DoD's $46.4M contract for Unmanned Maritime Systems development awarded to Penn State University

Contract Overview

Contract Amount: $46,438,408 ($46.4M)

Contractor: THE Pennsylvania State University

Awarding Agency: Department of Defense

Start Date: 2019-01-04

End Date: 2022-12-31

Contract Duration: 1,457 days

Daily Burn Rate: $31.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: PMS406 UNMANNED MARITIME SYS DEVELOPMENT AND SYSTEMS ENG. SUPP.

Place of Performance

Location: UNIVERSITY PARK, CENTRE County, PENNSYLVANIA, 16802

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $46.4 million to THE PENNSYLVANIA STATE UNIVERSITY for work described as: PMS406 UNMANNED MARITIME SYS DEVELOPMENT AND SYSTEMS ENG. SUPP. Key points: 1. Contract awarded to a single research institution, raising questions about broader industry engagement. 2. Focus on R&D for unmanned systems suggests a strategic investment in future naval capabilities. 3. The 'Cost Plus Award Fee' structure incentivizes performance but requires careful oversight to manage costs. 4. Long duration of the contract (nearly 4 years) indicates a complex, multi-phase research effort. 5. Limited competition may impact the government's ability to secure the most cost-effective solutions. 6. The contract's value is significant within the specialized R&D sector for maritime autonomy.

Value Assessment

Rating: fair

Benchmarking the value of this specific R&D contract is challenging due to its specialized nature and the unique capabilities of The Pennsylvania State University in this field. The 'Cost Plus Award Fee' (CPAF) contract type means the final cost is not fixed upfront and depends on performance metrics. While CPAF can encourage contractor efficiency, it necessitates robust government oversight to ensure costs remain reasonable and aligned with awarded fees. Without comparable contracts for similar unmanned maritime system development, a definitive value-for-money assessment is difficult, but the significant investment suggests a high perceived need for these specialized research services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple offerors. This approach is typically justified when a specific entity possesses unique capabilities, intellectual property, or a critical role in ongoing research that cannot be replicated by others. The lack of competition means the government did not benefit from a price discovery process driven by multiple proposals, potentially leading to higher costs than if a competitive bidding process had been employed.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium for these specialized R&D services, as the government did not leverage market forces to drive down costs.

Public Impact

The primary beneficiary is the Department of the Navy, which gains advanced research and development support for its Unmanned Maritime Systems program. The contract supports the development and engineering of critical technologies for future naval operations. The geographic impact is concentrated in Pennsylvania, where The Pennsylvania State University is located, potentially benefiting the local research and technical workforce. This contract fosters specialized expertise within the university's research community, contributing to the national pool of talent in autonomous systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits opportunities for other research institutions and potentially increases costs.
The 'Cost Plus Award Fee' structure requires diligent government oversight to prevent cost overruns and ensure fair pricing.
The specialized nature of the R&D may create a dependency on a single contractor for critical expertise.

Positive Signals

Leverages the established research expertise of a major university in a critical technology area.
The CPAF structure incentivizes performance and successful achievement of research objectives.
Supports the development of advanced capabilities crucial for national defense and maritime security.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The market for unmanned maritime systems (UMS) is a rapidly growing segment within defense technology, driven by the need for enhanced surveillance, reconnaissance, and operational capabilities. Spending in this area is characterized by long development cycles, high technical risk, and significant government investment. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of UMS R&D, but overall defense R&D spending runs into billions annually, with specialized areas like autonomy and unmanned systems receiving increasing focus.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to a large university suggests a focus on institutional research capabilities rather than a strategy to engage the small business ecosystem. This means the direct economic impact on small businesses within the defense R&D supply chain is likely minimal for this specific contract.

Oversight & Accountability

Oversight for this 'Cost Plus Award Fee' contract would primarily reside with the Department of the Navy contracting officers and program managers. They are responsible for monitoring the contractor's performance against established award fee criteria, reviewing incurred costs, and approving payments. Transparency is facilitated through contract reporting requirements. While no specific Inspector General jurisdiction is mentioned, the Department of Defense's Inspector General would have oversight authority over potential fraud, waste, or abuse related to this contract.

Related Government Programs

Naval Research Laboratory Contracts
Unmanned Systems Research Programs
Defense Advanced Research Projects Agency (DARPA) Contracts
University Research Agreements
Autonomous Systems Development

Risk Flags

Sole-source award may limit cost efficiencies.
CPAF structure requires diligent oversight to manage costs and ensure value.
Potential for contractor dependency due to specialized R&D focus.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.4 million to THE PENNSYLVANIA STATE UNIVERSITY. PMS406 UNMANNED MARITIME SYS DEVELOPMENT AND SYSTEMS ENG. SUPP.

Who is the contractor on this award?

The obligated recipient is THE PENNSYLVANIA STATE UNIVERSITY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $46.4 million.

What is the period of performance?

Start: 2019-01-04. End: 2022-12-31.

What is The Pennsylvania State University's track record in developing unmanned maritime systems?

The Pennsylvania State University (Penn State) has a long-standing reputation and extensive experience in research and development across various engineering disciplines, including those relevant to unmanned maritime systems (UMS). Their Applied Research Laboratory (ARL) is a significant contributor to defense research, often working on advanced naval technologies. Penn State's involvement in UMS likely spans areas such as hydrodynamics, sensor integration, autonomous control systems, and materials science. While specific project details for this contract are not public, the university's designation as a primary research institution and its history with the Department of Defense suggest a strong capability and a proven track record in tackling complex R&D challenges in this domain. Their engagement often involves significant government funding and collaboration on critical national security initiatives.

How does the 'Cost Plus Award Fee' (CPAF) structure compare to other contract types for R&D, and what are its implications for value?

The 'Cost Plus Award Fee' (CPAF) contract type is commonly used for research and development efforts where the scope of work is not fully defined at the outset, and performance outcomes are critical. Unlike fixed-price contracts, CPAF reimburses the contractor for allowable costs incurred. However, it also includes an award fee component, which is earned by the contractor based on meeting or exceeding specific performance objectives defined by the government. This structure aims to incentivize high performance and innovation. Compared to 'Cost Plus Fixed Fee' (CPFF), CPAF offers greater potential for rewarding exceptional performance. Compared to 'Cost Plus Incentive Fee' (CPIF), the award fee is often more subjective and based on broader performance assessments rather than solely on cost and schedule targets. For value, CPAF can be effective if the award criteria are well-defined and measurable, aligning contractor efforts with government goals. However, it requires robust government oversight to ensure costs are reasonable and that award fees are justified, preventing potential overspending if not managed diligently.

What are the potential risks associated with awarding a large R&D contract on a sole-source basis?

Awarding a large R&D contract on a sole-source basis carries several potential risks. Firstly, the absence of competition can lead to higher prices than might be achieved through a competitive bidding process, as the government loses the benefit of market forces driving cost efficiency. Secondly, it can stifle innovation by limiting the exposure of the government to alternative approaches or technologies that other potential contractors might offer. There's also a risk of contractor complacency or reduced urgency if they perceive no threat of losing future business to competitors. Furthermore, sole-source awards can raise concerns about fairness and equal opportunity for other capable research institutions or companies. In specialized R&D, the justification often rests on unique capabilities, but this needs rigorous vetting to ensure no viable competitive alternatives were overlooked, which could ultimately impact the program's long-term cost-effectiveness and technological advancement.

How does this contract contribute to the broader goals of the Department of the Navy's Unmanned Maritime Systems program?

This contract is crucial for advancing the Department of the Navy's strategic objectives in Unmanned Maritime Systems (UMS). UMS are envisioned to play a transformative role in future naval operations, offering enhanced capabilities for intelligence, surveillance, reconnaissance (ISR), mine countermeasures, anti-submarine warfare, and potentially strike missions, all while reducing risk to human personnel. The R&D supported by this contract likely focuses on developing core technologies, system integration, operational concepts, and performance enhancements for these platforms. By investing in fundamental research and systems engineering with a leading institution like Penn State, the Navy aims to mature critical technologies, reduce technical risks, and lay the groundwork for future procurement and fielding of advanced UMS capabilities. This ensures the Navy maintains a technological edge and adapts to evolving maritime threats and operational requirements.

What is the historical spending trend for similar R&D contracts within the Department of Defense for unmanned systems?

Historical spending trends within the Department of Defense (DoD) for R&D related to unmanned systems, including maritime variants, show a consistent and increasing trajectory over the past decade. Driven by evolving geopolitical landscapes and the recognized strategic importance of autonomous capabilities, the DoD has significantly ramped up investments. Budgets allocated to unmanned systems R&D have grown substantially, reflecting a shift towards incorporating these technologies across all military branches. This includes funding for research into artificial intelligence, autonomy, sensor fusion, power systems, and platform design for various unmanned vehicles (air, ground, and sea). While specific figures fluctuate annually based on program priorities and technological maturity, the overall trend indicates a sustained and growing commitment to advancing unmanned systems technology, making contracts like the one awarded to Penn State indicative of this broader investment pattern.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 201 OLD MAIN, UNIVERSITY PARK, PA, 16802

Business Categories: Category Business, Corporate Entity Tax Exempt, Educational Institution, Higher Education, Nonprofit Organization, Not Designated a Small Business, Higher Education (Public), Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $51,748,329

Exercised Options: $51,748,329

Current Obligation: $46,438,408

Actual Outlays: $1,568,657

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002418D6401

IDV Type: IDC

Timeline