DoD's $724.6M contract with MIT for R&D services awarded without competition

Contract Overview

Contract Amount: $724,562,750 ($724.6M)

Contractor: Massachusetts Institute of Technology

Awarding Agency: Department of Defense

Start Date: 2012-12-18

End Date: 2020-03-31

Contract Duration: 2,660 days

Daily Burn Rate: $272.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: R&D

Official Description: MIT-LL FY13 CONTINUATION CONTRACT

Place of Performance

Location: LEXINGTON, MIDDLESEX County, MASSACHUSETTS, 02421

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $724.6 million to MASSACHUSETTS INSTITUTE OF TECHNOLOGY for work described as: MIT-LL FY13 CONTINUATION CONTRACT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over 2600 days suggests a long-term, potentially evolving research need. 3. The 'All Other Professional, Scientific, and Technical Services' NAICS code indicates a broad scope, making direct comparisons difficult. 4. No small business set-aside was applied, suggesting no specific focus on small business participation. 5. The contract type 'COST NO FEE' can sometimes lead to cost overruns if not closely monitored. 6. High dollar value warrants scrutiny regarding the necessity and efficiency of the services procured.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and broad service category. The 'COST NO FEE' contract type, while common for research and development, requires robust oversight to ensure costs remain reasonable and aligned with objectives. Without competitive bids, it's difficult to ascertain if the pricing reflects market value or if a more cost-effective solution could have been secured through competition. The significant duration also raises questions about the initial cost projections and whether they accurately anticipated the full scope of work.

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 is typically justified when only one source is capable of meeting the requirement, often due to specialized expertise or unique capabilities. However, the absence of multiple bidders limits the government's ability to negotiate the best possible price and may result in higher costs for taxpayers.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from the price reductions typically achieved through a competitive bidding process. This could translate to a higher overall expenditure for the services rendered.

Public Impact

The primary beneficiary is the Department of Defense, which receives advanced research and technical services. The contract supports research and development activities, potentially leading to technological advancements relevant to national security. Services are likely concentrated in Massachusetts, given the contractor's location. The contract may indirectly support a highly skilled workforce in scientific and technical fields at MIT.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus contract type can incentivize higher spending without strict cost controls.
Broad service category makes performance and value assessment less precise.
Long contract duration may indicate potential for scope creep or evolving requirements not initially priced competitively.

Positive Signals

Contract awarded to a reputable research institution (MIT) known for expertise.
Long duration suggests a sustained and potentially critical need for the services.
Cost-plus contracts are sometimes necessary for R&D where outcomes are uncertain.

Sector Analysis

This contract falls within the Professional, Scientific, and Technical Services sector, specifically under the 'All Other' category. This broad classification encompasses a wide range of activities, including research and development, consulting, and testing. The market for such services is vast and diverse, with significant government spending directed towards R&D to maintain technological superiority. Comparable spending benchmarks are difficult to establish due to the unique nature of R&D and the specific expertise required.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of the work and the contractor, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available, though specific details would require further investigation into the contract's terms.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, a component of the Department of Defense. Given the 'COST NO FEE' contract type, rigorous financial oversight and performance monitoring are crucial to ensure that costs are reasonable and allocable to the contract. Transparency would depend on the DoD's reporting practices for R&D contracts and any specific reporting requirements stipulated within the contract itself.

Related Government Programs

Department of Defense Research and Development Contracts
Federal Contracts for Scientific and Technical Services
Sole-Source Federal Contracts
Cost-Plus Contracts

Risk Flags

Sole-source award
Cost-reimbursement contract type
Broad service category (NAICS 541990)
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $724.6 million to MASSACHUSETTS INSTITUTE OF TECHNOLOGY. MIT-LL FY13 CONTINUATION CONTRACT

Who is the contractor on this award?

The obligated recipient is MASSACHUSETTS INSTITUTE OF TECHNOLOGY.

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 $724.6 million.

What is the period of performance?

Start: 2012-12-18. End: 2020-03-31.

What specific research and development activities are covered under this contract?

The contract falls under NAICS code 541990, 'All Other Professional, Scientific, and Technical Services.' This broad classification suggests the research and development activities could encompass a wide array of scientific and technical disciplines. Without access to the specific statement of work or contract modifications, the precise nature of the R&D remains undefined. However, given the awarding agency (Department of the Air Force), the research likely pertains to areas critical for national defense, potentially including advanced materials, aerospace technology, cybersecurity, artificial intelligence, or other emerging technologies relevant to military applications. The 'COST NO FEE' structure implies that the contractor is reimbursed for allowable costs incurred, but does not receive a profit margin, which is common for certain types of government-funded research where the outcome is uncertain or the primary goal is knowledge acquisition rather than a specific deliverable product.

How does the $724.6 million cost compare to similar R&D contracts awarded by the DoD?

Comparing this $724.6 million contract to similar R&D contracts is challenging due to the broad NAICS code (541990) and the sole-source nature of the award. However, large-scale R&D contracts awarded by the Department of Defense frequently reach hundreds of millions, and sometimes billions, of dollars, especially when involving advanced technological development over extended periods. Contracts with institutions like MIT, known for their extensive research capabilities, often represent significant investments. The 'COST NO FEE' structure, while unusual for profit-driven entities, is sometimes employed for non-profit research institutions where the focus is on advancing knowledge rather than generating profit. To provide a precise comparison, one would need to identify other sole-source, cost-reimbursable R&D contracts within the DoD for similar broad scientific and technical services, which are inherently difficult to isolate and benchmark accurately.

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

The primary risks associated with a sole-source, cost-plus contract of this magnitude are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs as there is no market-driven incentive for the contractor to offer the lowest price. The government relies heavily on its negotiation and oversight capabilities to ensure fair pricing. Secondly, the 'COST NO FEE' structure, while intended to control profit, can still lead to cost overruns if not meticulously managed. The contractor is reimbursed for all allowable costs, which could incentivize less stringent cost control measures compared to fixed-price contracts. Without a profit motive tied to efficiency, there's a risk that costs could escalate beyond initial projections if oversight is inadequate. Robust auditing and performance monitoring are critical to mitigate these risks.

What is the track record of Massachusetts Institute of Technology (MIT) in performing large federal R&D contracts?

Massachusetts Institute of Technology (MIT) has a long and distinguished track record of performing large federal research and development contracts across various agencies, including the Department of Defense, Department of Energy, and National Science Foundation. As a leading academic and research institution, MIT consistently secures significant funding for cutting-edge research in fields such as engineering, computer science, physics, and biology. Their performance is generally characterized by high-quality scientific output and innovation. While specific performance metrics for individual contracts are not publicly detailed, MIT's continued success in obtaining substantial federal grants and contracts underscores its capability and reliability in executing complex R&D projects. Their extensive experience suggests a strong understanding of federal procurement regulations and research management.

How does the duration of this contract (2660 days) impact its overall value and risk?

The extended duration of 2660 days (approximately 7.3 years) for this contract significantly impacts its overall value and risk profile. On the value side, a long duration can be beneficial if the research is foundational and requires sustained effort over time to yield meaningful results, allowing for deep exploration and development. It can also provide stability and predictability for the research team. However, it also introduces considerable risk. Long-term projects are more susceptible to changes in technological landscapes, shifting government priorities, or unforeseen scientific challenges, potentially rendering the research obsolete or requiring costly pivots. Furthermore, the longer the contract, the greater the opportunity for cost escalation if not managed tightly, especially under a cost-reimbursement structure. Ensuring the continued relevance and cost-effectiveness of the research over such an extended period requires vigilant oversight and adaptive management.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D 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: 244 WOOD ST, LEXINGTON, MA, 02421

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: $724,562,750

Exercised Options: $724,562,750

Current Obligation: $724,562,750

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline