DoD's $190M contract with Carnegie Mellon University for R&D services shows a high per-unit cost

Contract Overview

Contract Amount: $402,541,867 ($402.5M)

Contractor: Carnegie Mellon University

Awarding Agency: Department of Defense

Start Date: 2005-07-05

End Date: 2016-07-30

Contract Duration: 4,043 days

Daily Burn Rate: $99.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: R&D

Official Description: 200510!000208!5700!FA8721!ESC/XPK !FA872105C0003 !A!N! !Y! ! !20050705!20100630!189570740!189570740!052184116!N!CARNEGIE MELLON UNIVERSITY !4500 5TH AVE !PITTSBURGH !PA!15213!61000!003!42!PITTSBURGH !ALLEGHENY !PENN !+000000750000!N!N!000411105411!AZ12!RDTE/OTHER RESEARCH&DEVELOPMENT-APPLIED RESEARC !S1 !SERVICES !000 !* !541511!E! !3! ! ! ! ! !20200930!B! ! !N!Z!C!U!S!1!001!N!3A!Z!Y!D! ! !N!V!N! ! ! ! ! !A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: PITTSBURGH, ALLEGHENY County, PENNSYLVANIA, 15213

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $402.5 million to CARNEGIE MELLON UNIVERSITY for work described as: 200510!000208!5700!FA8721!ESC/XPK !FA872105C0003 !A!N! !Y! ! !20050705!20100630!189570740!189570740!052184116!N!CARNEGIE MELLON UNIVERSITY !4500 5TH AVE !PITTSBURGH !PA!15213!61000!003!42!PITTSBURGH !ALLE… Key points: 1. The contract's value of $189.6M over 11 years suggests a significant investment in research and development. 2. The high total award amount, coupled with a relatively low number of contract actions, may indicate large-scale, long-term projects. 3. The 'NOT COMPETED' status raises questions about the procurement process and potential missed opportunities for cost savings. 4. The contract's duration of over 11 years points to a sustained need for the services provided. 5. The 'COST NO FEE' contract type implies that the government reimburses the contractor for allowable costs, with no profit margin. 6. The primary service category is 'RDTE/OTHER RESEARCH&DEVELOPMENT-APPLIED RESEARCH', indicating a focus on innovation and future capabilities.

Value Assessment

Rating: questionable

The total award of $189.6 million over more than 11 years for R&D services is substantial. Without specific benchmarks for comparable applied research contracts, it's difficult to definitively assess value. However, the 'COST NO FEE' contract type, while common for R&D, can sometimes lead to less price discipline compared to fixed-price contracts. The lack of competition further complicates a value assessment, as there's no market pressure to drive down costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition procurement. The data explicitly states 'NOT COMPETED'. This suggests that Carnegie Mellon University was likely selected for its unique capabilities, existing research, or a specific program requirement that could not be met by other sources. The lack of competition means there was no direct price comparison through bidding.

Taxpayer Impact: For taxpayers, a sole-source contract means there was no opportunity to benefit from competitive bidding, which typically drives down prices and increases value for money.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Department of the Air Force, which gains access to advanced research and development capabilities. The services delivered likely involve cutting-edge research in areas relevant to national security and technological advancement. The geographic impact is primarily centered around Pittsburgh, Pennsylvania, where Carnegie Mellon University is located, potentially fostering local economic activity and high-skilled employment. The contract supports a highly specialized workforce of researchers, scientists, and engineers at Carnegie Mellon University.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price discovery and potential savings for taxpayers.
Cost-reimbursement contract type ('COST NO FEE') may offer less incentive for cost control compared to fixed-price contracts.
Long contract duration (over 11 years) could mask inefficiencies or changing needs without periodic re-competition.
The specific nature of R&D makes direct performance benchmarking challenging.

Positive Signals

Carnegie Mellon University is a renowned institution with a strong track record in research and development.
The 'RDTE/OTHER RESEARCH&DEVELOPMENT-APPLIED RESEARCH' designation suggests investment in critical future capabilities.
The sustained funding indicates a long-term strategic commitment by the DoD to advancing technology.
The contract supports a leading academic institution, potentially fostering innovation and knowledge transfer.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically applied research. The federal government is a major investor in R&D, particularly in areas critical to national security, technological advancement, and economic competitiveness. Comparable spending benchmarks are difficult to establish for highly specialized R&D due to the unique nature of each project and the expertise required. However, the scale of this award suggests a significant, multi-year research initiative.

Small Business Impact

There is no indication in the provided data that this contract involved small business set-asides or subcontracting goals. Given the nature of the contractor (a large university) and the specialized R&D services, it is unlikely that small business participation was a primary focus of this specific award. Further investigation would be needed to determine if any subcontracting opportunities were mandated or pursued.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a 'COST NO FEE' contract, rigorous financial oversight is crucial to ensure that all reimbursed costs are allowable, allocable, and reasonable. Transparency is moderate, as contract awards are generally public, but the specifics of R&D progress and cost justification may be less accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development Programs
Air Force Science and Technology Investments
University Research Partnerships
Applied Research Contracts
Advanced Technology Development

Risk Flags

Lack of Competition
Cost-Reimbursement Contract Type
Long Contract Duration
Potential for Cost Overruns
Limited Transparency in R&D Progress

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $402.5 million to CARNEGIE MELLON UNIVERSITY. 200510!000208!5700!FA8721!ESC/XPK !FA872105C0003 !A!N! !Y! ! !20050705!20100630!189570740!189570740!052184116!N!CARNEGIE MELLON UNIVERSITY !4500 5TH AVE !PITTSBURGH !PA!15213!61000!003!42!PITTSBURGH !ALLEGHENY !PENN !+000000750000!N!N!000411105411!AZ12!RDTE/OTHER RESEARCH&DEVELOPMENT-APPLIED RESEARC !S1 !SERVICES !000 !* !541511!E! !3! ! ! ! ! !20200

Who is the contractor on this award?

The obligated recipient is CARNEGIE MELLON UNIVERSITY.

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 $402.5 million.

What is the period of performance?

Start: 2005-07-05. End: 2016-07-30.

What specific research areas did this contract cover for Carnegie Mellon University?

The provided data categorizes the contract under 'RDTE/OTHER RESEARCH&DEVELOPMENT-APPLIED RESEARCH' and lists the North American Industry Classification System (NAICS) code 541511 for 'Custom Computer Programming Services'. However, it does not specify the exact research areas. Applied research contracts with universities often focus on areas critical to the sponsoring agency's mission, which for the Department of the Air Force could include areas like artificial intelligence, cybersecurity, advanced materials, aerospace engineering, command and control systems, or data analytics. Carnegie Mellon University's strengths lie in computer science, engineering, and robotics, suggesting the research likely leveraged these capabilities to address specific defense-related challenges or opportunities.

How does the 'COST NO FEE' contract type typically function in R&D settings, and what are its implications for cost control?

A 'COST NO FEE' (CNF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable, allocable, and reasonable costs incurred in performing the contract, but receives no fee or profit. This type of contract is often used for research and development efforts, especially when the scope of work is uncertain or when the government wants to encourage innovation without the contractor bearing financial risk for profit. While it facilitates the pursuit of novel ideas, it can reduce the contractor's incentive to control costs rigorously, as they are guaranteed to be reimbursed for expenses. Effective government oversight is therefore critical to scrutinize costs and ensure they align with the contract's objectives and are not excessive.

What is the significance of the contract's duration (over 11 years) in the context of R&D spending?

A contract duration exceeding 11 years for R&D is exceptionally long and suggests a strategic, long-term investment by the Department of Defense in a particular research area or capability. Such extended periods are typically reserved for foundational research programs or initiatives that require sustained effort over many years to yield significant results. This longevity can provide stability for researchers and allow for deep exploration of complex problems. However, it also presents risks, such as the potential for the research objectives to become outdated, the technology landscape to shift dramatically, or for inefficiencies to develop over time without the pressure of periodic re-competition. Robust program management and milestone reviews are essential to ensure continued relevance and value throughout the contract's life.

Given the 'NOT COMPETED' status, what are the potential reasons for selecting Carnegie Mellon University on a sole-source basis for this contract?

Selecting a contractor on a sole-source basis, as indicated by 'NOT COMPETED', typically occurs when only one source is found to be capable of meeting the government's requirements. For a research institution like Carnegie Mellon University, this could be due to several factors. They might possess unique intellectual property, specialized facilities, or a highly specific expertise developed through prior government-funded research or unique academic programs directly relevant to the Air Force's needs. Alternatively, the contract might be a continuation or expansion of existing work where CMU is the only logical source due to institutional knowledge or ongoing project integration. The government would need to justify that no other source could fulfill the requirement adequately.

What does the NAICS code 541511 ('Custom Computer Programming Services') imply about the nature of the R&D performed under this contract?

The NAICS code 541511, 'Custom Computer Programming Services', suggests that a significant portion of the R&D work under this contract likely involved the development of specialized software, algorithms, or computer systems tailored to the Department of Defense's specific needs. While the contract is broadly categorized under R&D, this code indicates a focus on the practical application of research through software engineering. This could encompass developing advanced simulation tools, data analysis platforms, artificial intelligence applications, cybersecurity solutions, or command and control software. It implies that the research outcomes were intended to be implemented or tested through custom-built technological solutions.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

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 NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 4500 5TH AVE, PITTSBURGH, PA, 15213

Business Categories: Category Business, Educational Institution, Higher Education, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,064,770,401

Exercised Options: $1,064,554,008

Current Obligation: $402,541,867

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline