MITRE awarded $489M for Air Force engineering services, a sole-source contract with no fee

Contract Overview

Contract Amount: $489,310,892 ($489.3M)

Contractor: THE Mitre Corporation

Awarding Agency: Department of Defense

Start Date: 2023-10-01

End Date: 2028-09-30

Contract Duration: 1,826 days

Daily Burn Rate: $268.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Other

Official Description: MITRE NATIONAL SECURITY ENGINEERING CENTER SERVICES FOR THE AIR FORCE

Place of Performance

Location: BEDFORD, MIDDLESEX County, MASSACHUSETTS, 01730

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $489.3 million to THE MITRE CORPORATION for work described as: MITRE NATIONAL SECURITY ENGINEERING CENTER SERVICES FOR THE AIR FORCE Key points: 1. Contract awarded on a cost-plus-no-fee basis, indicating a focus on service delivery over profit maximization. 2. The sole-source nature of this award warrants scrutiny regarding the justification for not pursuing competitive bidding. 3. Long contract duration of 5 years suggests a strategic, long-term need for these specialized engineering services. 4. The absence of a fee structure may imply a unique relationship or mission-critical role for the contractor. 5. Significant contract value points to a substantial requirement for advanced technical and scientific support. 6. The contractor, MITRE, is a federally funded research and development center (FFRDC), suggesting a specific expertise and public interest mandate.

Value Assessment

Rating: fair

This contract's value-for-money assessment is challenging due to its sole-source, cost-plus-no-fee nature. Without competitive bids, it's difficult to benchmark pricing against market rates. The absence of a fee suggests that profit is not the primary driver, which could lead to cost efficiencies if managed well, or potential cost overruns if oversight is lacking. The 'no fee' structure is unusual for a contract of this size and scope, implying a unique arrangement, possibly related to MITRE's FFRDC status.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The justification for this approach is not detailed in the provided data. Typically, sole-source awards occur when only one responsible source can provide the required supplies or services, or in cases of urgent need. The lack of competition means that the Air Force did not benefit from the price discovery and innovation that typically arises from multiple bidders vying for a contract.

Taxpayer Impact: Taxpayers may not have received the best possible price or value due to the absence of a competitive bidding process. This could result in higher overall costs compared to a competed contract.

Public Impact

The primary beneficiary is the Department of the Air Force, which will receive specialized engineering services. Services delivered are expected to support national security objectives through advanced technical and scientific expertise. The geographic impact is likely focused on Air Force installations and research facilities, with potential for broader national security implications. Workforce implications may include the utilization of highly skilled engineers and scientists, potentially drawing from MITRE's established talent pool.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing or suboptimal service delivery.
The sole-source award requires strong justification and robust oversight to ensure fair value.
Cost-plus-no-fee contracts can sometimes lack incentives for cost control without careful management.

Positive Signals

MITRE's status as an FFRDC suggests a high level of technical expertise and a commitment to public service.
The 'no fee' structure may indicate a focus on mission accomplishment rather than profit, potentially aligning contractor and government interests.
A long-term contract can foster stability and deep understanding of the Air Force's complex needs.

Sector Analysis

This contract falls within the Professional, Scientific, and Technical Services sector, specifically under the 'All Other Professional, Scientific, and Technical Services' NAICS code. This broad category encompasses a wide range of specialized services. The market for such services is highly competitive, with many firms offering expertise in engineering, research, and development. However, MITRE, as an FFRDC, operates in a unique space, often tasked with complex, mission-critical projects that may not be suitable for standard competitive procurement. Comparable spending benchmarks are difficult to establish due to the specialized nature and sole-source award.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to MITRE, a large FFRDC, there are no direct subcontracting implications for small businesses mentioned. This contract does not appear to contribute to the small business ecosystem through set-asides or direct prime contracting opportunities.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. As MITRE is a Federally Funded Research and Development Center (FFRDC), there are often specific oversight mechanisms in place, potentially involving the sponsoring agency's program executive offices and potentially the Office of the Secretary of Defense. Transparency may be limited due to the sole-source nature, but reporting requirements on cost and performance are expected. Inspector General jurisdiction would apply as with any Department of Defense contract.

Related Government Programs

Air Force Research and Development Programs
Department of Defense Engineering Support Contracts
Federally Funded Research and Development Center (FFRDC) Contracts
National Security Technology Modernization Initiatives

Risk Flags

Sole-source award requires strong justification.
Cost-plus-no-fee contracts necessitate rigorous cost oversight.
Long contract duration increases long-term cost exposure.
Lack of competition may limit price discovery and innovation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $489.3 million to THE MITRE CORPORATION. MITRE NATIONAL SECURITY ENGINEERING CENTER SERVICES FOR THE AIR FORCE

Who is the contractor on this award?

The obligated recipient is THE MITRE CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $489.3 million.

What is the period of performance?

Start: 2023-10-01. End: 2028-09-30.

What is the specific justification for awarding this contract on a sole-source basis to The MITRE Corporation?

The provided data does not specify the justification for the sole-source award. However, The MITRE Corporation is a Federally Funded Research and Development Center (FFRDC). FFRDCs are typically established to meet specific long-term research and development needs of the government that cannot be met as effectively by the private sector or government laboratories alone. Common justifications for sole-source awards to FFRDCs include their unique capabilities, established infrastructure, deep institutional knowledge of government systems, and their role as trusted advisors. The Air Force likely determined that MITRE possessed unique expertise or capabilities essential for the national security engineering services required, and that a competitive process would not be in the government's best interest or feasible within the required timeframe or scope.

How does the 'Cost No Fee' (Cost Plus No Fee - CPFF) contract type impact value for money and contractor incentives?

A Cost Plus No Fee (CPNF) contract type means the contractor is reimbursed for allowable costs but receives no fee or profit. This structure is typically used when the government wants to ensure a service is performed without the contractor having a profit motive, often in situations where the contractor is a non-profit entity or an FFRDC like MITRE, whose primary mission is public service rather than profit. For value for money, it theoretically removes the profit margin that would be included in a fixed-price or cost-plus-award-fee contract, potentially lowering the overall cost. However, it also removes the contractor's financial incentive to control costs, as all allowable expenses are reimbursed. Therefore, robust government oversight and detailed cost monitoring are crucial to ensure efficiency and prevent cost overruns. The government bears the cost risk.

What is MITRE's track record with the Department of Defense and specifically the Air Force?

The MITRE Corporation has a long-standing and extensive track record of supporting the Department of Defense (DoD) and its various branches, including the Air Force. As a designated FFRDC, MITRE provides objective research, development, and systems engineering support across a wide range of critical national security programs. Their work often involves complex system design, integration, analysis, and strategic planning. MITRE has historically been involved in areas such as command and control systems, cybersecurity, air and missile defense, and advanced technologies for the Air Force. Their deep institutional knowledge and technical expertise make them a frequent partner for the DoD on challenging, long-term initiatives requiring unbiased technical advice and solutions.

Are there any comparable contracts or spending benchmarks for similar national security engineering services?

Establishing direct comparable spending benchmarks for this contract is challenging due to its sole-source nature and MITRE's unique FFRDC status. Standard market rates and competitive bidding outcomes are not applicable. However, the Department of Defense procures a vast array of engineering, research, and technical services across numerous contracts. Annual spending on professional, scientific, and technical services by the DoD runs into the tens of billions of dollars. Contracts awarded competitively for similar broad engineering support might range from tens to hundreds of millions of dollars, depending on scope, duration, and complexity. MITRE's FFRDC contracts are often characterized by their strategic importance and the specialized, often classified, nature of the work, making direct cost-per-unit or total value comparisons difficult without detailed scope alignment.

What are the potential risks associated with a sole-source, cost-plus-no-fee contract of this magnitude?

The primary risks associated with a sole-source, cost-plus-no-fee (CPNF) contract of this magnitude ($489 million) are related to cost control and potential lack of innovation. Since the contractor is reimbursed for all allowable costs and receives no fee, the financial incentive to minimize expenses is reduced. This can lead to cost overruns if not managed diligently. The sole-source nature means there was no competitive pressure to drive down prices or encourage innovative solutions from multiple vendors. This could result in the government paying more than necessary or not receiving the most advanced or efficient solutions available. Additionally, without a fee, the contractor might prioritize resource allocation towards other, more profitable contracts if not carefully managed by the government's program office. Robust oversight, clear performance metrics, and stringent cost accounting are essential to mitigate these risks.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 202 BURLINGTON RD, BEDFORD, MA, 01730

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: $547,935,375

Exercised Options: $547,935,375

Current Obligation: $489,310,892

Actual Outlays: $2,282,979

Subaward Activity

Number of Subawards: 214

Total Subaward Amount: $21,296,258

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline