DHS awards $22.2M sole-source contract for aerostats, raising questions on competition and value

Contract Overview

Contract Amount: $22,238,358 ($22.2M)

Contractor: ILC Astrospace LLC

Awarding Agency: Department of Homeland Security

Start Date: 2020-04-09

End Date: 2025-11-05

Contract Duration: 2,036 days

Daily Burn Rate: $10.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PURCHASE ORDER AWARD FOR THE PURCHASE OF 2-420K AEROSTATS.

Place of Performance

Location: FREDERICA, KENT County, DELAWARE, 19946

State: Delaware Government Spending

Plain-Language Summary

Department of Homeland Security obligated $22.2 million to ILC ASTROSPACE LLC for work described as: PURCHASE ORDER AWARD FOR THE PURCHASE OF 2-420K AEROSTATS. Key points: 1. The contract was awarded on a sole-source basis, limiting opportunities for competitive bidding and potentially impacting price. 2. The duration of the contract (over 5 years) suggests a long-term need for these aerostats. 3. The fixed-price contract type offers some cost certainty but doesn't inherently guarantee value for money. 4. The aerostat technology is specialized, potentially justifying a limited competition approach. 5. The award to ILC ASTROSPACE LLC represents a significant investment in surveillance or operational capabilities for CBP.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source nature and lack of publicly available comparable contract data for similar aerostat systems. The per-unit cost, while not explicitly stated, can be inferred from the total award and the quantity (2-420K aerostats). Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if there's an opportunity for cost savings through a more open procurement process. Further analysis would require understanding the specific capabilities and technological advancements of these aerostats.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning that only one vendor, ILC ASTROSPACE LLC, was considered. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in higher prices and reduced transparency compared to full and open competition. The lack of multiple bidders means there was no direct price comparison or incentive for the contractor to offer the most competitive pricing.

Taxpayer Impact: Taxpayers may be paying a premium for these aerostats due to the absence of competition. The government missed an opportunity to leverage market forces to secure a better price and potentially explore innovative solutions from a wider range of suppliers.

Public Impact

The U.S. Customs and Border Protection (CBP) is the primary beneficiary, likely using these aerostats for enhanced border surveillance and operational awareness. The services delivered include the provision of advanced aerostat systems, which are typically used for persistent aerial observation. The geographic impact is likely focused on border regions where CBP operates, enhancing their ability to monitor vast areas. This contract supports specialized manufacturing jobs within the aerospace sector, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially leads to overpayment.
Lack of transparency in the procurement process makes it difficult to assess true value for money.
Long contract duration could lock the government into a specific technology without future competitive evaluation.
The specific capabilities and performance metrics of the aerostats are not detailed, making independent assessment difficult.

Positive Signals

The contract addresses a specific, potentially critical, operational need for CBP.
The fixed-price contract type provides some level of cost predictability for the government.
Specialized technology may require a single, qualified provider if no alternatives exist.

Sector Analysis

The aerostat market is a niche segment within the broader aerospace and defense industry, often serving specialized surveillance and communication needs. Companies in this sector develop and manufacture lighter-than-air platforms for persistent aerial presence. Spending in this area is typically driven by government requirements for border security, intelligence gathering, and military operations. Comparable spending benchmarks are difficult to establish due to the unique nature of aerostat systems and the limited number of manufacturers.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of aerostat manufacturing, it is unlikely that small businesses would be primary contractors for such a large and complex system. However, the prime contractor, ILC ASTROSPACE LLC, may engage small businesses for subcontracting opportunities, though this is not explicitly detailed in the award information.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security's internal procurement review processes and potentially the U.S. Customs and Border Protection's program management. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Border Security Technology
Surveillance Systems
Aerospace Manufacturing
Department of Homeland Security Procurement
Customs and Border Protection Operations

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed public information on technical specifications and performance metrics.
Potential for higher costs due to absence of competitive bidding.
Long contract duration may limit future flexibility and adoption of newer technologies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $22.2 million to ILC ASTROSPACE LLC. PURCHASE ORDER AWARD FOR THE PURCHASE OF 2-420K AEROSTATS.

Who is the contractor on this award?

The obligated recipient is ILC ASTROSPACE LLC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $22.2 million.

What is the period of performance?

Start: 2020-04-09. End: 2025-11-05.

What is the specific technological advantage or unique capability of the aerostats being procured that justifies a sole-source award?

The justification for a sole-source award typically rests on unique capabilities, proprietary technology, or the lack of viable alternatives in the market. For aerostats, this could involve advanced sensor payloads, extended endurance, specific operational requirements met by only one manufacturer's design, or critical integration needs with existing systems. Without detailed documentation from the Department of Homeland Security (DHS) justifying this sole-source decision, it is difficult to ascertain the precise technological advantage. However, aerostats are often chosen for persistent, wide-area surveillance, and specific models may offer superior performance in terms of altitude, payload capacity, or operational resilience compared to other aerial platforms. The government would need to demonstrate that no other responsible source could meet the requirement.

How does the per-unit cost of these aerostats compare to similar systems procured competitively by other government agencies or international allies?

Direct comparison of per-unit costs is challenging without knowing the exact specifications and configurations of the aerostats procured by DHS and without access to competitive bid data. Sole-source awards inherently lack a competitive benchmark, often leading to higher prices than if multiple vendors had vied for the contract. To assess value, one would need to identify comparable aerostat systems (e.g., similar size, altitude, endurance, payload capacity) procured competitively. For instance, if the U.S. military or allied nations have recently acquired similar aerostats through competitive processes, their contract prices could serve as a benchmark. However, the specific mission requirements and technological sophistication of the DHS aerostats may differ significantly, making a direct price-to-price comparison potentially misleading. A thorough analysis would require detailed technical specifications and cost breakdowns.

What are the key performance indicators (KPIs) for these aerostats, and how will their performance be measured against the contract requirements?

Key performance indicators (KPIs) for aerostats typically revolve around operational endurance (hours/days aloft), altitude ceiling, payload capacity (weight and power), communication range, sensor performance (resolution, detection range), reliability (mean time between failures), and environmental resilience (wind tolerance, temperature range). The contract should specify these metrics and the methods for verifying performance. For this DHS contract, KPIs would likely focus on sustained surveillance capabilities along the border, integration with command and control systems, and the ability to detect and track relevant targets. Performance measurement would involve regular reporting from CBP operators, potentially independent testing, and adherence to delivery schedules and maintenance requirements. The effectiveness of the aerostats in achieving CBP's mission objectives would be the ultimate measure of success.

What is the track record of ILC ASTROSPACE LLC in delivering similar aerostat systems to government clients, and have they encountered performance issues in the past?

Assessing the track record of ILC ASTROSPACE LLC requires reviewing their past performance on government contracts, particularly those involving aerostat systems. Information on past performance, including delivery timeliness, adherence to specifications, and any reported issues or disputes, is often available through government contract databases (like the Federal Procurement Data System - FPDS) or contractor performance assessment reports (CPARS). Without specific data on ILC ASTROSPACE LLC's history with aerostats, it's difficult to provide a definitive assessment. However, agencies typically consider past performance as a critical factor in source selection, especially for sole-source awards where there's less opportunity to mitigate risks associated with a new or unproven contractor. Any history of significant performance problems, cost overruns, or delivery delays on similar projects would raise concerns about the current contract's successful execution.

What is the total historical spending by the Department of Homeland Security (and specifically CBP) on aerostat technology over the last five fiscal years?

To determine the total historical spending on aerostat technology by DHS and CBP, one would need to query federal procurement databases (such as FPDS or USAspending.gov) using relevant keywords (e.g., 'aerostat', 'blimp', 'lighter-than-air') and filtering by agency (Department of Homeland Security, U.S. Customs and Border Protection) and fiscal years. This analysis would reveal the trend in investment in this technology. For example, if spending has been consistently high or increasing, it indicates a sustained reliance on aerostats for operational needs. Conversely, fluctuating or declining spending might suggest shifts in strategy or technology adoption. Understanding this historical context is crucial for evaluating the significance of the current $22.2 million award and assessing whether it aligns with past investment patterns or represents a substantial new commitment.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

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: 1 MOONWALKER RD, FREDERICA, DE, 19946

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

Financial Breakdown

Contract Ceiling: $30,011,308

Exercised Options: $22,238,358

Current Obligation: $22,238,358

Actual Outlays: $8,324,754

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline