DoD's $27.3M contract for AI study awarded to RAND Corp. without competition

Contract Overview

Contract Amount: $27,360,599 ($27.4M)

Contractor: THE Rand Corporation

Awarding Agency: Department of Defense

Start Date: 2024-10-31

End Date: 2027-01-29

Contract Duration: 820 days

Daily Burn Rate: $33.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: STRATEGIC IMPLICATION OF ARTIFICIAL GENERAL INTELLIGENCE STUDY SUPPORT SERVICES.

Place of Performance

Location: SANTA MONICA, LOS ANGELES County, CALIFORNIA, 90401

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $27.4 million to THE RAND CORPORATION for work described as: STRATEGIC IMPLICATION OF ARTIFICIAL GENERAL INTELLIGENCE STUDY SUPPORT SERVICES. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The RAND Corporation, a well-established research organization, is the sole contractor. 3. The contract duration of over two years suggests a significant scope of work. 4. The 'All Other Professional, Scientific, and Technical Services' NAICS code indicates a broad range of potential activities. 5. The cost-plus-fixed-fee contract type may incentivize cost overruns if not closely monitored. 6. No small business set-aside was applied, indicating a lack of specific focus on small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized subject matter (AI strategic implications). Without competitive bids, it's difficult to assess if the fixed fee is reasonable or if the cost-plus structure will lead to inflated expenses. The RAND Corporation's established reputation suggests a certain level of expertise, but this does not inherently guarantee optimal value for taxpayer dollars in the absence of market validation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach bypasses the standard procurement process where multiple vendors submit bids, which typically drives down prices and fosters innovation. The lack of competition raises concerns about whether the government secured the best possible price and solution.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This can lead to higher overall spending for government services.

Public Impact

The Department of Defense benefits from strategic insights into Artificial General Intelligence. The contract supports research and analysis crucial for future defense planning and technological adoption. The primary service delivered is expert study and consultation on complex AI implications. The geographic impact is primarily within the Washington D.C. area, where RAND Corporation is headquartered and likely performs much of the analysis, though the findings will have national defense implications.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award limits opportunities for other qualified research institutions.
Cost-plus-fixed-fee structure requires diligent oversight to prevent cost escalation.

Positive Signals

Award to RAND Corporation leverages a highly reputable and experienced research organization.
Focus on AGI strategic implications addresses a critical and evolving area of national security.
Long contract duration allows for in-depth analysis and comprehensive study.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on advanced research and analysis related to Artificial General Intelligence (AGI). The market for such specialized studies is often dominated by a few well-established think tanks and research organizations. The Department of Defense is a significant investor in research and development, particularly in areas with strategic national security implications like AGI. Comparable spending benchmarks are difficult to establish due to the unique nature of AGI strategic studies, but overall federal spending on R&D and specialized consulting services runs into billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside. The award to a single, large, established research corporation like RAND suggests that subcontracting opportunities for small businesses may be limited unless RAND proactively seeks them out. This contract does not directly contribute to the small business ecosystem through set-aside provisions.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures would be tied to the delivery of research milestones and final reports as stipulated in the contract. Transparency may be limited due to the sole-source nature and the sensitive subject matter, but periodic reviews and reporting are expected. The Inspector General's office would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Artificial Intelligence Research Initiatives
National Security Strategy Studies
Think Tank and Research Services Contracts

Risk Flags

Sole-source award
Lack of competition
Cost-plus contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.4 million to THE RAND CORPORATION. STRATEGIC IMPLICATION OF ARTIFICIAL GENERAL INTELLIGENCE STUDY SUPPORT SERVICES.

Who is the contractor on this award?

The obligated recipient is THE RAND CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Washington Headquarters Services).

What is the total obligated amount?

The obligated amount is $27.4 million.

What is the period of performance?

Start: 2024-10-31. End: 2027-01-29.

What is the specific scope of work for the 'STRATEGIC IMPLICATION OF ARTIFICIAL GENERAL INTELLIGENCE STUDY SUPPORT SERVICES' contract?

The provided data does not detail the specific scope of work beyond the broad title. However, 'Strategic Implication of Artificial General Intelligence Study Support Services' suggests the contract involves research, analysis, and consultation on the potential impacts of AGI across various domains, likely including national security, economic, societal, and ethical considerations. This could encompass threat assessments, policy recommendations, technological forecasting, and scenario planning. The RAND Corporation, as the contractor, is known for its extensive research capabilities in defense and national security policy, indicating the study will likely be comprehensive and policy-oriented.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. Specific justifications for sole-source awards are typically documented by the procuring agency and can include reasons such as only one responsible source being available, urgent and compelling needs, or specific national security requirements that limit the pool of eligible contractors. Without further documentation from the Department of Defense, the precise reason for bypassing competition remains undisclosed, but it implies that the agency determined that the RAND Corporation was uniquely qualified or that competition was not feasible or in the government's best interest for this particular study.

How does the Cost Plus Fixed Fee (CPFF) contract type potentially impact the total cost to the government?

A Cost Plus Fixed Fee (CPFF) contract type means the government reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost is variable and depends on the actual costs incurred by the contractor. This structure can incentivize contractors to control costs to maximize their profit margin (as the fee is fixed regardless of cost fluctuations). However, it also requires robust government oversight to ensure that all claimed costs are reasonable, allocable, and allowable. If not managed carefully, the variable cost component could lead to higher-than-anticipated expenditures for the government, especially for complex research projects where cost estimation can be challenging.

What is the track record of The RAND Corporation with the Department of Defense for similar research services?

The RAND Corporation has a long-standing and extensive track record of providing research and analysis services to the Department of Defense (DoD) and other government agencies. They are a federally funded research and development center (FFRDC) with a deep history in defense policy, national security strategy, and technological assessments. Their work often informs high-level policy decisions. Given their established relationship and expertise, it is highly probable that they have been awarded numerous similar contracts over the years, making them a familiar and trusted partner for the DoD in complex research endeavors.

Are there any comparable federal spending benchmarks for studies on the strategic implications of Artificial General Intelligence?

Direct spending benchmarks for studies specifically on the 'strategic implications of Artificial General Intelligence' are difficult to pinpoint due to the specialized and evolving nature of the topic. However, broader benchmarks for federal spending on Artificial Intelligence (AI) research and development, as well as strategic studies and think tank services, can provide context. The U.S. government has significantly increased its investment in AI R&D across various agencies, including the DoD, often in the hundreds of millions or billions annually for AI initiatives. Contracts for high-level strategic analysis and policy support, even if not solely focused on AGI, can range from several million to tens of millions of dollars, depending on the scope, duration, and contractor's expertise. This $27.3 million contract appears to be within the upper range for specialized, in-depth strategic studies.

What are the potential risks associated with awarding a large contract for a critical topic like AGI without competition?

The primary risk of awarding a large contract for a critical topic like AGI without competition is the potential for suboptimal value for taxpayer money. Without competitive pressure, there is less incentive for the contractor to offer the most cost-effective solution or the lowest possible price. Furthermore, a sole-source award limits the government's exposure to a wider range of innovative approaches or alternative perspectives that might be offered by other qualified research institutions. This can also create a perception of favoritism or a lack of due diligence in the procurement process, potentially undermining public trust. The lack of competition also means the government foregoes the opportunity to benchmark different vendors' capabilities and pricing.

Industry Classification

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

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

Solicitation ID: HQ003420R0238

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: $27,360,599

Exercised Options: $27,360,599

Current Obligation: $27,360,599

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $1,168,030

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ003421D0006

IDV Type: IDC

Timeline