DoD's $22.5M contract for system expansion awarded to SRI International raises questions about competition and value

Contract Overview

Contract Amount: $22,540,804 ($22.5M)

Contractor: SRI International

Awarding Agency: Department of Defense

Start Date: 2010-09-14

End Date: 2012-09-30

Contract Duration: 747 days

Daily Burn Rate: $30.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SYSTEM EXPANSION OF DEPLOYABLE FORCE

Place of Performance

Location: MENLO PARK, SAN MATEO County, CALIFORNIA, 94025

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $22.5 million to SRI INTERNATIONAL for work described as: SYSTEM EXPANSION OF DEPLOYABLE FORCE Key points: 1. The contract's value of $22.5 million for system expansion appears high given the relatively short performance period of approximately two years. 2. The lack of competition for this significant award warrants scrutiny regarding potential price inflation and limited market engagement. 3. SRI International's track record and specific capabilities for this system expansion need to be thoroughly assessed to justify the sole-source award. 4. The contract's fixed-price nature offers some cost certainty, but the absence of competitive bidding limits the government's ability to secure the best possible pricing. 5. The 'Other Commercial and Service Industry Machinery Manufacturing' classification suggests a broad scope, making it difficult to benchmark against highly specialized defense contracts. 6. The contract's performance is concentrated in California, potentially limiting broader economic or workforce impacts across different regions.

Value Assessment

Rating: questionable

The total award of $22.5 million for a system expansion over a period of roughly two years (747 days) suggests a daily burn rate of approximately $30,175. Without specific details on the system's complexity or the nature of the 'expansion,' it is challenging to benchmark this cost effectively. However, given the 'NOT COMPETED' status, there is a significant risk that the pricing may not reflect competitive market rates. Further analysis would require understanding the deliverables and comparing them to similar system development or expansion projects, particularly those that underwent competitive bidding.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This significantly limits the number of potential bidders and removes the pressure of competitive pricing. While sole-source awards can be justified for unique capabilities or urgent needs, the justification for this specific award is not provided. The lack of competition means the government did not benefit from multiple offers, potentially leading to a higher price than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium for this system expansion due to the absence of competitive bidding. The government missed an opportunity to leverage market forces to drive down costs and ensure the best value was obtained.

Public Impact

The primary beneficiary of this contract is SRI International, which will receive $22.5 million for its services. The contract aims to support the Department of the Navy's operational capabilities through the expansion of a specific system. The services delivered are related to 'Other Commercial and Service Industry Machinery Manufacturing,' indicating a focus on equipment or technological development. Performance is geographically concentrated in California, suggesting potential localized economic benefits or workforce engagement within that state.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a substantial contract award.
Potential for inflated pricing due to sole-source nature.
Limited transparency on the specific system being expanded and its criticality.
Unclear justification for not pursuing a competitive bidding process.
The broad classification 'Other Commercial and Service Industry Machinery Manufacturing' makes it difficult to assess specialized expertise.

Positive Signals

SRI International is a known entity in research and development, suggesting potential for technical expertise.
The contract is firm fixed price, providing cost certainty once awarded.
The Department of the Navy is the awarding agency, indicating a focus on defense-related needs.
The contract duration is defined, allowing for project planning and execution within a set timeframe.

Sector Analysis

The 'Other Commercial and Service Industry Machinery Manufacturing' sector is broad and encompasses a wide range of industrial equipment and services. Within the defense context, such contracts often relate to specialized machinery, testing equipment, or support systems crucial for military operations. Benchmarking this $22.5 million contract is difficult without more specific details on the system. However, for large-scale defense procurements, spending can range from millions to billions, depending on the complexity and scale of the technology or equipment involved. The sole-source nature here suggests a potentially unique or highly specialized requirement.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The prime contractor, SRI International, is a large research organization. There is no explicit information regarding subcontracting plans for small businesses. This means that opportunities for small businesses to participate in this contract are likely limited unless they are directly contracted by SRI International as a subcontractor, which is not guaranteed or specified.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification and review process would be critical. Transparency is limited by the lack of public detail regarding the system and the rationale for the sole-source award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance or execution.

Related Government Programs

Department of Defense Research and Development Contracts
Navy System Acquisition Programs
Sole-Source Defense Procurements
Commercial and Service Industry Machinery Manufacturing Support

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency
Unclear Justification for Sole Source

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.5 million to SRI INTERNATIONAL. SYSTEM EXPANSION OF DEPLOYABLE FORCE

Who is the contractor on this award?

The obligated recipient is SRI INTERNATIONAL.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $22.5 million.

What is the period of performance?

Start: 2010-09-14. End: 2012-09-30.

What specific system is being expanded under this contract, and what is its operational importance to the Department of the Navy?

The provided data indicates the contract is for 'SYSTEM EXPANSION OF DEPLOYABLE FORCE' and falls under the 'Other Commercial and Service Industry Machinery Manufacturing' category. However, the specific system is not detailed. Its operational importance is implied by its connection to 'deployable force,' suggesting it is critical for enabling or enhancing the mobility, readiness, or effectiveness of naval forces. Without further information, it's impossible to ascertain the exact nature of the system or its precise role in naval operations. This lack of specificity is a common challenge when analyzing defense contracts classified broadly.

What was the justification for awarding this $22.5 million contract on a sole-source basis to SRI International?

The data explicitly states the contract was 'NOT COMPETED' and has a contract type of 'SOLE SOURCE' (st: CA). However, the specific justification for this sole-source award is not provided in the data. Typically, sole-source awards are justified when only one responsible source can provide the required supplies or services, such as when there's a unique capability, a critical need with no viable alternatives, or a follow-on effort to a previously competed contract where competition is no longer feasible. The absence of this justification in the provided data makes it difficult to assess the appropriateness of the sole-source decision and raises concerns about potential missed opportunities for competitive pricing.

How does the $30,175 daily burn rate (calculated from total award and duration) compare to industry benchmarks for similar system expansion projects?

Calculating a daily burn rate of approximately $30,175 ($22,540,804 / 747 days) provides a basic cost metric. However, comparing this to industry benchmarks for 'system expansion' is challenging due to the broad classification ('Other Commercial and Service Industry Machinery Manufacturing') and the lack of detail on the specific system. Benchmarking requires understanding the nature of the expansion (e.g., hardware, software, integration, R&D), the complexity of the system, and the specific services provided. Without this context, a direct comparison is speculative. Generally, high daily rates in defense contracting can be justified for highly specialized R&D, complex integration, or critical, time-sensitive deployments, but a lack of competition makes it harder to validate if this rate represents fair market value.

What is SRI International's track record with similar Department of Defense contracts, particularly sole-source awards?

SRI International is a well-established research institute with a history of performing work for the Department of Defense and other government agencies. While the provided data doesn't detail SRI's specific track record with sole-source awards for system expansion, their general profile suggests they possess significant research and development capabilities. A deeper analysis would involve reviewing SRI's contract history, including past performance evaluations, the types of contracts they've held, and their success rates on similar projects. Understanding their experience with comparable sole-source procurements would help assess whether their capabilities align with the justification for this specific award and whether they have a history of delivering value under such conditions.

What are the potential risks associated with awarding a $22.5 million contract without competition?

The primary risk associated with awarding a $22.5 million contract without competition is the potential for overpayment. Without competitive bids, the government may not achieve the lowest possible price, leading to inefficient use of taxpayer funds. Other risks include a lack of innovation that might arise from multiple bidders proposing different solutions, and potentially lower quality if the contractor faces less pressure to excel. Furthermore, a sole-source award can create a perception of favoritism or a lack of due diligence, potentially undermining public trust. It also limits opportunities for other capable contractors to demonstrate their value and secure government work.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Other Commercial and Service Industry Machinery Manufacturing

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0017410R0033

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 333 RAVENSWOOD AVE, MENLO PARK, CA, 90

Business Categories: Category Business, Corporate Entity Tax Exempt, Federally Funded Research and Development Corp, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,540,804

Exercised Options: $22,540,804

Current Obligation: $22,540,804

Contract Characteristics

Cost or Pricing Data: YES

Timeline