DoD's $63.5M missile and space systems R&D contract awarded to Orbital Sciences Corporation shows fair value

Contract Overview

Contract Amount: $63,516,429 ($63.5M)

Contractor: Orbital Sciences LLC

Awarding Agency: Department of Defense

Start Date: 2000-06-29

End Date: 2012-04-30

Contract Duration: 4,323 days

Daily Burn Rate: $14.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 200012!1700!001555!AT722 !NAVAL AIR SYSTEMS COMMAND !N0001900C0255 !A!*!* !20000629!20060430!803209782!101916062!101916062!N!27555!ORBITAL SCIENCES CORPORATION !3380 SOUTH PRICE ROAD !CHANDLER !AZ!85248!12000!013!04!CHANDLER !MARICOPA !ARIZONA !0001!+000008000000!N!N!000000000000!AC27!RDTE/MISSILE AND SPACE SYSTEMS-OP SYSTEM DEVELOP !A2 !MISSILE AND SPACE SYSTEMS !2000!NOT DISCERNABLE OR CLASSIFIED !3761!3!*!*!*!B!A!*!A !N!V!2!002!B!* !Z!N!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!Y!*!

Place of Performance

Location: CHANDLER, MARICOPA County, ARIZONA, 85286

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $63.5 million to ORBITAL SCIENCES LLC for work described as: 200012!1700!001555!AT722 !NAVAL AIR SYSTEMS COMMAND !N0001900C0255 !A!*!* !20000629!20060430!803209782!101916062!101916062!N!27555!ORBITAL SCIENCES CORPORATION !3380 SOUTH PRICE ROAD !CHANDLER !AZ!85248!12000!013!04!CHANDLER !MAR… Key points: 1. Contract awarded through full and open competition, suggesting a competitive pricing environment. 2. Cost-plus incentive fee contract type indicates shared risk and potential for cost savings. 3. Contract duration of over 11 years suggests a long-term need for these specialized services. 4. The contractor, Orbital Sciences Corporation, is a significant player in the aerospace and defense sector. 5. Awarded by Naval Air Systems Command, indicating a focus on naval aviation and missile systems. 6. The contract falls under Research, Development, Test, and Evaluation (RDTE) for missile and space systems.

Value Assessment

Rating: fair

The total award amount of $63.5 million over approximately 11 years suggests a moderate annual spend. Benchmarking this against similar R&D contracts for missile and space systems is challenging without more specific service details. However, the cost-plus incentive fee structure implies that the government aims to achieve value by incentivizing the contractor to control costs. The lack of detailed performance metrics makes a definitive value assessment difficult, but the competitive award process provides some assurance of fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The data does not specify the number of bidders, but the competitive nature of the award process generally leads to better price discovery and potentially lower costs for the government compared to sole-source or limited competition contracts.

Taxpayer Impact: Full and open competition ensures that taxpayer dollars are used efficiently by fostering a market where contractors vie to offer the best value, driving down prices and encouraging innovation.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Naval Air Systems Command, which receives advanced missile and space systems development. Services delivered include research, development, testing, and evaluation for missile and space systems, crucial for national defense capabilities. The geographic impact is primarily within the United States, with the contractor based in Arizona, but the defense systems developed have national security implications. Workforce implications include employment for scientists, engineers, and technicians involved in advanced aerospace research and development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus incentive fee contracts can sometimes lead to cost overruns if not managed diligently.
Long contract durations can present challenges in adapting to evolving technological requirements.
Specific performance metrics and value-for-money assessments are not readily available in the provided data.

Positive Signals

Awarded through full and open competition, indicating a competitive pricing environment.
Contractor is a recognized entity in the aerospace and defense sector, suggesting expertise.
The contract type incentivizes cost control, aligning contractor and government interests.

Sector Analysis

This contract falls within the Research, Development, Test, and Evaluation (RDTE) sector, specifically focusing on missile and space systems. This is a highly specialized and critical area within the broader aerospace and defense industry. The market for such advanced R&D is characterized by high barriers to entry due to technical expertise, intellectual property, and significant capital investment. Comparable spending benchmarks would typically be found within other large-scale defense R&D programs, often involving billions of dollars annually across various agencies.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss=false, sb=false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. However, the prime contractor, Orbital Sciences Corporation, may engage small businesses as subcontractors for specialized components or services, though this is not explicitly detailed in the contract information.

Oversight & Accountability

Oversight for this contract would typically be managed by the Naval Air Systems Command and potentially the Defense Contract Management Agency (DCMA), given the nature of the work and the contractor's location. Accountability measures are inherent in the cost-plus incentive fee structure, which links contractor profit to performance and cost control. Transparency is generally limited for defense R&D contracts due to national security considerations, but contract awards and basic details are publicly available through federal procurement databases.

Related Government Programs

Missile Defense Systems
Space Launch Vehicles
Advanced Avionics Development
Naval Aviation Research
Strategic Weapons Systems

Risk Flags

Long contract duration may increase risk of technological obsolescence.
Cost-plus contracts require diligent oversight to manage potential cost overruns.
Specific performance metrics and value-for-money details are not publicly detailed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.5 million to ORBITAL SCIENCES LLC. 200012!1700!001555!AT722 !NAVAL AIR SYSTEMS COMMAND !N0001900C0255 !A!*!* !20000629!20060430!803209782!101916062!101916062!N!27555!ORBITAL SCIENCES CORPORATION !3380 SOUTH PRICE ROAD !CHANDLER !AZ!85248!12000!013!04!CHANDLER !MARICOPA !ARIZONA !0001!+000008000000!N!N!000000000000!AC27!RDTE/MISSILE AND SPACE SYSTEMS-OP SYSTEM DEVELOP !A2 !MISSILE AND SPACE SYSTEMS !2000!NOT DISCERNABLE OR CLASSIFIED !3761!3!*!*!*!B!A!*!A !N!V!

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 $63.5 million.

What is the period of performance?

Start: 2000-06-29. End: 2012-04-30.

What is the track record of Orbital Sciences Corporation with similar government contracts?

Orbital Sciences Corporation, now part of Northrop Grumman, has a significant history of performing complex aerospace and defense contracts for the U.S. government. They have been involved in satellite development, launch services, and various missile technology programs. Their track record includes successful missions and product deliveries, but like many large defense contractors, they have also faced challenges and scrutiny on specific projects. For this particular contract, the award itself suggests they met the requirements for technical capability and past performance. A deeper dive into their specific performance on other Naval Air Systems Command contracts or similar RDTE efforts would provide a more comprehensive view of their reliability and expertise in this domain.

How does the $63.5 million award compare to other missile and space systems R&D contracts?

The $63.5 million award over approximately 11 years translates to an average annual value of roughly $5.77 million. This figure is moderate when compared to the overall landscape of defense R&D spending, which often involves programs in the tens or hundreds of millions, and sometimes billions, of dollars. For instance, major missile programs or advanced space exploration initiatives can command significantly larger budgets. However, for a specific R&D effort focused on a particular aspect of missile and space systems, this amount could be substantial, reflecting the specialized nature and duration of the research. Without knowing the precise scope and objectives, direct comparison is difficult, but it appears to be a significant, long-term investment rather than a massive, short-term project.

What are the primary risks associated with this Cost Plus Incentive Fee (CPIF) contract?

The primary risks with a CPIF contract, especially in R&D, revolve around cost control and defining achievable targets. While the incentive fee structure aims to align contractor and government interests by rewarding cost savings and performance, there's a risk that the target costs or performance metrics might be set too high or too low. If targets are too high, the incentive may be ineffective. If too low, the contractor might cut corners on quality or innovation. Furthermore, R&D inherently involves uncertainty; unforeseen technical challenges can arise, potentially leading to cost increases that strain the incentive structure. Effective government oversight is crucial to monitor progress, validate cost data, and ensure the incentive fee mechanism truly drives desired outcomes without compromising the integrity of the research.

What is the historical spending pattern for missile and space systems R&D by the Naval Air Systems Command?

The Naval Air Systems Command (NAVAIR) consistently invests in research, development, test, and evaluation (RDTE) for missile and space systems, as these are critical to naval aviation and warfare capabilities. Historical spending patterns show a significant and ongoing commitment to advancing technologies in areas such as air-to-air missiles, air-to-ground munitions, electronic warfare systems, and space-based intelligence, surveillance, and reconnaissance (ISR) platforms. While specific annual figures fluctuate based on strategic priorities and budget allocations, NAVAIR's RDTE budget for these categories typically runs into the hundreds of millions, if not billions, of dollars annually. This particular $63.5 million contract represents one component of that broader investment strategy.

How does the contract's duration (over 11 years) impact its risk profile?

A contract duration exceeding 11 years for an R&D project introduces several risk factors. Firstly, technological obsolescence is a significant concern; the requirements and technologies envisioned at the start of the contract may be outdated by its conclusion. Secondly, maintaining consistent program management and technical expertise within the government over such a long period can be challenging due to personnel turnover. Thirdly, the long timeframe increases the potential for unforeseen geopolitical or strategic shifts that could alter the necessity or direction of the R&D. Finally, long-term cost estimation becomes more uncertain, potentially impacting the effectiveness of the initial pricing and incentive structures. Mitigating these risks requires robust contract modification processes and continuous re-evaluation of program goals.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1575 SOUTH PRICE RD, CHANDLER, AZ, 85286

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline