DHS awards RAND Corporation $5M for FFRDC studies, raising questions on competition and value

Contract Overview

Contract Amount: $4,999,724 ($5.0M)

Contractor: THE Rand Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2023-09-25

End Date: 2026-04-24

Contract Duration: 942 days

Daily Burn Rate: $5.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: FEDERALLY FUNDED RESEARCH AND DEVELOPMENT CENTER (FFRDC) STUDIES AND ANALYSIS PROJECTS IN ACCORDANCE WITH SECTIONS C.1.3 AND C.1.11. AWARDED AND ADMINISTERED BY DHS COMPONENTS ON A COST-PLUS-FIXED-FEE (CPFF) BASIS.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20472

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $5.0 million to THE RAND CORPORATION for work described as: FEDERALLY FUNDED RESEARCH AND DEVELOPMENT CENTER (FFRDC) STUDIES AND ANALYSIS PROJECTS IN ACCORDANCE WITH SECTIONS C.1.3 AND C.1.11. AWARDED AND ADMINISTERED BY DHS COMPONENTS ON A COST-PLUS-FIXED-FEE (CPFF) BASIS. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can incentivize cost overruns. 2. The RAND Corporation, a known FFRDC, has a long history of government research. 3. Lack of competition raises concerns about potential overpayment and limited innovation. 4. The contract duration of 942 days suggests a significant scope of work. 5. This contract falls under R&D, a sector often characterized by unique and complex requirements. 6. The specific nature of FFRDC studies can make direct benchmarking difficult.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee (CPFF) structure requires careful monitoring to ensure value. While RAND is a reputable FFRDC, the absence of competition means there's no direct price comparison to assess if the fixed fee is reasonable. Benchmarking FFRDC studies is inherently challenging due to their specialized nature, but the $5 million award over approximately 2.5 years warrants scrutiny regarding the efficiency of resource utilization and the ultimate value delivered for the research outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to The RAND Corporation. As a Federally Funded Research and Development Center (FFRDC), RAND is specifically authorized to perform research and development for the government. However, the lack of a competitive bidding process means that alternative providers were not considered, potentially limiting price discovery and the opportunity for other qualified entities to offer their services.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of a competitive bidding process. This sole-source award bypasses the market's natural price discovery mechanisms.

Public Impact

The Department of Homeland Security (DHS) and its components, such as FEMA, will benefit from specialized research and analysis. Services delivered include FFRDC studies and analysis projects, likely informing policy and operational decisions. The geographic impact is primarily within the District of Columbia, where DHS is headquartered, but the research findings could have national implications. Workforce implications are minimal in terms of direct job creation, but the contract supports specialized research personnel within The RAND Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price discovery and potentially increases costs for taxpayers.
CPFF contract type can incentivize cost escalation if not rigorously managed.
The specialized nature of FFRDC work makes direct performance and value benchmarking difficult.
The duration and value suggest a significant commitment, requiring sustained oversight.

Positive Signals

Award to a designated FFRDC ensures access to specialized expertise and capabilities.
The RAND Corporation has a proven track record in conducting complex research for the government.
The contract is administered by DHS components, suggesting alignment with agency needs.
The fixed fee component, if well-defined, can provide some cost certainty.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on social sciences and humanities. The market for FFRDC services is specialized, with a limited number of authorized centers like RAND. Comparable spending benchmarks are difficult to establish due to the unique nature of FFRDC studies, but government investment in R&D, particularly for national security and public services, is substantial. This contract represents a specific allocation of funds for expert analysis within DHS's mission.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by the 'sb' field being false. As a sole-source award to a large FFRDC, there are no direct subcontracting opportunities for small businesses stemming from this specific award mechanism. The focus is on leveraging the unique capabilities of the FFRDC rather than promoting small business participation through set-asides.

Oversight & Accountability

Oversight for this contract is primarily the responsibility of the administering DHS components, likely FEMA, given the award details. The CPFF structure necessitates robust financial and performance oversight to ensure costs are reasonable and work is progressing as intended. Transparency is generally maintained through contract reporting requirements, though specific details of FFRDC studies may be sensitive. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse.

Related Government Programs

DHS FFRDC Contracts
RAND Corporation Research Projects
Social Science and Humanities R&D
Cost-Plus-Fixed-Fee Contracts
Federal Research Grants

Risk Flags

Sole-source award
Cost-Plus-Fixed-Fee structure
Lack of competition
Potential for cost overruns
Difficulty in benchmarking specialized R&D

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $5.0 million to THE RAND CORPORATION. FEDERALLY FUNDED RESEARCH AND DEVELOPMENT CENTER (FFRDC) STUDIES AND ANALYSIS PROJECTS IN ACCORDANCE WITH SECTIONS C.1.3 AND C.1.11. AWARDED AND ADMINISTERED BY DHS COMPONENTS ON A COST-PLUS-FIXED-FEE (CPFF) BASIS.

Who is the contractor on this award?

The obligated recipient is THE RAND CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Federal Emergency Management Agency).

What is the total obligated amount?

The obligated amount is $5.0 million.

What is the period of performance?

Start: 2023-09-25. End: 2026-04-24.

What is the specific scope of work for these FFRDC studies, and how does it align with FEMA's mission?

The provided data indicates the contract is for 'FEDERALLY FUNDED RESEARCH AND DEVELOPMENT CENTER (FFRDC) STUDIES AND ANALYSIS PROJECTS IN ACCORDANCE WITH SECTIONS C.1.3 AND C.1.11.' While the specific scope is not detailed, FFRDCs like RAND are typically engaged for complex, long-term research that requires specialized expertise not readily available in the private sector or government. For FEMA, these studies could encompass areas such as disaster preparedness, response strategies, risk assessment, mitigation planning, and the analysis of social and economic impacts of disasters. The alignment would depend on the specific tasks outlined in the Statement of Work (SOW) referenced by sections C.1.3 and C.1.11, which are not provided here. The contract's duration (942 days) suggests a substantial and ongoing research effort.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for R&D, and what are the associated risks?

The Cost-Plus-Fixed-Fee (CPFF) contract type is common for R&D efforts where the scope is not fully defined at the outset, allowing for flexibility. The government agrees to pay the contractor's actual allowable costs plus a fixed fee representing profit. Risks associated with CPFF include potential cost overruns, as the contractor is reimbursed for all allowable costs, which can incentivize less cost-conscious behavior. The fixed fee, however, provides some predictability regarding profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility but less cost certainty for the government. Compared to Cost-Plus-Incentive-Fee (CPIF) contracts, CPFF lacks the built-in incentives for the contractor to control costs below a target.

What is The RAND Corporation's track record with similar government contracts, particularly with DHS?

The RAND Corporation is a well-established FFRDC with a long history of conducting research and analysis for various U.S. government agencies, including the Department of Defense, intelligence agencies, and homeland security entities. They are known for their work in policy analysis, national security, and social and economic research. While specific contract details are often proprietary, RAND's designation as an FFRDC implies a strong track record and established relationship with the government for undertaking complex, often sensitive, research projects. Their extensive portfolio suggests they have successfully managed numerous contracts of significant value and duration, demonstrating capability in delivering research outcomes aligned with government objectives.

Given this is a sole-source award, what mechanisms are in place to ensure the $4.99 million is a fair and reasonable price?

For sole-source awards, especially to FFRDCs, ensuring fair and reasonable pricing typically involves a combination of factors. The government contracting officer must perform a price analysis, which may include reviewing historical pricing for similar work, analyzing the contractor's cost estimates, and evaluating the reasonableness of the fixed fee. Since RAND is an FFRDC, its operating costs and fee structures are often subject to specific government oversight and established policies. The contracting officer would likely rely on RAND's established cost accounting system, audit reports, and potentially engage Defense Contract Audit Agency (DCAA) or similar oversight bodies to validate cost submissions. The absence of competition means the government relies heavily on its own analysis and the contractor's transparency.

How does this $4.99 million contract compare to historical federal spending on FFRDC studies within DHS or similar agencies?

Directly comparing this $4.99 million contract to historical spending requires access to detailed historical contract databases and specific categorization of FFRDC studies. However, FFRDCs are typically awarded significant contracts due to the complexity and long-term nature of their research. DHS, as a large agency with diverse responsibilities including national security and emergency management, frequently utilizes FFRDCs for specialized analysis. Annual federal spending on FFRDCs across all agencies can run into billions of dollars. A $5 million contract for FFRDC studies over approximately 2.5 years is not unusual for a major agency like DHS, especially when addressing complex policy or technical challenges. Without more granular data on the specific types of studies funded historically, precise benchmarking is challenging.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Social Sciences and Humanities

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1776 MAIN ST, SANTA MONICA, CA, 90401

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: $9,472,555

Exercised Options: $4,999,724

Current Obligation: $4,999,724

Actual Outlays: $3,815,354

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $210,000

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: 70RSAT22D00000001

IDV Type: IDC

Timeline