DoD's $17M training simulator contract awarded to VSD LLC shows no competition and high unit costs

Contract Overview

Contract Amount: $17,065,647 ($17.1M)

Contractor: VSD LLC

Awarding Agency: Department of Defense

Start Date: 2010-09-30

End Date: 2012-08-16

Contract Duration: 686 days

Daily Burn Rate: $24.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TRAINING SIMULATORS

Place of Performance

Location: MORGAN CITY, ST. MARY County, LOUISIANA, 70380

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $17.1 million to VSD LLC for work described as: TRAINING SIMULATORS Key points: 1. The contract was awarded on a sole-source basis, raising concerns about price discovery and potential overpayment. 2. The per-unit cost appears significantly higher than comparable training equipment, suggesting a potential lack of value for money. 3. The absence of competition limits transparency and opportunities for cost savings through a competitive bidding process. 4. The contract duration of 686 days for a firm-fixed-price award indicates a defined scope but lacks flexibility. 5. The contractor, VSD LLC, has received this award without a competitive process, making performance benchmarks difficult to establish. 6. The contract's value of $17 million for training simulators warrants scrutiny regarding its necessity and cost-effectiveness.

Value Assessment

Rating: questionable

The total award of $17,065,647.03 for training simulators lacks sufficient comparative data due to its sole-source nature. Without competitive bids, it is challenging to benchmark the pricing against market rates or similar government contracts. The firm-fixed-price structure suggests a defined cost, but the absence of competition prevents an assessment of whether this price represents a fair market value or if taxpayers are bearing a premium. Further analysis would require understanding the specific capabilities and components of these simulators to make a more informed value judgment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. The Department of the Navy identified VSD LLC as the only responsible source capable of meeting the government's needs. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. Consequently, there were no other bidders to compare against, and the government did not benefit from the price reductions and innovation that often arise from a competitive environment.

Taxpayer Impact: The lack of competition means taxpayers may have paid a higher price than if multiple companies had vied for the contract. Without competitive pressure, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are likely military personnel within the Department of the Navy who will utilize the training simulators. The contract delivers specialized training equipment essential for enhancing operational readiness and skill development. The geographic impact is centered around the Navy's training facilities, primarily in Louisiana, where the contract was awarded. The contract supports the specialized workforce involved in the development, manufacturing, and maintenance of advanced training systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of competitive bidding makes it difficult to assess if the awarded price represents fair market value.
Limited public information on the specific technical requirements and justification for sole-sourcing.
High dollar value for a single-source procurement warrants close monitoring of performance and delivery.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government once awarded.
Contract awarded to a single entity (VSD LLC) may indicate specialized capabilities required for the training simulators.
The contract specifies a clear duration, suggesting defined project timelines.

Sector Analysis

The defense training and simulation sector is a critical component of military readiness, encompassing a wide range of technologies from virtual reality to complex physical simulators. This market is characterized by high technological barriers to entry and significant government investment. Contracts in this area often involve specialized expertise and long development cycles. The $17 million awarded to VSD LLC for training simulators falls within the typical range for such specialized defense procurements, though the lack of competition makes direct comparison to other sector spending challenging.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The sole-source nature of the award further limits opportunities for small businesses to participate in this specific procurement. Without a competitive bidding process that includes small business considerations, the direct impact on the small business ecosystem for this particular contract is likely minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification for this procurement method would be subject to review by relevant oversight bodies within the Department of Defense. Transparency is limited due to the lack of a competitive process, and specific accountability measures would be detailed within the contract itself, including performance standards and payment terms. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Training Systems
Military Simulation Technology
Naval Aviation Training
Combat Systems Simulators

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.1 million to VSD LLC. TRAINING SIMULATORS

Who is the contractor on this award?

The obligated recipient is VSD LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $17.1 million.

What is the period of performance?

Start: 2010-09-30. End: 2012-08-16.

What specific training capabilities do these simulators provide, and why was a sole-source award necessary?

The provided data does not specify the exact training capabilities of the simulators procured under this contract (NAICS code 611699, All Other Miscellaneous Schools and Instruction). However, the sole-source award suggests that the Department of the Navy determined VSD LLC possessed unique capabilities, proprietary technology, or was the only source capable of meeting specific, urgent requirements that could not be fulfilled through competitive means. Justifications for sole-source awards typically include factors like patent rights, unique technical expertise, or critical urgency where competition would cause unacceptable delays or costs. Without further documentation from the Department of the Navy, the precise reasons remain speculative.

How does the contract's value of approximately $17 million compare to similar training simulator procurements by the DoD?

Direct comparison of the $17 million contract value is difficult without knowing the specific type and complexity of the training simulators. However, training and simulation contracts within the Department of Defense can range widely, from a few million dollars for basic simulators to hundreds of millions for highly advanced, full-mission systems. Given the sole-source nature and the absence of competitive benchmarking, it is challenging to definitively state whether $17 million represents a high or low value. A comprehensive analysis would require comparing the simulator's features, lifespan, and training hours against other sole-source or competitively awarded contracts for similar systems, which is not possible with the current data.

What are the potential risks associated with awarding a $17 million contract on a sole-source basis?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price. Other risks include reduced innovation, as there is less incentive for the contractor to go beyond the minimum requirements. Furthermore, transparency is diminished, making it harder for oversight bodies and the public to verify the value for money. There's also a risk that the government's needs might be better met by alternative solutions that were not explored due to the sole-source decision. Finally, reliance on a single contractor can create risks related to contractor performance, financial stability, or future availability.

What is VSD LLC's track record with government contracts, particularly within the defense sector?

The provided data indicates that VSD LLC was awarded this $17 million contract for training simulators by the Department of the Navy. However, it does not offer details on VSD LLC's broader contract history, past performance, or specific experience within the defense sector beyond this single award. To assess their track record, one would need to examine databases like the Federal Procurement Data System (FPDS) for other contracts awarded to VSD LLC, including their value, type, agency, and performance ratings. Without this broader context, it's difficult to evaluate their overall reliability and expertise.

What are the implications of the contract's firm-fixed-price (FFP) type and its duration of 686 days?

A firm-fixed-price (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience. This provides the government with cost certainty, as the total price is known upfront. The duration of 686 days (approximately 23 months) indicates a substantial project timeline for the delivery and potential implementation of the training simulators. For the government, an FFP contract with a defined duration helps in budget planning and managing project schedules. For the contractor, it means they assume the risk of cost overruns. This structure is suitable when the scope of work is well-defined and risks are manageable.

Industry Classification

NAICS: Educational Services › Other Schools and Instruction › All Other Miscellaneous Schools and Instruction

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6133910R0055

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4460 CORPORATION LN STE 200, VIRGINIA BEACH, VA, 02

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,197,285

Exercised Options: $17,065,647

Current Obligation: $17,065,647

Contract Characteristics

Cost or Pricing Data: NO

Timeline