DoD awards $42.4M for ScanEagle UAVs to Southeast Asia, with no competition

Contract Overview

Contract Amount: $42,432,469 ($42.4M)

Contractor: Insitu, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-05-31

End Date: 2022-09-30

Contract Duration: 1,218 days

Daily Burn Rate: $34.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS PROCUREMENT IS TO SUPPORT THE FOLLOWING SOUTHEAST ASIA COUNTRIES: INDONESIA, MALAYSIA, PHILIPPINES AND VIETNAM. THIS PROCUREMENT CONSISTS OF (34) SCANEAGLE UNMANNED AIR VEHICLES (UAVS); INDONESIA (8), MALAYSIA #1 (6), MALAYSIA #2 (6) PHILIPPINES (8), VIETNAM (6), SPARE PAYLOADS, SPARE AND REPAIR PARTS, SUPPORT EQUIPMENT, TOOLS, TRAINING, TECHNICAL SERVICES, FIELD SERVICE REPRESENTATIVES (FSRS) AND PROGRAM MANAGEMENT.

Place of Performance

Location: BINGEN, KLICKITAT County, WASHINGTON, 98605

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $42.4 million to INSITU, INC. for work described as: THIS PROCUREMENT IS TO SUPPORT THE FOLLOWING SOUTHEAST ASIA COUNTRIES: INDONESIA, MALAYSIA, PHILIPPINES AND VIETNAM. THIS PROCUREMENT CONSISTS OF (34) SCANEAGLE UNMANNED AIR VEHICLES (UAVS); INDONESIA (8), MALAYSIA #1 (6), MALAYSIA #2 (6) PHILIPPINES (8), VIETNAM (6), SPARE PAYLO… Key points: 1. The contract focuses on providing ScanEagle Unmanned Aerial Vehicles (UAVs) and associated support to five Southeast Asian nations. 2. A significant portion of the award is allocated to the UAVs themselves, along with essential spare parts and training. 3. The sole-source nature of this procurement raises questions about potential price overruns and limited value for taxpayer funds. 4. The duration of the contract, spanning over three years, suggests a long-term commitment to supporting these specific defense assets. 5. The absence of competition limits opportunities for innovation and cost-saving measures that could benefit the government. 6. This award represents a substantial investment in unmanned aerial systems for regional security cooperation.

Value Assessment

Rating: questionable

The contract's value of $42.4 million for 34 ScanEagle UAVs and associated support appears high, especially given the lack of competitive bidding. Without a benchmark from competing offers, it is difficult to definitively assess value for money. The inclusion of extensive training, technical services, and field representatives contributes to the overall cost, but the absence of competition prevents a clear comparison to market rates or alternative solutions. This pricing structure warrants further scrutiny to ensure taxpayer funds are being used efficiently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Insitu, Inc., was considered. This approach bypasses the standard competitive bidding process, which typically solicits proposals from multiple interested parties. The lack of competition means that the government did not explore alternative suppliers or solutions, potentially missing out on better pricing or innovative approaches. This decision may have been driven by specific requirements or existing relationships, but it limits the government's ability to leverage market forces for cost savings.

Taxpayer Impact: The sole-source award means taxpayers may not have received the best possible price for these UAV systems and support services. Without competition, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the defense ministries and armed forces of Indonesia, Malaysia, the Philippines, and Vietnam, who will receive advanced UAV capabilities. Services delivered include the provision of ScanEagle UAVs, spare parts, support equipment, training, and technical services. The geographic impact is focused on Southeast Asia, enhancing regional security and surveillance capabilities. Workforce implications include training for foreign military personnel on the operation and maintenance of the UAVs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source procurement limits exploration of alternative technologies or vendors.
The extensive support services included could be areas for potential cost optimization if competed.
The specific allocation of UAVs to each country might not reflect the most efficient distribution without competitive analysis.

Positive Signals

Provides critical unmanned aerial vehicle technology to key allies in Southeast Asia.
Includes comprehensive training and technical support, ensuring operational readiness.
Addresses specific national security needs of partner nations.
The ScanEagle platform is a proven technology for intelligence, surveillance, and reconnaissance missions.

Sector Analysis

The Unmanned Aerial Vehicle (UAV) market is a rapidly growing segment within the aerospace and defense industry. This contract falls under the broader category of aircraft manufacturing and defense services. The global UAV market is projected to expand significantly, driven by increasing demand for surveillance, reconnaissance, and tactical support across military and civilian applications. This specific procurement for ScanEagle systems aligns with the trend of nations investing in advanced unmanned capabilities for enhanced situational awareness and operational effectiveness in complex regional environments.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting implications for small businesses based on the provided data. The prime contractor, Insitu, Inc., is a subsidiary of The Boeing Company. The sole-source nature of the award further reduces the likelihood of small business participation through set-asides or mandated subcontracting goals. This means the direct economic benefits to the small business ecosystem from this specific procurement are likely minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance standards and delivery schedules. Transparency is facilitated through contract databases like FPDS, where basic award information is recorded. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Foreign Military Sales (FMS)
Unmanned Aircraft Systems (UAS) Procurement
Defense Security Cooperation
Intelligence, Surveillance, and Reconnaissance (ISR) Systems

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.4 million to INSITU, INC.. THIS PROCUREMENT IS TO SUPPORT THE FOLLOWING SOUTHEAST ASIA COUNTRIES: INDONESIA, MALAYSIA, PHILIPPINES AND VIETNAM. THIS PROCUREMENT CONSISTS OF (34) SCANEAGLE UNMANNED AIR VEHICLES (UAVS); INDONESIA (8), MALAYSIA #1 (6), MALAYSIA #2 (6) PHILIPPINES (8), VIETNAM (6), SPARE PAYLOADS, SPARE AND REPAIR PARTS, SUPPORT EQUIPMENT, TOOLS, TRAINING, TECHNICAL SERVICES, FIELD SERVICE REPRESENTATIVES (FSRS) AND PROGRAM MANAGEMENT.

Who is the contractor on this award?

The obligated recipient is INSITU, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $42.4 million.

What is the period of performance?

Start: 2019-05-31. End: 2022-09-30.

What is the track record of Insitu, Inc. in delivering ScanEagle UAV systems and support to international partners?

Insitu, Inc., a subsidiary of Boeing, has a well-established track record in developing and supplying ScanEagle UAV systems. The ScanEagle has been deployed by various military and government agencies globally for intelligence, surveillance, and reconnaissance (ISR) missions. Insitu has experience in providing training, maintenance, and field support for its systems. While specific details on past international sales of this magnitude are not publicly detailed in this data, the company's long-standing presence and the widespread use of the ScanEagle suggest a mature capability to fulfill such requirements. However, the absence of competition in this specific award means that the government did not leverage this track record against other potential providers to ensure optimal value.

How does the per-unit cost of the ScanEagle UAV in this contract compare to historical or market benchmarks?

The provided data does not allow for a direct per-unit cost calculation or comparison. The total award is $42.4 million for 34 ScanEagle UAVs, plus a comprehensive package of spare parts, support equipment, training, and services. Breaking down the cost per UAV is not feasible without a detailed cost breakdown from the contract. Furthermore, as this was a sole-source procurement, there are no competing bids to establish a market benchmark. Historical data on similar sole-source international sales of the ScanEagle would be needed for a comparative analysis, but such data is not readily available. Therefore, assessing the per-unit cost against benchmarks is not possible with the current information.

What are the primary risks associated with a sole-source procurement of this magnitude for defense equipment?

The primary risks associated with a sole-source procurement of this magnitude include potential overpricing due to the lack of competitive pressure, limited opportunities for technological innovation from alternative vendors, and a reduced incentive for the sole contractor to optimize costs. Taxpayers may end up paying more than necessary for the equipment and services. Additionally, reliance on a single source can create vulnerabilities if the contractor faces production issues, financial instability, or geopolitical challenges. The government also misses out on the potential discovery of more suitable or cost-effective solutions that might have emerged from a competitive process.

How effective is the ScanEagle UAV platform for the stated mission requirements in Southeast Asia?

The ScanEagle UAV is a well-regarded platform for intelligence, surveillance, and reconnaissance (ISR) missions, known for its long endurance (up to 24 hours) and ability to operate in various weather conditions. Its effectiveness in Southeast Asia would depend on the specific operational environment, including factors like terrain, climate, and the nature of the threats or surveillance needs. The platform is designed for tactical-level ISR, providing persistent monitoring capabilities. Given its widespread use by military forces, it is generally considered effective for its intended purpose. The inclusion of training and field support further enhances its potential effectiveness by ensuring proper operation and maintenance by the recipient nations.

What are the historical spending patterns for ScanEagle UAVs or similar systems by the Department of Defense or its allies?

Historical spending patterns for ScanEagle UAVs and similar systems by the Department of Defense and its allies show a consistent investment in unmanned aerial systems for ISR capabilities. The ScanEagle itself has been procured by the U.S. military for over a decade, often through various contract vehicles, including some that were not fully competed due to specific requirements or existing platforms. International sales have also been a significant part of the ScanEagle's market. While precise historical dollar amounts for all such procurements are vast and varied, the trend indicates a sustained demand for reliable, long-endurance tactical UAVs. This specific $42.4 million award represents a substantial, but not unprecedented, single procurement for such systems and associated support.

What are the implications of awarding this contract to a U.S.-based company for the recipient Southeast Asian nations?

Awarding this contract to Insitu, Inc., a U.S.-based company, has several implications for the recipient Southeast Asian nations. It ensures access to a proven U.S. defense technology and provides a standardized platform that may integrate with other U.S.-supplied equipment or training programs. The provision of U.S. technical support and training can enhance interoperability and operational effectiveness. However, it also means that these nations are reliant on a foreign supplier for critical defense assets, potentially impacting long-term sustainment, upgrade paths, and supply chain security. The U.S. government's involvement through the Department of Defense also signifies a strategic partnership aimed at enhancing regional security cooperation.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

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

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: $42,432,469

Exercised Options: $42,432,469

Current Obligation: $42,432,469

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $2,745,214

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001917G0001

IDV Type: BOA

Timeline