Homeland Security's $23.6M AS&E Maintenance Contract Awarded Sole-Source to Incumbent

Contract Overview

Contract Amount: $23,568,626 ($23.6M)

Contractor: American Science & Engineering Inc

Awarding Agency: Department of Homeland Security

Start Date: 2021-07-01

End Date: 2023-06-30

Contract Duration: 729 days

Daily Burn Rate: $32.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: AMERICAN SCIENCE AND ENGINEERING(AS&E) OEM MAINTENANCE SUPPORT

Place of Performance

Location: BILLERICA, MIDDLESEX County, MASSACHUSETTS, 01821

State: Massachusetts Government Spending

Plain-Language Summary

Department of Homeland Security obligated $23.6 million to AMERICAN SCIENCE & ENGINEERING INC for work described as: AMERICAN SCIENCE AND ENGINEERING(AS&E) OEM MAINTENANCE SUPPORT Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies and market competition. 2. The contract covers OEM maintenance support, a critical but potentially high-cost service when not competitively bid. 3. Performance period of 729 days suggests a need for sustained support, but the lack of competition limits price discovery. 4. The fixed-price contract type aims to control costs, but the absence of competition may negate this benefit. 5. No small business set-aside was utilized, indicating potential missed opportunities for smaller specialized firms. 6. The contract's value is significant within the niche of specialized equipment maintenance. 7. Focus on OEM support suggests a reliance on the original manufacturer, potentially limiting third-party service options.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of comparable bids. However, the $23.6 million price tag for 729 days of OEM maintenance support for specialized equipment warrants scrutiny. Without competitive pressure, it's difficult to ascertain if this represents a fair market price or if taxpayers are overpaying for the services rendered. The reliance on a single OEM provider for maintenance can often lead to higher costs compared to a multi-vendor or third-party maintenance approach.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific vendor possesses unique capabilities, proprietary technology, or is the sole provider of essential goods or services. In this case, AMERICAN SCIENCE & ENGINEERING INC is likely the original equipment manufacturer (OEM) or has exclusive rights to service the equipment. The lack of competition means there were no other bidders, and therefore, no direct price comparison or negotiation leverage was available.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to secure the best possible value for its investment.

Public Impact

U.S. Customs and Border Protection (CBP) officers and agents benefit from the continued operational readiness of their specialized equipment. Ensures the functionality and reliability of critical systems used for border security and law enforcement. Geographic impact is likely nationwide, supporting CBP operations across various ports of entry and operational areas. Workforce implications include ensuring that maintenance personnel are trained and certified by the OEM, maintaining specialized skill sets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings.
Lack of competition may reduce incentives for the contractor to innovate or improve service efficiency.
Reliance on OEM maintenance can be more expensive than third-party options.
No small business participation noted, potentially excluding specialized smaller firms.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Contract ensures continued operational capability of critical border security equipment.
OEM maintenance ensures adherence to manufacturer specifications and warranty requirements.

Sector Analysis

This contract falls within the 'Other Electronic and Precision Equipment Repair and Maintenance' sector, classified under NAICS code 811219. This niche industry focuses on servicing specialized electronic equipment, often critical for government operations. The market size for OEM maintenance can be substantial for high-value, specialized equipment, but it is often fragmented and dominated by original manufacturers or authorized service providers. Comparable spending benchmarks are difficult to establish without knowing the specific equipment being maintained, but contracts for specialized maintenance can range from thousands to millions of dollars depending on complexity and volume.

Small Business Impact

This contract did not include a small business set-aside, nor is there an indication of significant subcontracting to small businesses. The sole-source nature of the award likely precluded opportunities for small businesses to participate as prime contractors. This could represent a missed opportunity to foster competition and leverage the capabilities of specialized small businesses within the maintenance sector.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security and U.S. Customs and Border Protection contracting officers and program managers. Accountability measures would be defined by the contract's performance work statement and delivery schedules. Transparency is limited by the sole-source nature of the award, with less public information available compared to competed contracts. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Homeland Security - Procurement
U.S. Customs and Border Protection - Equipment Maintenance
OEM Maintenance Services
Sole-Source Contracts
Electronic Equipment Repair

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $23.6 million to AMERICAN SCIENCE & ENGINEERING INC. AMERICAN SCIENCE AND ENGINEERING(AS&E) OEM MAINTENANCE SUPPORT

Who is the contractor on this award?

The obligated recipient is AMERICAN SCIENCE & ENGINEERING INC.

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 $23.6 million.

What is the period of performance?

Start: 2021-07-01. End: 2023-06-30.

What specific electronic and precision equipment is covered under this OEM maintenance support contract?

The provided data does not specify the exact type of electronic and precision equipment covered by this contract. However, given the agency (U.S. Customs and Border Protection) and the NAICS code (811219 - Other Electronic and Precision Equipment Repair and Maintenance), it is likely related to border security technology, surveillance systems, communication devices, or other specialized operational equipment critical for CBP's mission. Further details would typically be found in the contract's Statement of Work (SOW) or Performance Work Statement (PWS), which are not included in the provided data.

Why was this contract awarded on a sole-source basis instead of being competed?

The contract was awarded on a sole-source basis, as indicated by 'CT: NOT COMPETED'. This typically occurs when only one responsible source is available or capable of providing the required services. For OEM maintenance, this often means the contractor, AMERICAN SCIENCE & ENGINEERING INC, is the original equipment manufacturer or has exclusive rights, proprietary knowledge, or specialized tooling necessary for the maintenance. The government may have determined that using a non-OEM provider would compromise equipment performance, void warranties, or introduce unacceptable risks. Justification for sole-source awards is usually documented and approved by the agency.

What is the historical spending pattern for OEM maintenance support for this type of equipment by U.S. Customs and Border Protection?

The provided data only includes details for this specific contract award from July 1, 2021, to June 30, 2023, totaling $23.6 million. To understand historical spending patterns, one would need to analyze past contract awards for similar OEM maintenance services by U.S. Customs and Border Protection (CBP) or the Department of Homeland Security (DHS). This would involve searching federal procurement databases for previous sole-source or competed contracts related to the maintenance of the specific equipment covered. Without access to that broader historical data, it's impossible to determine if this $23.6 million represents an increase, decrease, or consistent level of spending for this service category.

Are there any performance metrics or key performance indicators (KPIs) associated with this contract to ensure service quality?

The provided data does not explicitly list performance metrics or Key Performance Indicators (KPIs) for this contract. However, standard government contracts, especially those for critical support services like OEM maintenance, typically include a Performance Work Statement (PWS) or Statement of Work (SOW) that outlines expected service levels, response times, quality standards, and reporting requirements. Failure to meet these defined performance standards can result in contractually specified remedies, such as price reductions or termination. The firm fixed-price nature of this contract suggests that the contractor is obligated to deliver the specified maintenance services within the agreed-upon price, regardless of the actual effort expended, provided the performance standards are met.

What is the potential financial risk to the government if the contractor fails to perform adequately under this sole-source agreement?

The financial risk to the government if the contractor fails to perform adequately under this sole-source agreement is significant, primarily due to the lack of immediate competitive alternatives. If AMERICAN SCIENCE & ENGINEERING INC fails to meet the contract's performance standards, the U.S. Customs and Border Protection (CBP) would have limited options. They could pursue contractual remedies such as withholding payments, seeking damages, or potentially terminating the contract. However, finding and onboarding a replacement contractor for specialized OEM maintenance, especially on a sole-source basis, can be time-consuming and costly, potentially leading to operational disruptions and increased overall expenditure to rectify the situation. The government's leverage is primarily through the contract terms and the threat of termination, rather than the ability to easily switch providers.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: OSI Systems Inc

Address: 829 MIDDLESEX TPKE, BILLERICA, MA, 01821

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: $23,643,450

Exercised Options: $23,568,626

Current Obligation: $23,568,626

Actual Outlays: $1,618,290

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 70B04C18D00000016

IDV Type: IDC

Timeline