DoD's $29.7M R&D contract with AI Signal Research Inc. shows fair value despite limited competition

Contract Overview

Contract Amount: $29,714,544 ($29.7M)

Contractor: AI Signal Research Inc

Awarding Agency: Department of Defense

Start Date: 2014-05-23

End Date: 2018-09-30

Contract Duration: 1,591 days

Daily Burn Rate: $18.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: INITIATE ORDER PERIOD 4

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $29.7 million to AI SIGNAL RESEARCH INC for work described as: INITIATE ORDER PERIOD 4 Key points: 1. Contract awarded for R&D in physical, engineering, and life sciences. 2. AI Signal Research Inc. is the sole contractor for this specific award. 3. The contract duration spans over 1500 days, indicating a long-term project. 4. Awarded under full and open competition after exclusion of sources, suggesting a specific justification for limited bidding. 5. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 6. Geographic location of performance is Alabama. 7. The North American Industry Classification System (NAICS) code is 541712, focusing on R&D services.

Value Assessment

Rating: fair

Benchmarking the value of this $29.7 million contract is challenging without more detailed performance metrics and comparable R&D projects. The Cost Plus Fixed Fee (CPFF) structure means the government pays the actual costs plus a fixed fee, which can be less predictable than fixed-price contracts. However, CPFF contracts are often used when the scope of work is not well-defined, allowing for flexibility in research and development. The pricing appears reasonable for a multi-year R&D effort, but a deeper dive into the fixed fee percentage and the contractor's historical performance would provide a clearer picture of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while the initial solicitation might have been open, specific sources were later excluded, or the competition was limited to a pre-qualified list. The exact number of bidders is not provided, but the 'exclusion of sources' suggests a potentially narrower field than a truly open competition. This limited competition could impact price discovery, potentially leading to higher costs than if a broader range of vendors had participated.

Taxpayer Impact: The limited competition may mean taxpayers did not benefit from the lowest possible price achievable through a wider bidding process. It suggests that either only a few entities possessed the required specialized capabilities, or specific justifications led to the exclusion of other potential offerors.

Public Impact

The primary beneficiary is the Department of Defense, which receives advanced research and development services. The contract supports innovation in physical, engineering, and life sciences, potentially leading to new technologies and capabilities. Performance is concentrated in Alabama, potentially creating or sustaining high-skilled jobs in the region. The research outcomes could have broader implications for national security and technological advancement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type introduces potential for cost overruns if not closely monitored.
Limited competition ('after exclusion of sources') may have restricted price discovery and potentially increased costs for taxpayers.
Lack of specific performance metrics makes it difficult to fully assess the value and effectiveness of the R&D investment.
The contract duration is substantial (over 4 years), requiring sustained oversight to ensure continued relevance and efficiency.

Positive Signals

The contract is for Research and Development, a critical area for technological advancement.
The contractor, AI Signal Research Inc., is specialized in this R&D domain.
The award was made by the Department of the Army, a major component of the DoD.
The contract is being performed in Alabama, potentially benefiting the local economy and workforce.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically NAICS code 541712. This sector is characterized by innovation and the pursuit of new knowledge and applications. Federal spending in R&D is crucial for maintaining technological superiority and addressing national challenges. Comparable spending benchmarks would involve analyzing other DoD R&D contracts, particularly those focused on physical, engineering, and life sciences, to assess the scale and pricing relative to similar investments.

Small Business Impact

The provided data indicates that small business participation (ss and sb fields) is false for this specific contract. This suggests that the prime contract was not set aside for small businesses, nor does it appear to have explicit subcontracting goals for small businesses mandated in this award. Consequently, the direct impact on the small business ecosystem through this particular contract is likely minimal, unless the prime contractor voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be tied to the Cost Plus Fixed Fee structure, requiring detailed cost reporting and justification from the contractor. Transparency is facilitated through contract databases like FPDS, but detailed R&D progress reports are often sensitive. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Research and Development Programs
Army Research Laboratory Contracts
Advanced Technology Development Contracts
Physical Sciences Research Contracts
Engineering Sciences Research Contracts
Life Sciences Research Contracts

Risk Flags

Limited competition justification requires scrutiny.
Cost Plus Fixed Fee contract necessitates robust cost oversight.
Potential for scope creep in R&D projects.
Performance metrics and value assessment require further detail.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.7 million to AI SIGNAL RESEARCH INC. INITIATE ORDER PERIOD 4

Who is the contractor on this award?

The obligated recipient is AI SIGNAL RESEARCH 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 $29.7 million.

What is the period of performance?

Start: 2014-05-23. End: 2018-09-30.

What is the track record of AI Signal Research Inc. with the federal government, particularly in R&D contracts?

AI Signal Research Inc. has a history of receiving federal contracts, primarily with the Department of Defense. Analyzing their past performance, including contract values, types (e.g., CPFF, FFP), and completion success, is crucial. A review of their contract history would reveal if they have consistently delivered on R&D projects, managed costs effectively under CPFF arrangements, and met technical objectives. Information on past performance evaluations, if available, would provide further insight into their reliability and capability as a government contractor in the R&D space. Their specialization in areas aligned with NAICS 541712 suggests a focused expertise.

How does the $29.7 million value compare to similar R&D contracts for physical, engineering, and life sciences?

The $29.7 million value for this multi-year R&D contract is within a typical range for specialized research projects undertaken by the Department of Defense. To establish a precise benchmark, one would need to compare it against contracts with similar scope, duration, and technical complexity awarded to other entities within the physical, engineering, and life sciences domains. Factors such as the novelty of the research, the required level of expertise, and the specific agency (e.g., Army, Navy, Air Force) influence contract values. Without access to a detailed database of comparable R&D efforts, it's difficult to definitively state if this represents a high, low, or average investment, but it signifies a substantial commitment to advancing specific scientific or technological areas.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D?

The primary risks associated with a CPFF contract for R&D revolve around cost control and potential for scope creep. Since the government agrees to cover all allowable costs plus a predetermined fixed fee, there is less financial incentive for the contractor to minimize costs compared to fixed-price contracts. This can lead to cost overruns if the R&D effort proves more complex or time-consuming than initially anticipated. Additionally, the flexibility inherent in R&D can sometimes lead to 'scope creep,' where the project's objectives expand beyond the original intent, further driving up costs. Effective oversight, rigorous cost monitoring, and clear definition of milestones are essential to mitigate these risks.

What does 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' imply for the procurement process and taxpayer value?

This specific procurement term, 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' suggests an initial intent for broad competition, but with subsequent limitations. It implies that after an initial solicitation or consideration phase, certain potential offerors were excluded based on specific criteria or justifications (e.g., lack of capability, national security concerns, or prior determinations). While it aims for a degree of openness, the exclusion of sources inherently narrows the competitive pool. This can potentially lead to less aggressive pricing than a truly unfettered full and open competition, as the number of viable bidders is reduced. Taxpayers may receive value through specialized capabilities, but the potential for higher costs due to limited competition warrants careful scrutiny of the justification for exclusion.

How has federal spending in the R&D sector (NAICS 541712) trended over the past five years?

Federal spending in the R&D sector, particularly under NAICS code 541712 (Research and Development in the Physical, Engineering, and Life Sciences), has generally seen consistent or increasing investment over the past five years. Agencies like the Department of Defense, National Science Foundation, and Department of Health and Human Services are major contributors. This trend reflects a strategic emphasis on innovation, technological advancement, and addressing complex national challenges. While specific year-over-year fluctuations can occur due to budget cycles and shifting priorities, the overall trajectory indicates a sustained commitment to funding scientific and engineering research. Analyzing detailed spending reports would reveal precise figures and agency-specific trends.

What are the potential long-term impacts of this R&D contract on technological advancement and national security?

This R&D contract has the potential for significant long-term impacts on both technological advancement and national security. By funding research in physical, engineering, and life sciences, the Department of Defense aims to develop cutting-edge capabilities that could provide a strategic advantage. Successful outcomes might lead to breakthroughs in areas such as materials science, artificial intelligence, advanced manufacturing, or biotechnology, which can have dual-use applications. These advancements could enhance military effectiveness, improve intelligence gathering, or lead to new defensive and offensive technologies. Furthermore, fostering domestic R&D strengthens the nation's innovation ecosystem and reduces reliance on foreign technologies, bolstering overall national security.

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 › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 3411 TRIANA BLVD SW, HUNTSVILLE, AL, 35805

Business Categories: Asian Pacific American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $60,642,538

Exercised Options: $60,642,538

Current Obligation: $29,714,544

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W31P4Q11D0008

IDV Type: IDC

Timeline