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What? No competition for a $415M Navy contract?

I’m sure this is the kind of contract that makes my friend Stan Soloway and his team over at the Professional Services Council see red.

On Friday, the Navy awarded a $415 million contract to Penn State’s Applied Research Laboratory for research and engineering work.

Three things bug me about this contract:

What they are buying. The five-year contract is for staff hours – two million hours over five years for research, engineering and test and evaluation for navigation systems, thermal propulsion concepts for undersea vehicles, something called propulsors, and defense communications systems.

It bothers me because this is work that any number of private sector companies could do; plus, they are buying it by the hour.

The size and length of the contract. The Defense Department announcement says that there is an option on this contract for five more years and nearly two million more staff hours. This would bring the value of the contract to $853.3 million. Nothing is obligate or guaranteed on this contract, so why make it so big with an option for more?

What bugs me the most. This six-word sentence toward the end of the announcement: This contract was not competitively procured.

I’m not as opposed as PSC and other industry groups to contract money going to universities and federally funded research and development centers, instead of private sector contracts. But not to compete a contract of this size?

Penn State is a fine school. I’m sure there is great research going on there, but why not pit them against any other university with equivalent facilities and let the best school win?

Maybe the government could have gotten those 2 million staff hours for less than the $201-an-hour rate Penn State will charge the Navy.

The lack of competition is appalling for a contract this size, particularly when the government is facing sequestration and a weak economy. The Navy should know better.

Posted by Nick Wakeman on Sep 10, 2012 at 7:23 PM


Reader Comments

Thu, Sep 13, 2012 PTW Artist NCR

Other sources show the award of N00024-12-D-6404 was CPFF, NOT T&M or FFP/LOE. I'd be hesitant to jump to the conclusion that their FBLR is $200/hr...If someone can get their hands on Section B/L, I'm willing to bet you'd see a nice fat ODC plug in that $415M.

Wed, Sep 12, 2012 Gastrula Nation's Capital

Mr. KRL does not his (conflict of) interest as a frequent flyer of UARCs. But just walk down the halls of a major university or FFRDC. They are usually better decorated that the typical govt contractor. As for world class expert? Give us a break. I have met enough emps of UARCs and FFRDCs to note that yes, there are some of those. But many are professors who did not get tenure, or retired colonels with PhDs, or emigres from major contractors. And note they do not pay taxes. I would rather they did, even on the paltry profit margins that the FAR allows. And speaking of such things, the typical major university or FFRDC has a cost multiple wayyyyyy larger than the typical large contractor. In a university, that is the coin or the realm

Wed, Sep 12, 2012 Jabberwocke

Jeff raises some great questions, and it would be helpful if Wash Tech did the reporting to supply a few key facts to accompany the opinions provided first. I have great respect for Stan S and the guys at PSC, but they should just see this as one more FFRDC. It is hard to argue that a university cannot sidle up to the trough. All it might mean is fewer people driving the Big BMW in the exclusive office buildings' parking garages of McLean, VA. Make sense?

Wed, Sep 12, 2012 KRL denver

Jeff,I think you are missing the purpose of the UARC. Having worked with several, I can guarantee you that a standard Beltway Bandit Service support contractor does not have the expertise that the DOD and NASA needs to do the type of research and development that will provide the strategic support that a UARC provides. These guys are the best in their field and are world class experts. And, there are not many of them. What they are paid is pittance because I can guarantee you that working for a university will never make you rich. In addition, did you miss the part about non-profit? In addition, university overheads are less than half of what a for-profit government contractor charges. A UARC is the best thing going and as a taxpayer, I am glad we have those guys working for the public - not a industry contractor who only cares about competitive advantage. Their R&D will eventually make it into products that the rest of us will use in 10-15 years.

Wed, Sep 12, 2012 Jeff

I think some of you are missing one of the key points of Nick's article. Outside of the fact that this is a UARC funded initiative, this is still being funded with taxpayer's dollars. Nick makes the point of the fact that this is a $400M+ contract, and the rates are $200+/hour. If this were any other scientific, research, engineering (etc) contract at those rates, it would cause a huge uproar. Although I do not think this is considered government fraud or abuse, it is perhaps not the best use of taxpayer dollars. I agree with the first comment on the fact that there will likely be research assistants (who would bill under $120/hour) to supplement the work of some of the more senior scientists and engineers. Outside of how this was contracted and whether it was competed or not, we as taxpayers are paying this amount -- are you ok with those fees? That's the question we should be asking.

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