DoD's $489M engineering services contract awarded to Charles Stark Draper Laboratory, Inc. with no competition

Contract Overview

Contract Amount: $489,286,382 ($489.3M)

Contractor: THE Charles Stark Draper Laboratory, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-10-01

End Date: 2011-09-30

Contract Duration: 364 days

Daily Burn Rate: $1.3M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: UK FUNDING

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02139

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $489.3 million to THE CHARLES STARK DRAPER LABORATORY, INC. for work described as: UK FUNDING Key points: 1. The contract represents a significant investment in specialized engineering services. 2. The sole-source award suggests a lack of readily available alternatives or unique capabilities required. 3. The cost-plus incentive fee structure aims to align contractor performance with government objectives. 4. The contract duration of 364 days indicates a focused, short-term engagement for specific needs. 5. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this $489 million contract is challenging without detailed scope of work and performance metrics. However, the 'NOT COMPETED' status raises immediate concerns about potential overpayment or lack of price discovery. The cost-plus incentive fee (CPIF) pricing structure, while designed to incentivize performance, can lead to cost overruns if not managed rigorously. Comparing this to similar sole-source engineering services contracts would be necessary to assess if the pricing is reasonable given the specialized nature of the work.

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, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces. This approach can be justified for highly specialized or urgent needs, but it limits the government's ability to explore alternative solutions or secure more favorable pricing.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of a competitive bidding process. The government's negotiating position is weakened without alternative offers to compare against.

Public Impact

The Department of Defense benefits from specialized engineering expertise to support its missions. Services delivered likely involve complex design, analysis, or development critical to defense systems. The geographic impact is primarily tied to the contractor's facilities and the DoD's operational areas. Workforce implications include employment for highly skilled engineers and technical professionals at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus incentive fee contracts can incentivize cost growth if not closely monitored.
Lack of small business participation may limit broader economic benefits and innovation.
Limited transparency due to sole-source nature makes independent value assessment difficult.

Positive Signals

Award to a known entity like Charles Stark Draper Laboratory suggests access to specialized, potentially critical expertise.
CPIF structure, if managed well, can drive contractor efficiency and alignment with government goals.
The contract addresses a specific, likely complex, engineering need within the Department of the Navy.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector supports government and private entities with specialized expertise in areas like design, development, testing, and analysis. The market for defense-related engineering services is substantial, often characterized by long-term relationships and high barriers to entry due to security clearances and specialized knowledge. Comparable spending benchmarks would focus on other large, sole-source engineering contracts awarded by the Department of Defense for similar complex technical requirements.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. The absence of a set-aside means that small businesses were not specifically targeted for this procurement. It is possible that subcontracting opportunities may exist, but without explicit set-aside goals or reporting, the extent of small business involvement is unclear. This could limit the participation of innovative small businesses in supporting critical defense engineering needs and potentially reduce the economic benefits distributed to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification and negotiation process would be subject to internal review and potentially oversight from the Government Accountability Office (GAO) if protests were filed. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Defense Engineering Services
Naval Research and Development
Sole-Source Procurements
Cost-Plus Contracts
Aerospace Engineering Support

Risk Flags

Sole-source award lacks competitive pricing pressure.
Cost-plus contracts require diligent oversight to manage costs.
Limited transparency in sole-source procurements.
Potential for higher costs due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $489.3 million to THE CHARLES STARK DRAPER LABORATORY, INC.. UK FUNDING

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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $489.3 million.

What is the period of performance?

Start: 2010-10-01. End: 2011-09-30.

What specific engineering services were provided under this contract, and why was it deemed a sole-source acquisition?

The contract, awarded to THE CHARLES STARK DRAPER LABORATORY, INC., was for engineering services valued at approximately $489 million. The 'NOT COMPETED' (CT: NOT COMPETED) designation indicates a sole-source award. While the specific services are not detailed in the provided data, Charles Stark Draper Laboratory is known for its expertise in areas such as inertial navigation systems, guidance, navigation, and control (GNC) systems, and advanced sensors, often supporting complex defense and aerospace applications. Sole-source justifications typically arise when only one responsible source is available or capable of meeting the government's needs, often due to unique technical capabilities, proprietary data, or urgent requirements where competition is not feasible. Without further documentation, the precise justification remains unspecified, but it likely relates to highly specialized technical expertise or technology possessed by the contractor.

How does the Cost Plus Incentive Fee (CPIF) contract type typically function, and what are its implications for cost control?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and also receives an incentive fee based on achieving predetermined performance objectives. These objectives are typically related to cost, schedule, or technical performance. The contract establishes a target cost, a minimum fee, and a maximum fee. If the contractor performs better than the target (e.g., comes in under target cost), they earn a larger incentive fee, shared with the government according to a pre-negotiated formula. Conversely, if performance is worse, the fee is reduced. The CPIF structure aims to motivate the contractor to control costs and meet performance goals. However, it requires careful establishment of realistic targets and robust government oversight to prevent potential cost overruns or manipulation of performance metrics. The government's final cost can vary significantly depending on the contractor's performance against the incentive targets.

What is the significance of the contract duration (364 days) in relation to the total contract value ($489M)?

A contract duration of 364 days, which is just under a full year, for a value of $489 million suggests a very high-intensity or high-value-per-day engagement. This implies that the engineering services required were either extremely complex and resource-intensive, or that the contract was structured for a specific, critical phase of a larger project. The short duration for such a substantial sum could indicate a need for rapid development, a critical system upgrade, or a focused research and development effort. It also suggests that the government may have intended to re-evaluate or re-compete the services after this period, or that this was a bridge contract to a subsequent, potentially larger, effort. The high daily burn rate necessitates close monitoring of progress and expenditures to ensure value for money.

What does the absence of small business participation (sb: false) imply for this contract?

The 'sb': false indicator signifies that this contract was not set aside for small businesses, nor does it appear to have explicit requirements for small business subcontracting participation. This means that large businesses were eligible to bid, and in this case, the award went to a large business on a sole-source basis. The implication is that opportunities for small businesses to directly participate in this specific $489 million engineering services contract are likely limited. While the prime contractor might voluntarily subcontract portions to small businesses, the lack of a formal set-aside or subcontracting plan requirement reduces the likelihood and visibility of such participation. This can limit the infusion of innovation from the small business sector into critical defense projects and potentially concentrate the economic benefits among larger corporations.

How does the 'NOT COMPETED' status impact the government's ability to ensure fair and reasonable pricing?

A 'NOT COMPETED' status, indicating a sole-source award, significantly impacts the government's ability to ensure fair and reasonable pricing. In a competitive procurement, multiple bids allow the government to compare prices, negotiate based on market rates, and leverage the bidding process to achieve the lowest possible price for the required goods or services. Without competition, the government relies heavily on its own cost and price analysis capabilities, historical pricing data, and negotiation skills. The contractor has less incentive to offer competitive pricing, and the government's negotiating leverage is diminished. This makes rigorous justification for the price, thorough cost analysis, and strong negotiation skills paramount to avoid paying more than necessary. The risk of paying a premium for goods or services increases substantially in sole-source situations.

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 SQ, CAMBRIDGE, MA, 02139

Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,636,087,677

Exercised Options: $1,445,685,215

Current Obligation: $489,286,382

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $13,309,458

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline