Department of Defense awards $23.5M contract for communication equipment repair, raising questions about competition and value

Contract Overview

Contract Amount: $23,455,969 ($23.5M)

Contractor: Dasnet Corporation

Awarding Agency: Department of Defense

Start Date: 2005-01-24

End Date: 2017-05-25

Contract Duration: 4,504 days

Daily Burn Rate: $5.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: IT

Official Description: 200505!000065!5700!FA8505!WR-ALC/LFK !FA850505C0003 !A!N! !Y! ! !20050124!20051031!014027770!014027770!014027770!N!DASNET CORPORATION !2150 JOSHUAS PATH STE 202 !HAUPPAUGE !NY!11788!32732!103!36!HAUPPAUGE !SUFFOLK !NEW YORK !+000004615984!Y!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1A!AIRFRAMES AND SPARES !000 !* !811213!E! !3! ! ! ! ! !20200930!B! ! !A! !B!U!J!1!001!N!5A!C!Y!Z! ! !N!A!N!N!C! ! ! !D!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: BOHEMIA, SUFFOLK County, NEW YORK, 11716

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $23.5 million to DASNET CORPORATION for work described as: 200505!000065!5700!FA8505!WR-ALC/LFK !FA850505C0003 !A!N! !Y! ! !20050124!20051031!014027770!014027770!014027770!N!DASNET CORPORATION !2150 JOSHUAS PATH STE 202 !HAUPPAUGE !NY!11788!32732!103!36!HAUPPAUGE !SUFF… Key points: 1. The contract was awarded on a non-competitive basis, limiting price discovery and potentially increasing costs for taxpayers. 2. The duration of the contract (over 12 years) suggests a long-term need for these services, but the lack of competition is a concern. 3. The awarded amount of $23.5 million is significant, and without competitive bidding, it's difficult to ascertain if this represents fair market value. 4. The specific services, 'Communication Equipment Repair and Maintenance,' are critical for defense operations, highlighting the importance of efficient procurement. 5. The contractor, DASNET CORPORATION, has secured this substantial award without facing competing offers, warranting further scrutiny of the procurement process. 6. The contract type 'COST NO FEE' can sometimes lead to cost overruns if not managed tightly, especially in a non-competitive environment.

Value Assessment

Rating: questionable

The awarded amount of $23.5 million for communication equipment repair and maintenance over a period exceeding 12 years is substantial. Without competitive bidding, it is challenging to benchmark this against similar contracts or market rates. The 'COST NO FEE' contract type, while allowing for flexibility, can obscure true cost efficiency when not subjected to competitive pressures. Further analysis would be needed to determine if the pricing reflects fair market value or if the lack of competition led to inflated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This indicates that the agency likely determined that only one source was capable of providing the required services, or that there were other justifications for avoiding full and open competition. The lack of multiple bidders means there was no opportunity for price negotiation or discovery through a competitive process, which can often lead to better pricing for the government.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive bidding. The government did not benefit from the price reductions typically achieved through a competitive procurement process.

Public Impact

The primary beneficiaries are the Department of Defense units relying on functional communication equipment for their operations. The contract ensures the continued repair and maintenance of critical communication systems, supporting military readiness. The geographic impact is likely focused on the locations where the communication equipment is deployed and serviced, potentially across various military installations. The contract supports the workforce employed by DASNET CORPORATION in providing these specialized technical services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer money.
The extended contract duration without competitive re-evaluation could mask inefficiencies or escalating costs.
The 'COST NO FEE' contract type requires robust oversight to prevent cost creep, especially in a sole-source scenario.

Positive Signals

Ensures continued availability of essential communication equipment repair services, critical for national security.
The award to a specific contractor suggests a potentially established relationship and expertise in this niche area.

Sector Analysis

The Information Technology and Telecommunications sector, particularly within defense procurement, often involves complex systems requiring specialized maintenance. Contracts for communication equipment repair and maintenance are crucial for ensuring the operational readiness of military forces. While specific market size data for this niche is not provided, the overall IT services market is vast. This contract fits within the broader category of IT support services, with a focus on hardware maintenance and repair for specialized defense communication systems.

Small Business Impact

There is no indication that this contract included small business set-asides or subcontracting requirements. As a sole-source award, the focus was likely on meeting the specific technical requirements of the agency rather than promoting small business participation. This means potential opportunities for small businesses to participate in this specific contract are limited, though they may be involved in the supply chain or in other competitive procurements.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the contracting officer within the Department of Defense. The 'COST NO FEE' contract type necessitates close monitoring of costs incurred by the contractor to ensure reasonableness and allowability. Transparency is dependent on the agency's reporting practices and the availability of contract data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Communications Systems Maintenance
IT Support Services for Military
Communication Equipment Procurement
Federal IT Services Contracts
Department of Defense IT Spending

Risk Flags

Sole-source award
Long contract duration
Cost-plus contract type (implied by 'COST NO FEE' without fixed price elements)
Lack of transparency in pricing justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.5 million to DASNET CORPORATION. 200505!000065!5700!FA8505!WR-ALC/LFK !FA850505C0003 !A!N! !Y! ! !20050124!20051031!014027770!014027770!014027770!N!DASNET CORPORATION !2150 JOSHUAS PATH STE 202 !HAUPPAUGE !NY!11788!32732!103!36!HAUPPAUGE !SUFFOLK !NEW YORK !+000004615984!Y!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1A!AIRFRAMES AND SPARES !000 !* !811213!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is DASNET CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $23.5 million.

What is the period of performance?

Start: 2005-01-24. End: 2017-05-25.

What is the track record of DASNET CORPORATION in performing similar communication equipment repair and maintenance services for the federal government?

Information regarding DASNET CORPORATION's specific track record for similar federal contracts is not detailed in the provided data. However, the award of a sole-source contract valued at $23.5 million suggests a level of trust or a perceived unique capability by the Department of Defense. To fully assess their track record, a review of past performance evaluations, contract history, and any reported issues or successes on previous government contracts would be necessary. Without this detailed performance history, it's difficult to definitively gauge their reliability and effectiveness in delivering these critical services.

How does the awarded amount of $23.5 million compare to the market rate for similar communication equipment repair and maintenance services?

Benchmarking the $23.5 million award against market rates is challenging due to the sole-source nature of this contract and the extended duration (over 12 years). Typically, competitive bidding allows for price discovery and negotiation, leading to rates that reflect market conditions. In a non-competitive scenario, the government may not achieve the most favorable pricing. A thorough market analysis, including comparisons with commercial service agreements for comparable equipment and services, and potentially data from other government agencies that have competitively procured similar services, would be required to assess if this amount represents fair market value.

What are the primary risks associated with awarding a long-term contract for communication equipment repair without competition?

The primary risks associated with a long-term, sole-source contract for communication equipment repair include potential cost overruns, reduced incentive for contractor efficiency, and a lack of innovation. Without competitive pressure, the contractor may have less incentive to control costs or improve service delivery. Furthermore, the government is locked into a single provider for an extended period, limiting its ability to adapt to new technologies or seek better value from alternative sources should they emerge. The 'COST NO FEE' structure, while flexible, also requires diligent oversight to mitigate risks of uncontrolled spending.

How effective is the 'COST NO FEE' contract type in ensuring value for money in a sole-source scenario for IT services?

The 'COST NO FEE' contract type is generally not ideal for ensuring value for money, especially in a sole-source scenario. This type of contract reimburses the contractor for all allowable costs but provides no fee or profit. While it can be useful in situations where the scope is highly uncertain or for urgent needs, it removes the profit incentive for the contractor to control costs. In a sole-source context, this lack of a profit motive for efficiency means that the government bears the full risk of cost increases. Robust government oversight and detailed cost accounting are essential to prevent excessive spending and ensure that the costs incurred are reasonable and necessary.

What is the historical spending pattern for communication equipment repair and maintenance within the Department of Defense?

The provided data focuses on a single contract and does not offer insight into the Department of Defense's historical spending patterns for communication equipment repair and maintenance. To understand these patterns, one would need to analyze aggregated spending data over multiple fiscal years, looking at the total amounts obligated for this service category, the number of contracts awarded, and the prevalence of competitive versus non-competitive procurements. Such an analysis could reveal trends in spending, identify major contractors, and highlight any shifts in procurement strategies over time.

What specific types of communication equipment are covered under this contract, and are there readily available commercial alternatives?

The provided data indicates the primary service is 'Communication Equipment Repair and Maintenance' under the PSC code 811213 (Communication Equipment Repair and Maintenance) and NAICS code 811213. However, it does not specify the exact types of communication equipment involved. This could range from tactical radios and satellite communication systems to base infrastructure networking equipment. The availability of commercial alternatives would depend heavily on the specificity and proprietary nature of the equipment used by the Department of Defense. If the equipment is standard commercial off-the-shelf (COTS), then commercial repair services might be viable, but specialized military-grade equipment often requires contractor support with specific knowledge and security clearances.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Communication Equipment Repair and Maintenance

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL 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: 20 ORVILLE DRIVE, BOHEMIA, NY, 11716

Business Categories: Black American Owned Business, Category Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline