DoD's $3B contract with MIT for R&D in electronics and communication, awarded in 2005, raises questions about competition and value

Contract Overview

Contract Amount: $3,009,698,421 ($3.0B)

Contractor: Massachusetts Institute of Technology

Awarding Agency: Department of Defense

Start Date: 2005-04-01

End Date: 2015-03-31

Contract Duration: 3,651 days

Daily Burn Rate: $824.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: R&D

Official Description: 200507!000127!5700!FA8721!ESC/XPK !FA872105C0002 !A!N! !Y! ! !20050401!20100331!001425594!001425594!001425594!N!MASSACHUSETTS INSTITUTE OF TEC!77 MASSACHUSETTS AVE NE49-!CAMBRIDGE !MA!02139!11000!017!25!CAMBRIDGE !MIDDLESEX !MASS !+000010298000!N!N!003260606491!AC61!RDTE/ELECTRONICS&COMMUNICATION EQ-BASIC RESEARCH!S1 !SERVICES !000 !* !541990!E! !3! ! ! ! ! !20200930!B!A! !N!Z!D!U!S!1!001!N!3A!Z!Y!D! ! !N!V!N! ! ! ! ! !A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: LEXINGTON, MIDDLESEX County, MASSACHUSETTS, 02421

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $3.01 billion to MASSACHUSETTS INSTITUTE OF TECHNOLOGY for work described as: 200507!000127!5700!FA8721!ESC/XPK !FA872105C0002 !A!N! !Y! ! !20050401!20100331!001425594!001425594!001425594!N!MASSACHUSETTS INSTITUTE OF TEC!77 MASSACHUSETTS AVE NE49-!CAMBRIDGE !MA!02139!11000!017!25!CAMBRIDGE !MIDD… Key points: 1. The contract, valued at over $3 billion, was awarded to MIT for research and development in electronics and communication. 2. Awarded in 2005 with an end date in 2015, the contract's long duration and lack of competition are notable. 3. The 'NOT COMPETED' status suggests a sole-source award, potentially limiting price discovery and taxpayer value. 4. The sector is R&D, specifically focusing on electronics and communication equipment, a critical area for defense.

Value Assessment

Rating: questionable

The contract's total value of over $3 billion over a decade is substantial. Benchmarking is difficult without specific deliverables, but the lack of competition suggests potential overpricing or suboptimal resource allocation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was explicitly marked as 'NOT COMPETED', indicating a sole-source award. This method bypasses competitive bidding, potentially leading to higher costs and reduced innovation compared to an open competition.

Taxpayer Impact: The lack of competition for a contract of this magnitude raises concerns about whether taxpayers received the best possible value for their investment.

Public Impact

Significant taxpayer funds allocated to a single research institution for a decade. Potential for missed opportunities in technological advancement through broader collaboration. Raises questions about the government's procurement strategy for long-term R&D projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Long contract duration
High total value
Cost-plus contract type (implied by 'COST NO FEE' and R&D focus)

Positive Signals

Awarded to a reputable research institution (MIT)
Focus on critical R&D area (electronics/communication)

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on electronics and communication equipment. Government spending in this area is crucial for technological advancement but requires careful oversight to ensure value and innovation.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was a sole-source award to a large research institution.

Oversight & Accountability

The 'NOT COMPETED' status and long duration warrant further investigation into the justification for the sole-source award and the oversight mechanisms in place to ensure the contract's objectives were met efficiently.

Related Government Programs

All Other Professional, Scientific, and Technical Services
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competitive bidding
High total contract value
Long contract duration (2005-2015)
Potential for cost overruns in R&D
Limited transparency on specific deliverables and outcomes

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.01 billion to MASSACHUSETTS INSTITUTE OF TECHNOLOGY. 200507!000127!5700!FA8721!ESC/XPK !FA872105C0002 !A!N! !Y! ! !20050401!20100331!001425594!001425594!001425594!N!MASSACHUSETTS INSTITUTE OF TEC!77 MASSACHUSETTS AVE NE49-!CAMBRIDGE !MA!02139!11000!017!25!CAMBRIDGE !MIDDLESEX !MASS !+000010298000!N!N!003260606491!AC61!RDTE/ELECTRONICS&COMMUNICATION EQ-BASIC RESEARCH!S1 !SERVICES !000 !* !541990!E! !3! ! ! ! ! !20200

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 $3.01 billion.

What is the period of performance?

Start: 2005-04-01. End: 2015-03-31.

What was the specific justification for awarding this contract on a sole-source basis to MIT, and were alternative competitive approaches considered?

The justification for a sole-source award typically involves unique capabilities, critical national security needs, or the unavailability of other sources. For a contract of this size and duration, a thorough review of the justification is essential to ensure it was indeed the most appropriate procurement method and that taxpayer funds were used responsibly.

How was the 'COST NO FEE' pricing structure managed over the decade-long contract to ensure cost control and prevent potential overruns?

A 'COST NO FEE' contract means the government reimburses the contractor for allowable costs but does not pay any profit. For R&D, this can incentivize cost-consciousness. However, without performance incentives, there's a risk of cost escalation if not rigorously monitored through audits and progress reviews.

What were the key research outcomes and technological advancements achieved under this $3 billion contract, and did they meet the Department of the Air Force's strategic goals?

Assessing the effectiveness requires examining the contract's deliverables, milestones, and final reports. Given the significant investment, the achieved advancements in electronics and communication technology should demonstrably contribute to the Air Force's capabilities and strategic objectives.

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

Financial Breakdown

Contract Ceiling: $9,665,578,799

Exercised Options: $9,664,047,765

Current Obligation: $3,009,698,421

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline