Viasat Inc. awarded $175M contract for airborne communication equipment, raising value-for-money questions

Contract Overview

Contract Amount: $89,913,161 ($89.9M)

Contractor: Viasat Inc

Awarding Agency: Department of Defense

Start Date: 2006-06-28

End Date: 2011-11-01

Contract Duration: 1,952 days

Daily Burn Rate: $46.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200609!061302!1700!N00039!SPACE AND NAVAL WARFARE SYSTEMS !N0003900D2101 !A!N! !N!0049 ! !20060628!20080531!175096619!175096619!175096619!N!VIASAT, INC !6155 EL CAMINO REAL !CARLSBAD !CA!92009!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000039552709!N!N!000000000000!5821!RADIO AND TV COMM EQUIPMENT, AIRBORNE !A7 !ELECTRONICS AND COMMUNICATION EQUIP !554 !MIDS-LVT !334290!E! !5!B!S! ! !D!20090930!B! ! !A! !A!N!J!2!002!B! !Z!N!Z! ! !N!B!N!N! ! !A! !A!A!000!A!B!N! ! ! ! !1739!N00039!0001! !

Place of Performance

Location: CARLSBAD, SAN DIEGO County, CALIFORNIA, 92009

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $89.9 million to VIASAT INC for work described as: 200609!061302!1700!N00039!SPACE AND NAVAL WARFARE SYSTEMS !N0003900D2101 !A!N! !N!0049 ! !20060628!20080531!175096619!175096619!175096619!N!VIASAT, INC !6155 EL CAMINO REAL !CARLSBAD !CA!92009!66000!073!06!SAN DIEGO !SAN … Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant contract value suggests a critical need for the specified equipment. 3. The duration of the contract (over 4 years) indicates a long-term requirement. 4. The procurement method raises concerns about potential overpayment compared to competitive bids. 5. The specific equipment type (airborne radio and TV communication) points to specialized defense applications. 6. Contractor's location in California may have implications for regional economic impact.

Value Assessment

Rating: questionable

The contract value of $175,096,619 for airborne radio and TV communication equipment appears substantial. Without competitive bidding, it is difficult to benchmark the value for money. The firm fixed-price nature suggests cost certainty for the government, but the lack of competition means the government may not have secured the lowest possible price. Further analysis would require comparing this to similar sole-source procurements or estimated market prices for comparable systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Viasat Inc., was considered. This significantly limits price discovery and negotiation leverage for the government. The absence of competition suggests potential barriers to entry for other suppliers or a specific, unique capability held by Viasat. This procurement strategy bypasses the typical benefits of a competitive process, such as innovation and cost reduction.

Taxpayer Impact: Taxpayers may have paid a premium for this equipment due to the lack of competitive pressure. The government did not benefit from the potential cost savings that a competitive bidding process could have yielded.

Public Impact

The primary beneficiary is the Department of Defense, likely for tactical or strategic airborne communication needs. The service delivered is the provision of specialized airborne radio and TV communication equipment. The geographic impact is primarily national, supporting defense operations, with a specific focus on the contractor's base in California. Workforce implications are tied to Viasat Inc.'s operations in Carlsbad, California, potentially supporting local jobs in the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the sole-source justification requires scrutiny.
The substantial contract value warrants close monitoring of performance and delivery.
Potential for vendor lock-in due to specialized nature of the equipment.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Viasat Inc. is a known entity in the aerospace and defense communication sector.
The contract addresses a specific, likely critical, operational requirement for the military.

Sector Analysis

This contract falls within the 'Electronics and Communication Equipment' sector, specifically 'Radio and TV Communication Equipment, Airborne'. This is a specialized niche within the broader defense industrial base. The market for such equipment is often characterized by high barriers to entry due to technological complexity, stringent quality requirements, and long development cycles. Comparable spending benchmarks are difficult to establish without detailed technical specifications and market analysis, but the value suggests a significant program requirement.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to Viasat Inc., a large corporation. There is no information provided regarding subcontracting plans for small businesses. The focus on a sole-source award to a prime contractor may limit opportunities for small businesses to participate in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price nature provides some level of financial oversight by locking in costs. Transparency regarding the justification for the sole-source award is crucial for accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Communications Systems
Airborne Electronic Equipment
Satellite Communications Equipment
Tactical Data Links

Risk Flags

Sole-source award raises concerns about fair pricing.
Lack of competition may limit innovation and cost-efficiency.
Contract duration suggests a long-term reliance on this specific technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $89.9 million to VIASAT INC. 200609!061302!1700!N00039!SPACE AND NAVAL WARFARE SYSTEMS !N0003900D2101 !A!N! !N!0049 ! !20060628!20080531!175096619!175096619!175096619!N!VIASAT, INC !6155 EL CAMINO REAL !CARLSBAD !CA!92009!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000039552709!N!N!000000000000!5821!RADIO AND TV COMM EQUIPMENT, AIRBORNE !A7 !ELECTRONICS AND COMMUNICATION EQUIP !554 !MIDS-LVT !334290!E! !5!B!S! ! !D!200

Who is the contractor on this award?

The obligated recipient is VIASAT 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 $89.9 million.

What is the period of performance?

Start: 2006-06-28. End: 2011-11-01.

What was the specific justification for awarding this contract on a sole-source basis to Viasat Inc.?

The provided data indicates the contract was 'NOT COMPETED'. A sole-source justification typically arises when only one responsible source is available or capable of meeting the government's requirements. This could be due to unique proprietary technology, urgent and compelling needs where competition is not feasible, or specific security requirements. Without the official justification document, the precise reason remains unknown. However, for specialized airborne communication systems, it's plausible that Viasat possessed unique technological capabilities or existing system integration expertise that made them the only viable option at the time of award.

How does the $175 million contract value compare to Viasat Inc.'s overall revenue or other similar government contracts?

The contract value of $175,096,619 represents a significant award. To contextualize this, Viasat Inc. is a major player in the satellite communications and defense electronics market. In fiscal year 2023, Viasat reported total revenues of approximately $3.1 billion. Therefore, this single contract, while substantial, likely represents a portion of their overall business. Comparing it to similar government contracts would require identifying procurements for comparable airborne communication systems from other large defense contractors. Given the sole-source nature and the specific equipment, direct comparisons might be challenging, but it indicates a substantial investment by the Department of Defense in this particular capability.

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

The primary risk associated with a sole-source contract of this magnitude is the potential for inflated pricing due to the lack of competitive pressure. The government may not be receiving the best possible value for its expenditure. Another risk is vendor lock-in, where the government becomes dependent on a single supplier for critical technology, potentially limiting future options and innovation. Furthermore, the absence of competition can reduce the incentive for the contractor to optimize efficiency or deliver superior performance beyond the contract's minimum requirements. Ensuring robust oversight and performance metrics becomes even more critical in sole-source situations.

What is the typical lifespan and upgrade cycle for airborne communication equipment like that procured under this contract?

The typical lifespan and upgrade cycle for specialized airborne communication equipment can vary significantly based on the technology's complexity, the operational environment, and the pace of technological advancement. For military applications, systems are often designed for durability and longevity, potentially lasting 10-20 years or more. However, the rapid evolution of communication technologies, cybersecurity threats, and changing operational requirements often necessitate upgrades or replacements sooner. This contract, with an initial period ending in May 2008 and subsequent modifications extending to November 2011 (totaling 1952 days or over 5 years), suggests a substantial operational life for the initial deployment. Future upgrades or replacements would likely involve new contract actions.

What does the Public Law 114-264 reference (if applicable) imply about this contract's procurement history or type?

The provided data does not explicitly reference Public Law 114-264. However, if this contract were subject to such a law, it would likely pertain to specific procurement regulations, such as those related to defense spending, small business utilization, or specific technology acquisitions. Public Law 114-264, for instance, relates to the National Defense Authorization Act for Fiscal Year 2017, which includes provisions on various defense matters. Without a direct link or mention in the data, its specific implication for this 2006 contract is unclear. Procurement laws and regulations evolve, and this contract would have been governed by the statutes in effect at the time of its award.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

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

Address: 6155 EL CAMINO REAL, CARLSBAD, CA, 49

Business Categories: Category Business, Not Designated a Small Business

Parent Contract

Parent Award PIID: N0003900D2101

IDV Type: IDC

Timeline