DoD's $82.7M Undefinitized Letter Contract for EWPS with DRS Raises Concerns Over Competition and Value
Contract Overview
Contract Amount: $82,731,241 ($82.7M)
Contractor: DRS Sustainment Systems, Inc
Awarding Agency: Department of Defense
Start Date: 2009-12-10
End Date: 2013-11-09
Contract Duration: 1,430 days
Daily Burn Rate: $57.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: THIS IS AN UNDEFINITIZED LETTER CONTRACT WITH DRS FOR THE EXPEDITIONARY WATER PACKAGING SYSTEM (EWPS)
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63121
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $82.7 million to DRS SUSTAINMENT SYSTEMS, INC for work described as: THIS IS AN UNDEFINITIZED LETTER CONTRACT WITH DRS FOR THE EXPEDITIONARY WATER PACKAGING SYSTEM (EWPS) Key points: 1. Significant contract value ($82.7M) awarded via an undefinitized letter contract. 2. Sole-source award to DRS Sustentment Systems, Inc. limits competitive pricing. 3. Long contract duration (1430 days) with potential for cost overruns. 4. Packaging and Labeling Services sector (NAICS 561910) may have competitive alternatives. 5. Lack of competition raises questions about fair pricing and taxpayer value.
Value Assessment
Rating: questionable
The undefinitized nature of the contract at $82.7M suggests potential for price escalation before definitization. Benchmarking against similar packaging services contracts is difficult without defined terms.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was 'NOT COMPETED,' indicating a sole-source award to DRS Sustentment Systems, Inc. This lack of competition prevents price discovery through market forces and may lead to inflated costs.
Taxpayer Impact: Awarding a large contract without competition limits the government's ability to secure the best possible price, potentially resulting in higher taxpayer expenditure.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The long duration of the contract increases the risk of cost creep and scope creep. Lack of transparency in the award process hinders public scrutiny. Essential military supplies like the EWPS may be procured at suboptimal cost.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Undefinitized Letter Contract
- Not Competed
- Long Contract Duration
- High Contract Value
Positive Signals
- Awarded to a known entity (DRS)
- Firm Fixed Price (once definitized)
Sector Analysis
The Packaging and Labeling Services sector (NAICS 561910) is broad. While specific expeditionary water packaging might be specialized, the lack of competition suggests a potential failure to explore the market adequately.
Small Business Impact
The data does not indicate whether small businesses were involved in subcontracting opportunities. The sole-source nature of the prime contract limits direct small business participation.
Oversight & Accountability
The use of an undefinitized letter contract for such a significant amount warrants close oversight to ensure timely definitization and fair pricing. Accountability for the lack of competition needs to be established.
Related Government Programs
- Packaging and Labeling Services
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Potential for overpricing due to lack of competition.
- Risk of cost escalation during undefinitized period.
- Limited transparency in award justification.
- Extended commitment of taxpayer funds without competitive validation.
- Potential for contractor to dictate terms during definitization.
Tags
packaging-and-labeling-services, department-of-defense, mo, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $82.7 million to DRS SUSTAINMENT SYSTEMS, INC. THIS IS AN UNDEFINITIZED LETTER CONTRACT WITH DRS FOR THE EXPEDITIONARY WATER PACKAGING SYSTEM (EWPS)
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 $82.7 million.
What is the period of performance?
Start: 2009-12-10. End: 2013-11-09.
What is the justification for awarding this large contract as a sole-source undefinitized letter contract?
The justification for a sole-source undefinitized letter contract (ULC) is typically based on urgent and compelling needs where competition is not feasible within the required timeframe. However, for a contract valued at over $82M and with a duration of nearly four years, the rationale needs thorough documentation to ensure it aligns with procurement regulations and doesn't simply bypass competitive processes.
How will the government ensure fair pricing and value for taxpayers given the lack of competition?
Ensuring fair pricing without competition is challenging. The government should employ robust cost analysis, independent government cost estimates, and potentially engage third-party experts to validate DRS's proposed costs. Strict negotiation during the definitization process and ongoing monitoring of performance and costs are crucial to mitigate risks associated with sole-source awards.
What are the risks associated with the long duration and undefinitized status of this contract?
The primary risks include potential cost growth during the undefinitized period, scope creep as requirements evolve without competitive re-evaluation, and contractor leverage due to the extended reliance on their services. The long duration also means taxpayer funds are committed for an extended period, potentially without the benefit of market-driven cost reductions that competition would provide.
Industry Classification
NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › Packaging and Labeling Services
Product/Service Code: WATER PURIFICATION/SEWAGE TREATMENT
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, 63121
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: $82,731,241
Exercised Options: $82,731,241
Current Obligation: $82,731,241
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2009-12-10
Current End Date: 2013-11-09
Potential End Date: 2013-11-09 12:11:00
Last Modified: 2016-09-01
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