DoD's $56M R&D contract with Orbital Sciences LLC shows potential for cost overruns and limited competition

Contract Overview

Contract Amount: $55,968,083 ($56.0M)

Contractor: Orbital Sciences LLC

Awarding Agency: Department of Defense

Start Date: 2007-11-07

End Date: 2015-02-15

Contract Duration: 2,657 days

Daily Burn Rate: $21.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: ANGELS

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $56.0 million to ORBITAL SCIENCES LLC for work described as: ANGELS Key points: 1. Contract awarded under full and open competition, but only four bids were received, suggesting potential limitations in market reach or contractor interest. 2. The contract type, Cost Plus Fixed Fee (CPFF), carries inherent risk of cost escalation, especially for R&D projects. 3. A duration of 2657 days (over 7 years) indicates a long-term, complex project with potential for evolving requirements and cost impacts. 4. The contract's focus on R&D in physical, engineering, and life sciences (NAICS 541712) is a critical area for technological advancement. 5. The award to Orbital Sciences LLC, a significant defense contractor, suggests a focus on established players for complex R&D. 6. The absence of small business set-asides (sb: false) means opportunities for smaller innovative firms may have been limited. 7. The contract was managed by the Defense Contract Management Agency (DCMA), indicating a focus on oversight for a significant DoD investment.

Value Assessment

Rating: questionable

Benchmarking the value of this R&D contract is challenging without specific deliverables and performance metrics. However, the Cost Plus Fixed Fee (CPFF) structure, combined with a long performance period, presents a higher risk for cost overruns compared to fixed-price contracts. The total award amount of $55.97 million over nearly seven years suggests a substantial investment, but the value proposition hinges on the successful development of the intended research outcomes. Without detailed performance data or comparisons to similar R&D efforts, it's difficult to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that all responsible sources were permitted to submit offers. However, the receipt of only four bids suggests that the market for this specific R&D requirement may be concentrated among a few large contractors, or that the solicitation's requirements were highly specialized, potentially deterring a broader range of bidders. This level of competition, while technically open, might not have driven the most aggressive pricing.

Taxpayer Impact: While the competition was open, the limited number of bidders could mean taxpayers did not benefit from the most competitive pricing achievable in a broader market. This could translate to higher costs for the research outcomes.

Public Impact

The primary beneficiaries are the Department of Defense, which stands to gain from advancements in physical, engineering, and life sciences research. The contract supports the development of new technologies and capabilities crucial for national security. The geographic impact is primarily within Virginia (SN: VIRGINIA), where the contract was managed. The workforce implications include employment for scientists, engineers, and support staff involved in advanced research and development activities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type increases the risk of cost overruns for taxpayers.
Limited number of bidders (4) in a 'full and open' competition may indicate a lack of robust market competition, potentially leading to suboptimal pricing.
Long contract duration (2657 days) increases the potential for scope creep and cost escalation over time.
Lack of specific performance metrics makes it difficult to assess the true value for money and contractor performance.
No indication of small business participation or subcontracting goals, potentially limiting opportunities for smaller innovative firms.

Positive Signals

Awarded under 'full and open competition,' theoretically allowing for the widest possible range of qualified bidders.
Contract awarded to Orbital Sciences LLC, a known entity in the aerospace and defense sector, suggesting a level of established capability.
The contract addresses Research and Development (R&D) in critical physical, engineering, and life sciences, vital for technological advancement.
Managed by the Defense Contract Management Agency (DCMA), implying a degree of oversight and accountability.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically NAICS code 541712, which covers R&D in the Physical, Engineering, and Life Sciences (except Biotechnology). This is a highly specialized and critical area for government innovation, often involving significant investment. The market for such R&D is typically dominated by large, specialized contractors with proven expertise and facilities. Comparable spending benchmarks would depend heavily on the specific research area, but R&D contracts often represent a substantial portion of agency budgets focused on future capabilities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). This means that the competition was open to all responsible sources, including large businesses. While this ensures a broad pool of potential bidders, it also means that specific opportunities for small businesses to compete and win prime contracts in this area were not explicitly carved out. There is no information provided on subcontracting plans, so the extent to which small businesses may have participated as subcontractors is unknown.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), which is responsible for providing contract administration services to the Department of Defense and other federal agencies. DCMA's oversight typically includes monitoring contractor performance, ensuring compliance with contract terms, and managing payments. The specific oversight mechanisms for this Cost Plus Fixed Fee R&D contract would likely involve detailed reviews of cost proposals, progress reports, and technical milestones to ensure accountability and transparency. However, without more specific details on reporting requirements and audit procedures, a full assessment of oversight effectiveness is limited.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Engineering Services Contracts
Physical Sciences Research Contracts
Life Sciences Research Contracts

Risk Flags

Cost Overrun Risk (CPFF contract type)
Limited Competition
Long Contract Duration
Lack of Specific Performance Metrics
Potential for Market Concentration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $56.0 million to ORBITAL SCIENCES LLC. ANGELS

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 $56.0 million.

What is the period of performance?

Start: 2007-11-07. End: 2015-02-15.

What were the specific research objectives and expected outcomes of this contract?

The provided data does not specify the exact research objectives or expected outcomes for this contract. However, given the NAICS code 541712 (Research and Development in the Physical, Engineering, and Life Sciences), the contract likely aimed to advance scientific knowledge or develop new technologies in these broad fields. These could range from materials science, aerospace engineering, advanced computing, or biological research, depending on the specific needs of the Department of Defense at the time of award. Without access to the contract statement of work or related documentation, the precise deliverables and their intended impact remain unspecified. This lack of detail makes it challenging to fully assess the contract's value and success.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for R&D, and what are the associated risks?

Cost Plus Fixed Fee (CPFF) is a common contract type for research and development (R&D) where the scope of work is not well-defined at the outset, making it difficult to estimate costs accurately. Under CPFF, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure incentivizes the contractor to control costs to maximize their fixed fee, but it also carries significant risk for the government. Unlike fixed-price contracts, the total cost to the government is not predetermined and can exceed initial estimates if costs escalate. This makes CPFF contracts inherently riskier for taxpayers, as the government bears the brunt of cost overruns. For R&D, where innovation and unforeseen challenges are common, CPFF can be appropriate, but it necessitates robust government oversight to manage costs effectively.

What is the track record of Orbital Sciences LLC with government R&D contracts of similar scope and value?

Orbital Sciences LLC (now part of Northrop Grumman) has a substantial track record with government contracts, particularly in the aerospace and defense sectors. While specific details on their performance for this particular $56 million R&D contract are not provided in the summary data, the company has historically been involved in numerous complex projects for agencies like NASA and the Department of Defense. Their experience spans satellite development, launch services, and various research initiatives. Assessing their track record for R&D contracts would require a deeper dive into their past performance evaluations, any contract disputes or awards, and the successful delivery of research outcomes on similar projects. Generally, as a large, established contractor, they are expected to possess the technical expertise and management capabilities for such endeavors.

Given the limited competition (4 bidders), what does this imply about the market for this type of R&D and potential price discovery?

The fact that only four bids were received for this 'full and open competition' contract suggests a potentially concentrated market for this specific type of R&D. This could be due to the highly specialized nature of the research required, the significant technical expertise and facilities needed, or perhaps the perceived risk and complexity of the project. In such a scenario, price discovery might be less robust than in a market with numerous bidders. With fewer competitors, there may be less downward pressure on pricing, and the government might not achieve the most economically advantageous outcome. It could also indicate that only a few companies possess the unique capabilities sought by the agency for this particular R&D effort.

How has spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' category (NAICS 541712) trended over the years for the Department of Defense?

Spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' category (NAICS 541712) for the Department of Defense (DoD) has historically been substantial and has generally trended upwards, reflecting the DoD's continuous need for technological superiority. While the specific data for this contract dates back to 2007, broader trends show significant investment in areas like advanced materials, artificial intelligence, cybersecurity, hypersonics, and biotechnology. The DoD consistently ranks among the top federal agencies for R&D spending. Analyzing historical spending patterns within this NAICS code would reveal fluctuations based on strategic priorities, budget allocations, and emerging technological threats or opportunities. This particular contract represents a segment of that larger, ongoing investment in scientific and engineering advancement.

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 › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Address: 45101 WARP DR, DULLES, VA, 20166

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $63,535,303

Exercised Options: $63,535,303

Current Obligation: $55,968,083

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline