Department of the Army awards $31.2M contract for air conditioning systems, raising questions about competition and value

Contract Overview

Contract Amount: $31,196,437 ($31.2M)

Contractor: DRS Sustainment Systems, Inc

Awarding Agency: Department of Defense

Start Date: 2005-09-30

End Date: 2012-08-01

Contract Duration: 2,497 days

Daily Burn Rate: $12.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200512!009634!2100!W52H09!TACOM ROCK ISLAND !W52H0905C0317 !A!N! !N! ! !20050930!20061230!027010420!027010420!122604846!N!ENGINEERED AIR SYSTEMS, INC !201 EVANS LN !SAINT LOUIS !MO!63121!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !+000024485259!N!N!000032175000!5410!PREFABRICATED AND PORTABLE BUILDINGS !C9E!ALL OTHER SUPPLIES AND EQUIPMENT !000 !* !336391!E! !3! ! ! ! ! !20200930!B! ! !A! !D!U!J!1!001!N!1G!A!Y!A! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: WEST PLAINS, HOWELL County, MISSOURI, 65775

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $31.2 million to DRS SUSTAINMENT SYSTEMS, INC for work described as: 200512!009634!2100!W52H09!TACOM ROCK ISLAND !W52H0905C0317 !A!N! !N! ! !20050930!20061230!027010420!027010420!122604846!N!ENGINEERED AIR SYSTEMS, INC !201 EVANS LN !SAINT LOUIS !MO!63121!65000!510!29!ST. LOUIS !ST. … Key points: 1. Contract awarded to DRS Sustainment Systems, Inc. for air conditioning units. 2. Significant contract value of over $31 million awarded. 3. Contract duration spans over 8 years, indicating a long-term need. 4. The contract was not competed, raising concerns about potential overpricing. 5. The primary service is related to motor vehicle air-conditioning manufacturing. 6. The contract was awarded to a single vendor, limiting price discovery. 7. The contract was awarded in 2005, with a long performance period.

Value Assessment

Rating: questionable

The contract value of $31.2 million over an 8-year period is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition suggests that the government may not have secured the best possible price for these air conditioning systems. Further analysis would be needed to determine if the price paid was reasonable compared to commercial equivalents or other government contracts for similar equipment.

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 vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. However, the lack of competition limits the government's ability to leverage market forces to achieve lower prices and potentially better terms. It also raises questions about whether alternative solutions or vendors were adequately explored.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This contract's value suggests that taxpayers may have paid a premium due to the absence of a competitive bidding process.

Public Impact

The primary beneficiaries are likely military personnel who require functional air conditioning in vehicles. The contract delivers essential climate control systems for military vehicles. The geographic impact is primarily within the operational areas of the Department of the Army. Workforce implications include potential employment at DRS Sustainment Systems, Inc. and its suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in inflated pricing.
Long contract duration without re-competition could lead to outdated technology or missed cost-saving opportunities.
Sole-source awards can reduce transparency and accountability in government spending.
The specific need for a sole-source award should be rigorously justified to ensure taxpayer funds are used efficiently.

Positive Signals

The contract addresses a critical need for climate control in military vehicles, ensuring operational readiness.
DRS Sustainment Systems, Inc. is a known entity in defense contracting, suggesting some level of established capability.
The firm-fixed-price nature of the contract provides cost certainty for the government, assuming the price was fair.

Sector Analysis

The defense sector relies heavily on specialized equipment for vehicle and operational support. Contracts for components like air conditioning systems are crucial for maintaining the functionality and comfort of military assets in diverse environmental conditions. The market for such specialized military vehicle components can be limited, sometimes leading to sole-source or limited competition awards. Benchmarking this contract would involve comparing it to other awards for similar vehicle systems within the Department of Defense or other military branches.

Small Business Impact

There is no indication from the provided data that this contract included small business set-asides or subcontracting requirements. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless the prime contractor actively engages small businesses in its supply chain. Further investigation into subcontracting plans would be necessary to assess any indirect benefits to small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Inspector General investigations could be initiated if concerns regarding fraud, waste, or abuse arise. Transparency is limited due to the sole-source nature of the award; however, contract modifications and performance reports would be subject to internal review and potentially public disclosure depending on classification and reporting requirements.

Related Government Programs

Military Vehicle Components
Defense Logistics Agency Contracts
Department of the Army Procurement
Climate Control Systems for Equipment

Risk Flags

Sole-source award
Lack of competition
Long contract duration
Potential for inflated pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.2 million to DRS SUSTAINMENT SYSTEMS, INC. 200512!009634!2100!W52H09!TACOM ROCK ISLAND !W52H0905C0317 !A!N! !N! ! !20050930!20061230!027010420!027010420!122604846!N!ENGINEERED AIR SYSTEMS, INC !201 EVANS LN !SAINT LOUIS !MO!63121!65000!510!29!ST. LOUIS !ST. LOUIS (CITY) !MISSOURI !+000024485259!N!N!000032175000!5410!PREFABRICATED AND PORTABLE BUILDINGS !C9E!ALL OTHER SUPPLIES AND EQUIPMENT !000 !* !336391!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is DRS SUSTAINMENT SYSTEMS, 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 $31.2 million.

What is the period of performance?

Start: 2005-09-30. End: 2012-08-01.

What is the track record of DRS Sustainment Systems, Inc. with Department of Defense contracts, particularly for air conditioning systems?

DRS Sustainment Systems, Inc. (and its predecessors/related entities) has a history of contracting with the Department of Defense. While specific details on their track record for air conditioning systems in this particular context require deeper database analysis, the company is generally known for providing sustainment and support services for military platforms. Their involvement in this contract suggests they possess the capability to manufacture or supply these specialized units. However, the lack of competition in this specific award means that their performance and pricing cannot be directly compared against other potential suppliers for this particular requirement.

How does the per-unit cost of these air conditioning systems compare to commercial market rates or similar government contracts?

Without access to the specific technical specifications of the air conditioning units and the detailed breakdown of the contract's pricing, a direct per-unit cost comparison is challenging. Given that this was a sole-source award, it is difficult to establish a competitive market rate. Commercial market rates for industrial-grade air conditioning systems can vary widely based on capacity, features, and ruggedization requirements. To perform a robust comparison, one would need to identify comparable government contracts for similar vehicle-mounted or ruggedized AC units awarded competitively, or analyze commercial pricing for systems with equivalent specifications, factoring in any necessary military-grade modifications.

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

The primary risks associated with a sole-source award of this magnitude ($31.2 million) and duration (over 8 years) include potential overpricing due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and the risk of vendor lock-in. Taxpayers may bear a higher cost than if the contract had been competed. Furthermore, a long-term sole-source contract can make it difficult for the government to adapt to technological advancements or changing requirements, as the incumbent contractor may have little incentive to propose more cost-effective or superior solutions. There's also a risk that the contractor's business priorities could shift, impacting their commitment to fulfilling the contract effectively.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The provided data does not include the specific justification for awarding this contract on a sole-source basis. Typically, sole-source justifications are based on factors such as the unavailability of comparable products or services from any other source, urgent and compelling needs that preclude competition, or specific circumstances where only one responsible source can fulfill the requirement. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to definitively state why full and open competition was bypassed. This lack of transparency is a common concern with sole-source awards.

How has spending on 'Motor Vehicle Air-Conditioning Manufacturing' (NAICS 336391) by the Department of the Army trended over time?

Analyzing the historical spending trends for NAICS code 336391 ('Motor Vehicle Air-Conditioning Manufacturing') by the Department of the Army requires access to historical contract databases covering multiple fiscal years. This specific contract, awarded in 2005 for over $31 million, represents a significant single award within this category. To understand the overall trend, one would need to aggregate all contracts awarded under this NAICS code by the Army over several years. This would reveal whether spending in this area is increasing, decreasing, or remaining relatively stable, and whether this particular award was an outlier or representative of typical spending levels.

What is the significance of the contract type 'FIRM FIXED PRICE' in the context of this sole-source award?

The 'FIRM FIXED PRICE' (FFP) contract type means that the price is set and not subject to adjustment based on the contractor's cost experience in performing the work. For the government, this offers cost certainty, as the total expenditure is known upfront, assuming no contract modifications. However, in the context of a sole-source award, the benefit of cost certainty is somewhat diminished if the initial fixed price was not established through competitive means and may be higher than necessary. The contractor assumes all the risk of cost overruns, which they would have factored into the initial price. This contract type is generally preferred when risks can be reasonably well-defined.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Parts Manufacturing › Motor Vehicle Air-Conditioning Manufacturing

Product/Service Code: PREFAB STRUCTURES/SCAFFOLDING

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: Leonardo SPA (UEI: 428869465)

Address: 201 EVANS LN, SAINT LOUIS, MO, 90

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline