DHS leases X-ray machines for $48.3M over 5 years, with a firm fixed price

Contract Overview

Contract Amount: $48,283 ($48.3K)

Contractor: Smiths Detection Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2023-09-01

End Date: 2028-09-30

Contract Duration: 1,856 days

Daily Burn Rate: $26/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LEASE X-RAY MACHINES R6

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64108

State: Missouri Government Spending

Plain-Language Summary

Department of Homeland Security obligated $48,283.2 to SMITHS DETECTION INC. for work described as: LEASE X-RAY MACHINES R6 Key points: 1. The contract value represents a significant investment in security screening technology. 2. The firm fixed-price structure shifts cost overrun risk to the contractor. 3. Leasing offers flexibility compared to outright purchase, allowing for technology upgrades. 4. The duration of the contract suggests a long-term need for these assets. 5. The specific model of X-ray machines and their capabilities are key to assessing value. 6. Competition dynamics will be crucial in understanding the pricing efficiency.

Value Assessment

Rating: fair

Benchmarking the value of leased X-ray machines is challenging without specific model details and usage intensity. However, a $48.3 million lease over nearly five years suggests a substantial commitment. Comparing this to outright purchase costs, maintenance, and potential depreciation of owned assets would be necessary for a full value assessment. The firm fixed-price nature provides cost certainty, but the overall value hinges on the technology's effectiveness and the negotiated lease terms relative to market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This competitive process is generally expected to yield more favorable pricing and terms for the government. The number of bidders and the specific evaluation criteria would provide further insight into the intensity of the competition and its impact on the final price.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it promotes a competitive marketplace, driving down costs and encouraging innovation, ultimately leading to better value for public funds.

Public Impact

The Department of Homeland Security (DHS) benefits from enhanced security screening capabilities. These X-ray machines are likely deployed at ports of entry, airports, or other critical infrastructure to detect threats. The geographic impact is tied to the specific locations where these machines are deployed, potentially across multiple states or federal facilities. The contract supports jobs within the security technology manufacturing and service sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for technology obsolescence if lease terms do not allow for timely upgrades.
Dependence on a single contractor for maintenance and support could lead to service disruptions.
The total cost over the lease term might exceed the purchase price of comparable equipment.

Positive Signals

Firm fixed-price contract provides budget certainty and limits the government's exposure to cost overruns.
Full and open competition suggests a potentially competitive price was secured.
Leasing allows for access to advanced technology without the large upfront capital expenditure of purchasing.

Sector Analysis

The market for security screening equipment, including X-ray machines, is a significant segment within the broader industrial machinery sector. This contract falls under commercial and industrial machinery and equipment rental and leasing. Spending in this area is driven by national security needs, regulatory requirements, and the constant evolution of threat detection technologies. Comparable spending benchmarks would involve analyzing other government leases or purchases of similar screening equipment.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities if the prime contractor, Smiths Detection Inc., engages them. Without specific subcontracting plans, it's difficult to assess the direct benefit to the small business ecosystem from this particular award.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Homeland Security's contracting officers and program managers. They are responsible for ensuring compliance with contract terms, monitoring performance, and managing payments. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Customs and Border Protection Equipment Leases
Transportation Security Administration Screening Technology
Department of Defense Security Equipment Procurements
Federal Supply Schedule Leases

Risk Flags

Potential for technology obsolescence
Lease cost vs. purchase cost analysis needed
Performance metrics not detailed

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $48,283.2 to SMITHS DETECTION INC.. LEASE X-RAY MACHINES R6

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 $48,283.2.

What is the period of performance?

Start: 2023-09-01. End: 2028-09-30.

What is the specific model of X-ray machine being leased, and what are its technical specifications and capabilities?

The provided data does not specify the exact model of X-ray machines being leased. To conduct a thorough analysis, obtaining the specific model numbers and their corresponding technical specifications (e.g., resolution, penetration depth, threat detection algorithms, throughput) is crucial. This information would allow for a direct comparison with current market offerings and assess whether the leased technology represents state-of-the-art capabilities or is potentially lagging. Without this detail, evaluating the true value proposition and technological relevance of the lease is difficult.

How does the total lease cost compare to the estimated purchase price and lifecycle costs of similar X-ray machines?

The total lease cost for these X-ray machines is approximately $48.3 million over roughly five years. To assess value, this figure needs to be compared against the outright purchase price of comparable machines, including associated costs such as maintenance, service contracts, software updates, and potential depreciation. If the total lease payments significantly exceed the purchase price plus estimated operational costs over the same period, the government may be overpaying. Conversely, if leasing provides access to newer technology or avoids large capital outlays, it could represent better value depending on DHS's strategic priorities and budget flexibility.

What is the track record of the contractor, Smiths Detection Inc., in delivering similar security screening equipment and services to the government?

Smiths Detection Inc. is a known entity in the security screening market. Their track record with government contracts, particularly for X-ray machines and related technologies, would need to be reviewed. This includes examining past performance evaluations, any history of contract disputes or terminations, and their success in meeting delivery schedules and performance requirements on previous DHS or other federal agency contracts. A strong performance history suggests a lower risk of delivery or operational issues, contributing positively to the overall assessment of this contract.

What are the key performance indicators (KPIs) for these X-ray machines, and how will their performance be measured and enforced?

The contract data does not detail the specific Key Performance Indicators (KPIs) for the leased X-ray machines. Effective oversight requires clearly defined KPIs related to factors such as image quality, detection rates for specific threats, system uptime, throughput speed, and reliability. The contract should outline how these KPIs will be measured, reported, and what remedies or penalties are in place if the contractor fails to meet them. Without this information, assessing the contractor's performance and ensuring the government receives the expected level of service is challenging.

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

Analyzing historical spending patterns for X-ray machines by DHS is essential for context. This would involve examining previous contract awards for similar equipment, including their values, durations, and competition levels. Understanding whether this $48.3 million lease represents an increase or decrease in spending, and whether it aligns with previous procurement strategies (e.g., leasing vs. purchasing), provides insight into the agency's long-term approach to acquiring such technology and helps benchmark current spending against past investments.

What are the implications of the firm fixed-price contract type on potential cost savings or overruns?

A firm fixed-price (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience. This structure is advantageous for the government as it provides cost certainty and shifts the risk of cost overruns entirely to the contractor. For taxpayers, this means the $48.3 million is the maximum the government will pay, barring any contract modifications. However, it also means the government may not benefit from any cost savings the contractor achieves. The initial price negotiation is therefore critical to ensure it reflects a fair market value.

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: $60,354

Exercised Options: $48,283

Current Obligation: $48,283

Actual Outlays: $22,130

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 70RFP321DEH000001

IDV Type: IDC

Timeline