DoD's $80M TI-2 Engineering Contract Awarded to Penn State Faces Scrutiny for Limited Competition

Contract Overview

Contract Amount: $80,052,504 ($80.1M)

Contractor: THE Pennsylvania State University

Awarding Agency: Department of Defense

Start Date: 2020-09-28

End Date: 2025-12-31

Contract Duration: 1,920 days

Daily Burn Rate: $41.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: TECHNOLOGY INSERTON-2 (TI-2)ENGINEERING

Place of Performance

Location: UNIVERSITY PARK, CENTRE County, PENNSYLVANIA, 16802

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $80.1 million to THE PENNSYLVANIA STATE UNIVERSITY for work described as: TECHNOLOGY INSERTON-2 (TI-2)ENGINEERING Key points: 1. The contract's value of $80,052,504 over five years raises questions about cost-effectiveness given the limited competition. 2. Awarded to The Pennsylvania State University, the contract focuses on R&D in physical, engineering, and life sciences. 3. The 'NOT COMPETED' status and sole-source nature present a significant risk of inflated pricing and reduced innovation. 4. The R&D sector is crucial, but the lack of competitive bidding here may hinder broader technological advancement and taxpayer value.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Without benchmarks from similar competitively awarded contracts, it's hard to determine if the $80M is a fair price for the R&D services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was explicitly marked 'NOT COMPETED,' indicating a sole-source award to The Pennsylvania State University. This severely limits price discovery and competitive pressure, potentially leading to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may be overpaying for research and development services, as there was no mechanism to ensure the lowest possible price was achieved.

Public Impact

Taxpayers may be footing a higher bill due to the absence of competitive bidding. Limited competition could stifle innovation by not exploring alternative solutions from other research institutions. The Department of the Navy is potentially missing out on more cost-effective or advanced R&D approaches. Transparency in R&D spending is reduced when contracts are not competed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Cost Plus Fixed Fee structure
Long contract duration

Positive Signals

Award to established research institution
Focus on critical R&D area

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. Spending in this area is vital for national security and technological advancement, but competitive bidding is typically encouraged to ensure value for money.

Small Business Impact

The contract was awarded directly to a large university, The Pennsylvania State University, with no indication of subcontracting opportunities for small businesses. This award mechanism bypasses potential avenues for small business participation in government R&D.

Oversight & Accountability

The sole-source nature of this award warrants closer oversight to ensure the fixed fee is reasonable and that the research objectives are being met efficiently. Accountability is crucial when competition is absent.

Related Government Programs

Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Potential for inflated costs due to sole-source award.
Lack of competitive pressure may reduce efficiency and innovation.
Limited transparency in pricing and performance.
Missed opportunity to engage a broader range of research institutions.
Risk of contractor not being incentivized to find most cost-effective solutions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.1 million to THE PENNSYLVANIA STATE UNIVERSITY. TECHNOLOGY INSERTON-2 (TI-2)ENGINEERING

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 $80.1 million.

What is the period of performance?

Start: 2020-09-28. End: 2025-12-31.

What specific justification was provided for awarding this R&D contract on a sole-source basis, and does it align with federal procurement regulations for non-competitive procurements?

Federal regulations allow for sole-source awards under specific circumstances, such as when only one responsible source can provide the required services. A thorough review of the justification document is necessary to confirm its validity and ensure it meets the stringent criteria for non-competitive procurements, especially for a contract of this magnitude.

How will the Department of the Navy ensure cost control and prevent potential overruns within the Cost Plus Fixed Fee structure, given the absence of competitive pricing benchmarks?

The Navy must implement robust oversight mechanisms, including detailed cost tracking, regular performance reviews, and stringent auditing of expenditures. Establishing clear milestones and performance metrics will be critical to managing the fixed fee and ensuring the contractor remains incentivized to control costs effectively throughout the contract's duration.

What is the potential long-term impact on technological advancement and innovation within the specified R&D fields due to the lack of broader competition for this significant funding?

The lack of competition may limit the exposure of the Department of the Navy to a wider array of innovative approaches and emerging technologies from diverse research entities. This could potentially slow down the pace of advancement in critical fields by not fostering a competitive environment that drives novel solutions and pushes the boundaries of current capabilities.

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 FIXED FEE (U)

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: $85,191,272

Exercised Options: $85,191,272

Current Obligation: $80,052,504

Actual Outlays: $506,427

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