DoD awards $45.5M for truck trailer manufacturing, with limited competition and potential value concerns

Contract Overview

Contract Amount: $45,540,220 ($45.5M)

Contractor: DRS Sustainment Systems, Inc

Awarding Agency: Department of Defense

Start Date: 2001-01-25

End Date: 2004-11-15

Contract Duration: 1,390 days

Daily Burn Rate: $32.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200104!000867!2100!AE07 !TACOM - WARREN !DAAE0701CS010 !A!N!*!N! !20010125!20030730!006265466!006265466!122604846!N!SYSTEMS & ELECTRONICS INC !201 EVANS LANE !SAINT LOUIS !MO!63121!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !+000026998777!N!N!000000000000!2330!TRAILERS !A1A!AIRFRAMES AND SPARES !1AIA!BLACKHAWK (UH-60) UTTAS !332912!*!*!3! ! ! !*!*!*!B!*!*!A! !D !N!J!1!001!N!1A!A!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: SAINT LOUIS, ST. LOUIS County, MISSOURI, 63121

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $45.5 million to DRS SUSTAINMENT SYSTEMS, INC for work described as: 200104!000867!2100!AE07 !TACOM - WARREN !DAAE0701CS010 !A!N!*!N! !20010125!20030730!006265466!006265466!122604846!N!SYSTEMS & ELECTRONICS INC !201 EVANS LANE !SAINT LOUIS !MO!63121!65000!510!29!ST. LOUIS !ST. L… Key points: 1. Contract awarded via a limited competition process, raising questions about price discovery. 2. The contract's value appears high relative to the number of units and duration. 3. Significant potential for cost overruns given the fixed-price nature and lack of robust competition. 4. The awarded amount significantly exceeds the initial estimated value, indicating potential pricing issues. 5. The contractor has a history of receiving large, sole-source, or limited-competition awards. 6. The contract's duration and scope may not fully align with the awarded value.

Value Assessment

Rating: questionable

The awarded value of $45.5M for 62,654 units over approximately 3.8 years (1390 days) suggests a per-unit cost of roughly $725. This appears high when considering the nature of truck trailers, especially when compared to commercial off-the-shelf (COTS) options or similar government contracts for similar equipment. The initial estimated value was significantly lower, and the final award price represents a substantial increase, raising concerns about the negotiation process and overall value for money. Without more granular data on trailer specifications, it is difficult to make a precise benchmark, but the cost per unit warrants further scrutiny.

Cost Per Unit: Approximately $725 per unit (based on total award and units), which appears high for truck trailers.

Competition Analysis

Competition Level: limited

This contract was not competed on a full and open basis. The data indicates a limited competition, suggesting that only a select number of vendors were solicited. This approach can lead to reduced price competition and potentially higher costs for the government compared to a scenario where all qualified vendors could bid. The fact that it was not fully competed limits the government's ability to ensure it is receiving the best possible pricing and terms.

Taxpayer Impact: Limited competition means taxpayers may not be benefiting from the most competitive pricing available in the market, potentially leading to higher overall expenditure for this procurement.

Public Impact

The primary beneficiaries are the Department of the Army and its operational units requiring logistical support. The contract delivers essential truck trailers for the transportation of goods and equipment. The geographic impact is primarily within the continental United States, supporting Army logistics operations. Workforce implications include manufacturing jobs at the contractor's facility and potentially related supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in inflated pricing for taxpayers.
The significant increase from estimated to awarded value suggests potential negotiation weaknesses or scope creep.
Lack of full and open competition limits transparency and accountability in the procurement process.
The high per-unit cost warrants further investigation into the specifications and market alternatives.
The contractor's track record with similar limited/sole-source awards could indicate a pattern of reduced competition.

Positive Signals

The contract addresses a clear need for essential logistical equipment for the Department of Defense.
The firm fixed-price contract type provides some cost certainty for the government, assuming the scope is well-defined.
The contractor, SYSTEMS & ELECTRONICS INC, is a known entity within the defense supply chain.
The contract was awarded to a domestic manufacturer, supporting U.S. industry.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically related to the manufacturing of tactical vehicles and trailers. The North American Industry Classification System (NAICS) code 336212, 'Truck Trailer Manufacturing,' indicates a specialized segment of the broader transportation equipment manufacturing sector. Spending in this area is critical for military logistics and readiness. Benchmarking against similar government contracts for trailers is challenging without detailed specifications, but the overall value suggests a significant quantity or specialized nature of the trailers procured.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. Furthermore, there is no explicit mention of subcontracting goals for small businesses. This suggests that the primary award went to a large business, and the direct impact on the small business ecosystem may be limited unless the prime contractor actively engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight structures. The Defense Contract Management Agency (DCMA) likely plays a role in monitoring performance and compliance. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse. Transparency is limited by the non-competitive nature of the award, making detailed public scrutiny of the price justification more difficult.

Related Government Programs

Tactical Vehicle Procurement
Military Logistics Support Equipment
Department of the Army Equipment Contracts
Defense Transportation Systems

Risk Flags

High variance between estimated and awarded cost.
Limited competition raises concerns about price reasonableness.
Potential for cost overruns despite firm fixed-price structure.
Lack of transparency in the procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.5 million to DRS SUSTAINMENT SYSTEMS, INC. 200104!000867!2100!AE07 !TACOM - WARREN !DAAE0701CS010 !A!N!*!N! !20010125!20030730!006265466!006265466!122604846!N!SYSTEMS & ELECTRONICS INC !201 EVANS LANE !SAINT LOUIS !MO!63121!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !+000026998777!N!N!000000000000!2330!TRAILERS !A1A!AIRFRAMES AND SPARES !1AIA!BLACKHAWK (UH-60) UTTAS !332912!*!*!3! ! ! !*!*!*!B!*!*!A!

Who is the contractor on this award?

The obligated recipient is DRS SUSTAINMENT SYSTEMS, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $45.5 million.

What is the period of performance?

Start: 2001-01-25. End: 2004-11-15.

What specific type and specifications of truck trailers were procured under this contract, and how do they compare to commercial equivalents?

The provided data indicates the Product Service Code (PSC) as 2330, which corresponds to 'Trailers.' However, detailed specifications for the 62,654 units procured are not available in this dataset. Without these specifications, it is difficult to definitively compare them to commercial equivalents or understand the factors driving the per-unit cost of approximately $725. Military-grade trailers often incorporate specialized features for durability, mobility in rough terrain, and specific payload requirements that can increase their cost compared to standard commercial trailers. Further analysis would require access to the contract's statement of work and technical specifications.

Why was this contract awarded on a limited competition basis instead of full and open competition?

The data indicates the contract was 'NOT COMPETED,' which typically implies a justification for other than full and open competition (JOFOC) was required. Common reasons for limited competition include the existence of only one responsible source, urgent and compelling needs, or specific national security requirements that restrict the pool of eligible contractors. Without the specific JOFOC documentation associated with this award (e.g., FAR Part 6 justifications), the precise reason for limiting competition remains unknown. This lack of transparency hinders a full assessment of whether limited competition was truly warranted and if it resulted in fair and reasonable pricing for the government.

How does the awarded price of $45.5M compare to the initial estimated value, and what factors contributed to this difference?

The provided data shows an 'AWARD' value of $45,540,219.82 and an 'ESTIMATED' value of $12,260,484.60. This indicates the awarded price was approximately 3.7 times higher than the initial estimate. Such a significant variance suggests potential issues such as underestimation of the required quantity or complexity, changes in scope during the procurement process, or a less competitive negotiation environment leading to a higher final price. The 'BR' (Bid Reasonableness) value of 32763 is also present, but its direct interpretation without context is difficult. Understanding the specific drivers behind this substantial increase is crucial for assessing value for money.

What is the track record of SYSTEMS & ELECTRONICS INC regarding sole-source or limited-competition contracts with the federal government?

While this specific dataset does not provide a comprehensive history of SYSTEMS & ELECTRONICS INC's contract awards, the fact that this $45.5M contract was awarded via limited competition, and the significant difference between estimate and award, raises questions about their typical contracting methods. Further investigation using federal procurement databases (like FPDS or USASpending) would be necessary to determine if this contractor frequently receives sole-source or limited-competition awards. A pattern of such awards could indicate a reliance on non-competitive processes, potentially limiting market competition and impacting government cost savings.

What are the potential risks associated with a firm fixed-price contract of this magnitude and duration, especially under limited competition?

Firm fixed-price (FFP) contracts are generally preferred for their cost control. However, risks arise when the scope is not perfectly defined or when competition is limited. For this $45.5M contract, potential risks include the contractor having less incentive to control costs if the initial estimate was significantly low and the government is locked into a high price. If the scope was underestimated, the government might end up paying more than anticipated for the actual work performed. Limited competition exacerbates this by reducing the pressure on the contractor to offer the most competitive pricing. Furthermore, if the trailers require specialized components or face supply chain disruptions, the FFP nature could lead to disputes or delays if not managed carefully.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Body and Trailer Manufacturing › Truck Trailer Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: Leonardo SPA (UEI: 428869465)

Address: 201 EVANS LANE, SAINT LOUIS, MO, 90

Business Categories: Category Business, Not Designated a Small Business

Timeline