How $245 Million Moves Without a Solicitation

On January 6 the Naval Air Warfare Center Aircraft Division at Lakehurst opened a basic ordering agreement with no dollars on it. Seven and a half months later that agreement carries $244,993,733.

Nothing in that sequence produced a notice you could have found. No synopsis, no draft RFP, no sources-sought, no justification and approval document sitting on SAM.gov waiting to be read.

"How much work leaves the addressable market before anybody publishes anything?"

The vehicle is Castelion Corp.'s SBIR Phase III agreement N6833526G0006, and Tuesday's Department of War board added the second order against it: $89,997,162 firm-fixed-price for the Blackbeard hypersonic weapon, order N6833526F1192, work through August 2028.

The board's own competition sentence runs four words. This contract action was not competed.

The Statute Does the Work

Phase III is the least understood competition-free channel in the building. Every other one gives a contracting officer permission to skip competition; this one comes closer to an instruction.

The mechanics, in the order they apply:

1. A firm wins an SBIR or STTR Phase I or Phase II award through a merit-based competition. That competition is the only one that ever happens.
2. Under 15 U.S.C. 638(r)(4), agencies shall "consider an award under the SBIR program or the STTR program to satisfy the requirements under sections 3201 through 3205 of title 10 and any other applicable competition requirements", and shall "issue, without further justification, Phase III awards relating to technology, including sole source awards, to the ... award recipients that developed the technology."
3. SBA's Policy Directive, section 4(c)(3), tells the contracting officer what a J&A needs to say if the agency bothers with one: that the project is a Phase III award derived from prior SBIR work and authorized under 638(r)(4). "Further justification is not needed."
4. Section 4(c)(7)(ii) is the part capture teams miss. If pursuing the work with the original awardee "is found to be practicable, the agency must award a non-competitive contract to the firm." Whatever discretion the contracting officer has, it points at sole source.
5. Section 4(c)(5) removes the guardrails you would expect to find: "There is no limit on the number, duration, type, or dollar value of Phase III awards made to a business concern." No time limit either, between the Phase II and the Phase III or between one Phase III and the next.