Draper Laboratory awarded $413M contract for engineering services, with limited competition and cost-plus incentives

Contract Overview

Contract Amount: $413,390,675 ($413.4M)

Contractor: THE Charles Stark Draper Laboratory, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2022-11-30

Contract Duration: 1,521 days

Daily Burn Rate: $271.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: GUIDANCE OMNIBUS

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02139

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $413.4 million to THE CHARLES STARK DRAPER LABORATORY, INC. for work described as: GUIDANCE OMNIBUS Key points: 1. Contract awarded to a single entity, raising questions about competitive pricing. 2. Cost-plus incentive fee structure may incentivize cost overruns. 3. Long contract duration (1521 days) suggests a sustained need for services. 4. Services provided under NAICS code 541330 (Engineering Services) are critical for defense. 5. The contract's value places it in the upper tier of engineering service procurements. 6. Performance is managed by the Defense Contract Management Agency, indicating a focus on defense applications.

Value Assessment

Rating: fair

The total award of over $413 million for engineering services is substantial. Benchmarking this specific contract's value is challenging without detailed service breakdowns and comparable contracts. The cost-plus incentive fee (CPIF) structure, while common for complex R&D, can lead to higher final costs compared to fixed-price contracts if not managed rigorously. The contract's duration of over four years suggests a long-term need, and the final cost will depend heavily on the achievement of performance incentives and the control of indirect costs.

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 approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency precludes a full competition. The lack of competition means that pricing was not tested against market alternatives, potentially leading to a higher cost for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price through competitive bidding, potentially resulting in taxpayer funds being used less efficiently.

Public Impact

The primary beneficiary is the Department of Defense, receiving critical engineering support. Services likely encompass design, development, testing, and integration of complex systems. Geographic impact is concentrated around the contractor's facilities, primarily in Massachusetts. Workforce implications include employment for highly skilled engineers and technical staff at The Charles Stark Draper Laboratory.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost-plus incentive fee structure carries inherent risk of cost escalation if incentives are not well-defined or managed.
Long contract duration may not adapt well to rapidly changing technological requirements without modifications.

Positive Signals

Award to a known entity (The Charles Stark Draper Laboratory) suggests a reliance on established expertise for critical defense needs.
The contract is managed by a specialized agency (DCMA), indicating robust oversight.
The use of incentive fees, if structured effectively, can align contractor performance with government objectives.

Sector Analysis

The engineering services sector is a vital component of the defense industrial base, providing essential expertise for developing and maintaining advanced military technologies. Spending in this category often involves high levels of R&D and specialized knowledge. The Charles Stark Draper Laboratory is a well-established entity in this space, particularly known for its work in guidance, navigation, and control systems. This contract likely represents a significant portion of the government's investment in specific engineering capabilities within this sector.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is also no explicit mention of subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, and opportunities for small businesses would primarily arise if Draper Laboratory voluntarily engages them as subcontractors.

Oversight & Accountability

Oversight for this contract is provided by the Defense Contract Management Agency (DCMA), a key agency responsible for ensuring contractors meet performance and cost requirements. The 'cost plus incentive fee' (CPIF) structure implies specific performance metrics and targets that, if met or exceeded, trigger additional fee payments. Transparency regarding the specific metrics and outcomes of these incentives would be crucial for assessing accountability.

Related Government Programs

Defense Engineering Services
Research and Development Contracts
Guidance, Navigation, and Control Systems
Department of Defense Major Contracts

Risk Flags

Sole-source award limits competition.
Cost-plus incentive fee structure carries inherent cost risk.
Lack of specified small business subcontracting goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $413.4 million to THE CHARLES STARK DRAPER LABORATORY, INC.. GUIDANCE OMNIBUS

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 $413.4 million.

What is the period of performance?

Start: 2018-10-01. End: 2022-11-30.

What is the historical spending trend for engineering services with The Charles Stark Draper Laboratory?

Analyzing historical spending with The Charles Stark Draper Laboratory for engineering services requires access to broader contract databases. However, this single award of over $413 million indicates a significant and sustained investment by the Department of Defense in the contractor's capabilities. Without prior data, it's difficult to establish a trend, but the magnitude of this contract suggests a long-standing relationship and critical reliance on Draper's expertise for specific defense engineering needs. Future analysis would benefit from examining prior awards to Draper under similar NAICS codes to identify patterns in contract value, duration, and type.

How does the cost-plus incentive fee (CPIF) structure compare to other contract types for similar engineering services?

Cost-plus incentive fee (CPIF) contracts are often used for research and development or complex services where the final cost is uncertain and performance outcomes are critical. Unlike fixed-price contracts, CPIF reimburses the contractor for allowable costs plus a fee that is adjusted based on performance against pre-defined targets. Compared to cost-plus-fixed-fee (CPFF), CPIF offers greater potential for cost savings if targets are met, as the fee can increase or decrease. However, compared to firm-fixed-price (FFP) contracts, CPIF carries a higher risk of cost overrun for the government, as the contractor is incentivized to incur costs to achieve performance goals, and the government bears the base cost risk. For routine engineering services, FFP might be more cost-effective, but for highly specialized or uncertain R&D, CPIF can be appropriate if well-managed.

What are the specific performance incentives tied to this contract, and how are they measured?

The provided data does not specify the exact performance incentives or their measurement criteria for this contract. However, under a Cost Plus Incentive Fee (CPIF) structure, these incentives are typically tied to achieving specific technical milestones, delivery schedules, or performance metrics relevant to the engineering services being provided. For example, incentives could be linked to exceeding system reliability targets, completing development phases ahead of schedule, or achieving specific performance benchmarks in testing. The fee adjustment mechanism would outline how exceeding or falling short of these targets impacts the contractor's final fee. Detailed insight into these specific metrics would require reviewing the contract's statement of work and incentive clauses.

What is the potential impact of this sole-source award on future competition for similar engineering services?

A sole-source award, by definition, bypasses the competitive process. This can have several impacts on future competition. Firstly, it may signal to other potential bidders that the government perceives a unique capability in the incumbent contractor, potentially discouraging them from investing in developing similar capabilities or bidding on future solicitations. Secondly, if the sole-source contract is lengthy and successful, it can solidify the incumbent's market position and relationship with the agency, making it harder for new entrants to break in. However, if the agency is required to justify the sole-source nature and plans for future competition, it might only represent a temporary pause in the competitive cycle.

How does the $413M contract value compare to the overall federal spending on engineering services (NAICS 541330)?

Federal spending on engineering services (NAICS 541330) is substantial, often running into tens of billions of dollars annually across various agencies. A single contract award of $413 million, while significant for the contractor and the specific project, represents a fraction of the total federal outlay for these services. For context, total federal obligations for engineering services can fluctuate but generally represent a major category within professional services procurement. This contract is a large award within its specific domain but should be viewed as one component of a much larger federal spending landscape for engineering expertise.

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

Solicitation ID: N0003019Q0001

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: $431,056,485

Exercised Options: $431,056,485

Current Obligation: $413,390,675

Actual Outlays: $100,634,905

Subaward Activity

Number of Subawards: 59

Total Subaward Amount: $9,791,770

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline