DoD's $22M R&D contract with P E SYSTEMS, INC. awarded via sole-source procurement

Contract Overview

Contract Amount: $22,077,390 ($22.1M)

Contractor: P E Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-04-18

End Date: 2016-06-17

Contract Duration: 1,156 days

Daily Burn Rate: $19.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::CT::IGF PASS INTERIM CONTRACT

Place of Performance

Location: FAIRFAX, FAIRFAX CITY County, VIRGINIA, 22030

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $22.1 million to P E SYSTEMS, INC. for work described as: IGF::CT::IGF PASS INTERIM CONTRACT Key points: 1. Contract awarded on a sole-source basis, limiting competitive pressure on pricing. 2. Research and Development focus in Physical, Engineering, and Life Sciences. 3. Contract duration of 1156 days suggests a substantial, long-term project. 4. Awarded by the Department of the Air Force, indicating a specific defense need. 5. No small business set-aside, potentially limiting opportunities for smaller firms. 6. Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed scope of work and deliverables. However, the sole-source award and Cost Plus Fixed Fee structure suggest a higher risk of less favorable pricing compared to competitively bid fixed-price contracts. The absence of a clear per-unit cost metric makes direct value-for-money assessment difficult, relying more on the perceived necessity and outcome of the R&D.

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 among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when urgency dictates a rapid award. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards can mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This necessitates strong internal oversight to ensure the awarded price is fair and reasonable.

Public Impact

Benefits the Department of the Air Force by funding critical research and development. Services delivered are likely advanced scientific and engineering solutions. Geographic impact is centered in Virginia, where the contractor is located. Workforce implications include employment for specialized researchers and engineers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not closely managed.
Lack of transparency in the justification for sole-source award.
No indication of performance metrics or evaluation criteria in the provided data.

Positive Signals

Contract supports critical R&D for the Department of the Air Force.
P E SYSTEMS, INC. is a known entity in the defense contracting space.
Contract duration suggests a commitment to a specific, potentially important, research area.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for defense innovation. The market for R&D services is often specialized, with a few key players possessing the necessary expertise. Comparable spending benchmarks would depend heavily on the specific R&D domain, but significant government investment in defense R&D is common.

Small Business Impact

The contract data indicates that this was not a small business set-aside, nor does it mention any subcontracting requirements for small businesses. This suggests that opportunities for small businesses to participate in this specific R&D effort may have been limited, unless they were part of a larger subcontracting plan not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and Cost Plus Fixed Fee structure, rigorous oversight of costs, progress, and adherence to the Statement of Work would be crucial. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development Contracts
Air Force Science and Technology Programs
Physical and Engineering Sciences Research
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.1 million to P E SYSTEMS, INC.. IGF::CT::IGF PASS INTERIM CONTRACT

Who is the contractor on this award?

The obligated recipient is P E SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $22.1 million.

What is the period of performance?

Start: 2013-04-18. End: 2016-06-17.

What specific research and development activities were undertaken under this contract?

The provided data indicates the contract number and basic NAICS code (541712 - Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)), but does not detail the specific research objectives or deliverables. To understand the activities, one would need to consult the contract's Statement of Work (SOW) and any associated technical reports. These documents would outline the precise scientific or engineering problems being addressed, the methodologies employed, and the expected outcomes, such as prototypes, analyses, or new technologies.

How was the fair and reasonableness of the price determined for this sole-source contract?

For sole-source contracts, the government must conduct a price analysis to determine if the proposed price is fair and reasonable. This typically involves reviewing the contractor's cost and pricing data, comparing it to historical prices for similar work (if available), using cost estimating techniques, or referencing published commercial price lists. Given the Cost Plus Fixed Fee structure, the government would scrutinize the estimated costs and the fixed fee to ensure they align with the anticipated effort and risk. The Defense Contract Audit Agency (DCAA) often plays a role in auditing the contractor's cost proposals.

What is the track record of P E SYSTEMS, INC. with the Department of Defense, particularly in R&D contracts?

P E SYSTEMS, INC. has a history of receiving contracts from the Department of Defense. While specific performance details for this particular $22 million R&D contract are not provided, their continued awards suggest a level of capability and past performance deemed acceptable by the DoD. A deeper dive into contract databases and performance reviews (like Contractor Performance Assessment Reporting System - CPARS) would be necessary to fully assess their track record, including any past issues or exceptional performance in R&D or other areas.

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

CPFF contracts, while offering flexibility for R&D where scope can evolve, carry inherent risks. For the government, the primary risk is that the contractor may have less incentive to control costs, as the fee is fixed regardless of the final cost. This can lead to cost overruns if the initial cost estimates are inaccurate or if unforeseen challenges arise. For the contractor, there's a risk if the actual costs significantly exceed the estimated costs, as their profit margin (the fixed fee) remains constant. Effective oversight and clear performance metrics are crucial to mitigate these risks.

How does this contract compare to other R&D spending by the Air Force in similar domains?

Comparing this $22 million contract requires context on the specific R&D domain (physical, engineering, life sciences). The Air Force invests billions annually in R&D across various scientific and technological areas. This contract's value appears moderate within the broader R&D landscape. To assess its comparability, one would need to identify other Air Force contracts with similar NAICS codes, contract types (CPFF), and durations, and analyze their award values and scopes. Without more specific information on the R&D subject matter, a precise benchmark is difficult.

What is the significance of the contract being awarded in Virginia?

The contract being awarded to P E SYSTEMS, INC., located in Virginia, signifies that the funds are likely to be spent within that state, contributing to the local economy through employment and business activity. Virginia has a significant presence of defense contractors and government agencies, making it a hub for such contracts. This geographic concentration can also imply access to a skilled workforce and established infrastructure relevant to defense R&D.

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: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT 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: 10201 FAIRFAX BLVD STE 400, FAIRFAX, VA, 22030

Business Categories: Black American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $29,171,969

Exercised Options: $25,958,236

Current Obligation: $22,077,390

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline