DoD's $163M contract for UAS ISR services awarded to Insitu, Inc. raises value and competition concerns

Contract Overview

Contract Amount: $163,248,282 ($163.2M)

Contractor: Insitu, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-05-31

End Date: 2013-09-30

Contract Duration: 853 days

Daily Burn Rate: $191.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UAS ISR SERVICES FOR USMC

Place of Performance

Location: BINGEN, KLICKITAT County, WASHINGTON, 98605

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $163.2 million to INSITU, INC. for work described as: UAS ISR SERVICES FOR USMC Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The firm-fixed-price contract type suggests a defined scope, but the lack of competition is a significant risk indicator. 3. Performance period of 853 days for a $163M contract warrants scrutiny regarding efficiency and cost-effectiveness. 4. The contract falls under 'All Other Professional, Scientific, and Technical Services,' a broad category that may obscure specific performance metrics. 5. No small business set-aside was utilized, indicating a missed opportunity for small business participation. 6. The contract's value is substantial, requiring robust oversight to ensure taxpayer funds are used efficiently.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the broad service category. However, a $163 million contract for unmanned aerial system (UAS) intelligence, surveillance, and reconnaissance (ISR) services over approximately two years suggests a significant per-day expenditure. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers received the best possible deal. The lack of transparency inherent in sole-source awards necessitates a deeper dive into the justification for this approach and the cost breakdown.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Insitu, Inc. was the only bidder considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government. The absence of competition means there was no market pressure to drive down prices or encourage innovative solutions.

Taxpayer Impact: The lack of competition means taxpayers may have paid a premium for these services, as there was no mechanism to ensure the lowest possible price was obtained. This also limits the government's ability to explore alternative, potentially more cost-effective solutions from other providers.

Public Impact

The primary beneficiaries are the U.S. Marine Corps, receiving critical intelligence, surveillance, and reconnaissance capabilities. The services delivered are essential for battlefield awareness, threat detection, and operational planning. The geographic impact is likely focused on areas of military operation where the USMC is deployed. Workforce implications include the potential for highly skilled technical personnel to operate and maintain the UAS, as well as analysts to process the gathered intelligence.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and innovation.
Lack of transparency in cost justification for sole-source contracts.
Broad service category may obscure specific performance metrics and value.
No small business participation noted, potentially missing economic opportunities.
Long performance period for a large-value contract requires diligent oversight.

Positive Signals

Firm-fixed-price contract provides cost certainty for a defined scope.
Insitu, Inc. is a known provider in the UAS ISR space.
Contract supports critical military intelligence gathering for the USMC.

Sector Analysis

The Unmanned Aerial System (UAS) market, particularly for Intelligence, Surveillance, and Reconnaissance (ISR) services, is a rapidly growing sector within the broader aerospace and defense industry. This contract represents a significant investment in a critical capability for military operations. The market is characterized by both large defense contractors and specialized smaller firms. Spending in this area is driven by the increasing demand for persistent surveillance and real-time data in complex operational environments. Comparable spending benchmarks would typically involve analyzing other large-scale ISR contracts, both manned and unmanned, across different military branches.

Small Business Impact

This contract does not appear to have included a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses based on the provided data. This suggests that the primary contract was awarded to a large business without specific provisions to ensure small business participation. Consequently, the direct impact on the small business ecosystem for this particular award is likely minimal, representing a missed opportunity to leverage the agility and innovation of smaller firms in the UAS ISR domain.

Oversight & Accountability

Oversight for this contract would fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The firm-fixed-price nature of the contract provides some level of cost control, but the sole-source award necessitates careful monitoring of deliverables and adherence to the contract's terms. Transparency is limited due to the non-competitive nature of the award, making detailed public scrutiny of the value proposition more challenging. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Intelligence, Surveillance, and Reconnaissance (ISR) Services
Unmanned Aerial Systems (UAS) Procurement
Department of Defense Contract Awards
Marine Corps Aviation Programs
Professional, Scientific, and Technical Services Contracts

Risk Flags

Sole-source award
Lack of competition
High contract value
Broad service category

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $163.2 million to INSITU, INC.. UAS ISR SERVICES FOR USMC

Who is the contractor on this award?

The obligated recipient is INSITU, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $163.2 million.

What is the period of performance?

Start: 2011-05-31. End: 2013-09-30.

What was the specific justification for awarding this contract on a sole-source basis to Insitu, Inc.?

Sole-source contract awards are typically justified when only one responsible source can provide the required supplies or services. This can occur due to unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when a specific contractor is the only source capable of meeting the requirement. For this specific contract, the justification would likely stem from Insitu, Inc.'s established expertise and potentially proprietary technology related to their UAS ISR systems, which the Department of Defense deemed essential and not readily available from other sources within the required timeframe or specifications. A detailed review of the Justification and Approval (J&A) document associated with this sole-source award would provide the precise rationale.

How does the cost per day of this contract compare to similar UAS ISR service contracts awarded competitively?

Comparing the cost per day of this sole-source contract ($163,248,281.72 / 853 days ≈ $191,375 per day) to competitively awarded contracts is crucial for assessing value. However, without access to specific competitive contract data for similar UAS ISR services, a direct benchmark is difficult. Generally, sole-source contracts tend to be more expensive than competitively awarded ones due to the absence of market pressure. If competitive contracts for comparable UAS ISR services typically fall below $150,000 per day, this contract's daily rate would raise concerns about potential overpayment. Further analysis would require identifying and examining the pricing structures of recently awarded, competitively bid UAS ISR contracts.

What are the key performance indicators (KPIs) used to measure the success of Insitu, Inc.'s UAS ISR services under this contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. However, for UAS ISR services, typical KPIs would likely include metrics related to flight hours, operational availability of the UAS platforms, data quality and timeliness, mission success rates (e.g., successful detection of targets), response times for ISR requests, and adherence to flight safety regulations. The firm-fixed-price nature suggests that the government has a defined scope of work, and performance would be measured against the successful completion of these defined tasks. The contracting officer's representative (COR) would be responsible for monitoring these KPIs and ensuring Insitu, Inc. meets the contractual obligations.

What is Insitu, Inc.'s track record with the Department of Defense, particularly regarding UAS ISR contracts?

Insitu, Inc. has a significant track record with the Department of Defense, particularly in providing unmanned aerial systems and related services. As a subsidiary of The Boeing Company, Insitu benefits from extensive resources and experience. They are known for their ScanEagle and Integrator UAS platforms, which have been widely used by various military branches, including the Marine Corps, for ISR missions. Their history includes numerous contract awards for the operation, maintenance, and data analysis associated with these systems, often in deployed environments. This extensive experience suggests a familiarity with military requirements and operational demands, although the sole-source nature of this particular $163M contract warrants scrutiny regarding its specific context and justification.

What is the historical spending trend for UAS ISR services within the Department of Defense, and how does this contract fit into that trend?

Historical spending on UAS ISR services within the Department of Defense has shown a consistent upward trend over the past two decades, driven by the increasing recognition of the value of unmanned platforms for intelligence gathering and persistent surveillance. This $163 million contract with Insitu, Inc. represents a substantial single award within this category. It aligns with the broader DoD strategy to enhance its ISR capabilities through advanced technologies. While specific historical spending figures for this exact service category are complex to isolate due to varied contract structures and classifications, the overall investment in UAS technology and services has grown significantly, reflecting its critical role in modern warfare and security operations.

Are there any known risks associated with Insitu, Inc.'s technology or service delivery that could impact this contract?

While Insitu, Inc. is a reputable provider with a strong track record, potential risks associated with any UAS ISR contract could include technological obsolescence, cybersecurity vulnerabilities, operational limitations in adverse weather conditions, and the potential for system failures. For this specific contract, the primary risk highlighted by the data is the sole-source award, which carries inherent risks related to cost efficiency and lack of competitive innovation. Furthermore, the reliance on a single provider for a critical capability like UAS ISR could pose a risk if Insitu, Inc. faces significant business disruptions. Robust government oversight and contingency planning are essential to mitigate these potential risks.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001911R0052

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Boeing Company

Address: 118 E COLUMBIA RIVER WAY, BINGEN, WA, 98605

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

Financial Breakdown

Contract Ceiling: $163,261,175

Exercised Options: $163,261,175

Current Obligation: $163,248,282

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline