DoD's $4.3B R&D contract with Aerospace Corporation shows limited competition and potential value concerns

Contract Overview

Contract Amount: $4,288,177,894 ($4.3B)

Contractor: THE Aerospace Corporation

Awarding Agency: Department of Defense

Start Date: 2013-10-01

End Date: 2019-01-19

Contract Duration: 1,936 days

Daily Burn Rate: $2.2M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::CL::IGF AEROSPACE FFRDC CONTRACT FROM 1 OCT 2013 TO 30 SEPT 2018

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $4.29 billion to THE AEROSPACE CORPORATION for work described as: IGF::CL::IGF AEROSPACE FFRDC CONTRACT FROM 1 OCT 2013 TO 30 SEPT 2018 Key points: 1. The contract was awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. A significant portion of the contract value was spent on research and development, a sector prone to cost overruns. 3. The duration of the contract (over 5 years) and its sole-source nature warrant close scrutiny of performance and cost efficiency. 4. While the contractor is a Federally Funded Research and Development Center (FFRDC), the lack of competition is a notable risk indicator. 5. The contract's focus on R&D in physical, engineering, and life sciences suggests a need for specialized expertise, but competition could still be explored. 6. The absence of small business set-asides indicates a lack of focus on fostering small business participation in this high-value contract.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and FFRDC designation. However, the significant dollar amount over a five-year period, coupled with the lack of competitive bidding, raises concerns about whether the government received the best possible value. Without comparative pricing from other potential providers, it's difficult to definitively assess if the costs incurred were reasonable. The cost-plus-fixed-fee structure, while common for R&D, can also incentivize cost increases if not rigorously managed.

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 Aerospace Corporation is a Federally Funded Research and Development Center (FFRDC), which often leads to sole-source awards due to their unique capabilities and government-sponsored status. However, this lack of competition limits the government's ability to leverage market forces to achieve lower prices and potentially better terms.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from potential cost savings that could have arisen from a bidding process. This could translate to higher overall program costs.

Public Impact

The Department of Defense benefits from specialized research and development services provided by a trusted FFRDC. Services delivered include research and development in physical, engineering, and life sciences, supporting national security objectives. The geographic impact is primarily within California, where The Aerospace Corporation is headquartered. The contract supports a highly specialized workforce in R&D fields, contributing to the nation's scientific and technological base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost growth if not closely monitored.
Long contract duration (over 5 years) increases exposure to potential inefficiencies.
Lack of small business participation limits opportunities for smaller innovative firms.

Positive Signals

Award to an FFRDC ensures access to specialized, objective technical expertise.
Contract supports critical R&D for national security, aligning with government priorities.
The contractor has a long-standing relationship and proven track record with the government.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This sector is characterized by innovation, long development cycles, and often high costs. FFRDCs play a crucial role in providing specialized research capabilities to government agencies. Comparable spending in this area can vary widely depending on the specific research focus, but large-scale R&D contracts are common within defense and technology sectors.

Small Business Impact

This contract did not include any small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. The sole-source nature of the award to a large FFRDC inherently limits the direct inclusion of small businesses in the prime contracting role. This approach does not actively foster the small business ecosystem for this specific contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting agency (Department of the Air Force) and potentially the Department of Defense's Inspector General. Given the FFRDC status, there are often specific oversight frameworks in place. Transparency is generally maintained through contract reporting, but the sole-source nature means public scrutiny of the competitive process is absent. Accountability would stem from performance metrics and adherence to the contract's terms and conditions.

Related Government Programs

Defense Research and Development
Federally Funded Research and Development Centers (FFRDCs)
Aerospace Research Contracts
Engineering and Physical Sciences R&D
National Security Research

Risk Flags

Sole-source award
Lack of competition
High contract value
Cost-plus-fixed-fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $4.29 billion to THE AEROSPACE CORPORATION. IGF::CL::IGF AEROSPACE FFRDC CONTRACT FROM 1 OCT 2013 TO 30 SEPT 2018

Who is the contractor on this award?

The obligated recipient is THE AEROSPACE CORPORATION.

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 $4.29 billion.

What is the period of performance?

Start: 2013-10-01. End: 2019-01-19.

What is the track record of The Aerospace Corporation in delivering on similar R&D contracts for the Department of Defense?

The Aerospace Corporation, as an FFRDC, has a long and established history of supporting the Department of Defense (DoD) and other government agencies with research, development, and systems engineering services. They are known for their expertise in space systems, missile defense, and other advanced technologies critical to national security. Their track record generally indicates successful delivery of complex technical analyses, program support, and independent assessments. However, specific performance metrics and past issues on individual contracts are often not publicly detailed, making a granular assessment challenging. The longevity of their FFRDC status and continued funding by the DoD suggest a consistent level of performance that meets government requirements.

How does the cost of this contract compare to similar R&D efforts, considering it was sole-sourced?

Direct cost comparisons for sole-sourced contracts, especially those awarded to FFRDCs, are inherently difficult. The absence of a competitive bidding process means there are no alternative price proposals to benchmark against. The value proposition for sole-sourcing an FFRDC often lies in their unique expertise, objectivity, and long-term strategic alignment with government needs, rather than purely cost minimization. While the $4.3 billion over approximately five years is substantial, the government likely assessed it as reasonable based on the specialized nature of the work and the contractor's unique position. However, without competitive bids, it's impossible to definitively state if it represents the 'best value' in a purely price-driven sense. The cost-plus-fixed-fee structure also means that the final cost is subject to the actual expenses incurred, plus a negotiated fixed fee.

What are the primary risks associated with a sole-source R&D contract of this magnitude?

The primary risks associated with a sole-source R&D contract of this magnitude include potential lack of price competition, leading to higher costs than might be achieved through bidding. There's also a risk of complacency from the contractor, as the absence of competitive pressure might reduce incentives for aggressive cost control or innovation. Furthermore, without multiple bidders, there's a reduced opportunity to explore diverse technical approaches or benefit from the unique insights other potential contractors might offer. For R&D specifically, the inherent uncertainty of research outcomes poses a risk, and a sole-source award means the government is committed to a single path without the benefit of alternative perspectives that competition might provide. Ensuring robust oversight and performance management becomes even more critical in sole-source situations.

How effective is the FFRDC model, like The Aerospace Corporation, in fulfilling long-term R&D needs for the DoD?

The FFRDC model is generally considered highly effective for fulfilling long-term, strategic R&D needs for the DoD. FFRDCs provide a stable, objective, and technically proficient resource that can undertake complex, long-range research and development projects that might be too risky or require too much sustained investment for traditional for-profit contractors. They operate under a government charter, ensuring their focus remains on public interest and government needs, free from commercial conflicts of interest. Their ability to attract and retain specialized talent, maintain institutional knowledge, and provide independent analysis makes them invaluable partners for agencies like the DoD. The long-term nature of this contract suggests the DoD views the FFRDC model as essential for sustained technological advancement in critical areas.

What is the historical spending pattern for R&D contracts awarded on a sole-source basis by the Department of the Air Force?

The Department of the Air Force (DAF), like other branches of the DoD, utilizes sole-source contracts, particularly for specialized R&D efforts and when awarding to FFRDCs. Historical spending patterns show a consistent allocation of significant funds towards R&D, with a portion of these contracts being sole-sourced due to the unique nature of the requirements or the specialized capabilities of entities like The Aerospace Corporation. While the DAF aims to maximize competition whenever feasible, certain advanced research, critical infrastructure support, or classified programs may necessitate sole-source awards. Analyzing specific historical spending requires access to detailed contract databases, but the trend indicates that sole-source R&D awards are a recognized, albeit less common than competed, contracting strategy within the DAF for specific strategic needs.

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: RESEARCH AND DEVELOPMENT › Space 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: 2310 EAST 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: $4,386,995,877

Exercised Options: $4,386,995,077

Current Obligation: $4,288,177,894

Subaward Activity

Number of Subawards: 304

Total Subaward Amount: $46,372,852

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline