Homeland Security leases X-ray machines for $2M, with a 5-year term and full and open competition

Contract Overview

Contract Amount: $2,045,114 ($2.0M)

Contractor: Smiths Detection Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2023-03-13

End Date: 2028-03-12

Contract Duration: 1,826 days

Daily Burn Rate: $1.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LEASE OF X-RAY MACHINES

Place of Performance

Location: ATLANTA, FULTON County, GEORGIA, 30308

State: Georgia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $2.0 million to SMITHS DETECTION INC. for work described as: LEASE OF X-RAY MACHINES Key points: 1. The contract value appears reasonable for the rental of specialized X-ray equipment over a five-year period. 2. Full and open competition suggests a competitive bidding process, likely leading to favorable pricing. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. The delivery order award indicates this is part of a larger contract vehicle. 5. The equipment category (NAICS 532490) covers a broad range of industrial machinery rentals. 6. The contract duration of five years aligns with the typical lifecycle for such leased equipment.

Value Assessment

Rating: good

The contract value of approximately $2 million over five years for X-ray machine leases seems within a reasonable range for specialized equipment. Without specific details on the type and quantity of machines, a direct per-unit cost comparison is difficult. However, the use of full and open competition suggests that pricing was vetted against multiple offers, implying a degree of value for money. The fixed-price nature of the contract further supports good value by capping potential government expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The specific number of bidders is not provided, but the designation suggests a robust competitive environment. This level of competition is generally expected to drive down prices and ensure the government receives competitive offers for the leased equipment.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible price for the required X-ray machines, reducing the risk of overpayment.

Public Impact

The Department of Homeland Security benefits from access to necessary X-ray equipment for its operations. The services delivered include the rental and potential maintenance of X-ray machines. The geographic impact is likely focused on the locations where DHS operates and requires this equipment, with the award notice specifying Georgia (GA) as the state. Workforce implications are minimal, as this is a lease of equipment rather than a service contract requiring significant new personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the type and quantity of X-ray machines leased makes it difficult to fully assess value for money.
The duration of the lease (5 years) might exceed the optimal operational lifespan for some advanced X-ray technologies.
Potential for vendor lock-in if follow-on support or upgrades are not clearly defined.
The 'Delivery Order' status suggests this is a task order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, whose overall terms and competition level are not detailed here.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
Fixed-price contract type helps control costs and mitigate budget uncertainty.
The contract is with a known entity (Smiths Detection Inc.), suggesting established capabilities.
The lease provides necessary equipment without the large capital outlay of purchasing outright.

Sector Analysis

The market for industrial machinery and equipment rental and leasing (NAICS 532490) is diverse, encompassing a wide array of specialized equipment. This contract for X-ray machines fits within the broader category of security and inspection equipment rentals, a segment that often sees government procurement due to the need for advanced technology without the long-term commitment of ownership. Comparable spending benchmarks are difficult to establish without knowing the specific type and volume of machines leased, but government leases for such equipment typically range from tens of thousands to millions of dollars depending on sophistication and duration.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (SB is false). There is no explicit mention of subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem from this particular contract appears to be minimal, unless the prime contractor, Smiths Detection Inc., voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security's contracting and program management offices. As a delivery order under a potentially larger contract vehicle, oversight may also be influenced by the terms of that parent contract. Accountability measures are inherent in the fixed-price contract type, which obligates the contractor to deliver the leased equipment as specified. Transparency is supported by the public availability of contract award data, though detailed operational performance metrics are not typically disclosed.

Related Government Programs

Department of Homeland Security Equipment Leases
Commercial and Industrial Machinery and Equipment Rental and Leasing
Security and Inspection Equipment Procurement
Federal Government Contract Vehicles

Risk Flags

Potential for technological obsolescence within the 5-year lease term.
Lack of specific details on equipment type and quantity hinders full value assessment.
Delivery Order status implies reliance on a potentially broader, less-detailed IDIQ contract.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $2.0 million to SMITHS DETECTION INC.. LEASE OF X-RAY MACHINES

Who is the contractor on this award?

The obligated recipient is SMITHS DETECTION INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Office of Procurement Operations).

What is the total obligated amount?

The obligated amount is $2.0 million.

What is the period of performance?

Start: 2023-03-13. End: 2028-03-12.

What is the specific type and quantity of X-ray machines being leased under this contract?

The provided data does not specify the exact type or quantity of X-ray machines being leased. It only indicates the general category of 'X-RAY MACHINES' under the broader NAICS code 532490 (Other Commercial and Industrial Machinery and Equipment Rental and Leasing). This lack of specificity makes it challenging to perform a detailed technical or cost-benefit analysis. Understanding the model, capabilities (e.g., cargo screening, personnel screening), and number of units would be crucial for benchmarking against market rates and assessing the suitability for the Department of Homeland Security's operational needs.

How does the lease cost compare to purchasing similar X-ray machines outright, considering a 5-year lifecycle?

A direct comparison between leasing and purchasing costs is complex without knowing the specific X-ray machine models and their purchase prices versus lease rates. Generally, leasing offers lower upfront costs and predictable monthly expenses, which can be advantageous for budgeting and avoiding large capital expenditures. However, over a 5-year period, the total lease payments could potentially exceed the outright purchase price of the equipment, especially if the machines have a long operational lifespan beyond the lease term. The decision to lease often hinges on factors like technological obsolescence, maintenance responsibilities, and the desire for flexibility rather than long-term asset ownership.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this lease agreement?

The provided contract data does not detail the specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this lease. Typically, for equipment leases, SLAs would cover aspects such as response times for maintenance and repairs, uptime guarantees, and potentially the condition of the equipment upon return. The Department of Homeland Security would likely have internal metrics to ensure the leased X-ray machines are operational and meet their security screening requirements. The effectiveness of oversight would depend on how rigorously these (unspecified) SLAs are monitored and enforced.

What is the track record of Smiths Detection Inc. in providing similar X-ray equipment to government agencies?

Smiths Detection Inc. is a well-established company specializing in security screening technology, including X-ray systems, for aviation, ports, borders, and critical infrastructure. They have a significant history of supplying such equipment to various government agencies worldwide, including U.S. federal agencies like the Transportation Security Administration (TSA) and Customs and Border Protection (CBP), which fall under the Department of Homeland Security. Their extensive experience suggests a strong capability to meet the technical and logistical demands of providing and maintaining X-ray equipment for government use.

What is the historical spending pattern for X-ray machine leases or similar equipment by the Department of Homeland Security?

Historical spending data for X-ray machine leases by the Department of Homeland Security (DHS) is not detailed in the provided information. However, DHS, through its various components like CBP and TSA, consistently procures and leases security screening equipment, including X-ray systems, due to the critical nature of border security, aviation safety, and threat detection. Annual spending on such equipment can fluctuate based on technology upgrades, operational needs, and budget allocations, often running into millions of dollars across the department for various screening technologies.

Are there any specific risks associated with leasing X-ray machines versus purchasing them, particularly concerning technological obsolescence?

A primary risk associated with leasing equipment like X-ray machines is technological obsolescence. The X-ray technology landscape evolves rapidly, with newer, more efficient, or higher-resolution systems becoming available. If the leased machines are not the latest models or if the lease term is lengthy, the government might find itself using outdated technology. Conversely, purchasing carries the risk of the technology becoming obsolete before the equipment's useful life is over, leading to a sunk cost. Leasing can mitigate this by allowing for upgrades at the end of the term, but this depends heavily on the contract's terms regarding upgrade options and associated costs.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Commercial and Industrial Machinery and Equipment Rental and Leasing › Other Commercial and Industrial Machinery and Equipment Rental and Leasing

Product/Service Code: LEASE/RENT EQUIPMENT › LEASE OR RENTAL OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2202 LAKESIDE BLVD, EDGEWOOD, MD, 21040

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $2,556,392

Exercised Options: $2,045,114

Current Obligation: $2,045,114

Actual Outlays: $1,130,048

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 70RFP321DEH000001

IDV Type: IDC

Timeline