Naval Research Laboratory contract for advanced engineering and science awarded to Peraton Inc. for over $120M
Contract Overview
Contract Amount: $120,980,775 ($121.0M)
Contractor: Peraton Inc.
Awarding Agency: Department of Defense
Start Date: 2003-08-14
End Date: 2010-03-31
Contract Duration: 2,421 days
Daily Burn Rate: $50.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: 200311!004328!1700!E3220 !NAVAL RESEARCH LABORATORY !N0017303C2037 !A!N! !N! !20030814!20040529!120731484!120731484!001216845!N!ADVANCED ENGINEERING & SCIENCE!2560 HUNTINGTON AVENUE !ALEXANDRIA !VA!22303!50000!001!11!WASHINGTON !DISTRICT OF COLUMBIA !D.C. !+000006384912!N!N!000000000000!AC62!RDTE/ELECTRONICS & COMMUNICATION EQ-APPLIED RESEA !A7 !ELECTRONICS AND COMMUNICATION !2000!NOT DISCERNABLE OR CLASSIFIED !541710!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!U!2!001!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !
Place of Performance
Location: HERNDON, FAIRFAX County, VIRGINIA, 20170
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $121.0 million to PERATON INC. for work described as: 200311!004328!1700!E3220 !NAVAL RESEARCH LABORATORY !N0017303C2037 !A!N! !N! !20030814!20040529!120731484!120731484!001216845!N!ADVANCED ENGINEERING & SCIENCE!2560 HUNTINGTON AVENUE !ALEXANDRIA !VA!22303!50000!001!11!WASHINGTON !DISTR… Key points: 1. Contract value significantly exceeds initial estimates, suggesting potential scope expansion or cost overruns. 2. The contract was awarded through full and open competition, indicating a competitive bidding process. 3. Long contract duration of over 6 years may present risks related to technological obsolescence and changing requirements. 4. The 'Cost Plus Fixed Fee' pricing structure can incentivize contractor spending, requiring robust oversight. 5. The primary service area is Research and Development in Physical, Engineering, and Life Sciences, a critical but complex sector. 6. The contract's significant value places it among larger R&D awards within the defense sector.
Value Assessment
Rating: fair
The final award amount of $120,980,774.90 is substantially higher than the initial estimated value of $50,000. This significant increase warrants scrutiny to understand the drivers behind the escalation. Without more detailed breakdowns of the work performed and the associated costs, it is difficult to definitively benchmark the value for money. However, the substantial difference between the initial estimate and the final award suggests potential for cost growth or scope creep that may not have been fully anticipated.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under 'Full and Open Competition,' suggesting that multiple bidders were likely considered. The presence of a competitive process is generally positive for price discovery and ensuring fair market value. However, the specific number of bids received and the details of the evaluation process are not provided, which limits a deeper assessment of the competition's effectiveness in driving down costs.
Taxpayer Impact: A competitive award process is beneficial for taxpayers as it typically leads to more favorable pricing and encourages innovation among potential contractors.
Public Impact
The Naval Research Laboratory benefits from advanced engineering and scientific support, crucial for maintaining technological superiority. Services delivered likely include research, development, and testing of advanced technologies relevant to naval operations. The geographic impact is centered in Alexandria, Virginia, supporting the local economy and specialized workforce. This contract supports a highly skilled workforce in engineering and scientific fields.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Significant increase from estimated to awarded value requires explanation.
- Long contract duration (over 6 years) poses risks of cost escalation and potential misalignment with evolving technological needs.
- Cost Plus Fixed Fee contract type can lead to higher contractor spending if not closely monitored.
- Lack of detailed performance metrics makes it difficult to assess the true value and effectiveness of the services rendered.
Positive Signals
- Awarded through full and open competition, indicating a potentially robust bidding process.
- Contract supports critical research and development for the Department of Defense.
- The contractor, Peraton Inc., is a known entity in the government contracting space.
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on electronics and communication equipment applied research. The North American Industry Classification System (NAICS) code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences,' encompasses a broad range of scientific and technical services. Spending in this area is vital for national security and technological advancement, with significant government investment annually. Comparable contracts often involve long-term engagements due to the nature of R&D projects.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss=false, sb=false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. However, the prime contractor, Peraton Inc., may engage small businesses as subcontractors, but this information is not detailed in the provided data.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The 'Cost Plus Fixed Fee' structure necessitates rigorous financial oversight to control costs and prevent unnecessary expenditures. Transparency regarding the specific deliverables and performance metrics would be crucial for effective accountability, though such details are not readily available in this summary.
Related Government Programs
- Naval Research Laboratory Core R&D
- Department of Defense Research and Development
- Electronics and Communication Equipment Research
- Applied Scientific Research Contracts
Risk Flags
- Cost Growth
- Long Contract Duration
- Potential for Technological Obsolescence
- Oversight Intensity Required for CPFF
Tags
department-of-defense, naval-research-laboratory, research-and-development, electronics-and-communication, definitive-contract, cost-plus-fixed-fee, full-and-open-competition, virginia, large-contract, applied-research
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $121.0 million to PERATON INC.. 200311!004328!1700!E3220 !NAVAL RESEARCH LABORATORY !N0017303C2037 !A!N! !N! !20030814!20040529!120731484!120731484!001216845!N!ADVANCED ENGINEERING & SCIENCE!2560 HUNTINGTON AVENUE !ALEXANDRIA !VA!22303!50000!001!11!WASHINGTON !DISTRICT OF COLUMBIA !D.C. !+000006384912!N!N!000000000000!AC62!RDTE/ELECTRONICS & COMMUNICATION EQ-APPLIED RESEA !A7 !ELECTRONICS AND COMMUNICATION !2000!NOT DISCERNABLE OR CLASSIFIED !541710!E! !3! ! ! ! ! !99990909!B
Who is the contractor on this award?
The obligated recipient is PERATON 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 $121.0 million.
What is the period of performance?
Start: 2003-08-14. End: 2010-03-31.
What factors contributed to the final award amount exceeding the initial estimate by such a significant margin?
The substantial increase from the initial estimate ($50,000) to the final award ($120,980,774.90) suggests several potential factors. It is common for initial estimates in large R&D contracts to be preliminary and subject to change as project scope solidifies. This could involve the inclusion of additional research tasks, unforeseen technical challenges requiring more resources, extended timelines, or adjustments in labor rates and material costs over the contract's extended duration. The 'Cost Plus Fixed Fee' (CPFF) contract type also allows for costs to be reimbursed, plus a negotiated fixed fee, which can lead to higher final costs if the initial fee was based on a much smaller estimated cost base. Without detailed contract modifications and performance reports, pinpointing the exact reasons is speculative, but it likely reflects a combination of evolving project requirements and the inherent uncertainties in long-term R&D.
How does the 'Cost Plus Fixed Fee' (CPFF) pricing structure impact contractor incentives and government oversight?
The Cost Plus Fixed Fee (CPFF) pricing structure reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used in R&D or services where the scope is not well-defined, making it difficult to estimate costs accurately upfront. For the contractor, the CPFF structure provides a guaranteed profit margin regardless of cost fluctuations, which can reduce their financial risk. However, it can also reduce the incentive to control costs, as the government bears most of the financial risk. Consequently, effective government oversight is critical. Agencies must meticulously track and audit all incurred costs to ensure they are reasonable, allocable, and allowable. Robust performance monitoring is also essential to ensure the contractor is delivering the required services efficiently and effectively, despite the cost-reimbursement nature of the contract.
What is the typical duration for contracts of this nature (R&D in Physical, Engineering, and Life Sciences) within the Department of Defense?
Contracts for Research and Development (R&D) in fields like Physical, Engineering, and Life Sciences within the Department of Defense (DoD) often have longer durations compared to contracts for standard goods or services. This is due to the inherent nature of R&D, which involves exploration, experimentation, and iterative development, often spanning multiple years. Durations of 3 to 7 years are not uncommon for significant R&D efforts, especially those involving fundamental research or the development of complex systems. The specific duration of this contract (over 6 years, from August 2003 to March 2010) aligns with this trend. Longer durations allow for sustained focus and the potential for groundbreaking discoveries, but they also introduce risks related to technological obsolescence, changing strategic priorities, and cost management over time.
Can the 'full and open competition' designation provide insights into the level of innovation or the quality of solutions offered by the winning contractor?
While 'full and open competition' primarily ensures that all responsible sources are allowed to compete, it indirectly fosters innovation and quality. By opening the bidding process to a wide range of potential contractors, the government increases the likelihood of receiving diverse approaches and cutting-edge solutions. Companies are incentivized to propose innovative methods and demonstrate superior technical capabilities to win the contract. In this case, Peraton Inc. winning a competitive bid suggests their proposal met or exceeded the government's technical requirements and offered a compelling value proposition compared to other bidders. The competitive environment pushes all participants to refine their offerings, potentially leading to higher quality outcomes and more advanced technological developments than might occur under a sole-source award.
What are the potential risks associated with a contract awarded in 2003 that concluded in 2010, particularly in the field of electronics and communication?
A contract spanning from 2003 to 2010 in the rapidly evolving field of electronics and communication carries inherent risks. Technological obsolescence is a primary concern; advancements made during the contract period could render the initial research or developed technologies outdated by its conclusion. There's also a risk of scope creep or requirement misalignment, where the initial objectives may become less relevant due to shifts in military needs or technological landscapes. Furthermore, managing costs over such a long period can be challenging, with potential for inflation, changes in labor costs, and the need for contract modifications. Ensuring the final deliverables remain relevant and cutting-edge requires proactive management and adaptation throughout the contract's lifecycle.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Contractor Details
Parent Company: Veritas Capital Fund Management, L.L.C. (UEI: 078628925)
Address: 12975 WORLDGATE DR STE 7117, HERNDON, VA, 20170
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $121,154,574
Exercised Options: $121,154,574
Current Obligation: $120,980,775
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2003-08-14
Current End Date: 2010-03-31
Potential End Date: 2010-03-31 00:00:00
Last Modified: 2020-03-10
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