Army awards $77.1M for Tank Rack Modules, with no competition

Contract Overview

Contract Amount: $77,167,051 ($77.2M)

Contractor: DRS Sustainment Systems, Inc

Awarding Agency: Department of Defense

Start Date: 2012-02-17

End Date: 2018-11-16

Contract Duration: 2,464 days

Daily Burn Rate: $31.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCURE A QUANTITY OF 800 EACH TANK RACK MODULES (TRMS). 380 EACH FOR INITIAL PRODUCTION AND 420 EACH FOR OUT YEAR PRODUCTION. PROCUREMENT INCLUDES PRICED OPTIONS FOR ANCILLARY HARDWARE REQUIRED FOR FIELDING AND PRESERVATION AND PACKAGING REQUIRED FOR LONG TERM STORAGE.

Place of Performance

Location: BRIDGETON, SAINT LOUIS County, MISSOURI, 63044

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $77.2 million to DRS SUSTAINMENT SYSTEMS, INC for work described as: PROCURE A QUANTITY OF 800 EACH TANK RACK MODULES (TRMS). 380 EACH FOR INITIAL PRODUCTION AND 420 EACH FOR OUT YEAR PRODUCTION. PROCUREMENT INCLUDES PRICED OPTIONS FOR ANCILLARY HARDWARE REQUIRED FOR FIELDING AND PRESERVATION AND PACKAGING REQUIRED FOR LONG TERM STORAGE. Key points: 1. Significant investment in specialized military equipment. 2. Sole-source award raises concerns about price discovery. 3. Long-term storage and fielding requirements noted. 4. No small business participation indicated.

Value Assessment

Rating: questionable

The contract value of $77.1M for 800 units suggests a per-unit cost of approximately $96,458. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market rates for similar heavy-gauge metal tank components.

Cost Per Unit: $96,458

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source award to DRS Sustainment Systems, Inc. This lack of competition limits the government's ability to leverage market forces for the best possible price and terms.

Taxpayer Impact: Taxpayer funds are committed without the benefit of competitive pricing, potentially leading to overpayment for the Tank Rack Modules.

Public Impact

Ensures operational readiness by providing essential equipment for tanks. Supports long-term military readiness through preservation and packaging for storage. Procurement spans multiple years, indicating sustained demand. Potential for follow-on contracts for ancillary hardware and services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
No small business participation

Positive Signals

Definitive contract provides clear terms
Firm fixed price limits cost overrun risk
Includes options for ancillary hardware

Sector Analysis

The procurement falls under the Metal Tank (Heavy Gauge) Manufacturing sector. Spending benchmarks for specialized military hardware can vary widely, but a lack of competition for such a significant award warrants scrutiny.

Small Business Impact

The data indicates that small businesses were not involved in this contract, as the 'sb' field is false. This represents a missed opportunity to support small business participation in defense contracting.

Oversight & Accountability

The contract was awarded as a definitive contract with a firm fixed price, suggesting clear terms and conditions. However, the sole-source nature of the award raises questions about the effectiveness of oversight in ensuring fair pricing.

Related Government Programs

Metal Tank (Heavy Gauge) Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competitive bidding
Sole-source award
Potential for inflated pricing
No small business participation
Long-term storage costs not fully detailed

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.2 million to DRS SUSTAINMENT SYSTEMS, INC. PROCURE A QUANTITY OF 800 EACH TANK RACK MODULES (TRMS). 380 EACH FOR INITIAL PRODUCTION AND 420 EACH FOR OUT YEAR PRODUCTION. PROCUREMENT INCLUDES PRICED OPTIONS FOR ANCILLARY HARDWARE REQUIRED FOR FIELDING AND PRESERVATION AND PACKAGING REQUIRED FOR LONG TERM STORAGE.

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 $77.2 million.

What is the period of performance?

Start: 2012-02-17. End: 2018-11-16.

What is the justification for the sole-source award of the Tank Rack Modules, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves factors like unique capabilities, urgent need, or lack of viable alternatives. Without specific documentation, it's presumed the Army determined DRS Sustainment Systems, Inc. was the only source capable of meeting the requirements. However, the absence of competition makes it imperative to verify that rigorous price analysis was conducted to ensure the $77.1M award was fair and reasonable.

What are the long-term implications of procuring specialized tank components through a non-competitive process on future defense budgets?

Procuring specialized components like Tank Rack Modules via sole-source contracts can set a precedent and potentially inflate future costs if not carefully managed. Without competitive pressure, the incumbent contractor may have less incentive to reduce prices. This can lead to higher overall defense spending over time, as similar sole-source awards for related or future systems could follow, impacting budget allocation for other critical defense needs.

How will the ancillary hardware and preservation/packaging options be evaluated and priced to ensure value for taxpayer dollars?

The contract includes priced options for ancillary hardware and preservation/packaging. The government should conduct thorough market research and price analysis for these options, even if they are with the same contractor. Evaluating these against industry standards and potentially seeking competitive quotes for similar services, where feasible, will be crucial to ensure these additional costs are justified and do not represent further overspending.

Industry Classification

NAICS: Manufacturing › Boiler, Tank, and Shipping Container Manufacturing › Metal Tank (Heavy Gauge) Manufacturing

Product/Service Code: MAINT/REPAIR SHOP EQPT

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

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: $78,113,262

Exercised Options: $77,167,051

Current Obligation: $77,167,051

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline