DoD's $396.7M contract with Draper Lab for navigation systems lacks competition, raising cost concerns

Contract Overview

Contract Amount: $396,709,566 ($396.7M)

Contractor: THE Charles Stark Draper Laboratory, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-02-26

End Date: 2026-07-31

Contract Duration: 1,981 days

Daily Burn Rate: $200.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: MK6 GEUS FY21

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02139

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $396.7 million to THE CHARLES STARK DRAPER LABORATORY, INC. for work described as: MK6 GEUS FY21 Key points: 1. The contract value is substantial, indicating a significant investment in critical defense systems. 2. Lack of competition is a major red flag, potentially leading to inflated costs. 3. The sector is vital for national security, but procurement methods need scrutiny. 4. The use of a Cost Plus Incentive Fee contract type requires careful monitoring of performance and costs.

Value Assessment

Rating: questionable

The contract's Cost Plus Incentive Fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Without competitive bids, it's hard to benchmark against market rates for similar systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to The Charles Stark Draper Laboratory, Inc. This limits price discovery and potentially increases costs for taxpayers.

Taxpayer Impact: The absence of competition for a contract of this magnitude likely results in higher costs than if multiple vendors had vied for the work.

Public Impact

Taxpayers may be overpaying for critical navigation and guidance systems due to the lack of competitive bidding. The Department of the Navy relies on this contractor for essential defense technology, highlighting potential single-point-of-failure risks. The long contract duration (ending 2026) means these potential inefficiencies could persist for years.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long contract duration
No small business participation noted

Positive Signals

Critical technology development
Long-term strategic partnership

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is crucial for defense capabilities, but competitive procurement is standard practice to ensure value.

Small Business Impact

There is no indication of small business participation in this contract. Given the sole-source nature and the specialized field, opportunities for small businesses may have been limited or overlooked.

Oversight & Accountability

The sole-source award and cost-plus contract type necessitate robust oversight from the Department of the Navy to ensure cost control and performance. Transparency in reporting is crucial.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competition
Potential for cost overruns
Reliance on a single source
Limited transparency in pricing
No small business involvement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $396.7 million to THE CHARLES STARK DRAPER LABORATORY, INC.. MK6 GEUS FY21

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 $396.7 million.

What is the period of performance?

Start: 2021-02-26. End: 2026-07-31.

What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities or proprietary technology. However, without competitive bidding, ensuring fair and reasonable pricing requires rigorous independent cost analysis and negotiation by the contracting agency. The agency must demonstrate that the awarded price reflects market value as closely as possible, even without competing offers.

What are the specific performance metrics and cost controls in place for this Cost Plus Incentive Fee contract?

A Cost Plus Incentive Fee (CPIF) contract aims to incentivize both the contractor and the government by sharing cost savings or overruns based on performance targets. Specific metrics likely include technical performance, delivery schedules, and cost ceilings. Robust oversight is needed to monitor progress against these targets and ensure that the incentive structure effectively controls costs and drives desired outcomes.

How does the government plan to mitigate risks associated with relying on a single contractor for these critical systems?

Mitigation strategies for sole-source contracts often include building in strong contract clauses for knowledge transfer, ensuring detailed documentation, and potentially developing alternative solutions or contractors over the long term. The government might also conduct regular reviews of the technology landscape to identify potential future competitors or alternative systems.

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: N0003021R0008

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: $396,709,566

Exercised Options: $396,709,566

Current Obligation: $396,709,566

Subaward Activity

Number of Subawards: 29

Total Subaward Amount: $144,204,798

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline