DoD's $25.8M contract for electrical equipment manufacturing awarded to INDRA SISTEMAS, SOCIEDAD ANÓNIMA, lacked competition

Contract Overview

Contract Amount: $25,807,121 ($25.8M)

Contractor: Indra Sistemas, Sociedad Anónima

Awarding Agency: Department of Defense

Start Date: 2002-12-02

End Date: 2011-10-31

Contract Duration: 3,255 days

Daily Burn Rate: $7.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AIRSIM OTPS

Plain-Language Summary

Department of Defense obligated $25.8 million to INDRA SISTEMAS, SOCIEDAD ANÓNIMA for work described as: AIRSIM OTPS Key points: 1. The contract's value of $25.8 million over its duration suggests a significant investment in specialized electrical components. 2. The absence of competition raises concerns about potential overpricing and limited market exploration. 3. The long duration of the contract (over 9 years) may indicate a need for sustained supply or specialized support. 4. The specific North American Industry Classification System (NAICS) code 335999 covers a broad range of electrical equipment manufacturing, making it difficult to pinpoint exact product specifics without further detail. 5. The contract's award type as 'DEFINITIVE CONTRACT' implies a finalized agreement with specific terms and conditions. 6. The firm-fixed-price nature of the contract shifts cost risk to the contractor, which can be beneficial for the government if managed effectively.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without knowing the specific electrical components or services procured. However, a $25.8 million award over nearly a decade for a single definitive contract, especially one that was not competed, warrants scrutiny. The lack of competitive bidding means there's no market-driven price discovery to compare against. Without comparable contracts or market data for similar specialized electrical equipment, assessing whether the price represents good value for money is difficult. The government may have paid a premium due to the sole-source nature of the award.

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 among multiple potential vendors. This typically occurs when only one vendor can provide the required goods or services, or in specific circumstances where full and open competition is not feasible or not in the government's best interest. The lack of competition limits the government's ability to explore a wider range of solutions and potentially secure more favorable pricing through a bidding process.

Taxpayer Impact: Taxpayers may have missed out on potential cost savings that could have been achieved through a competitive bidding process. Without competition, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries of this contract are likely entities within the Department of Defense requiring specialized electrical equipment or components. The services delivered involve the manufacturing and supply of miscellaneous electrical equipment and components. The geographic impact is not specified but is likely tied to military installations or operational needs of the DoD. Workforce implications would primarily affect the contractor's employees involved in the manufacturing and supply chain for these electrical components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce the incentive for contractors to innovate or improve efficiency.
The long contract duration could indicate a lack of readily available alternatives or a critical dependency on the sole provider.

Positive Signals

The firm-fixed-price contract structure shifts cost risk to the contractor.
A definitive contract provides clear terms and conditions, offering predictability for both parties.
The contract's duration suggests a potentially stable and reliable supply of necessary components for the DoD.

Sector Analysis

The contract falls under the 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' sector (NAICS 335999). This is a broad category encompassing a wide array of electrical products not classified elsewhere, such as electrical insulators, wiring devices, carbon and graphite products, and various other electrical components. The market for such components is diverse, serving numerous industries including defense, aerospace, telecommunications, and consumer electronics. The total federal spending in this sector can fluctuate based on defense needs, infrastructure projects, and technological advancements. This specific contract represents a portion of the DoD's procurement within this manufacturing sub-sector.

Small Business Impact

This contract does not appear to have been set aside for small businesses, as indicated by the 'sb' field being false. There is no information provided regarding subcontracting plans or their impact on the small business ecosystem. Without specific subcontracting goals or reporting, it's difficult to assess the extent to which small businesses may have benefited indirectly from this award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. Accountability measures are inherent in the definitive contract structure and firm-fixed-price terms, which obligate the contractor to deliver specified goods. Transparency regarding the specifics of this sole-source award, beyond the basic contract data, may be limited due to its non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Procurement
Electrical Equipment Manufacturing
Sole-Source Contracts
Department of Defense Contracts
Long-Term Supply Contracts

Risk Flags

Sole-source award
Lack of competition
Long contract duration
Limited transparency on justification for sole-source

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.8 million to INDRA SISTEMAS, SOCIEDAD ANÓNIMA. AIRSIM OTPS

Who is the contractor on this award?

The obligated recipient is INDRA SISTEMAS, SOCIEDAD ANÓNIMA.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.8 million.

What is the period of performance?

Start: 2002-12-02. End: 2011-10-31.

What specific electrical components or services were procured under this contract?

The provided data indicates the contract falls under NAICS code 335999, 'All Other Miscellaneous Electrical Equipment and Component Manufacturing.' This is a broad classification that includes items like electrical insulators, wiring devices, carbon and graphite electrodes, dry cell batteries, and other electrical components not elsewhere classified. Without more specific product descriptions or line item details, it is impossible to determine the exact nature of the electrical equipment or services provided. This lack of specificity makes it challenging to assess the contract's true purpose and value.

Why was this contract awarded on a sole-source basis instead of being competed?

The data explicitly states the contract was 'NOT COMPETED,' indicating a sole-source award. Common justifications for sole-source contracts include situations where only one responsible source can provide the required supplies or services, the government's need is of such urgency that full and open competition is impractical, or when specific circumstances, such as a follow-on contract to a previously competed effort where only one source developed the technology, apply. Without further documentation or justification from the awarding agency (Department of Defense), the precise reason for the sole-source award remains unknown. This lack of transparency is a common concern with non-competed contracts.

How does the $25.8 million contract value compare to similar procurements in the electrical equipment manufacturing sector?

Directly comparing the $25.8 million value is difficult without knowing the specific electrical components procured. However, for a single definitive contract awarded over a period of nearly 10 years (December 2002 to October 2011), this represents a substantial investment. In the broader 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' sector, contract values can vary widely. Large-scale defense procurements for specialized components can indeed reach tens of millions of dollars. The key concern here is the lack of competitive benchmarking; a sole-source award means there's no market validation to determine if this amount represents fair and reasonable pricing compared to what could have been achieved through competition.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risks associated with a sole-source contract of this magnitude ($25.8 million) and duration (over 9 years) include potential overpricing, reduced incentive for contractor innovation, and a lack of market responsiveness. Without competitive pressure, the contractor may not be motivated to offer the lowest possible price or to seek cost-saving efficiencies. Furthermore, the government becomes heavily reliant on a single supplier, which can create vulnerabilities if the contractor faces financial difficulties, quality issues, or decides to exit the market. The long duration also increases the risk of the procured technology or components becoming obsolete during the contract period.

What is the track record of INDRA SISTEMAS, SOCIEDAD ANÓNIMA with the Department of Defense?

The provided data identifies INDRA SISTEMAS, SOCIEDAD ANÓNIMA as the contractor. To assess their track record, one would need to examine their contract history with the Department of Defense and other federal agencies. This would involve looking at past performance, quality of deliverables, adherence to schedules, and any history of disputes or contract terminations. Without access to a broader contract database or performance reviews specific to INDRA SISTEMAS, SOCIEDAD ANÓNIMA, it's impossible to provide a detailed assessment of their track record based solely on this single contract award.

How does the firm-fixed-price (FFP) contract type influence the risk and cost for the government?

A Firm-Fixed-Price (FFP) contract type, as indicated for this award, places the majority of the cost risk on the contractor. Under an FFP agreement, the contractor agrees to a set price for the goods or services, regardless of their actual costs incurred. This provides the government with cost certainty, as the total price is fixed. However, it also means the contractor has a strong incentive to control costs and maximize profit, which can sometimes lead to compromises in quality or scope if not carefully managed and monitored. For the government, the primary benefit is predictability of expenditure, while the risk lies in potentially paying a premium if the contractor's initial price was set high due to the lack of competition.

Industry Classification

NAICS: Manufacturing › Other Electrical Equipment and Component Manufacturing › All Other Miscellaneous Electrical Equipment and Component Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: C/ VELAZQUEZ, 132, SAN FERNANDO D

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $26,663,221

Exercised Options: $25,807,121

Current Obligation: $25,807,121

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline