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NAICS NewsletterNovember 8, 2007

NAICS 541712

Research and Development
Physical, Engineering, Life Sciences

(except Biotechnology)

Government Contract and Procurement Analysis Report

Report Summary

This report, offered by epipeline, contains a brief analysis of the Federal government's procurement practices with regards to purchasing the services of Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology).


You will find information on the top federal government agencies that purchase these services, as well as their procurement strategy (i.e. full and open competition, set-asides and more). Finally, there is a review of the top companies that are awarded federal government contracts for Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology).


To get a more comprehensive analysis and learn more about how epipeline can help you identify current and future bid opportunities, register for a live Demo.

This report takes an in-depth look at the 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' industry, NAICS 541712. To understand the future, one must study the past. epipeline's Contract History Plus* provides you with a broad context and several perspectives that enables you to develop the best positioning and strategy for your company to more effectively compete for government contracts. The following graph illustrates one such perspective: the top Government departments buying these services over the last four fiscal years.

Top 10 Federal Agencies by % of Total Market FY03 through FY06 for NAICS 541712

WHAT IS NAICS 541712?

Companies represented by NAICS 541712 provide research and experimental development in the physical, engineering, and life sciences, such as agriculture, electronics, environmental, biology, botany, computers, chemistry, food, fisheries, forests, geology, health, mathematics, medicine, oceanography, pharmacy, physics, veterinary and other allied subjects.

The description of NAICS 541712 is further broken out to include these additional specific topics:

  • Agriculture research and development laboratories or services (except biotechnology research and development)
  • Bacteriological research and development laboratories or services (except biotechnology research and development)
  • Biology research and development laboratories or services (except biotechnology research and development)
  • Botany research and development laboratories or services (except biotechnology research and development)
  • Chemical research and development laboratories or services (except biotechnology research and development)
  • Computer and related hardware research and development laboratories or services
  • Dental research and development laboratories or services
  • Electronic research and development laboratories or services
  • Engineering research and development laboratories or services
  • Entomological research and development laboratories or services (except biotechnology research and development)
  • Environmental research and development laboratories or services (except biotechnology research and development)
  • Experimental farms
  • Fisheries research and development laboratories or services
  • Food research and development laboratories or services (except biotechnology research and development)
  • Forestry research and development laboratories or services
  • Genetics research and development laboratories or services (except biotechnology research and development)
  • Geological research and development laboratories or services
  • Guided missile and space vehicle engine research and development
  • Guided missile and space vehicle parts (except engines) research and development
  • Health research and development laboratories or services (except biotechnology research and development)
  • Industrial research and development laboratories or services (except biotechnology research and development)
  • Life sciences research and development laboratories or services (except biotechnology research and development)
  • Mathematics research and development laboratories or services
  • Medical research and development laboratories or services (except biotechnology research and development)
  • Observatories, research institutions
  • Oceanographic research and development laboratories or services
  • Physical science research and development laboratories or services (except biotechnology research and development)
  • Physics research and development laboratories or services
  • Veterinary research and development laboratories or services (except biotechnology research and development)

This is a NEW CODE, created for the 2007 version of the North American Industrial Classification System. This code was previously represented in the 2002 version of NAICS by 541710. The new NAICS code excludes biotechnology research and experimental development, which has now broken out to its own code, NAICS 541711. This new code went into effect with the start of FY 2008, October 1, 2007. However, until these contracts are solicited and awarded, much of the information about them is still reported under the old NAICS, 541710. This information will include biotechnology research contracts.

The size standard for NAICS 541712 has not changed from the 2002 version. It still relies on an employee-based size standard, rather than gross revenue. Specifically, the size standard associated with this code is 500 employees.

This code also had some additional footnotes with regards to the size standard: For research and development contracts requiring the delivery of a manufactured product, the appropriate size standard is that of the manufacturing industry. "Research and Development" means laboratory or other physical research and development. It does not include economic, educational, engineering, operations, systems, or other nonphysical research; or computer programming, data processing, commercial and/or medical laboratory testing. For purposes of the Small Business Innovation Research (SBIR) program only, a different definition has been established by law. See section 121.701of these regulations. "Research and Development" for guided missiles and space vehicles includes evaluations and simulation, and other services requiring thorough knowledge of complete missiles and spacecraft.

There are also exceptions to the size standard. Where NAICS 541712 applies to Aircraft, the size standard is 1,500 employees. If it is 'aircraft parts, and auxiliary equipment, and aircraft engine parts;' or ' space vehicles and guided missiles, their propulsion units, their propulsion units parts, and their auxiliary equipment and parts;' then the size standard is 1,000 employees.

Total reported spending under NAICS 541710 in FY03 was almost $30 Billion. FY04 saw a slight increase, to $30.8 Billion. Spending for FY05 and FY06 are not as widely reported as the previous fiscal years, so those values ($27 Billion for FY05 and $13 Billion for FY06) may not represent total contract spending for those fiscal years. These numbers may increase as more departments and agencies report their contract spending. Contract spending information under NAICS 541712 will not begin until FY08 contracts using this code are reported to FPDS.

WHO ISSUES THE CONTRACTS?

The Department of Defense (DoD) was the largest buyer for these services for the last four fiscal years (FY03 through FY06), with over $56 Billion in contract spending, comprising over 55% of the market share for NAICS 541710. This value may include all components of the Defense Department (Army, Navy, Air Force, DLA, etc.), however, FY05 and FY06 contract dollars have not been as widely reported yet (at least as far as FPDS data). The Department of Energy was less then half of DoD's market share, though still a respectable amount at over $20 Billion. NASA holds the third position, with just under $20 Billion and 18% of the market share. The Department of Health and Human Services (HHS), was significantly less, with only 4% of the market share. The remaining departments in the top ten all held less then 1% of the market share, though all but GSA had at least $100 Million in contract spending for the FY03 through FY06 period.

Top 10 Federal Agencies by % of Total Market FY03 through FY06 for NAICS 541712 Source: epipeline's Contract History Plus*

WHO WINS THE CONTRACTS?

According to the Central Contractor Registry (CCR), there are 15,985 companies registered under the 2002 version, NAICS 541710 (source: active registrants, www.ccr.gov as of 10/17/2007). Of this number, 12,820 qualify as small businesses. Only 971 firms have so far registered themselves under the new code, NAICS 541712, with 636 qualified as small businesses.

The two charts below identify the top 10 Companies, by market share, for the period of FY03 through FY06. The first chart represents the top 10 companies that were awarded their contracts under ANY type of competition, whether it was full and open, small business set-aside, sole-sourced, etc. This list primarily consists of large businesses. The second chart, however, lists the top 10 companies that won their contracts under RESTRICTED competition. Specifically, epipeline limited this to those contracts awarded under the following acquisition strategies:

  • 8(a) Competed
  • 8(a) Small Disadvantaged (SDB) set-aside
  • 8(a) sole-source
  • SDB set-aside
  • SDB, 8(a) with HUBZone
  • Combination HUBZone and 8(a)
  • HUBZone set-aside
  • HUBZone sole-source
  • Service Disabled Veteran-Owned Small Business (SDVOSB) set-aside
  • SDVOSB sole-source
  • Emerging Small Business set-aside
  • Very Small Business set-aside
  • Reserved for Small Businesses ($2501 to $100,000)
  • Total Small Business set-aside

The Boeing Company holds the top spot on the unrestricted competition list, with $8.89 Billion in total contract dollars for FY03 through FY06 - over 11.03% of the market share. Boeing actually is listed twice in the top ten. Along with the top rank, they also hold the ninth spot as "Boeing Sikorsky Comanche Team." The University of California is ranked second on this list, and is a very close second to the Boeing Company, with 10.97%, or $8.84 Billion. All of the firms on this list, along with eight other firms (ranked 11th through 18th) have reported spending for the FY03 through FY06 period above $1 Billion. Many of the contractors performing services under this NAICS form joint ventures to perform these contracts.

PLEASE NOTE: as this is a listing by Company name, rather than PARENT company, some companies may have more than one ranking, which may not reflected in the chart below.

Top 10 NAICS 541712 Contractors by % of Total Market for FY03 through FY06 - Unrestricted Source: epipeline's Contract History Plus*

The combined contract spending for contracts awarded under "restricted competition" totaled over $3.3 Billion for FY03 through FY06. Swales and Associates, Inc., takes top honors on the restricted chart, with over 10% of the restricted contract spending, which equates to over $355 Million. Mevatech Corporation holds the second spot with 4.5% of the market share, which represents $153 Million in reported contract spending for the period of FY03 through FY06 under NAICS 541710. BAE Systems Analytical Solutions and CAS Inc. are the only other firms on this list that have contract spending above $100 Million for the reported period. While BAE systems is not a small business, they acquired Mevatech, which was a small female/minority owned firm. Within FPDS contract history data, the contracts are listed under one or both firms, as contract modifications were originally under Mevatech, but after the acquisition, may have been under BAE System's name. This is not uncommon, as mergers and acquisitions are constantly changing the dynamics of the contracting community. The leader of this 'restricted' competition list, Swales, was acquired by ATK this year, so future reporting of their contracts' spending will follow a similar path to Mevatech and BAE.

PLEASE NOTE: as this is a listing by Company name, rather than PARENT company, some companies may have more than one ranking, which may not reflected in the chart below.

Top 10 NAICS 541712 Contractors by % of Total Market for FY03 through FY06 - RESTRICTED Competition

HOW ARE THESE CONTRACTS PROCURED?

Over half of the contract dollars spend during the FY03 through FY06 timeframe did not report their acquisition strategy. This could include contracts awarded using full and open competition, small business set-aside, or any manner of restriction. This accounted for 51% of the market share - over $52 Billion in contract dollars.

Full and Open (unrestricted) competition held 42% of the market share, equating to over $43 Billion. Businesses of any size and type can compete for these contracts. Projects identified as small business set-aside totaled over $5 Billion of reported contract dollars for this period under NAICS 541710.

The combined total of all other acquisition strategies did not even reach 1% of reported contract spending for this period. This still translates to over $680 Million contract dollars. Projects that were sole sourced to 8(a) firms totaled over $300 Million and those that were awarded through competitive 8(a) solicitations amounted to $285 Million.

Acquisition Breakout under NAICS 541712 - FY03 through FY06 Source: epipeline's Contract History Plus*

WHERE ARE THESE CONTRACTS PERFORMED?


These contracts are being performed across the continental United States and abroad. The map below illustrates the distribution of locations within the United States. For example, there are 21 states (including the District of Columbia) that are shaded dark purple. This means that these states have reported contract spending between $500 Million and $21 Billion.

The state with the highest total of reported contract spending is California, with over $21 Billion. Alabama and Texas are about half that, with $10 Billion each. Pennsylvania and New Mexico round out the top five. While much of the work may be performed at the contractor's own location, states with the highest spending are easily identifiable as those that are the homes for DOE's laboratories or NASA's space centers.

Contract Place of Performance under NAICS 541712 for FY03 through FY06 Source: epipeline's Contract History Plus*
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