DoD's $225.6M RAND Corporation contract for technical services awarded without competition

Contract Overview

Contract Amount: $225,566,297 ($225.6M)

Contractor: THE Rand Corporation

Awarding Agency: Department of Defense

Start Date: 2012-04-06

End Date: 2020-09-30

Contract Duration: 3,099 days

Daily Burn Rate: $72.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: PROJECT: AT&L 12-408

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20310

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $225.6 million to THE RAND CORPORATION for work described as: PROJECT: AT&L 12-408 Key points: 1. Contract awarded on a sole-source basis, limiting competitive pressure on pricing. 2. Significant duration of nearly 8.5 years suggests a long-term need for services. 3. The 'All Other Professional, Scientific, and Technical Services' NAICS code is broad, potentially masking specific service details. 4. Cost-plus-fixed-fee contract type carries inherent risk of cost overruns. 5. The contract was awarded to a single bidder, raising questions about price discovery. 6. No small business set-aside was utilized, indicating no specific focus on small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive data and the broad nature of the services. The cost-plus-fixed-fee structure, while common for research and development, can lead to higher costs compared to fixed-price contracts if not managed tightly. Without comparable sole-source awards for similar scope and duration, assessing whether the $225.6 million represents a fair price is difficult. The absence of competition means there was no market validation of the proposed costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. The Department of Defense likely determined that only The RAND Corporation could provide the specialized services required. This approach bypasses the typical competitive bidding process, which can lead to higher prices and reduced innovation as there is no pressure from competing firms.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the lack of competition. Without a competitive bidding process, there is less assurance that the government secured the best possible price or value.

Public Impact

The Department of Defense benefits from specialized research and technical support services. Services likely support strategic planning, policy analysis, and technical assessments within the DoD. The geographic impact is primarily within Washington D.C., where the services were administered. The contract supports a highly specialized workforce within The RAND Corporation, contributing to national security expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost escalation if not rigorously overseen.
Broad NAICS code makes it difficult to ascertain the precise nature and value of services rendered.
Long contract duration without clear performance metrics makes ongoing value assessment challenging.

Positive Signals

The RAND Corporation is a well-established research institution with a strong track record in defense analysis.
The contract's long duration suggests a sustained and critical need for the services provided.
The services likely contribute to high-level strategic decision-making within the Department of Defense.

Sector Analysis

This contract falls within the Professional, Scientific, and Technical Services sector, a broad category encompassing a wide range of analytical, research, and consulting activities. The Department of Defense is a major consumer of these services, particularly for policy analysis, systems engineering, and advanced research. The market for such specialized services is competitive, but specific niche areas, like those potentially addressed by RAND, can sometimes lead to sole-source procurements. Comparable spending benchmarks are difficult to establish due to the unique nature of RAND's work and the sole-source award.

Small Business Impact

This contract did not include a small business set-aside, nor is there any indication of subcontracting requirements for small businesses. The award to The RAND Corporation, a large research organization, suggests that the primary focus was on specialized expertise rather than fostering small business participation. This means the contract likely had minimal direct impact on the small business ecosystem within the professional services sector.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Given the sole-source nature and the cost-plus-fixed-fee structure, rigorous oversight of expenditures, performance, and adherence to the contract's statement of work would be crucial. Transparency is limited by the lack of public competition details. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Contracts
Professional and Technical Services Contracts
Sole-Source Procurements
Cost-Plus-Fixed-Fee Contracts
Policy Analysis and Strategic Planning Services

Risk Flags

Sole-source award
Lack of competitive benchmarking
Cost-plus-fixed-fee contract type
Broad NAICS code obscuring service details

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $225.6 million to THE RAND CORPORATION. PROJECT: AT&L 12-408

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 $225.6 million.

What is the period of performance?

Start: 2012-04-06. End: 2020-09-30.

What specific services did The RAND Corporation provide under this contract?

The contract falls under NAICS code 541990, 'All Other Professional, Scientific, and Technical Services.' While the specific statement of work is not publicly detailed, The RAND Corporation is known for providing high-level research, analysis, and policy recommendations to government agencies, particularly in defense and national security. Services likely included strategic assessments, threat analysis, technology evaluation, and policy development support for the Department of Defense. The broad categorization suggests a wide scope of potential analytical and advisory functions tailored to the DoD's evolving needs over the contract's nearly eight-year duration.

How does the $225.6 million cost compare to similar contracts for technical services within the DoD?

Direct comparison is difficult due to the sole-source nature of this award and the broad service category. Sole-source contracts inherently lack competitive benchmarking, making it hard to determine if the price represents optimal value. While the DoD procures billions in professional and technical services annually, most are competed. Contracts with similar durations and large dollar values typically undergo extensive competition. The cost-plus-fixed-fee structure also introduces variability. Without access to detailed cost breakdowns or comparable sole-source awards for similar specialized research, assessing value against market rates is speculative.

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

The primary risks are financial and performance-related. A sole-source award eliminates competitive pressure, potentially leading to higher costs than if the contract were competed. The cost-plus-fixed-fee structure, while providing flexibility, can incentivize the contractor to incur more costs, as a portion of the profit is fixed regardless of the final cost. This necessitates robust government oversight to manage expenditures and ensure efficiency. Without competition, there's also a risk that the contractor may not be as motivated to innovate or deliver superior performance compared to a competitively bid scenario. The long duration further amplifies these risks if not managed proactively.

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

The RAND Corporation has a long-standing and extensive track record of providing research and analysis services to the Department of Defense and other government agencies. It is a federally funded research and development center (FFRDC) and is highly regarded for its objective, data-driven insights on national security, defense policy, and strategic issues. Their history with the DoD spans decades, involving numerous contracts and research projects that have informed policy and operational decisions. This specific contract builds upon that established relationship and expertise.

How has spending on 'All Other Professional, Scientific, and Technical Services' by the DoD trended historically?

Spending by the Department of Defense on NAICS code 541990, 'All Other Professional, Scientific, and Technical Services,' has generally trended upwards over the past decade, reflecting a growing reliance on external expertise for specialized tasks. However, this category is very broad and encompasses a diverse range of services. While overall spending in this sector has increased, the proportion allocated to sole-source contracts within this category may fluctuate. Analyzing historical spending patterns requires segmenting data by contract type, agency, and specific service descriptions, which is challenging given the broad nature of this NAICS code.

What are the implications of awarding such a large contract without competition for future procurements?

Awarding a significant contract like this on a sole-source basis can set a precedent and potentially discourage future competition if not adequately justified. Agencies are generally required to justify sole-source awards extensively, demonstrating why competition is not feasible. If such justifications become routine for certain types of services or contractors, it could lead to a perception that competition is being avoided, potentially impacting market dynamics and driving up prices across the board. It underscores the importance of robust justification processes and periodic reviews of sole-source awards.

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

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, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $225,566,297

Exercised Options: $225,566,297

Current Obligation: $225,566,297

Actual Outlays: $210,576

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $6,368,996

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline