DoD's $78.8M R&D contract with Penn State University awarded on a sole-source basis

Contract Overview

Contract Amount: $78,818,303 ($78.8M)

Contractor: THE Pennsylvania State University

Awarding Agency: Department of Defense

Start Date: 2006-12-18

End Date: 2014-02-07

Contract Duration: 2,608 days

Daily Burn Rate: $30.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: RESEARCH & DEV.

Place of Performance

Location: UNIVERSITY PARK, CENTRE County, PENNSYLVANIA, 16802

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $78.8 million to THE PENNSYLVANIA STATE UNIVERSITY for work described as: RESEARCH & DEV. Key points: 1. Contract awarded non-competitively, raising questions about potential value for money. 2. Long duration of over 8 years suggests a significant, ongoing research effort. 3. Cost-Plus-Fixed-Fee contract type may incentivize cost overruns. 4. Lack of competition limits opportunities for price discovery and potentially increases costs. 5. Performance context is R&D in physical, engineering, and life sciences, a broad category. 6. Sector positioning is within Defense R&D, a critical but often high-cost area.

Value Assessment

Rating: questionable

Benchmarking value for a sole-source R&D contract is challenging without comparable bids. The Cost-Plus-Fixed-Fee structure, while common for R&D where scope can evolve, carries inherent risks of cost escalation. Without competitive pressure, it's difficult to ascertain if the fixed fee adequately reflects the effort or if the overall cost is optimized. The total award value of $78.8 million over nearly 8 years indicates a substantial investment, but its cost-effectiveness is not readily apparent due to the lack of competitive data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The Department of the Navy likely justified this approach based on specific capabilities or existing relationships with The Pennsylvania State University. The absence of multiple bidders means there was no direct price competition, which can lead to higher costs for the government compared to a fully competed contract. This limits the government's ability to leverage market forces to achieve the best possible price.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding, potentially leading to a higher overall expenditure for the research conducted.

Public Impact

The primary beneficiary is The Pennsylvania State University, which receives significant funding for its research activities. The contract supports research and development in physical, engineering, and life sciences, potentially leading to advancements in defense technology. Geographic impact is concentrated in Pennsylvania, where the university is located, supporting local economic activity and research infrastructure. Workforce implications include employment for researchers, technicians, and support staff at the university.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-Plus-Fixed-Fee contract type can incentivize higher spending if not closely managed.
Long contract duration (over 8 years) increases the risk of cost escalation and scope creep.
Lack of transparency inherent in sole-source awards makes independent value assessment difficult.

Positive Signals

Long-term funding for a single institution can foster deep expertise and stable research environments.
Potential for significant technological advancements in critical R&D areas for national security.
University research can contribute to scientific knowledge and innovation beyond immediate defense applications.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. The R&D sector is characterized by innovation, long development cycles, and often high upfront investment. Government spending in this area is crucial for technological advancement and national security. Comparable spending benchmarks are difficult to establish for unique R&D projects, but the $78.8 million awarded over eight years represents a substantial commitment to a single research entity.

Small Business Impact

There is no indication that this contract included small business set-asides. As a sole-source award to a large university, it is unlikely to involve significant subcontracting opportunities for small businesses unless specifically mandated. The focus is on institutional research capacity rather than leveraging the broader small business industrial base.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is limited due to the sole-source nature, but reporting requirements for R&D contracts usually include progress reports and financial accountability.

Related Government Programs

Department of Defense Research and Development Programs
University Research Grants
Navy Science and Technology Programs
Physical Sciences Research Contracts
Engineering Research Contracts
Life Sciences Research Contracts

Risk Flags

Sole-source award
Cost-Plus-Fixed-Fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.8 million to THE PENNSYLVANIA STATE UNIVERSITY. RESEARCH & DEV.

Who is the contractor on this award?

The obligated recipient is THE PENNSYLVANIA STATE UNIVERSITY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $78.8 million.

What is the period of performance?

Start: 2006-12-18. End: 2014-02-07.

What specific research outcomes were expected from this $78.8 million contract with The Pennsylvania State University?

The provided data indicates the contract was for 'Research and Development in the Physical, Engineering, and Life Sciences' (NAICS 541710). Specific research outcomes are not detailed in the summary data. Typically, such contracts would outline objectives related to advancing scientific knowledge, developing new technologies, or solving specific engineering or scientific challenges relevant to the Department of the Navy's mission. The long duration suggests a multi-faceted research program rather than a single, narrowly defined objective. Without access to the contract's statement of work or performance reports, the precise expected outcomes remain unspecified in this summary.

How does the Cost-Plus-Fixed-Fee (CPFF) contract type compare to other R&D contract types in terms of risk and value for the government?

The Cost-Plus-Fixed-Fee (CPFF) contract type is common for research and development where the scope of work can be uncertain or evolve. It reimburses the contractor for allowable costs plus a fixed fee representing profit. While it allows flexibility for R&D, it carries a higher risk of cost overruns for the government compared to fixed-price contracts, as the contractor is incentivized to incur costs to perform the work, and the fee remains constant regardless of the final cost. Value for money under CPFF is highly dependent on robust government oversight, clear performance metrics, and effective negotiation of the fixed fee. If not managed diligently, CPFF contracts can be more expensive than competitively bid fixed-price contracts.

What are the potential risks associated with awarding a nearly $79 million contract on a sole-source basis for over 8 years?

The primary risk of a sole-source award is the lack of competition, which can lead to inflated prices and reduced value for money. Taxpayers may end up paying more than necessary because there was no market pressure to drive down costs. A long duration (over 8 years) exacerbates this risk, as it locks the government into a single provider for an extended period, limiting flexibility and the opportunity to re-evaluate options or benefit from market changes. Furthermore, sole-source awards can create a perception of favoritism and may not always result in the best available technology or approach if other capable sources were not considered. Robust justification and oversight are critical to mitigate these risks.

What is the typical track record of The Pennsylvania State University as a government contractor, particularly with the Department of Defense?

The Pennsylvania State University (PSU) has a long and extensive history of receiving federal funding, particularly for research and development, from various agencies including the Department of Defense (DoD). Universities like PSU are major players in the federal R&D landscape, often securing significant contracts and grants due to their established research infrastructure, faculty expertise, and track record. While specific performance metrics for individual contracts are not provided here, PSU's consistent receipt of substantial federal funding suggests a generally positive track record in fulfilling research obligations. However, like any large contractor, individual contract performance can vary.

How does the $78.8 million total award value compare to other R&D contracts in the physical, engineering, and life sciences sector awarded by the DoD?

The $78.8 million total award value over approximately 8 years for this contract is substantial but falls within the range of significant R&D investments made by the Department of Defense. The DoD funds numerous large-scale research initiatives, often exceeding hundreds of millions of dollars, particularly in areas like advanced materials, aerospace engineering, and biomedical research. While this specific contract's value is considerable for a single award to one institution, it is not exceptionally large in the context of the DoD's overall R&D budget, which supports a wide array of projects across numerous universities, research institutions, and private companies. Its significance is amplified by its sole-source nature and long duration.

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 › General Science and Technology R&D Services

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: 408 OLD MAIN, UNIVERSITY PARK, PA, 15

Business Categories: Category Business, Educational Institution, Higher Education, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $138,675,606

Exercised Options: $138,675,606

Current Obligation: $78,818,303

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0002402D6604

IDV Type: IDC

Timeline