DoD's $196M missile and space systems R&D contract awarded to Spectrum Astro Inc. shows potential value concerns

Contract Overview

Contract Amount: $85,486,235 ($85.5M)

Contractor: Orbital Sciences LLC

Awarding Agency: Department of Defense

Start Date: 2001-02-21

End Date: 2009-11-14

Contract Duration: 3,188 days

Daily Burn Rate: $26.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: 200111!000049!5700!GZ24 !SMC/PKB !F0470101C0203 !A!N!*!N! !20010221!20041129!196066807!196066807!196066807!N!SPECTRUM ASTRO INC !1440 N FIESTA BLVD !GILBERT !AZ!85233!27400!013!04!GILBERT !MARICOPA !ARIZONA !+000014134000!N!N!000000000000!AC26!RDTE/MISSILE AND SPACE SYSTEMS-MGMT SUPPORT !A2 !MISSILE AND SPACE SYSTEMS !3000!NOT DISCERNABLE OR CLASSIFIED !541710!*!*!3! ! ! !*!*!*!B!*!*!A! !A !U!R!2!002!B! !Z!N!Z! ! !N!B!Y!N! ! !C! !A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $85.5 million to ORBITAL SCIENCES LLC for work described as: 200111!000049!5700!GZ24 !SMC/PKB !F0470101C0203 !A!N!*!N! !20010221!20041129!196066807!196066807!196066807!N!SPECTRUM ASTRO INC !1440 N FIESTA BLVD !GILBERT !AZ!85233!27400!013!04!GILBERT !MARIC… Key points: 1. The contract's cost-plus-award-fee structure may incentivize spending without strict cost controls. 2. Limited competition information available for this contract raises questions about price discovery. 3. The contract duration of over 8 years suggests a long-term commitment with potential for cost overruns. 4. The 'Not Discernible or Classified' nature of some details hinders a full assessment of performance. 5. Research and Development in Missile and Space Systems is a critical but complex sector for oversight.

Value Assessment

Rating: questionable

The total award amount of $196,066,807 over a period of approximately 8 years presents a significant investment. Without detailed performance metrics or comparable contract data, it is difficult to definitively benchmark the value for money. The cost-plus-award-fee (CPAF) contract type, while allowing for flexibility in R&D, can sometimes lead to higher costs if not managed rigorously, as the contractor is reimbursed for allowable costs plus a fee that is based on performance. This structure warrants close monitoring to ensure taxpayer funds are used efficiently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the specific number of bidders and the details of the competitive process are not readily available in the provided data. Full and open competition is generally expected to foster a competitive environment that drives down prices and encourages innovation. The absence of detailed competition metrics makes it challenging to assess the extent to which this objective was achieved for this particular contract.

Taxpayer Impact: While full and open competition is a positive indicator for taxpayers, the lack of specific details on the bidding process prevents a precise assessment of the competitive pressure exerted on the contractor.

Public Impact

The primary beneficiaries are likely the Department of Defense and its various branches requiring advanced missile and space systems. The contract supports the development and management of critical missile and space systems, enhancing national security capabilities. The geographic impact is primarily centered around the contractor's location in Gilbert, Arizona, and potentially other research facilities. The contract likely supports a specialized workforce in aerospace engineering, research, and development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-award-fee structure may lead to less cost control compared to fixed-price contracts.
Limited transparency on specific performance metrics and outcomes makes value assessment difficult.
Long contract duration increases the risk of scope creep and cost escalation over time.
Lack of detailed competition data hinders assessment of price reasonableness.

Positive Signals

Awarded under full and open competition, suggesting a broad initial search for qualified contractors.
Contractor is Spectrum Astro Inc., a known entity in the aerospace sector.
Contract supports critical national security R&D in missile and space systems.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on 'Missile and Space Systems Management Support'. This is a highly specialized and critical area within the aerospace and defense industry. The market for such advanced R&D is typically characterized by a limited number of highly capable contractors. Benchmarking spending in this niche area is challenging due to the proprietary nature of much of the technology and the unique requirements of defense contracts.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, unless the prime contractor voluntarily engages small businesses for specific components or services.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services. Oversight mechanisms would typically include regular performance reviews, audits, and financial monitoring by the agency. The 'Not Discernable or Classified' elements may present challenges for full transparency and oversight, requiring specific protocols to ensure accountability.

Related Government Programs

Missile Defense Systems
Space Systems Development
Advanced Technology Research
Department of Defense Procurement

Risk Flags

Cost-Plus-Award-Fee structure
Long contract duration
Limited competition details available
Classified/Not Discernable information

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.5 million to ORBITAL SCIENCES LLC. 200111!000049!5700!GZ24 !SMC/PKB !F0470101C0203 !A!N!*!N! !20010221!20041129!196066807!196066807!196066807!N!SPECTRUM ASTRO INC !1440 N FIESTA BLVD !GILBERT !AZ!85233!27400!013!04!GILBERT !MARICOPA !ARIZONA !+000014134000!N!N!000000000000!AC26!RDTE/MISSILE AND SPACE SYSTEMS-MGMT SUPPORT !A2 !MISSILE AND SPACE SYSTEMS !3000!NOT DISCERNABLE OR CLASSIFIED !541710!*!*!3! ! ! !*!*!*!B!*!*!A!

Who is the contractor on this award?

The obligated recipient is ORBITAL SCIENCES LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $85.5 million.

What is the period of performance?

Start: 2001-02-21. End: 2009-11-14.

What is the track record of Spectrum Astro Inc. in managing similar large-scale R&D contracts for the Department of Defense?

Spectrum Astro Inc., now part of Northrop Grumman, has a history of involvement in significant aerospace and defense projects. While specific details on their performance for this particular $196 million contract are not fully elaborated in the provided data, their broader corporate history suggests experience with complex R&D initiatives. Assessing their track record would involve reviewing past performance evaluations, any documented issues or successes on similar contracts, and their overall reputation within the defense contracting community. Given the 'Not Discernable or Classified' nature of some contract details, a comprehensive review of their past performance on comparable missile and space systems R&D would be crucial for a complete understanding of their capabilities and reliability.

How does the cost-plus-award-fee (CPAF) structure of this contract compare to other R&D contracts in the missile and space systems sector?

The Cost-Plus-Award-Fee (CPAF) structure is common for research and development contracts where the scope of work can be uncertain and innovation is paramount. In a CPAF contract, the contractor is reimbursed for all allowable costs incurred and receives a base fee plus an award fee. The award fee is contingent upon meeting or exceeding specific performance objectives defined in the contract. Compared to fixed-price contracts, CPAF can offer more flexibility for the contractor to explore innovative solutions without immediate cost constraints. However, it also places a greater emphasis on robust government oversight to ensure that costs remain reasonable and that performance targets are met to justify the award fee. For missile and space systems R&D, where technological breakthroughs are often the goal, CPAF is a frequently utilized mechanism, though it requires diligent administration to ensure value for money.

What are the primary risks associated with the long duration (over 8 years) of this contract?

The extended duration of this contract, spanning from February 2001 to November 2009 (approximately 8 years and 9 months), introduces several key risks. Firstly, there is an increased likelihood of scope creep, where the project's objectives may evolve or expand over time, potentially leading to cost overruns and schedule delays. Secondly, technological obsolescence is a significant concern in the fast-paced fields of missile and space systems; by the end of the contract, the developed technologies might be outdated. Thirdly, maintaining consistent oversight and contractor performance over such a long period can be challenging for the contracting agency. Finally, economic fluctuations and changes in defense priorities could impact the contract's funding and relevance, necessitating potential modifications or even termination, which can incur additional costs.

Can the 'Not Discernable or Classified' information be obtained to better assess contract performance and value?

Information designated as 'Not Discernable or Classified' typically pertains to details that cannot be publicly disclosed due to national security concerns, proprietary restrictions, or the sensitive nature of the research. Obtaining such information would generally require appropriate security clearances and a 'need-to-know' basis, usually within the contracting agency or authorized oversight bodies. For external analysts or the general public, this classified or sensitive data remains inaccessible, inherently limiting the ability to conduct a fully transparent and comprehensive assessment of contract performance and value. While agencies strive for transparency where possible, national security imperatives often necessitate such redactions.

What is the historical spending trend for missile and space systems R&D within the Department of Defense?

Historical spending by the Department of Defense (DoD) on Research and Development (R&D) for missile and space systems has consistently been substantial, reflecting the strategic importance of these capabilities for national security. Over the years, significant investments have been channeled into areas such as missile defense, strategic deterrence, space-based intelligence, surveillance, and reconnaissance (ISR), and advanced propulsion systems. Funding levels often fluctuate based on geopolitical threats, technological advancements, and evolving defense strategies. While specific figures vary annually, the R&D budget for these domains typically represents a significant portion of the overall DoD R&D portfolio, underscoring the continuous need for innovation and modernization in these critical technological areas.

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 › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: Northrop Grumman Innovation Systems LLC (UEI: 618705925)

Address: 45101 WARP DR, DULLES, VA, 20166

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline