Draper Laboratory awarded $533M engineering services contract by DoD, facing limited competition

Contract Overview

Contract Amount: $533,248,149 ($533.2M)

Contractor: THE Charles Stark Draper Laboratory, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-11-27

End Date: 2012-09-30

Contract Duration: 1,769 days

Daily Burn Rate: $301.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: ENGINEERING SERVICES

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02139

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $533.2 million to THE CHARLES STARK DRAPER LABORATORY, INC. for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded via sole-source negotiation, raising questions about price discovery and potential for overpayment. 2. Significant contract duration of nearly five years suggests a long-term need for these specialized engineering services. 3. The cost-plus-incentive-fee structure may incentivize performance but also carries inherent cost escalation risks. 4. Draper Laboratory's established relationship with the DoD likely influenced the sole-source award. 5. Lack of competition limits opportunities for other firms and potentially reduces overall value for taxpayers. 6. The contract's value places it among substantial federal procurements for engineering services.

Value Assessment

Rating: questionable

Benchmarking the value of this $533 million contract is challenging due to the sole-source nature and lack of publicly available comparable data. The cost-plus-incentive-fee (CPIF) pricing structure, while common for complex R&D, can lead to costs exceeding initial estimates if not managed rigorously. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if efficiencies could have been achieved through a more open bidding process. The long duration of the contract also means that potential cost overruns could accumulate significantly over time.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities or when circumstances preclude a competitive process. The lack of competition means that potential bidders were not given an opportunity to offer their services, which can limit price discovery and potentially lead to higher costs for the government. It also bypasses the standard process of evaluating multiple proposals to ensure the best value is obtained.

Taxpayer Impact: Taxpayers may not be receiving the best possible price for these engineering services due to the absence of competitive pressure. The government's ability to negotiate favorable terms is diminished when only one provider is considered.

Public Impact

The Department of Defense benefits from specialized engineering services crucial for its operations. The contract supports advanced technological development and maintenance within defense systems. Geographic impact is primarily centered around the contractor's facilities in Massachusetts, with potential downstream effects on the national defense industrial base. The contract likely supports a skilled workforce in engineering and related technical fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially inflates costs.
Cost-plus-incentive-fee structure carries inherent risk of cost overruns.
Long contract duration increases exposure to potential inefficiencies over time.
Lack of transparency in the sole-source justification process.

Positive Signals

Contract supports critical defense engineering services.
Draper Laboratory is a recognized leader in its field, suggesting technical expertise.
CPIF structure can incentivize contractor performance towards specific goals.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector is characterized by high barriers to entry, specialized expertise, and often long-term relationships with government clients, particularly in defense. The total federal spending on engineering services is substantial, with significant portions allocated to defense and R&D. Contracts like this, valued in the hundreds of millions, are typical for major defense programs requiring deep technical knowledge and proprietary capabilities.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. As a sole-source award to a large, established entity, the direct impact on the small business ecosystem is likely minimal. The focus appears to be on securing specialized capabilities rather than fostering small business participation through this specific procurement vehicle.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The cost-plus-incentive-fee structure necessitates close monitoring of costs and performance against established targets. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal DoD oversight and potentially the Government Accountability Office (GAO) if protests or specific inquiries arise.

Related Government Programs

Defense Engineering Services
Research and Development Contracts
Cost-Plus Contracts
Sole-Source Procurements
Department of Defense Major Contracts

Risk Flags

Sole-source award lacks competitive transparency.
Potential for cost overruns due to CPIF structure.
Long contract duration increases risk exposure.
Limited public data on specific performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $533.2 million to THE CHARLES STARK DRAPER LABORATORY, INC.. ENGINEERING SERVICES

Who is the contractor on this award?

The obligated recipient is THE CHARLES STARK DRAPER LABORATORY, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $533.2 million.

What is the period of performance?

Start: 2007-11-27. End: 2012-09-30.

What is the track record of The Charles Stark Draper Laboratory, Inc. with the Department of Defense on similar contracts?

The Charles Stark Draper Laboratory, Inc. has a long-standing history of contracting with the Department of Defense, particularly in areas related to advanced technology, guidance, navigation, and control systems. Their work often involves highly specialized research, development, and engineering services. Historical data indicates a pattern of significant contract awards from various DoD branches, often in sole-source or limited-competition scenarios due to their unique expertise. While specific performance metrics for past contracts are not always publicly detailed, their continued selection for substantial awards suggests a generally satisfactory performance record and a recognized capability to meet complex defense requirements. However, the scale and nature of these contracts warrant continuous scrutiny regarding cost control and adherence to program objectives.

How does the $533 million value compare to other engineering services contracts awarded by the DoD?

A contract valued at $533 million for engineering services is considered a substantial award within the Department of Defense. While the DoD procures a vast array of goods and services, contracts in this magnitude are typically reserved for major programs, critical research and development initiatives, or long-term sustainment efforts requiring specialized expertise. Compared to the average engineering services contract, this award is significantly larger. It suggests a high level of criticality and complexity associated with the services being procured. Benchmarking against similar sole-source or limited-competition awards for highly specialized engineering functions would provide a more precise context, but generally, this figure represents a significant investment in a specific technological or engineering capability.

What are the primary risks associated with a sole-source, cost-plus-incentive-fee contract of this size and duration?

The primary risks associated with this sole-source, cost-plus-incentive-fee (CPIF) contract are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, increasing the risk of paying a non-competitive price and potentially missing out on cost-saving innovations from other vendors. Secondly, the CPIF structure, while designed to incentivize performance, carries the inherent risk of cost escalation. If the target costs are not well-defined or if unforeseen technical challenges arise, the final cost to the government could significantly exceed initial projections. The long duration (1769 days) amplifies these risks, providing a longer window for potential cost overruns and performance deviations. Effective government oversight and robust cost-reimbursement controls are critical to mitigate these risks.

What specific engineering services are being provided under this contract, and how do they contribute to DoD's mission?

While the provided data specifies 'Engineering Services' (NAICS 541330), the exact nature of these services for The Charles Stark Draper Laboratory, Inc. under this $533 million contract likely pertains to highly specialized areas critical to national defense. Given Draper Lab's expertise, these services could encompass research, design, development, testing, and integration of advanced systems such as guidance, navigation, and control (GNC) for missiles and spacecraft, strategic systems, undersea warfare technologies, and potentially cyber capabilities. These services directly contribute to the DoD's mission by ensuring the technological superiority and operational effectiveness of its platforms and weapon systems, supporting strategic deterrence, and maintaining readiness across various defense domains.

What has been the historical spending trend for engineering services by the Department of Defense over the past 5-10 years?

The Department of Defense has consistently been one of the largest federal spenders on engineering services, reflecting its reliance on advanced technological solutions for national security. Over the past 5-10 years, annual spending on engineering services by the DoD has generally remained in the tens of billions of dollars. While specific figures fluctuate based on global security environments, technological advancements, and budget allocations, there has been a sustained high level of investment. Trends often show increased spending in areas like cybersecurity, artificial intelligence, advanced materials, and aerospace engineering, driven by the need to maintain a technological edge. Contracts like the one awarded to Draper Laboratory represent a portion of this significant and ongoing investment in specialized engineering capabilities.

Are there any specific performance metrics or deliverables associated with this contract that indicate its effectiveness?

The provided data does not include specific performance metrics or deliverables for this contract. However, as a Cost Plus Incentive Fee (CPIF) contract, it is designed with performance targets. The 'incentive' component implies that the contractor, The Charles Stark Draper Laboratory, Inc., can earn a higher profit (or fee) by exceeding certain performance goals (e.g., cost savings, schedule adherence, technical milestones) and may incur a penalty if they fall short. The effectiveness of the contract would be measured against these pre-defined targets, which are typically detailed in the contract's Statement of Work (SOW). Without access to the SOW and subsequent performance reports, a definitive assessment of effectiveness is not possible from the given data alone.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 555 TECHNOLOGY SQUARE, CAMBRIDGE, MA, 02139

Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $926,878,048

Exercised Options: $533,317,632

Current Obligation: $533,248,149

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline