DoD's $140.8M OCONUS operational assessment contract with SRI International awarded via sole-source, raising value-for-money questions

Contract Overview

Contract Amount: $140,757,957 ($140.8M)

Contractor: SRI International

Awarding Agency: Department of Defense

Start Date: 2009-08-18

End Date: 2014-07-25

Contract Duration: 1,802 days

Daily Burn Rate: $78.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: U437D00 DESERT OWL OCONUS OPERATIONAL ASSESSMENT

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $140.8 million to SRI INTERNATIONAL for work described as: U437D00 DESERT OWL OCONUS OPERATIONAL ASSESSMENT Key points: 1. The contract's sole-source nature limits competitive pressure, potentially impacting cost-effectiveness. 2. Long duration (nearly 5 years) and cost-plus-fixed-fee structure warrant scrutiny for potential cost overruns. 3. The R&D focus in a specialized area suggests limited market competition. 4. Performance context is an OCONUS operational assessment, a critical but potentially opaque service. 5. SRI International's track record in R&D is a positive signal, but specific performance on this contract needs review. 6. The contract's value is substantial, requiring robust oversight to ensure taxpayer funds are well-managed.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its specialized R&D nature and sole-source award. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher costs if not tightly managed. Without competitive bids, it's difficult to definitively assess if the $140.8 million represents a fair market price. The lack of comparable sole-source R&D contracts of this scale and duration makes direct comparison difficult, necessitating a deeper dive into SRI International's cost proposals and the government's cost-effectiveness analysis.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, SRI International, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they inherently reduce price discovery and competitive pressure. The lack of competition means the government did not benefit from a range of proposals and pricing strategies that would likely emerge in a full-and-open competition.

Taxpayer Impact: The absence of competition means taxpayers may not have received the lowest possible price for the services rendered. Without competing offers, there's a risk that the awarded price is higher than what could have been achieved through a competitive process.

Public Impact

The primary beneficiaries are the Department of Defense and potentially U.S. forces operating in OCONUS locations, receiving insights into operational effectiveness. The services delivered involve complex research and development to assess and improve operational capabilities in challenging environments. The geographic impact is primarily OCONUS, focusing on specific operational theaters relevant to national security. Workforce implications include specialized researchers, analysts, and technical staff employed by SRI International and potentially subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost growth if not rigorously managed.
Long contract duration increases the risk of scope creep and cost overruns.
Lack of transparency in sole-source justifications can obscure potential inefficiencies.
Specialized R&D nature makes independent cost verification challenging.

Positive Signals

SRI International is a reputable research organization with a history of government contracting.
The contract addresses critical OCONUS operational assessments, vital for national security.
The fixed-fee component of the CPFF contract provides some cost predictability.
The definitive contract structure implies a clear statement of work and deliverables.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences (excluding biotechnology). The R&D services market is characterized by innovation, specialized expertise, and often long development cycles. Government spending in this area supports technological advancement and national security objectives. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of OCONUS operational assessments, but R&D contracts of this magnitude are significant investments within the broader defense R&D landscape.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss': false flag suggests it was not specifically designated for small businesses. Consequently, the primary contractor, SRI International, would be responsible for any subcontracting efforts. Analysis of subcontracting to small businesses would require further investigation into SRI International's subcontracting plan and actual performance, which is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting officers and program managers. Given the OCONUS operational assessment nature, specific oversight mechanisms might include site visits, performance reviews, and regular reporting requirements. Accountability measures would be tied to the contract's deliverables and performance metrics. Transparency is often limited in sole-source R&D contracts, but contract modifications, payment reports, and performance evaluations are typically available through federal procurement databases, subject to classification and redaction.

Related Government Programs

Department of Defense Research and Development Contracts
Operational Assessment Services
Oversight of OCONUS Operations
Cost-Plus-Fixed-Fee Contracts
Sole-Source Research Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of competitive benchmarking
Oversight of OCONUS operations

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $140.8 million to SRI INTERNATIONAL. U437D00 DESERT OWL OCONUS OPERATIONAL ASSESSMENT

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 Army).

What is the total obligated amount?

The obligated amount is $140.8 million.

What is the period of performance?

Start: 2009-08-18. End: 2014-07-25.

What is SRI International's track record with similar sole-source R&D contracts for the Department of Defense?

SRI International has a significant history of contracting with the Department of Defense, often in research and development capacities. While specific details on sole-source awards of this magnitude are not immediately available without deeper database searches, SRI is known for its expertise in various scientific and engineering fields. Their performance on previous DoD contracts, including those involving complex operational assessments or advanced research, would be a key indicator of their capability and reliability. A review of past performance evaluations and any documented issues or successes on prior sole-source awards would provide crucial context for assessing the risk and value proposition of this particular contract.

How does the $140.8 million cost compare to similar OCONUS operational assessment contracts, if any?

Direct comparison of the $140.8 million cost to similar OCONUS operational assessment contracts is challenging due to the specialized nature of the service and the sole-source award. Typically, competitive bidding would provide a market-based price point. However, R&D contracts, especially those involving unique operational environments and requiring specialized expertise like SRI International's, can command significant investment. Without comparable competitively awarded contracts for similar scope and duration, assessing value requires a detailed breakdown of SRI's costs, labor rates, overhead, and profit margins, as well as the government's independent cost estimates and justification for the sole-source award.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this duration and value?

The primary risks associated with this contract structure are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs and reduced incentive for efficiency. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing some cost certainty with the fixed fee, can incentivize the contractor to incur higher costs to maximize their fee base, especially if oversight is not stringent. The long duration (1802 days) amplifies these risks, increasing the potential for scope creep, cost overruns, and contractor performance degradation over time. Robust government oversight, clear performance metrics, and rigorous cost control are essential to mitigate these inherent risks.

How effective has the Department of the Army been in managing similar large-scale R&D contracts awarded on a sole-source basis?

The Department of the Army's effectiveness in managing large-scale, sole-source R&D contracts can vary significantly. Historically, sole-source awards are justified when a unique capability is required, or in situations of urgent need where competition is not feasible. When managed effectively, with strong program oversight, clear performance metrics, and diligent cost tracking, these contracts can yield valuable results. However, challenges can arise if oversight is insufficient, leading to potential cost overruns, schedule delays, or a lack of innovation. Assessing the Army's specific performance on this contract would require reviewing performance reports, contract modifications, and any audits or reviews conducted during its lifecycle.

What is the historical spending pattern for OCONUS operational assessments by the Department of Defense?

Historical spending patterns for OCONUS operational assessments by the Department of Defense are not readily available from the provided data snippet. This specific contract represents a significant investment of approximately $140.8 million over nearly five years. To understand broader spending trends, one would need to analyze historical contract awards for similar services across different branches of the DoD, looking at contract types, durations, awardees, and total spending over multiple fiscal years. Such an analysis would help contextualize whether this contract is an outlier or part of a consistent investment strategy in operational assessment capabilities.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 333 RAVENSWOOD AVE, MENLO PARK, CA, 94025

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: $148,198,608

Exercised Options: $141,520,891

Current Obligation: $140,757,957

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline