Leidos awarded $33M for Army test equipment, but competition was limited
Contract Overview
Contract Amount: $33,012,649 ($33.0M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2019-12-31
End Date: 2024-12-31
Contract Duration: 1,827 days
Daily Burn Rate: $18.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: GENERAL ELECTRONIC TEST STATION (GETS-1000) TEST EQUIPMENT AND TEST PROGRAM SET (TPS) HARDWARE AND SOFTWARE, TEST EQUIPMENT UPGRADES, AND REPAIR PARTS.
Place of Performance
Location: HUNTSVILLE, MADISON County, ALABAMA, 35898
State: Alabama Government Spending
Plain-Language Summary
Department of Defense obligated $33.0 million to LEIDOS, INC. for work described as: GENERAL ELECTRONIC TEST STATION (GETS-1000) TEST EQUIPMENT AND TEST PROGRAM SET (TPS) HARDWARE AND SOFTWARE, TEST EQUIPMENT UPGRADES, AND REPAIR PARTS. Key points: 1. Contract focuses on specialized test equipment and software for defense applications. 2. Significant portion of the contract value is for upgrades and repair parts. 3. Sole-source nature raises questions about potential overpayment and lack of innovation. 4. Long contract duration suggests a sustained need for these specific capabilities. 5. Geographic concentration in Alabama for contract performance. 6. Contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed tightly.
Value Assessment
Rating: questionable
The contract value of $33 million for engineering services related to test equipment is substantial. Without specific benchmarks for similar 'GENERAL ELECTRONIC TEST STATION (GETS-1000) TEST EQUIPMENT AND TEST PROGRAM SET (TPS) HARDWARE AND SOFTWARE, TEST EQUIPMENT UPGRADES, AND REPAIR PARTS', it is difficult to definitively assess value for money. However, the lack of competition (NOT COMPETED) suggests that pricing may not have been subjected to market pressures, potentially leading to higher costs than if multiple vendors had bid. The Cost Plus Fixed Fee (CPFF) contract type also introduces risk, as the contractor is reimbursed for allowable costs plus a fixed fee, which can incentivize cost increases.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, Leidos, Inc., was solicited. This approach is typically used when a unique capability or product is required, or when only one source is capable of meeting the requirement. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple providers. This raises concerns about whether the government secured the best possible terms and pricing.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without alternative offers, there is less assurance that the price reflects true market value, potentially leading to inefficient use of public funds.
Public Impact
The primary beneficiaries are the Department of the Army, which receives critical test equipment and support for its operations. Services delivered include the provision of specialized test equipment, software, upgrades, and repair parts, ensuring readiness and operational capability. Geographic impact is concentrated in Alabama, where the contract performance is located. Workforce implications include support for specialized engineering and technical roles within Leidos and potentially its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price discovery and potentially leads to higher costs.
- Cost Plus Fixed Fee contract type carries inherent risk of cost escalation.
- Lack of competition may stifle innovation and prevent the adoption of more advanced solutions.
- Long contract duration could indicate a lack of market alternatives or a strategic dependency.
Positive Signals
- Leidos, Inc. is a large, established contractor with significant experience in defense systems.
- The contract addresses a specific and likely critical need for specialized test equipment.
- Contract provides for upgrades, indicating an effort to maintain technological relevance.
Sector Analysis
The defense sector relies heavily on specialized test equipment to ensure the reliability and performance of complex military systems. This contract falls within the Engineering Services (NAICS 541330) category, which encompasses firms providing engineering design and consulting services. The market for such specialized test equipment is often characterized by high barriers to entry due to technical complexity and intellectual property. Spending in this area is critical for maintaining military readiness and technological superiority, with comparable contracts often involving significant investment in R&D and specialized manufacturing.
Small Business Impact
This contract does not appear to have a small business set-aside component (ss: false, sb: false). As a sole-source award to a large prime contractor, there is a potential for limited subcontracting opportunities for small businesses, depending on Leidos's subcontracting strategy. Without specific subcontracting plans detailed in the award, the direct impact on the small business ecosystem is unclear, but it is unlikely to be a primary driver of small business growth in this instance.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance standards, reporting requirements, and payment schedules tied to milestones. Transparency may be limited due to the sole-source nature of the award, with less public information available compared to competitively bid contracts. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Defense Test Equipment Procurement
- Military Readiness Support Services
- Engineering and Technical Services Contracts
- Department of the Army Acquisition Programs
- Specialized Hardware and Software Development
Risk Flags
- Sole Source Award
- Cost Plus Fixed Fee Contract Type
- Potential for Cost Overruns
- Limited Price Competition
Tags
defense, department-of-the-army, engineering-services, alabama, definitive-contract, cost-plus-fixed-fee, not-competed, sole-source, test-equipment, specialized-hardware, software
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.0 million to LEIDOS, INC.. GENERAL ELECTRONIC TEST STATION (GETS-1000) TEST EQUIPMENT AND TEST PROGRAM SET (TPS) HARDWARE AND SOFTWARE, TEST EQUIPMENT UPGRADES, AND REPAIR PARTS.
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $33.0 million.
What is the period of performance?
Start: 2019-12-31. End: 2024-12-31.
What is Leidos, Inc.'s track record with similar sole-source defense contracts?
Leidos, Inc. has a substantial track record of securing large defense contracts, including those awarded on a sole-source or limited-competition basis. As a major defense contractor, they possess extensive experience in providing complex systems, software, and services to various branches of the U.S. military. Their history often involves managing large-scale projects with significant technical requirements. While specific details on past sole-source awards for test equipment analogous to the GETS-1000 are not provided here, their overall portfolio suggests a capacity to fulfill such requirements. However, the lack of competition in this specific award means that direct comparisons of their performance on similar sole-source test equipment contracts are not readily available, making it difficult to assess if this particular award represents a pattern of sole-source reliance or a unique necessity.
How does the $33 million contract value compare to historical spending on the GENERAL ELECTRONIC TEST STATION (GETS-1000) program?
The provided data indicates a total award of $33,012,648.66 for the GENERAL ELECTRONIC TEST STATION (GETS-1000) TEST EQUIPMENT AND TEST PROGRAM SET (TPS) HARDWARE AND SOFTWARE, TEST EQUIPMENT UPGRADES, AND REPAIR PARTS. The data includes a duration of 1827 days (approximately 5 years) and an award date of December 31, 2019, with an end date of December 31, 2024. Without historical spending data specifically for the GETS-1000 program prior to this award or for subsequent periods, a direct comparison of this contract's value to past spending is not possible. This $33 million figure represents the total value obligated under this specific definitive contract over its five-year period. To assess historical spending patterns, one would need access to prior contract awards or budget allocations for this specific test station or its predecessors.
What are the primary risks associated with a sole-source Cost Plus Fixed Fee (CPFF) contract for specialized test equipment?
The primary risks associated with a sole-source CPFF contract for specialized test equipment are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing as the government lacks alternative bids to benchmark against. This reduces the incentive for the contractor to offer the most cost-effective solution. Secondly, the CPFF structure reimburses the contractor for allowable costs plus a fixed fee. While the fee is fixed, the allowable costs can escalate, and the contractor may have less incentive to control costs rigorously compared to fixed-price contracts, as cost overruns are generally covered. This combination can result in higher overall expenditures for the government and a reduced assurance of achieving the best possible value for taxpayer money, especially if robust oversight is not diligently applied.
How does the lack of competition impact the potential for innovation in test equipment for the Department of the Army?
The lack of competition in this sole-source award for the GENERAL ELECTRONIC TEST STATION (GETS-1000) test equipment can significantly stifle innovation. When a contract is awarded without competitive bidding, the incumbent contractor, Leidos, Inc., has little external pressure to develop or adopt cutting-edge technologies or more efficient solutions. Competitors are not incentivized to invest in R&D to offer superior alternatives because they are not part of the procurement process. This can lead to the Army relying on potentially outdated technology for an extended period, as upgrades might be incremental and focused on maintaining the existing system rather than embracing disruptive advancements. True innovation often arises from diverse perspectives and market competition, which are absent in a sole-source scenario.
What are the implications of the Cost Plus Fixed Fee (CPFF) contract type on budget predictability?
The Cost Plus Fixed Fee (CPFF) contract type introduces a degree of uncertainty regarding final budget expenditure, impacting predictability. While the 'fixed fee' component is predetermined and represents the contractor's profit, the 'cost' component is variable. The government agrees to reimburse the contractor for all allowable costs incurred in performing the contract. If the actual costs exceed initial estimates, the total contract value will increase, provided those costs are deemed allowable and reasonable. This means that while the fee is known, the total expenditure can fluctuate based on the contractor's actual spending and the government's oversight of those costs. This contrasts with fixed-price contracts, where the total price is set upfront, offering greater budget certainty, albeit potentially at a higher initial price to account for contractor risk.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q19R0046
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 700 N FREDERICK AVE, GAITHERSBURG, MD, 20879
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $48,085,045
Exercised Options: $33,012,649
Current Obligation: $33,012,649
Subaward Activity
Number of Subawards: 34
Total Subaward Amount: $8,931,996
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2019-12-31
Current End Date: 2024-12-31
Potential End Date: 2024-12-31 12:12:00
Last Modified: 2024-12-11
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