Draper Laboratory awarded $367.8M for Trident MK 6 guidance systems, a sole-source contract

Contract Overview

Contract Amount: $367,757,487 ($367.8M)

Contractor: THE Charles Stark Draper Laboratory, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-02-01

End Date: 2021-03-31

Contract Duration: 1,519 days

Daily Burn Rate: $242.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: IGF::CT::IGF TRIDENT MK 6 GUIDANCE SYSTEM PEUS

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02139

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $367.8 million to THE CHARLES STARK DRAPER LABORATORY, INC. for work described as: IGF::CT::IGF TRIDENT MK 6 GUIDANCE SYSTEM PEUS Key points: 1. The contract value of $367.8 million represents a significant investment in strategic defense capabilities. 2. Sole-source procurement raises questions about potential price inflation and lack of competitive pressure. 3. The fixed-price incentive contract type suggests a shared risk between the government and contractor. 4. The duration of the contract (1519 days) indicates a long-term need for these critical components. 5. The absence of small business set-asides or subcontracting requirements may limit broader economic participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized defense application. Without competitive bids, it's difficult to ascertain if the $367.8 million represents a fair market price. The fixed-price incentive structure aims to control costs, but the initial award price is a key factor. Comparisons to similar, publicly available guidance system contracts are scarce, making a direct value-for-money assessment difficult without more granular cost data.

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 potential suppliers. 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 limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a single provider for critical defense systems.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure the awarded price is justified.

Public Impact

The primary beneficiaries are the U.S. Navy, which relies on the Trident II (D5) missile system for strategic deterrence. The contract delivers essential guidance systems for the Trident II (D5) submarine-launched ballistic missile. The geographic impact is national, supporting strategic defense infrastructure, with manufacturing likely concentrated in Massachusetts. Workforce implications include specialized engineering and manufacturing roles at The Charles Stark Draper Laboratory, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the sole-source justification process.
No indication of small business participation or subcontracting opportunities.
Fixed-price incentive contract requires careful monitoring to ensure contractor performance aligns with cost goals.

Positive Signals

Contract awarded to a known, specialized defense contractor with a track record in guidance systems.
Fixed-price incentive contract structure aims to align contractor and government interests in cost control.
Long-term contract duration suggests a stable and critical need for the technology.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, specifically focusing on advanced guidance systems for strategic defense. The market for such specialized components is highly concentrated, often dominated by a few key players with the necessary expertise and security clearances. The total addressable market for strategic missile guidance systems is difficult to quantify publicly but represents a critical niche within the broader aerospace and defense industry.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating subcontracting opportunities for small businesses. The specialized nature of the technology and the sole-source award likely contribute to this. This means the economic benefits are concentrated with the prime contractor, and opportunities for small businesses within the defense supply chain are not being leveraged through this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). The fixed-price incentive contract type requires diligent monitoring of performance and costs to ensure the contractor meets milestones and stays within projected expenditures. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal government review and potentially Inspector General audits.

Related Government Programs

Trident II (D5) Missile System
Strategic Deterrence Programs
Ballistic Missile Defense Systems
Naval Weapons Systems
Aerospace and Defense Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Critical defense component dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $367.8 million to THE CHARLES STARK DRAPER LABORATORY, INC.. IGF::CT::IGF TRIDENT MK 6 GUIDANCE SYSTEM PEUS

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 $367.8 million.

What is the period of performance?

Start: 2017-02-01. End: 2021-03-31.

What is the specific justification for awarding this contract on a sole-source basis to The Charles Stark Draper Laboratory, Inc.?

The justification for a sole-source award typically rests on the contractor possessing unique capabilities, proprietary technology, or being the only responsible source capable of meeting the government's requirements. For advanced defense systems like the Trident MK 6 guidance system, The Charles Stark Draper Laboratory, Inc. has a long-standing and specialized history. They are known for their expertise in inertial navigation and guidance systems, often developed through extensive research and development, sometimes with government funding. Without this specific proprietary knowledge or specialized manufacturing infrastructure, other companies may not be able to produce the system to the required specifications or security standards. A formal Justification for Other than Full and Open Competition (JOFOC) would detail these reasons, often citing national security interests and the lack of viable alternatives.

How does the fixed-price incentive (FPI) contract type aim to manage costs compared to other contract types?

A Fixed-Price Incentive (FPI) contract is designed to share cost risks and rewards between the government and the contractor. It establishes an initial target cost, target profit, and a price ceiling. If the final cost is below the target cost, both parties share in the savings according to a predetermined formula. Conversely, if the final cost exceeds the target cost, the contractor bears an increasing share of the overrun up to the price ceiling. This structure incentivizes the contractor to control costs diligently to achieve a higher profit, while the government benefits from a ceiling that limits its maximum liability. It's a middle ground between firm-fixed-price (where the contractor bears all cost risk) and cost-plus contracts (where the government bears most risk).

What is the historical spending trend for similar guidance system contracts awarded by the Department of Defense?

Analyzing historical spending trends for highly specialized and often sole-sourced defense components like guidance systems is complex due to limited public data and the unique nature of each contract. However, generally, the Department of Defense invests billions annually in weapon system development and sustainment, including navigation and guidance technologies. Contracts for such systems are often long-term, multi-year procurements due to lengthy development cycles and the critical role they play in national security. Spending can fluctuate based on modernization programs, geopolitical threats, and budget allocations. For systems like the Trident, which are part of a continuous modernization effort, spending tends to be consistent, reflecting the ongoing need for upgrades and replacements.

What are the potential risks associated with relying on a single contractor for critical defense components?

Relying on a single contractor for critical defense components, as is the case with this sole-source award, presents several risks. Firstly, it eliminates competitive pressure, potentially leading to higher prices and reduced innovation over time. Secondly, it creates a single point of failure; if the contractor experiences financial difficulties, production issues, or goes out of business, the supply chain for that critical component could be severely disrupted, impacting national security. Thirdly, it can lead to a loss of government insight into alternative technologies or manufacturing processes. Finally, it can foster a dependency that makes transitioning to a different supplier or technology in the future more difficult and costly.

What is The Charles Stark Draper Laboratory, Inc.'s track record in developing and producing guidance systems for the U.S. military?

The Charles Stark Draper Laboratory, Inc. (CSDL) has a long and distinguished track record in developing and producing guidance, navigation, and control (GNC) systems for the U.S. military, particularly for strategic weapons. They were instrumental in the development of the guidance systems for the Polaris, Poseidon, and Trident missile programs. Their expertise is deeply rooted in inertial navigation technology. CSDL has consistently been a key player in ensuring the accuracy and reliability of U.S. strategic deterrent forces. Their continued involvement in contracts like the Trident MK 6 guidance system underscores their sustained capability and the government's reliance on their specialized knowledge and experience in this critical defense sector.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003017Q0008

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $458,882,417

Exercised Options: $393,355,487

Current Obligation: $367,757,487

Actual Outlays: $49,292,875

Subaward Activity

Number of Subawards: 41

Total Subaward Amount: $178,237,624

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline