DoD's $10.3M R&D contract for design and fabrication awarded to MTS SYSTEMS CORPORATION

Contract Overview

Contract Amount: $10,297,731 ($10.3M)

Contractor: MTS Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2006-07-24

End Date: 2010-07-30

Contract Duration: 1,467 days

Daily Burn Rate: $7.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: DESIGN AND FABRICATION

Place of Performance

Location: EDEN PRAIRIE, HENNEPIN County, MINNESOTA, 55344

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $10.3 million to MTS SYSTEMS CORPORATION for work described as: DESIGN AND FABRICATION Key points: 1. Contract awarded for specialized research and development services. 2. MTS SYSTEMS CORPORATION is the sole contractor for this effort. 3. The contract duration spans over four years. 4. This award falls under the Research and Development in the Physical, Engineering, and Life Sciences NAICS code. 5. The contract type is Cost Plus Fixed Fee, indicating potential for cost overruns. 6. The award was made by the Department of the Army. 7. The contract was not competed, raising questions about price discovery.

Value Assessment

Rating: questionable

Benchmarking the value of this Cost Plus Fixed Fee contract is challenging without detailed cost breakdowns and performance metrics. The lack of competition limits the ability to assess if the pricing is competitive. Given the R&D nature, cost escalation is a possibility, and the fixed fee component needs careful monitoring to ensure it remains reasonable for the work performed. Without comparable contracts or market data, a definitive value-for-money assessment is difficult.

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. The justification for this approach is not provided in the data. Sole-source awards can sometimes be necessary for highly specialized or proprietary technologies, but they also reduce the government's ability to secure the best possible price through competitive bidding.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from the price reductions typically achieved through a competitive bidding process.

Public Impact

The Department of the Army benefits from specialized research and fabrication capabilities. This contract supports advancements in physical, engineering, and life sciences research. The geographic impact is centered in Minnesota, where MTS SYSTEMS CORPORATION is located. The contract likely supports a specialized technical workforce within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing.
Cost Plus Fixed Fee contracts carry inherent risks of cost escalation.
Limited transparency due to sole-source award and lack of detailed performance data.

Positive Signals

Contract supports critical R&D in physical, engineering, and life sciences.
Long-term duration suggests a sustained need for the contractor's expertise.
Award to a specific company indicates specialized capabilities.

Sector Analysis

This contract falls within the Research and Development sector, specifically NAICS code 541710. This sector is characterized by innovation and the creation of new knowledge and capabilities. Federal spending in R&D is crucial for national security, technological advancement, and economic competitiveness. Comparable spending benchmarks would typically involve other R&D contracts within the Department of Defense or other federal agencies focused on similar scientific disciplines.

Small Business Impact

The provided data does not indicate any small business set-aside or subcontracting requirements for this contract. As a sole-source award to a specific corporation, it is unlikely that small businesses were directly involved in the bidding process. Further investigation would be needed to determine if any subcontracting opportunities were extended to small businesses by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of the Army. Accountability measures would be tied to the Cost Plus Fixed Fee structure, requiring detailed reporting and justification of costs. Transparency is limited due to the sole-source nature and the proprietary aspects of R&D, but contract performance reviews and audits would be standard oversight mechanisms.

Related Government Programs

Department of Defense Research and Development Contracts
Cost Plus Fixed Fee Contracts
Sole Source R&D Awards
Army Research Laboratory Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Cost Plus Fixed Fee contract type increases risk of cost escalation.
Limited transparency on specific R&D deliverables and performance.
Long contract duration for R&D may not adapt to evolving needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.3 million to MTS SYSTEMS CORPORATION. DESIGN AND FABRICATION

Who is the contractor on this award?

The obligated recipient is MTS SYSTEMS CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $10.3 million.

What is the period of performance?

Start: 2006-07-24. End: 2010-07-30.

What is the specific nature of the 'design and fabrication' work performed under this contract?

The data provided does not specify the exact nature of the 'design and fabrication' work. However, given the NAICS code 541710 (Research and Development in the Physical, Engineering, and Life Sciences), it is highly probable that the work involves the creation of prototypes, specialized equipment, or components resulting from research efforts. This could range from advanced materials testing apparatus to complex engineering models or experimental systems. Further details would typically be found in the contract's statement of work, which is not included in the provided data.

Why was this contract awarded on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT COMPETED' and is 'sole-source'. The specific justification for this sole-source award is not detailed in the data. Common reasons for sole-source awards in R&D include the unique capabilities of a single contractor, the proprietary nature of the technology being developed, or a critical need that cannot be met through competitive means within the required timeframe. Without the official justification document, the precise reason remains unknown, but it implies that MTS SYSTEMS CORPORATION was deemed the only viable source for this particular requirement.

How does the Cost Plus Fixed Fee (CPFF) contract type impact the overall cost and risk for the government?

The Cost Plus Fixed Fee (CPFF) contract type allows the contractor to recover all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used for R&D or services where the scope is not well-defined, making it difficult to estimate costs accurately upfront. For the government, the primary risk is cost overrun, as the contractor is incentivized to incur costs to perform the work, but their profit is fixed. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to manage this risk and ensure value for money. The fixed fee, however, provides some predictability regarding the contractor's profit margin.

What is the track record of MTS SYSTEMS CORPORATION with federal contracts, particularly with the Department of Defense?

The provided data indicates MTS SYSTEMS CORPORATION has received this $10.3 million contract from the Department of the Army. To assess their broader track record, one would need to examine historical contract awards to this entity across all federal agencies. Key areas to investigate would include the types of services provided, contract values, performance ratings (if available), and any history of contract disputes or terminations. A comprehensive review would reveal their experience level, reliability, and past performance in fulfilling government requirements, especially within the defense sector.

Are there any comparable R&D contracts awarded by the Department of Defense for similar design and fabrication services?

The provided data does not include information on comparable contracts. To identify similar R&D contracts for design and fabrication services within the Department of Defense, a search of federal procurement databases (like FPDS or SAM.gov) would be necessary. This search would ideally filter by relevant NAICS codes (e.g., 541710), contract types (e.g., CPFF), and agencies. Comparing award values, durations, and contractor performance for similar efforts would help benchmark the value and necessity of the MTS SYSTEMS CORPORATION contract.

What are the potential risks associated with a four-year R&D contract awarded on a sole-source basis?

A four-year R&D contract awarded on a sole-source basis carries several potential risks. Firstly, the lack of competition means the government may not be achieving the most cost-effective solution. Secondly, the extended duration for R&D work, which can be inherently uncertain, increases the risk of cost overruns, especially under a CPFF structure. Without competitive pressure, there might be less incentive for the contractor to innovate aggressively or manage costs tightly. Furthermore, the government is locked into a single provider, limiting flexibility if new technologies or better-suited contractors emerge during the contract period.

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 › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 14000 TECHNOLOGY DR, EDEN PRAIRIE, MN, 03

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $10,846,174

Exercised Options: $10,634,313

Current Obligation: $10,297,731

Contract Characteristics

Cost or Pricing Data: YES

Timeline