Draper Lab's $334M Navy contract for MK6 US/UK Systems Support awarded without competition

Contract Overview

Contract Amount: $334,207,627 ($334.2M)

Contractor: THE Charles Stark Draper Laboratory, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-10-01

End Date: 2022-06-10

Contract Duration: 3,539 days

Daily Burn Rate: $94.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MK6 US/UK SYSTEMS SUPT (FY13)

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02139

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $334.2 million to THE CHARLES STARK DRAPER LABORATORY, INC. for work described as: MK6 US/UK SYSTEMS SUPT (FY13) Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Long contract duration of 10 years suggests a sustained need for these specialized engineering services. 3. The cost-plus-fixed-fee structure may incentivize cost overruns, requiring robust oversight. 4. Lack of competition limits opportunities for other firms and potentially reduces innovation. 5. The contract's value places it in the upper tier of defense engineering service procurements. 6. Performance context is limited due to the absence of competitive benchmarks.

Value Assessment

Rating: questionable

The contract's value of over $334 million over a decade, awarded without competition, raises concerns about value for money. Without competitive bids, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee (CPFF) award type, while common for complex R&D, can lead to higher costs if not managed closely, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure necessitates strong government oversight to ensure costs remain reasonable and that the fixed fee adequately compensates the contractor for the effort.

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 potential offerors. This typically occurs when a specific contractor possesses unique capabilities or when circumstances preclude full and open competition, such as urgent needs or the existence of only one responsible source. The absence of competition means that price discovery through market forces was bypassed, potentially leading to less favorable pricing for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the lack of competitive pressure to drive down costs. Without competing the requirement, the government loses the opportunity to secure the best possible price and value through market mechanisms.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives critical systems support for the MK6 program. Services delivered include engineering support, likely encompassing design, development, testing, and sustainment of complex systems. The geographic impact is primarily within the defense industrial base, supporting specialized engineering roles. Workforce implications include the employment of highly skilled engineers and technical personnel at The Charles Stark Draper Laboratory, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost-plus-fixed-fee contract type can incentivize cost growth.
Long contract duration may reduce flexibility and opportunities for innovation.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Draper Laboratory is a recognized leader in advanced engineering and research.
Long-term contract suggests a stable and critical need for the services provided.
Fixed fee component provides some cost certainty compared to other cost-reimbursement types.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense systems. The market for specialized defense engineering services is characterized by high barriers to entry, requiring deep technical expertise and often security clearances. Spending in this area is substantial, driven by the complex and evolving needs of military branches. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of defense systems, but large, long-term sole-source engineering contracts are not uncommon in this sector.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, The Charles Stark Draper Laboratory, Inc., is a large research and development organization. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is likely minimal, though large prime contractors often engage small businesses for specialized support.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of contractor performance, cost accounting, and adherence to contract terms is crucial. Transparency is limited by the non-competitive award, but contract modifications, performance reviews, and financial audits would be key accountability measures. The Inspector General for the Department of Defense may also have jurisdiction for audits and investigations.

Related Government Programs

Defense Engineering Services
Naval Systems Support
Research and Development Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source Procurements

Risk Flags

Sole-source award
Cost-plus-fixed-fee structure
Long contract duration
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $334.2 million to THE CHARLES STARK DRAPER LABORATORY, INC.. MK6 US/UK SYSTEMS SUPT (FY13)

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 $334.2 million.

What is the period of performance?

Start: 2012-10-01. End: 2022-06-10.

What is the historical spending trend for MK6 US/UK Systems Support with The Charles Stark Draper Laboratory, Inc. prior to this award?

Detailed historical spending data prior to this specific award is not provided in the given data. However, the contract's start date of 2012 and end date of 2022, with a value of $334,207,627.37, suggests a significant and sustained investment in these services over a decade. To understand historical trends, one would need to examine prior contract awards, modifications, and task orders issued to Draper Laboratory for similar MK6 support functions. Analyzing these historical data points would reveal if spending has been consistent, increasing, or decreasing, and whether the current award represents a continuation or expansion of previous efforts.

What specific justifications were provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'SOLE-SOURCE'. Specific justifications, such as the existence of only one responsible source capable of providing the required services, or circumstances that would not permit advertising or competitive proposal, are not detailed in the summary data. Typically, sole-source justifications are documented in a Justification and Approval (J&A) document, which would outline the rationale, market research conducted, and the determination that competitive procedures are not feasible or not in the government's best interest. Without access to the J&A, the precise reasons remain unstated.

How does the fixed fee component of this Cost Plus Fixed Fee (CPFF) contract compare to industry standards for similar engineering services?

Benchmarking the fixed fee for this CPFF contract against industry standards is challenging without more specific details about the scope of work, the complexity of the MK6 US/UK systems, and the specific risks involved. CPFF contracts reimburse the contractor for allowable costs plus a predetermined fixed fee, which represents the contractor's profit. Industry standards for fixed fees can vary widely, often ranging from 5% to 15% of the estimated cost, depending on the contract type, risk, and nature of the work. A thorough analysis would require comparing the fee percentage to the total estimated cost and evaluating it against fees on comparable sole-source or competitively awarded engineering support contracts for complex defense systems.

What are the key performance indicators (KPIs) used to measure the success of this contract?

The provided data does not specify the key performance indicators (KPIs) used to measure the success of this contract. For a contract of this nature, KPIs would typically be defined in the contract's Performance Work Statement (PWS) or Statement of Work (SOW). These might include metrics related to system availability, reliability, maintainability, response times for technical support, successful completion of engineering studies or modifications, adherence to project schedules, and quality of deliverables. The government's quality assurance personnel would monitor these KPIs to ensure the contractor is meeting its obligations.

What is the potential impact of this contract's duration (10 years) on technological obsolescence and future system upgrades?

A 10-year contract duration for complex systems support presents a significant risk of technological obsolescence. Over a decade, technology can advance rapidly, potentially making the systems supported by this contract outdated or less efficient compared to newer alternatives. This long duration may also disincentivize the contractor from proposing or implementing cutting-edge upgrades if the current systems are profitable to maintain. The government must actively manage this risk through contract clauses that encourage or mandate technology refresh, incorporate provisions for future upgrades, and conduct regular reviews to assess the system's continued relevance and performance against evolving technological landscapes.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $340,828,730

Exercised Options: $335,605,798

Current Obligation: $334,207,627

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline