contract, exceeding $518 million, places it among significant government investments in R&D. Comparable spending benchmarks would typically involve other large-scale R&D contracts awarded by agencies like the Department of Defense, NASA, or the National Science Foundation for similar scientific endeavors.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of small business subcontracting requirements. This means that opportunities for small businesses to participate in this specific contract were limited. While this may not directly impact the broader small business ecosystem, it represents a missed opportunity for small firms to contribute to significant R&D projects and gain valuable experience.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The cost-plus award fee structure necessitates robust performance monitoring and evaluation to ensure that award fees are justified. Transparency is generally maintained through contract databases and reporting requirements, though specific details of performance reviews are often internal. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Kwajalein Atoll Support Contracts
Advanced Technology Development Contracts
Aerospace and Defense R&D
Scientific Research Services

Risk Flags

Award Term Transfer Complexity
Cost-Plus Award Fee Oversight Needs
Specialized R&D Services Market
Limited Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $518.4 million to KWAJALEIN RANGE SERVICES, LLC. IGF::OT::IGF SHELL CONTRACT TO TRANSFER UNEXERCISED AWARD TERM CLIN FROM CONTRACT DASG60-02-C-0074 DUE TO LIMITATIONS WITHIN THE DFARS AND PD REGARDING ACCOUNTING REFERENCE CLASSIFICATION NUMBERS.

Who is the contractor on this award?

The obligated recipient is KWAJALEIN RANGE SERVICES, 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 $518.4 million.

What is the period of performance?

Start: 2015-03-01. End: 2019-04-30.

What was the specific reason for the award term transfer and what were the accounting limitations encountered?

The award term was transferred due to limitations within the DFARS (Defense Federal Acquisition Regulation Supplement) and PD (Program Director) regarding accounting reference classification numbers. This suggests a bureaucratic or regulatory hurdle that prevented the unexercised award term from being utilized under its original contract structure. The exact nature of these limitations would require a deeper dive into the specific DFARS clauses and internal Army policies in effect at the time. Such transfers are often complex and require justification to ensure compliance and proper financial management. The goal was to ensure the continuity of services without violating accounting regulations.

How did the cost-plus award fee (CPAF) structure influence contractor performance and final cost?

The Cost-Plus Award Fee (CPAF) structure is designed to incentivize contractor performance by linking a portion of the payment to achieving specific performance objectives, in addition to covering allowable costs. For this contract, Kwajalein Range Services, LLC would have received its base cost plus an award fee determined by the government's evaluation of its performance against pre-defined criteria. This structure encourages the contractor to go beyond minimum requirements to earn higher fees. However, it also places a significant burden on the government to establish clear, measurable performance metrics and conduct objective evaluations. Without this rigorous oversight, CPAF contracts can potentially lead to higher overall costs if award fees are granted generously or if performance metrics are not well-defined.

What is the significance of Kwajalein Range Services, LLC operating at Kwajalein Atoll for R&D?

Kwajalein Atoll is a critical U.S. military base and a unique location for missile defense testing, space surveillance, and other advanced research and development activities. Its remote location in the Pacific Ocean provides a vast, unpopulated area for testing and data collection, minimizing interference and safety risks. Companies like Kwajalein Range Services, LLC are essential for providing the infrastructure, technical support, and operational expertise required to conduct these complex R&D missions. Their presence ensures the continued capability of the U.S. to test and develop cutting-edge technologies in a secure and controlled environment, contributing significantly to national security and technological advancement.

Were there any performance issues or disputes associated with this contract during its term?

Information regarding specific performance issues or disputes on this contract is not readily available in the provided data. Contracts of this magnitude and duration, especially those involving complex R&D and CPAF structures, can sometimes encounter challenges. These might range from disagreements over performance evaluations affecting award fees to technical difficulties or schedule delays. However, the absence of readily accessible public records detailing disputes does not necessarily mean none occurred. It could also indicate that any issues were resolved internally through contract modifications or negotiations without escalating to formal disputes.

How does the $518M contract value compare to other R&D spending in the physical, engineering, and life sciences sector?

A contract valued at over $518 million for R&D in physical, engineering, and life sciences is substantial. Federal R&D spending is a significant portion of the national budget, with agencies like the Department of Defense, Department of Health and Human Services (including NIH), and the National Science Foundation being major contributors. While this specific contract represents a large single award, it is one of many investments made annually across the broader R&D landscape. To provide a precise comparison, one would need to analyze aggregate R&D spending data for the relevant fiscal years (2015-2019) across comparable agencies and scientific disciplines to understand its relative scale within the total federal R&D portfolio.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Bechtel Group, Inc.

Address: 4975 BRADFORD DR NW STE 600, HUNTSVILLE, AL, 35805

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $617,148,476

Exercised Options: $617,148,476

Current Obligation: $518,365,802

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline