Department of Defense awarded $250M+ for communications security equipment, with Thales Defense & Security Inc. as the sole provider

Contract Overview

Contract Amount: $25,044,411 ($25.0M)

Contractor: Thales Defense & Security Inc

Awarding Agency: Department of Defense

Start Date: 2006-04-04

End Date: 2011-08-03

Contract Duration: 1,947 days

Daily Burn Rate: $12.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200608!700072!1700!M67854!COMMANDING GENERAL !M6785405D7013 !A!N! !N!0021 ! !20060404!20061030!003253788!088956800!275250553!N!THALES COMMUNICATIONS, INC !22605 GATEWAY CENTER DR !CLARKSBURG !MD!20871!17350!031!24!CLARKSBURG !MONTGOMERY !MARYLAND !+000025093191!N!N!000000000000!5810!COMMUNICATIONS SECURITY EQUIP AND COMPS !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !334220!E! !5!B!S! ! !D!20091030!B! ! !A! !D!U!J!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !Z!A!A!A!000!A!A!N! ! ! ! !1727!M67854!0001! !

Place of Performance

Location: CLARKSBURG, MONTGOMERY County, MARYLAND, 20871

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $25.0 million to THALES DEFENSE & SECURITY INC for work described as: 200608!700072!1700!M67854!COMMANDING GENERAL !M6785405D7013 !A!N! !N!0021 ! !20060404!20061030!003253788!088956800!275250553!N!THALES COMMUNICATIONS, INC !22605 GATEWAY CENTER DR !CLARKSBURG !MD!20871!17350!031!24!CLARKSBURG !MONT… Key points: 1. The contract value of over $250 million indicates a significant investment in critical communication security infrastructure. 2. Sole-source award suggests a lack of readily available alternatives or a highly specialized requirement, potentially limiting price competition. 3. The duration of the contract (2006-2011) spans a period where evolving communication technologies may have impacted the long-term value. 4. Performance context is limited without specific details on deliverables and operational success. 5. Sector positioning is within defense electronics and communication equipment, a vital but often high-cost area. 6. The absence of competition raises questions about potential overpricing or missed opportunities for cost savings through market engagement.

Value Assessment

Rating: questionable

The contract value of over $250 million for communications security equipment is substantial. Without specific details on the equipment provided and its performance, a direct value-for-money assessment is difficult. However, the sole-source nature of the award raises concerns about whether the government secured the best possible price. Benchmarking against similar sole-source contracts for specialized security equipment would be necessary to determine if the pricing was competitive within its niche.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Thales Defense & Security Inc., was solicited. This typically occurs when a product or service is unique, proprietary, or when there's an urgent need that cannot be met through competitive bidding. The lack of competition means there was no direct price discovery through multiple bids, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government did not benefit from the price reductions that often result from a competitive bidding process.

Public Impact

The primary beneficiaries are likely military and intelligence agencies requiring secure communication capabilities. Services delivered include the provision of communications security equipment and components, essential for safeguarding sensitive information. Geographic impact is national, supporting defense operations across various theaters. Workforce implications are indirect, potentially supporting specialized manufacturing and technical roles within Thales and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Contract duration may not align with rapid technological advancements in communications security.
Limited public information on specific performance metrics and value delivered.
Potential for vendor lock-in due to specialized nature of equipment.

Positive Signals

Addresses a critical national security need for secure communications.
Ensures availability of specialized equipment from a known provider.
Contract was awarded to an established company with a track record in defense.
Firm Fixed Price contract type provides cost certainty once awarded.

Sector Analysis

This contract falls within the Electronics and Communication Equipment sector, specifically focusing on Communications Security Equipment and Components. This is a critical sub-sector for defense and national security, often characterized by high research and development costs, proprietary technologies, and specialized manufacturing. Market size can be substantial, driven by government procurement needs, but is often segmented by specific technological requirements and security clearances. Comparable spending benchmarks would focus on other sole-source or limited-competition awards for similar high-security communication systems.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. As a sole-source award to a large corporation, it is unlikely to have directly benefited the small business ecosystem through set-asides. However, Thales may have utilized small business subcontractors, but this information is not discernible from the provided data.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Defense Contract Management Agency (DCMA), responsible for ensuring contractor compliance with terms and conditions. Accountability measures are inherent in the contract's firm fixed-price nature, requiring delivery of specified goods. Transparency is limited due to the sole-source award and the sensitive nature of communications security equipment. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Secure Communications Systems
Tactical Communication Equipment
Cryptographic Equipment
Defense Electronics Procurement
National Security Systems

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited transparency on justification
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.0 million to THALES DEFENSE & SECURITY INC. 200608!700072!1700!M67854!COMMANDING GENERAL !M6785405D7013 !A!N! !N!0021 ! !20060404!20061030!003253788!088956800!275250553!N!THALES COMMUNICATIONS, INC !22605 GATEWAY CENTER DR !CLARKSBURG !MD!20871!17350!031!24!CLARKSBURG !MONTGOMERY !MARYLAND !+000025093191!N!N!000000000000!5810!COMMUNICATIONS SECURITY EQUIP AND COMPS !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !334220!E! !5!B!S! ! !D!200

Who is the contractor on this award?

The obligated recipient is THALES DEFENSE & SECURITY INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $25.0 million.

What is the period of performance?

Start: 2006-04-04. End: 2011-08-03.

What specific types of communications security equipment were procured under this contract?

The contract data specifies the Product Service Code (PSC) as 5810, which corresponds to 'Radio and Signal Equipment'. More granularly, the description includes 'COMMUNICATIONS SECURITY EQUIP AND COMPS'. While the exact models or technical specifications are not detailed in the provided summary, this indicates the procurement of hardware and potentially software components designed to ensure the confidentiality, integrity, and authenticity of communications, likely including encryption devices, secure terminals, and related accessories for military and government use.

What was the justification for awarding this contract on a sole-source basis?

The provided data explicitly states the contract type as 'NOT COMPETED'. While the specific justification is not detailed, sole-source awards are typically granted when only one responsible source is available or capable of providing the required goods or services. This could be due to proprietary technology, unique capabilities, compatibility requirements with existing systems, or urgent and compelling circumstances. Without further documentation, the precise reason for deeming Thales Defense & Security Inc. the sole source remains unspecified in this data.

How does the $250M+ contract value compare to similar procurements for communications security equipment?

Comparing the $250M+ value requires context on the specific type and quantity of equipment procured. However, for major defense procurements of specialized communication security systems, this figure is substantial, reflecting significant investment. Sole-source awards often tend to be higher than competitively bid contracts. Benchmarking would involve looking at other large sole-source contracts for similar high-security, potentially classified, communication systems awarded by the Department of Defense or other intelligence agencies during the 2006-2011 timeframe.

What is Thales Defense & Security Inc.'s track record with the Department of Defense for similar procurements?

Thales Defense & Security Inc. (and its predecessor/related entities) has a significant history of contracting with the Department of Defense, particularly in areas related to secure communications, electronic warfare, and radar systems. The award of a sole-source contract valued at over $250 million suggests a pre-existing relationship and likely a demonstrated capability to meet the DoD's stringent requirements for secure communication equipment. Their extensive experience in this specialized field would have been a key factor in their selection, even without competition.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risks associated with a sole-source contract of this magnitude include potential overpricing due to the lack of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and the risk of vendor lock-in, where the government becomes heavily reliant on a single supplier. There's also a risk that the government may not be receiving the most technologically advanced or cost-effective solution available on the market. Furthermore, the justification for sole-source procurement itself can be subject to scrutiny to ensure it was appropriate.

How has spending on communications security equipment evolved within the Department of Defense since this contract?

Spending on communications security equipment within the Department of Defense has likely continued to be substantial, driven by evolving threats, technological advancements, and the need for secure communication across global operations. Since the 2006-2011 period of this contract, there has been a continuous push towards more integrated, software-defined, and resilient communication systems, including advancements in encryption, network security, and counter-intelligence capabilities. While specific aggregate spending figures fluctuate based on budget priorities and operational needs, the strategic importance of secure communications ensures consistent investment in this area.

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: Thales (UEI: 275250553)

Address: 22605 GATEWAY CENTER DR, CLARKSBURG, MD, 06

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785405D7013

IDV Type: IDC

Timeline