NOAA awards $9.8M for space systems R&D, but competition concerns arise

Contract Overview

Contract Amount: $9,851,628 ($9.9M)

Contractor: THE Aerospace Corporation

Awarding Agency: Department of Commerce

Start Date: 2023-04-01

End Date: 2027-03-31

Contract Duration: 1,460 days

Daily Burn Rate: $6.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: SPACE SYSTEMS RESEARCH & DEVELOPMENT / ENGINEERING SUPPORT FOR OSPO

Place of Performance

Location: SUITLAND, PRINCE GEORGES County, MARYLAND, 20746

State: Maryland Government Spending

Plain-Language Summary

Department of Commerce obligated $9.9 million to THE AEROSPACE CORPORATION for work described as: SPACE SYSTEMS RESEARCH & DEVELOPMENT / ENGINEERING SUPPORT FOR OSPO Key points: 1. Contract focuses on critical space systems research and development. 2. Sole-source award raises questions about potential price overruns and limited innovation. 3. Long-term contract duration (4 years) requires careful performance monitoring. 4. The contractor, The Aerospace Corporation, has a significant role in space systems. 5. Lack of competition may limit opportunities for emerging small businesses in this sector. 6. The contract type (Cost Plus Fixed Fee) can incentivize cost escalation. 7. Geographic concentration in Maryland for contract performance.

Value Assessment

Rating: questionable

The contract value of $9.8 million for space systems R&D is moderate. However, without competitive bidding, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, carries inherent risks of cost overruns if not meticulously managed. The absence of competition means there's no direct market comparison to assess if the pricing is optimal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Aerospace Corporation, was solicited. This significantly limits the opportunity for price discovery and innovation that typically arises from a competitive bidding process. While sole-source awards can be justified for specialized expertise or urgent needs, the rationale for this specific award needs further scrutiny to ensure it serves the government's best interest.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition. Without competing offers, there is less pressure on the contractor to offer the most cost-effective solution, potentially leading to higher overall spending for the government.

Public Impact

The primary beneficiary is the National Oceanic and Atmospheric Administration (NOAA), which will receive advanced research and engineering support for its Office of Space and Advanced Projects (OSPO). The services delivered will enhance NOAA's capabilities in space systems, crucial for weather forecasting, climate monitoring, and space weather research. The contract's performance is concentrated in Maryland, potentially impacting the local high-tech workforce. This contract supports the development of technologies that underpin critical scientific and operational missions for the nation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost Plus Fixed Fee contract type can lead to cost escalation without strict oversight.
Lack of competition may stifle innovation and prevent the adoption of novel solutions.
Long contract duration requires sustained vigilance to ensure performance and value.
No explicit small business set-aside or subcontracting plan mentioned, potentially limiting small business participation.

Positive Signals

The Aerospace Corporation is a recognized expert in space systems, suggesting a high likelihood of technical competence.
The contract addresses a critical need for NOAA's space-related research and development.
The fixed fee component of the CPFF contract provides some level of cost predictability.
The contract duration allows for sustained focus on complex R&D objectives.

Sector Analysis

This contract falls within the Research and Development in the Physical, Engineering, and Life Sciences sector, specifically NAICS code 541715. This sector is characterized by high innovation and specialized expertise. The market for space systems R&D is often dominated by a few large, specialized contractors due to the complexity and security requirements. Comparable spending benchmarks are difficult to establish without competitive data, but significant government investment is typical for advanced space technologies.

Small Business Impact

This contract does not appear to have a small business set-aside, and the contractor, The Aerospace Corporation, is a large entity. The sole-source nature of the award further limits opportunities for small businesses to participate, either as prime contractors or potentially as subcontractors, unless specifically included by the prime. This could represent a missed opportunity to foster innovation and competition within the small business space technology ecosystem.

Oversight & Accountability

Oversight for this contract will be managed by the National Oceanic and Atmospheric Administration (NOAA). As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring are crucial to manage costs and ensure deliverables are met. Transparency will depend on NOAA's reporting practices and any available Inspector General reviews related to R&D contracts within the agency.

Related Government Programs

NASA Research and Development Contracts
DoD Space Systems Acquisition
National Science Foundation Research Grants
NOAA Satellite Operations and Research

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of small business participation potential

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $9.9 million to THE AEROSPACE CORPORATION. SPACE SYSTEMS RESEARCH & DEVELOPMENT / ENGINEERING SUPPORT FOR OSPO

Who is the contractor on this award?

The obligated recipient is THE AEROSPACE CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Commerce (National Oceanic and Atmospheric Administration).

What is the total obligated amount?

The obligated amount is $9.9 million.

What is the period of performance?

Start: 2023-04-01. End: 2027-03-31.

What is the specific justification for awarding this contract on a sole-source basis to The Aerospace Corporation?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified based on factors such as unique capabilities, urgent and compelling needs, or the unavailability of other sources. For this contract, NOAA would need to document why The Aerospace Corporation is the only entity capable of performing the required space systems research and development, or why competition was not feasible or practical. Without this documentation, it's difficult to assess if the sole-source decision was appropriate and served the government's best interest, potentially leading to higher costs for taxpayers compared to a competitive process.

How does the Cost Plus Fixed Fee (CPFF) contract structure compare to other R&D contract types in terms of risk and potential cost overruns?

The Cost Plus Fixed Fee (CPFF) contract type is common for research and development efforts where the scope of work may evolve or is not fully defined at the outset. It allows the contractor to recover all allowable costs plus a predetermined fixed fee, representing profit. While the fixed fee provides some incentive for the contractor to control costs (as it doesn't increase with higher costs), the primary risk of cost overrun lies with the government. Unlike fixed-price contracts, the government bears the risk of cost increases. This structure can incentivize contractors to incur costs, as they are reimbursed, making robust oversight and clear performance metrics essential to prevent excessive spending. Other R&D contract types, like Firm-Fixed-Price (FFP) or Cost-Plus-Incentive-Fee (CPIF), shift risk differently.

What is The Aerospace Corporation's track record with government R&D contracts, particularly with NOAA?

The Aerospace Corporation is a federally funded research and development center (FFRDC) with extensive experience in space systems engineering and development. They have a long-standing relationship with various government agencies, including NOAA and the Department of Defense, providing critical research, analysis, and technical support. Their track record generally indicates a high level of technical expertise and reliability in complex space-related projects. However, specific performance metrics and past issues related to cost control or schedule adherence on similar NOAA contracts would require a deeper dive into contract performance databases and agency reports.

What are the potential implications of this contract's sole-source nature on technological innovation in the space sector?

Awarding a contract on a sole-source basis, especially for R&D, can have significant implications for technological innovation. By not engaging in a competitive process, the government misses out on potentially diverse approaches and novel solutions that different companies might propose. Competition often drives innovation as firms strive to differentiate themselves and offer superior or more cost-effective technologies. A sole-source award to an incumbent or established entity, while potentially ensuring continuity, might inadvertently stifle the adoption of disruptive technologies or limit the growth of newer, innovative firms seeking to enter the market. This can lead to a slower pace of advancement or reliance on established, potentially less cutting-edge, methods.

How does the $9.8 million contract value compare to historical NOAA spending on similar space systems R&D efforts?

To accurately compare the $9.8 million contract value to historical NOAA spending on similar space systems R&D, one would need access to historical contract databases and NOAA's budget allocations for R&D over several fiscal years. Without this specific data, a direct comparison is not possible. However, R&D for space systems is inherently costly due to the specialized nature of the work, advanced technology requirements, and long development cycles. NOAA's mission relies heavily on space-based assets for weather, climate, and oceanic monitoring, suggesting that significant and sustained investment in R&D is typical. The value of this contract should be assessed within the context of NOAA's overall R&D budget and the specific objectives it aims to achieve.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2310 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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

Financial Breakdown

Contract Ceiling: $9,998,441

Exercised Options: $9,998,441

Current Obligation: $9,851,628

Actual Outlays: $5,654,540

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: 1332KP22DNEEG0002

IDV Type: IDC

Timeline