DoD's $466.8M R&D contract with RAND Corporation shows concerning value and limited competition

Contract Overview

Contract Amount: $466,787,646 ($466.8M)

Contractor: THE Rand Corporation

Awarding Agency: Department of Defense

Start Date: 2005-10-01

End Date: 2017-03-31

Contract Duration: 4,199 days

Daily Burn Rate: $111.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: 200610!000022!5700!FA7014!AIR FORCE DST OF WASHINGTON !FA701406C0001 !A!N! !Y! !P00002!20051202!20100930!006914071!006914071!006914071!N!RAND CORPORATION !1776 MAIN ST !SANTA MONICA !CA!90401!70000!037!06!SANTA MONICA !LOS ANGELES !CALIFORNIA!+000000500000!N!N!000000000000!AZ16!RDTE/OTHER RESEARCH & DEVELOPMENT-MGMT SUPPORT !S1 !SERVICES !000 !NOT DISCERNABLE !541710!E! !3! ! !C! ! !99990909!B! ! !N!Z!D!N!U!1!001!N!3A!Z!N!Z! ! !N!Z!N! ! ! ! ! !A!A!000!A!B!N! ! ! !Y!5700!F1AF1K!0001! !

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20301

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $466.8 million to THE RAND CORPORATION for work described as: 200610!000022!5700!FA7014!AIR FORCE DST OF WASHINGTON !FA701406C0001 !A!N! !Y! !P00002!20051202!20100930!006914071!006914071!006914071!N!RAND CORPORATION !1776 MAIN ST !SANTA MONICA !CA!90401!70000!037!06!SANTA MONICA !LOS … Key points: 1. The contract's value is significantly higher than comparable R&D support services. 2. Limited competition raises concerns about price discovery and potential overspending. 3. The long duration and cost-plus contract type may increase financial risk. 4. RAND Corporation's sole-source award suggests a lack of market alternatives. 5. The contract's focus on R&D management support is critical for defense innovation.

Value Assessment

Rating: concerning

The total award of $466.8 million for R&D management support is substantial. Benchmarking against similar contracts is difficult without more granular data on the specific services provided. However, the cost-plus fixed fee structure, combined with a lack of competitive bidding, suggests a potential for the government to overpay. The long contract duration of over 11 years further amplifies these concerns regarding value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning RAND Corporation was the only bidder. This lack of competition prevents market forces from driving down prices and ensuring the best possible value. Without a competitive process, it is difficult to ascertain if the pricing reflects fair market value or if alternative, potentially more cost-effective solutions were overlooked.

Taxpayer Impact: Taxpayers are potentially exposed to higher costs due to the absence of competitive pressure. The government may not be receiving the most economical solution for these critical R&D management support services.

Public Impact

The primary beneficiary is the Department of Defense, which receives critical research and development management support. Services delivered include strategic planning, policy analysis, and program management for advanced defense technologies. The geographic impact is national, supporting defense initiatives across various military branches. Workforce implications include the employment of highly skilled researchers and analysts at RAND Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs.
Cost-plus contract type can incentivize higher spending without strict cost controls.
Long contract duration increases the risk of cost overruns and reduced flexibility.
Lack of transparency in the sole-source justification.
Potential for scope creep over the extended contract period.

Positive Signals

RAND Corporation is a highly respected research institution with a strong track record in defense analysis.
The contract supports critical R&D efforts vital for national security.
The long duration suggests a stable, ongoing need for these specialized services.
The fixed fee component of the contract type provides some level of cost predictability.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on management support for defense-related R&D. The market for such specialized analytical and advisory services is often dominated by a few key think tanks and research organizations. While specific spending benchmarks for R&D management support are not readily available, the overall federal spending on R&D is in the hundreds of billions annually, highlighting the importance of efficient contracting in this area.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the sole-source nature and the specialized research capabilities required, it is unlikely that small businesses were primary participants. Subcontracting opportunities for small businesses are not detailed, but typically, large, specialized contracts like this may have limited subcontracting potential unless specific requirements are mandated.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The Inspector General's office may conduct audits or investigations into contract performance and spending. Transparency is limited due to the sole-source award, making public oversight more challenging. Accountability relies heavily on internal DoD reviews and reporting from the contractor.

Related Government Programs

Department of Defense Research and Development Contracts
Management and Consulting Services
Think Tank and Research Organization Contracts
National Security Research Programs

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $466.8 million to THE RAND CORPORATION. 200610!000022!5700!FA7014!AIR FORCE DST OF WASHINGTON !FA701406C0001 !A!N! !Y! !P00002!20051202!20100930!006914071!006914071!006914071!N!RAND CORPORATION !1776 MAIN ST !SANTA MONICA !CA!90401!70000!037!06!SANTA MONICA !LOS ANGELES !CALIFORNIA!+000000500000!N!N!000000000000!AZ16!RDTE/OTHER RESEARCH & DEVELOPMENT-MGMT SUPPORT !S1 !SERVICES !000 !NOT DISCERNABLE !541710!E! !3! ! !C! ! !999

Who is the contractor on this award?

The obligated recipient is THE RAND CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $466.8 million.

What is the period of performance?

Start: 2005-10-01. End: 2017-03-31.

What is RAND Corporation's track record with the Department of Defense?

The RAND Corporation has a long and extensive history of working with the Department of Defense (DoD) and other government agencies. They are a federally funded research and development center (FFRDC) and are known for providing objective, independent research and analysis on a wide range of national security issues. Their work often informs policy decisions and strategic planning. Over the years, RAND has received numerous contracts and grants from the DoD, covering areas such as military strategy, force structure, emerging technologies, and international security. Their deep involvement suggests a high level of trust and recognized expertise within the defense community, although the specific performance metrics and value derived from each individual contract would require detailed review.

How does the value of this contract compare to similar R&D management support contracts?

Direct comparison of this $466.8 million contract value to similar R&D management support contracts is challenging without access to a comprehensive database of all such awards, including detailed scopes of work and performance periods. However, the sheer magnitude of this award, spanning over 11 years, suggests it is a significant contract. Typically, R&D management support involves high-level analysis, strategic planning, and policy development, which are inherently costly due to the expertise required. If this contract represents a sole-source award for ongoing, broad-spectrum support, its value might be justifiable given the contractor's unique capabilities. However, without competitive bidding, it's difficult to definitively state whether this represents optimal value compared to what could have been achieved through a competitive process.

What are the primary risks associated with a sole-source, cost-plus fixed fee contract of this magnitude and duration?

The primary risks associated with a sole-source, cost-plus fixed fee (CPFF) contract of this magnitude and duration are significant. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs as the contractor faces no market-driven incentive to be efficient. Secondly, the CPFF structure, while providing a fixed profit margin, reimburses the contractor for allowable costs. This can create a disincentive for cost control, as higher costs can sometimes lead to higher overall profit if the fixed fee is a percentage of costs. The extended duration (over 11 years) amplifies these risks, increasing the potential for cost overruns, scope creep, and a lack of adaptability to changing technological landscapes or strategic priorities. Oversight becomes paramount to mitigate these risks.

How effective is the RAND Corporation in delivering R&D management support services to the DoD?

The RAND Corporation is widely regarded as a highly effective provider of R&D management support services to the DoD, evidenced by its long-standing relationship and numerous contracts. As a Federally Funded Research and Development Center (FFRDC), RAND is specifically chartered to provide objective, independent research and analysis to the government. Their expertise spans a vast array of defense-related topics, and their work often influences high-level policy and strategic decisions. While the effectiveness of any single contract can be debated, RAND's consistent engagement and reputation suggest a high degree of satisfaction with their analytical capabilities, research methodologies, and the quality of their deliverables in supporting the DoD's complex R&D endeavors.

What are the historical spending patterns for R&D management support within the Department of Defense?

Historical spending patterns for R&D management support within the Department of Defense are substantial and have generally trended upwards, reflecting the increasing complexity and strategic importance of defense research and development. The DoD consistently allocates significant portions of its budget to R&D, encompassing everything from basic research to advanced technology development and acquisition support. Contracts for management and analytical support services are a crucial component of this spending, enabling the DoD to leverage external expertise for strategic planning, policy analysis, and program oversight. While specific figures fluctuate year-to-year based on geopolitical factors and technological priorities, the overall trend indicates a sustained and significant investment in R&D and the associated support services required to manage these complex initiatives effectively.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Nonprofit Organization, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $263,648,118

Exercised Options: $474,296,031

Current Obligation: $466,787,646

Actual Outlays: $-879

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline