DoD's $391.8M contract to The Charles Stark Draper Laboratory, Inc. for navigation systems awarded via sole-source negotiation

Contract Overview

Contract Amount: $391,766,827 ($391.8M)

Contractor: THE Charles Stark Draper Laboratory, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-02-15

End Date: 2025-12-31

Contract Duration: 2,511 days

Daily Burn Rate: $156.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: MK6 GEUS FY19

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02139

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $391.8 million to THE CHARLES STARK DRAPER LABORATORY, INC. for work described as: MK6 GEUS FY19 Key points: 1. The contract's value of $391.8 million over its period of performance suggests a significant investment in critical defense capabilities. 2. Awarded as a sole-source contract, it bypasses standard competitive processes, raising questions about potential price efficiencies and market alternatives. 3. The fixed-price incentive (FPI) contract type aims to balance cost control with performance incentives, but requires careful monitoring of cost overruns and target achievement. 4. The duration of the contract (2511 days) indicates a long-term need for these specialized navigation systems, implying ongoing strategic importance. 5. The absence of small business set-aside flags suggests the prime contractor is expected to handle the entire scope, with potential implications for subcontracting opportunities. 6. The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code, placing it within a specialized segment of the defense industrial base.

Value Assessment

Rating: questionable

Benchmarking the value of this $391.8 million contract is challenging without detailed cost breakdowns and comparisons to similar sole-source awards for navigation systems. The fixed-price incentive structure suggests an expectation of cost control, but the lack of competition inherently limits the government's ability to secure the lowest possible price through market forces. Without competitive bids, it's difficult to definitively assess if the pricing represents fair market value or if alternative, more cost-effective solutions exist.

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. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards limit taxpayer value by removing the downward pressure on prices that competition provides. This can result in higher overall spending for the government compared to what might be achieved through an open bidding process.

Public Impact

The primary beneficiaries are the Department of Defense, which receives advanced navigation systems crucial for military operations. The contract delivers essential components and services for search, detection, navigation, guidance, aeronautical, and nautical systems. The geographic impact is primarily within the United States, supporting domestic defense manufacturing and research capabilities. The contract supports a highly specialized workforce within the aerospace and defense sector, particularly in areas of advanced engineering and systems integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Long contract duration may obscure current market pricing and technological advancements.
Fixed-price incentive contracts can lead to cost overruns if not managed rigorously.
Lack of small business set-aside may limit opportunities for smaller innovative firms.

Positive Signals

Award to a specialized contractor (Draper Laboratory) suggests access to unique expertise.
Fixed-price incentive contract aims to align contractor and government interests on cost and performance.
Long duration indicates a stable, long-term need for critical defense technology.
Contract supports advanced navigation systems vital for national security.

Sector Analysis

The contract falls within the defense industrial base, specifically the segment focused on advanced navigation, guidance, and control systems. This sector is characterized by high R&D intensity, long product development cycles, and significant government procurement. The market is often dominated by a few specialized firms due to the technical expertise and security clearances required. Comparable spending benchmarks are difficult to establish due to the proprietary nature of such systems and the sole-source award.

Small Business Impact

The contract does not indicate any small business set-aside provisions (ss=false, sb=false). This suggests that the prime contractor, The Charles Stark Draper Laboratory, Inc., is expected to perform the majority of the work. While this can streamline execution, it may limit subcontracting opportunities for small businesses that could offer specialized components or services within the navigation system domain. The government's approach to ensuring small business participation, if any, would likely be through the prime contractor's own subcontracting plan.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, potentially involving the Defense Contract Management Agency (DCMA) for contract administration. The fixed-price incentive (FPI) nature of the contract requires diligent monitoring of cost performance against targets and evaluation of technical progress to ensure value for money. Transparency is generally limited for sole-source defense contracts, but reporting requirements on cost and performance would be mandated.

Related Government Programs

DoD Navigation Systems Procurement
Defense Research and Development Contracts
Aeronautical and Nautical Instrument Manufacturing
Sole-Source Defense Contracts
Fixed-Price Incentive Contracts

Risk Flags

Sole-source award limits competition.
Lack of transparency in pricing due to sole-source nature.
Potential for cost overruns in fixed-price incentive contracts.
Long contract duration may not reflect current market value.
Limited opportunities for small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $391.8 million to THE CHARLES STARK DRAPER LABORATORY, INC.. MK6 GEUS FY19

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 $391.8 million.

What is the period of performance?

Start: 2019-02-15. End: 2025-12-31.

What is the historical spending pattern for The Charles Stark Draper Laboratory, Inc. with the Department of Defense for similar navigation systems?

Analyzing historical spending for The Charles Stark Draper Laboratory, Inc. with the DoD reveals a consistent pattern of significant contract awards, particularly in areas related to inertial navigation, guidance, and control systems. Draper Laboratory has a long-standing relationship with the DoD, often securing sole-source or limited-competition contracts due to its specialized expertise and proprietary technologies developed over decades. While specific dollar amounts for 'similar' navigation systems would require a detailed search of contract databases, their overall portfolio indicates a substantial and ongoing investment by the DoD in the capabilities Draper provides. This historical reliance suggests a strategic partnership where the DoD values Draper's unique contributions, even if it means foregoing broader competitive bidding processes. Understanding these past awards provides context for the current $391.8 million contract, indicating it aligns with a sustained commitment to these critical technologies.

How does the per-unit cost of the systems procured under this contract compare to industry benchmarks or similar government contracts?

Determining a precise per-unit cost benchmark for the systems procured under this $391.8 million contract is challenging due to several factors. Firstly, the contract is for 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' which encompasses a broad range of potential products and services, not a single standardized unit. Secondly, as a sole-source award to The Charles Stark Draper Laboratory, Inc., there is no direct competitive pricing data to establish a market rate. Thirdly, the fixed-price incentive (FPI) contract structure means that costs are variable based on performance and target achievement. Without specific details on the units being delivered, their complexity, and the negotiated cost targets, a direct per-unit comparison to industry benchmarks or other government contracts is not feasible. Such analysis would typically require access to detailed cost proposals and production data, which are often proprietary or classified.

What are the key performance indicators (KPIs) and risk mitigation strategies associated with this fixed-price incentive contract?

For this fixed-price incentive (FPI) contract, key performance indicators (KPIs) would likely revolve around the technical performance of the navigation systems (e.g., accuracy, reliability, operational readiness), delivery schedules, and cost control against negotiated targets. The FPI structure inherently includes risk-sharing: the contractor bears more risk if costs exceed the target price, while the government benefits from a ceiling price. Risk mitigation strategies employed by the DoD would focus on rigorous oversight of the contractor's cost accounting, regular technical reviews to ensure progress aligns with objectives, and robust quality assurance processes. The government would also monitor the contractor's financial stability and technical execution closely. Potential risks include cost overruns exceeding the target price (up to the ceiling), schedule delays impacting operational needs, and performance shortfalls in the advanced navigation capabilities. Effective management of these KPIs and proactive risk mitigation are crucial for the success of such a significant, long-term sole-source award.

What is the strategic importance of these navigation systems to the Department of Defense, justifying a sole-source award?

The strategic importance of these navigation systems to the Department of Defense likely stems from their critical role in enabling mission success across various platforms, including aircraft, missiles, and naval vessels. Navigation, guidance, and control systems are fundamental to precision targeting, operational effectiveness, and force protection. The Charles Stark Draper Laboratory, Inc. is a recognized leader in developing highly specialized and often proprietary technologies in this domain, potentially holding unique intellectual property or manufacturing capabilities essential for these systems. A sole-source award may be justified if no other contractor can meet the stringent technical requirements, security protocols, or if the systems are deeply integrated with existing platforms, making a transition to another vendor prohibitively expensive or technically infeasible. This ensures the DoD maintains access to state-of-the-art, reliable navigation capabilities vital for national security operations.

What are the potential long-term implications of this contract on the market for navigation system manufacturing?

This sole-source, $391.8 million contract awarded to The Charles Stark Draper Laboratory, Inc. has several potential long-term implications for the navigation system manufacturing market. Firstly, it reinforces Draper Laboratory's dominant position in specialized defense navigation technologies, potentially creating barriers to entry for competitors seeking to develop similar capabilities. Secondly, the long duration (over 6 years) means significant resources and focus will be directed towards this single entity, potentially diverting attention or investment from broader market innovation. Thirdly, the lack of competition in this specific award may signal a trend where the DoD relies on established, sole-source providers for highly specialized systems, potentially reducing overall market dynamism. However, it also ensures a stable supply chain for critical components and may spur innovation within Draper Laboratory itself to meet the contract's objectives.

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: N0003018R0008

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: $391,766,827

Exercised Options: $391,766,827

Current Obligation: $391,766,827

Subaward Activity

Number of Subawards: 48

Total Subaward Amount: $128,966,389

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline