DoD's $87M contract for missile systems R&D awarded to Nichols Research Corp. shows significant cost growth

Contract Overview

Contract Amount: $87,012,408 ($87.0M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2001-04-02

End Date: 2006-01-31

Contract Duration: 1,765 days

Daily Burn Rate: $49.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: R&D

Official Description: 200107!001700!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0100D0012 !A!N!*!N!001101 !20010402!20011130!081390726!081390726!009581091!N!NICHOLS RESEARCH CORPORATION !4090 SOUTH MEMORIAL PARKWA!HUNTSVILLE !AL!35815!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000000374891!N!N!000000000000!AD92!RDTE/OTHER DEFENSE-APPLIED RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !1000!NOT DISCERNABLE OR CLASSIFIED !336414!*!*!5!B!S!H!*!*!*!B!*!*!A! !A !N!J!2!001!B! !C!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $87.0 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: 200107!001700!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0100D0012 !A!N!*!N!001101 !20010402!20011130!081390726!081390726!009581091!N!NICHOLS RESEARCH CORPORATION !4090 SOUTH MEMORIAL PARKWA!HUNTSVILLE !AL!35815!37000!089!01!HUNTSVILLE !MADIS… Key points: 1. Contract value increased by over $37M, indicating potential cost overruns or scope changes. 2. The contract was awarded through full and open competition, suggesting a competitive bidding process. 3. Performance was rated 'good', but the significant funding increase warrants scrutiny. 4. The contract falls under R&D for missile and space systems, a critical defense sector. 5. The contractor, Nichols Research Corporation, has a track record in defense contracting. 6. The contract's duration of nearly 5 years suggests a long-term project with evolving requirements.

Value Assessment

Rating: fair

The initial award amount was $40.9M, but the final value reached $87M, representing a substantial increase of over 112%. This growth significantly exceeds typical cost variances for R&D contracts of this nature. While the performance was rated 'good', the magnitude of the cost increase raises questions about initial pricing accuracy, scope creep, or unforeseen technical challenges. Benchmarking against similar missile systems R&D contracts would be necessary to fully assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of a competitive process is generally positive for price discovery. However, the significant cost growth post-award suggests that the initial competitive bids may not have fully anticipated the eventual project costs, or that the competitive pressure was insufficient to contain cost escalations over the contract's life.

Taxpayer Impact: Taxpayers benefit from the competitive process potentially driving down initial prices. However, the substantial cost growth indicates that the final expenditure was significantly higher than initially anticipated, potentially reducing the overall value for money.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense, receiving advanced missile and space systems research and development. The contract supports the development and enhancement of critical defense technologies, contributing to national security. The contract is geographically centered in Huntsville, Alabama, a known hub for aerospace and defense activities, potentially benefiting the local economy and workforce. The project likely involves highly skilled engineers, scientists, and technicians, contributing to the specialized defense workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from initial award to final value.
Potential for scope creep or underestimation of project complexity in initial bids.
Long contract duration could lead to evolving requirements and associated cost increases.

Positive Signals

Awarded through full and open competition, suggesting a robust initial bidding process.
Performance rated as 'good', indicating the contractor met key objectives.
Contract supports critical defense R&D in missile and space systems.

Sector Analysis

This contract falls within the Research, Development, Testing, and Evaluation (RDTE) sector, specifically focusing on 'Other Defense-Applied Research' related to missile and space systems. Huntsville, Alabama, is a major center for this type of work, often referred to as 'Rocket City'. The market for defense R&D is characterized by long-term government funding cycles, high technical barriers to entry, and significant competition among specialized contractors. Comparable spending benchmarks would typically be found within the Army's overall RDTE budget for missile programs.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses. Given the nature of advanced missile and space systems R&D, it is likely that the prime contractor is a large business. Subcontracting opportunities for small businesses may exist, but they would depend on the prime contractor's strategy and the specific technical needs of the project. The overall impact on the small business ecosystem is likely minimal unless significant subcontracting plans were mandated.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army, likely managed by the U.S. Army Aviation and Missile Command. Accountability measures would include performance reviews, milestone tracking, and financial audits. Transparency is generally limited for defense R&D contracts due to national security considerations, but contract awards and modifications are typically reported in federal databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems R&D
Advanced Weapons Systems Development
Army Research Laboratory Programs
Space Systems Engineering Contracts
Defense Applied Research Projects

Risk Flags

Significant Cost Growth
Potential Scope Creep
Long Contract Duration
High Value R&D Contract

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $87.0 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. 200107!001700!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0100D0012 !A!N!*!N!001101 !20010402!20011130!081390726!081390726!009581091!N!NICHOLS RESEARCH CORPORATION !4090 SOUTH MEMORIAL PARKWA!HUNTSVILLE !AL!35815!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000000374891!N!N!000000000000!AD92!RDTE/OTHER DEFENSE-APPLIED RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !1000!NOT DISCERNABLE OR CLASSIFIED !336414!*!*!5!B!S!H!*!*!*!B!*!*!A!

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $87.0 million.

What is the period of performance?

Start: 2001-04-02. End: 2006-01-31.

What was the specific nature of the R&D performed under this contract?

The contract data indicates the work was categorized under 'RDTE/OTHER DEFENSE-APPLIED RESEARCH' and specifically related to 'MISSILE AND SPACE SYSTEMS'. While the precise technical details of the research are often classified or proprietary, it likely involved the conceptualization, design, analysis, and potentially prototyping of advanced missile technologies and associated space systems. This could encompass areas such as guidance, propulsion, warheads, countermeasures, or integrated system performance for next-generation missile platforms.

How does the cost growth of over 112% compare to typical R&D contracts in the defense sector?

A cost growth exceeding 100% on a contract of this magnitude ($40.9M initial to $87M final) is considered substantial and significantly higher than average for many R&D contracts. While R&D inherently involves uncertainty and potential for unforeseen challenges that can lead to cost increases, such a large variance often suggests issues with initial cost estimation, significant scope changes during performance, or potentially inefficient project management. Benchmarking against contracts with similar technical complexity and duration within the DoD's RDTE portfolio would provide a more precise comparison, but this level of growth typically triggers closer scrutiny from oversight bodies.

What is the track record of Nichols Research Corporation with the Department of Defense?

Nichols Research Corporation, prior to its acquisition, was a known entity in the defense contracting space, particularly in areas related to missile technology and aerospace. The data shows this contract was awarded in 2001, and Nichols Research Corporation was later acquired by General Dynamics. Their historical performance with the DoD would have been evaluated through contract performance metrics, past performance reviews, and award fee determinations. This specific contract's 'good' performance rating suggests a generally positive execution, despite the cost growth.

What were the primary drivers for the significant increase in contract value?

The provided data does not explicitly detail the drivers for the $37.4M increase in contract value. However, common reasons for such significant growth in defense R&D contracts include unforeseen technical challenges requiring additional research or redesign, expansion of the contract's scope to include new research objectives or system components, inflation adjustments over a long performance period, or changes in government requirements. Without further documentation or a contract modification history, pinpointing the exact cause remains speculative, but it warrants investigation into contract amendments and program office justifications.

How did the 'good' performance rating align with the substantial cost growth?

A 'good' performance rating indicates that Nichols Research Corporation generally met the technical and schedule requirements outlined in the contract. This suggests that, despite the escalating costs, the contractor was successful in delivering the intended research and development outcomes. The discrepancy between strong performance and significant cost growth could imply that the initial budget was insufficient for the complexity of the task, or that the government approved additional funding to achieve the desired results, even at a higher cost. It highlights a potential tension between achieving technical objectives and maintaining cost control.

What is the significance of the contract being for 'MISSILE AND SPACE SYSTEMS' in Huntsville, AL?

Huntsville, Alabama, is a major hub for the U.S. Army's missile and space programs, home to the Redstone Arsenal and the U.S. Army Aviation and Missile Command (AMCOM). Awarding a contract for missile and space systems R&D to a contractor located in Huntsville leverages the existing ecosystem of expertise, infrastructure, and skilled workforce specialized in these areas. This geographic concentration facilitates collaboration, knowledge transfer, and access to specialized facilities, which can be advantageous for complex R&D projects critical to national defense.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 310 THE BRIDGE ST, HUNTSVILLE, AL, 35806

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

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: DAAH0100D0012

IDV Type: IDC

Timeline