Department of Defense awards $87M contract to Penn State for MK 48 MOD 9 torpedo development

Contract Overview

Contract Amount: $87,086,091 ($87.1M)

Contractor: THE Pennsylvania State University

Awarding Agency: Department of Defense

Start Date: 2023-09-20

End Date: 2026-09-19

Contract Duration: 1,095 days

Daily Burn Rate: $79.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: MK 48 MOD 9 PROOF OF DESIGN DEVELOPMENT

Place of Performance

Location: UNIVERSITY PARK, CENTRE County, PENNSYLVANIA, 16802

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $87.1 million to THE PENNSYLVANIA STATE UNIVERSITY for work described as: MK 48 MOD 9 PROOF OF DESIGN DEVELOPMENT Key points: 1. Contract focuses on critical research and development for advanced torpedo technology. 2. Sole-source award raises questions about potential cost efficiencies and market alternatives. 3. Long-term contract duration suggests a significant, ongoing need for this technology. 4. The Pennsylvania State University's extensive research background positions it well for this specialized work. 5. This award falls within the broader category of physical, engineering, and life sciences R&D. 6. The contract type (Cost Plus Fixed Fee) allows for flexibility but requires close oversight of costs.

Value Assessment

Rating: fair

Benchmarking the value of this specific R&D contract is challenging due to its specialized nature and sole-source award. The Cost Plus Fixed Fee structure means actual costs will be reconciled against a fixed fee, which can lead to cost overruns if not managed diligently. Without competitive bids, it's difficult to definitively assess if the pricing represents optimal value for money compared to potential market alternatives. However, the fixed fee component provides some level of cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Pennsylvania State University, was solicited. This approach is typically used when a unique capability or specialized expertise is required that cannot be met by other sources. The lack of competition means there was no direct price comparison or negotiation against other potential providers, which could limit price discovery and potentially lead to higher costs than a competed contract.

Taxpayer Impact: Taxpayers may not benefit from the cost savings typically achieved through competitive bidding. The justification for a sole-source award needs to be robust to ensure public funds are used efficiently.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive advanced torpedo technology. This contract supports the development of the MK 48 MOD 9 torpedo, crucial for naval defense capabilities. The geographic impact is concentrated in Pennsylvania, where The Pennsylvania State University is located. The contract will likely involve specialized researchers and engineers, impacting the high-skilled workforce in R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contracts can incentivize cost escalation if not rigorously monitored.
The specialized nature of torpedo development may limit the pool of qualified contractors, potentially justifying sole-source awards but reducing competition.

Positive Signals

The Pennsylvania State University has a strong track record in research and development, suggesting technical competence.
The contract is for a critical defense system, indicating a high priority for national security.
The fixed fee component provides a degree of cost predictability for the government.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical and engineering sciences. The market for advanced defense systems like torpedoes is highly specialized, often dominated by a few key research institutions and defense contractors. The total addressable market for such specialized R&D is difficult to quantify but represents a significant portion of defense spending dedicated to technological advancement and maintaining military superiority.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The nature of advanced defense R&D often involves large, established institutions with specialized capabilities, which may limit the direct involvement of small businesses in prime contracting roles.

Oversight & Accountability

Oversight will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures will be tied to the achievement of development milestones and adherence to the Cost Plus Fixed Fee agreement. Transparency may be limited due to the sensitive nature of defense R&D, but contract modifications and performance reports should be available through federal procurement databases.

Related Government Programs

Naval Weapons Systems Development
Advanced Torpedo Research
Defense Research and Development Contracts
Cost Plus Fixed Fee Contracts
Sole Source Defense Procurements

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $87.1 million to THE PENNSYLVANIA STATE UNIVERSITY. MK 48 MOD 9 PROOF OF DESIGN DEVELOPMENT

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 $87.1 million.

What is the period of performance?

Start: 2023-09-20. End: 2026-09-19.

What is the historical spending pattern for the MK 48 torpedo program?

Historical spending data for the MK 48 torpedo program is not directly available in the provided data. However, the MK 48 torpedo is a long-standing and critical component of the U.S. Navy's arsenal, having undergone numerous upgrades and modifications over decades. Previous development and procurement phases would have involved significant government investment. Analyzing past contracts for different 'MOD' (modifications) of the MK 48 would reveal trends in R&D costs, production expenses, and sustainment, providing context for the current $87 million award for the MOD 9 proof of design development. Without specific historical contract data, it's difficult to establish a precise spending trajectory, but the program's longevity suggests consistent, substantial funding.

What is The Pennsylvania State University's track record with similar defense R&D contracts?

The Pennsylvania State University (PSU) has a well-established and extensive history of engaging in defense-related research and development contracts. As a major research institution, PSU frequently collaborates with various branches of the Department of Defense, including the Navy, Air Force, and Army, across a wide spectrum of scientific and engineering disciplines. Their Applied Research Laboratory (ARL) is particularly known for its work on advanced naval systems, including underwater technologies, propulsion, and materials science, which aligns closely with the requirements of torpedo development. PSU has a proven capacity to manage complex, long-term R&D projects, often involving significant funding and requiring specialized expertise. Their consistent success in securing and executing such contracts indicates a strong track record of technical competence and reliable performance for the government.

How does the Cost Plus Fixed Fee (CPFF) contract type typically perform in R&D settings?

Cost Plus Fixed Fee (CPFF) contracts are common in research and development settings where the scope of work can be uncertain or evolve. In this structure, the contractor is reimbursed for allowable costs incurred, plus a predetermined fixed fee representing profit. This provides the government with some cost predictability through the fixed fee, while allowing flexibility to adapt the R&D effort as discoveries are made or challenges arise. However, CPFF contracts can incentivize contractors to incur higher costs, as their fee is fixed regardless of the total cost. Effective oversight, stringent cost controls, and clear milestone definitions are crucial to mitigate the risk of cost overruns and ensure value for money. For the MK 48 MOD 9 development, the CPFF structure allows Penn State to pursue the complex R&D without being penalized by unforeseen technical hurdles, but requires diligent monitoring by the Navy.

What are the potential risks associated with a sole-source award for advanced defense technology?

Sole-source awards for advanced defense technology, like the MK 48 MOD 9 torpedo development, carry several potential risks. Primarily, the absence of competition can lead to higher prices than might be achieved in a competitive bidding process, as the government lacks the leverage of multiple offers. This can result in less efficient use of taxpayer funds. Furthermore, without competitive pressure, there may be less incentive for the sole contractor to innovate aggressively or optimize performance beyond the contract's minimum requirements. There's also a risk that the government might overlook alternative solutions or technologies that could be offered by other capable entities. To mitigate these risks, a thorough justification for the sole-source award is essential, demonstrating that no other source can meet the requirement, and robust contract management is needed to ensure performance and cost control.

What is the significance of the 'Proof of Design Development' phase for a weapon system?

The 'Proof of Design Development' phase, as indicated for the MK 48 MOD 9 torpedo, is a critical early stage in the lifecycle of a complex weapon system. It signifies the transition from conceptualization and preliminary design to a more concrete and validated design that is ready for further development, prototyping, and eventual production. During this phase, engineers and scientists work to demonstrate that the proposed design is technically feasible, meets all specified performance requirements, and can be manufactured within acceptable cost and schedule parameters. This involves detailed analysis, simulations, component testing, and potentially early prototypes. Successfully completing this phase provides confidence to the procuring agency (the Navy, in this case) that the design is sound, reducing the risk of costly changes or failures in later, more expensive stages of development and testing. It's a crucial gate before committing to full-scale prototyping and production.

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 › C – National Defense R&D Services

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: $155,628,609

Exercised Options: $155,628,609

Current Obligation: $87,086,091

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