DoD's $31.6M R&D contract with IBM shows long-term engagement in physical sciences

Contract Overview

Contract Amount: $31,612,852 ($31.6M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2008-06-20

End Date: 2014-08-31

Contract Duration: 2,263 days

Daily Burn Rate: $14.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 21

Pricing Type: COST NO FEE

Sector: R&D

Official Description: ROSETTA: AN ANALYST CO-PILOT

Place of Performance

Location: YORKTOWN HEIGHTS, WESTCHESTER County, NEW YORK, 10598, UNITED STATES OF AMERICA

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $31.6 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: ROSETTA: AN ANALYST CO-PILOT Key points: 1. Contract awarded under full and open competition, suggesting a broad search for qualified vendors. 2. The contract duration of 2263 days indicates a significant, long-term research and development effort. 3. IBM's extensive experience likely contributed to securing this substantial R&D award. 4. The R&D focus in physical, engineering, and life sciences (NAICS 541712) is a specialized area. 5. Awarded by the Defense Contract Management Agency, highlighting a critical oversight role in defense procurement. 6. The contract's value, while substantial, needs to be benchmarked against similar long-term R&D efforts.

Value Assessment

Rating: fair

Benchmarking the value of this $31.6 million contract is challenging without specific deliverables or comparable R&D projects. The 'Cost No Fee' (PT) contract type suggests that the government is primarily concerned with the effort expended rather than specific outcomes, which can sometimes lead to less cost-efficiency compared to fixed-price contracts. However, for complex R&D, this structure can be appropriate to encourage innovation without limiting the scope prematurely. Further analysis would require understanding the specific research objectives and milestones.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. With 21 bids received, this suggests a healthy level of interest and competition for this R&D opportunity. A robust competitive process generally leads to better price discovery and potentially more innovative solutions, as contractors vie to offer the most compelling technical approach and value proposition.

Taxpayer Impact: A competitive award process like this is beneficial for taxpayers as it increases the likelihood of securing the best possible research outcomes and technological advancements at a reasonable cost, preventing potential overpayment that might occur in less competitive scenarios.

Public Impact

This contract supports advanced research and development in physical, engineering, and life sciences, potentially leading to technological breakthroughs for the Department of Defense. The primary beneficiary is the DoD, which gains access to specialized R&D capabilities from a leading technology firm. The geographic impact is centered in New York (ST: NY, SN: NEW YORK), where IBM's research facilities are likely located. This contract likely involves highly skilled scientists, engineers, and researchers, contributing to the high-tech workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Cost No Fee' contract type can sometimes incentivize higher spending if not tightly managed, as contractor profit is not directly tied to cost savings.
Long-term R&D contracts can face scope creep or shifts in research priorities, potentially impacting the initial value proposition if not actively managed.
The lack of specific performance metrics or fee structure in 'Cost No Fee' contracts can make it harder to assess contractor efficiency and effectiveness.

Positive Signals

Awarded through full and open competition with 21 bids, indicating a strong market response and potential for competitive pricing.
IBM is a well-established technology leader with a proven track record in research and development, suggesting a high likelihood of technical success.
The contract duration of over 6 years (2263 days) allows for in-depth research and development, fostering innovation and potentially significant technological advancements.

Sector Analysis

This contract falls within the Research and Development in the Physical, Engineering, and Life Sciences sector (NAICS 541712). This is a highly specialized and often high-cost sector critical for technological advancement and national security. The market is characterized by significant investment in innovation, a highly skilled workforce, and long development cycles. Comparable spending benchmarks would typically involve other large-scale, multi-year R&D contracts awarded by government agencies to major technology firms for foundational research.

Small Business Impact

This contract does not appear to have a small business set-aside (SB: false). Given the nature of advanced R&D and the prime contractor (IBM), it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available unless specifically required for niche expertise. The focus is on leveraging the prime contractor's extensive capabilities.

Oversight & Accountability

The Defense Contract Management Agency (DCMA) is responsible for overseeing this contract, ensuring compliance with terms and conditions. As a 'Cost No Fee' contract, oversight would likely focus on tracking labor hours, material costs, and adherence to the research plan. Transparency is generally maintained through contract reporting requirements, though specific R&D details might be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Contracts
Information Technology Research and Development
Advanced Materials Research
Engineering Services Contracts
Life Sciences Research Funding

Risk Flags

Long contract duration may lead to obsolescence of research findings.
Cost-reimbursement nature without fee requires strong oversight to control costs.
Potential for scope creep in long-term R&D projects.
Reliance on a single large contractor may limit broader industry innovation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.6 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. ROSETTA: AN ANALYST CO-PILOT

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES 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 $31.6 million.

What is the period of performance?

Start: 2008-06-20. End: 2014-08-31.

What specific research areas were covered under this $31.6 million contract with IBM?

The contract falls under NAICS code 541712, 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology).' While the specific research topics are not detailed in the provided data, this broad classification suggests work could encompass areas such as advanced materials science, novel engineering methodologies, physics research, or biological engineering applications relevant to defense. The 'Cost No Fee' (PT) award type implies the government was primarily interested in funding the effort and expertise required for exploration and discovery, rather than a predefined product. The long duration (2263 days) further indicates a focus on foundational or exploratory research with potentially long-term payoffs for national security.

How does the 'Cost No Fee' (PT) contract type impact value for money compared to other contract types for R&D?

The 'Cost No Fee' (PT) contract type means the contractor is reimbursed for allowable costs but does not earn a fee or profit. This can be advantageous for taxpayers in R&D scenarios where the scope is highly uncertain or difficult to define upfront, as it removes the profit motive that might otherwise inflate costs. However, it can also reduce the contractor's incentive to control costs efficiently, as their reimbursement is tied to expenses incurred. Value for money in such contracts hinges heavily on robust government oversight to ensure costs are reasonable and necessary, and that the research progresses towards its objectives. Compared to fixed-price contracts, it offers flexibility but potentially less cost certainty.

What does the award to IBM, a large established contractor, imply about competition and innovation in this R&D sector?

Awarding a significant R&D contract like this to a large, established firm like IBM suggests that the government sought deep technical expertise, extensive resources, and a proven track record. While IBM possesses these qualities, it also raises questions about whether smaller, innovative firms might be overlooked. However, the 'full and open competition' with 21 bids indicates a broad solicitation. The government likely balanced the need for proven capability with the desire for competitive proposals. Innovation can still thrive, as IBM may subcontract specialized work or compete internally, but the primary award signals a preference for a known quantity in complex R&D.

What are the potential risks associated with a 2263-day R&D contract, and how might they be mitigated?

A contract spanning over six years carries inherent risks. Technological relevance can shift rapidly, making initial research objectives obsolete. Scope creep is another significant risk, where the project expands beyond its original intent, increasing costs and timelines. Furthermore, key personnel might leave the project, impacting institutional knowledge. Mitigation strategies include establishing clear interim milestones and review points, maintaining flexibility to adapt research directions based on emerging trends, implementing strong project management and change control processes, and ensuring knowledge transfer mechanisms are in place to retain expertise within the project team.

How does the geographic location (New York) influence the execution and oversight of this contract?

The contract's indication of New York (ST: NY, SN: NEW YORK) as a location likely points to the primary research facilities of IBM where the work is being performed. This geographic concentration can facilitate oversight by the Defense Contract Management Agency (DCMA) if they have a local presence or dedicated personnel assigned to monitor IBM's operations. It can also foster closer collaboration between government technical monitors and the contractor's research team. However, it also means that if unforeseen issues arise at that specific location, they could have a concentrated impact on the project's progress. The DCMA's ability to effectively oversee the contract will depend on their resources and proximity to IBM's facilities.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 21

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 1101 KITCHAWAN RD, YORKTOWN HEIGHTS, NY, 10598

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,612,852

Exercised Options: $31,612,852

Current Obligation: $31,612,852

Contract Characteristics

Cost or Pricing Data: YES

Timeline