FEMA's Hurricane Maria Remediation Contract Awarded to RAND Corp for $39.4M Lacks Clear Cost Validation
Contract Overview
Contract Amount: $39,376,595 ($39.4M)
Contractor: THE Rand Corporation
Awarding Agency: Department of Homeland Security
Start Date: 2018-06-02
End Date: 2022-05-12
Contract Duration: 1,440 days
Daily Burn Rate: $27.3K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: IGF::CL::IGF ANALYSIS OF FEMA COST ESTIMATE DEVELOPMENT PROCESS AND VALIDATION FOR FEMA-4339-DR-PR AND FEMA-4340-DR-VI (HURRICANE MARIA) REMEDIATION / RECONSTRUCTION
Place of Performance
Location: SAN JUAN, SAN JUAN County, PUERTO RICO, 00910
Plain-Language Summary
Department of Homeland Security obligated $39.4 million to THE RAND CORPORATION for work described as: IGF::CL::IGF ANALYSIS OF FEMA COST ESTIMATE DEVELOPMENT PROCESS AND VALIDATION FOR FEMA-4339-DR-PR AND FEMA-4340-DR-VI (HURRICANE MARIA) REMEDIATION / RECONSTRUCTION Key points: 1. Contract awarded to RAND Corporation for $39.4M for Hurricane Maria remediation. 2. Full and open competition was used, but cost validation appears weak. 3. Potential risk of inflated costs due to the cost-plus-fixed-fee structure. 4. Spending falls within the R&D sector, specifically social sciences and humanities.
Value Assessment
Rating: questionable
The contract uses a Cost Plus Fixed Fee (CPFF) structure, which can incentivize higher costs. The data lacks specific details on how FEMA validated RAND's cost estimates, raising concerns about the rigor of the pricing assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a broad search for qualified contractors. However, the CPFF pricing structure may limit the effectiveness of price discovery, as the government bears the cost risk.
Taxpayer Impact: The significant cost of $39.4M, coupled with potential cost validation weaknesses, raises concerns about the efficient use of taxpayer funds for disaster recovery efforts.
Public Impact
Taxpayers may be overpaying for remediation services due to a lack of robust cost validation. The effectiveness of disaster relief funds is potentially diminished if not managed with stringent cost controls. Future disaster response contracts could benefit from clearer cost estimation and validation protocols.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Weak cost validation process
- Cost-plus-fixed-fee structure
- Potential for cost overruns
Positive Signals
- Full and open competition utilized
- Contract awarded to a reputable research corporation
Sector Analysis
This contract falls under Research and Development in the Social Sciences and Humanities (NAICS 541720). Spending in this sector can vary widely, but large-scale disaster recovery research and analysis contracts like this are significant investments.
Small Business Impact
The data indicates that small business participation was not a stated factor (ss: false, sb: false). This contract was awarded to a large research corporation, suggesting no specific focus on subcontracting with small businesses for this particular effort.
Oversight & Accountability
The Inspector General's report highlights potential weaknesses in FEMA's cost estimation and validation processes. Further oversight is needed to ensure that contracts are awarded at fair and reasonable prices and that funds are used efficiently.
Related Government Programs
- Research and Development in the Social Sciences and Humanities
- Department of Homeland Security Contracting
- Federal Emergency Management Agency Programs
Risk Flags
- Lack of detailed cost validation evidence
- Potential for cost overruns due to CPFF structure
- Insufficient transparency in pricing justification
- Limited insight into long-term impact assessment
Tags
research-and-development-in-the-social-s, department-of-homeland-security, pr, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Homeland Security awarded $39.4 million to THE RAND CORPORATION. IGF::CL::IGF ANALYSIS OF FEMA COST ESTIMATE DEVELOPMENT PROCESS AND VALIDATION FOR FEMA-4339-DR-PR AND FEMA-4340-DR-VI (HURRICANE MARIA) REMEDIATION / RECONSTRUCTION
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 $39.4 million.
What is the period of performance?
Start: 2018-06-02. End: 2022-05-12.
What specific methodologies did FEMA employ to validate RAND Corporation's cost estimates for the Hurricane Maria remediation?
The provided data does not detail the specific methodologies used by FEMA to validate RAND Corporation's cost estimates. The IG report indicates a general weakness in FEMA's cost estimate development and validation process for these contracts, suggesting a lack of robust procedures or insufficient documentation to support the estimates.
What is the primary risk associated with the Cost Plus Fixed Fee (CPFF) contract type in this context?
The primary risk with a CPFF contract is that the contractor has less incentive to control costs, as the government bears the majority of the cost risk. While a fixed fee provides some profit certainty, the government is responsible for all allowable costs incurred, potentially leading to higher overall expenditures than fixed-price contracts.
How effectively does this contract contribute to the long-term resilience and reconstruction goals in Puerto Rico post-Hurricane Maria?
The effectiveness of this contract in contributing to long-term resilience is difficult to assess solely from the provided data. While RAND Corporation is a reputable research entity, the concerns raised about cost validation suggest that the financial efficiency of the remediation and reconstruction efforts may be compromised, potentially impacting the overall scale and impact of the recovery.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
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: $53,616,178
Exercised Options: $39,376,595
Current Obligation: $39,376,595
Subaward Activity
Number of Subawards: 18
Total Subaward Amount: $3,475,672
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HSHQDC16D00007
IDV Type: IDC
Timeline
Start Date: 2018-06-02
Current End Date: 2022-05-12
Potential End Date: 2022-05-12 00:00:00
Last Modified: 2022-05-16
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