DHS awards $81.4M for non-intrusive inspection equipment maintenance, with limited competition

Contract Overview

Contract Amount: $81,416,250 ($81.4M)

Contractor: Rapiscan Systems Inc

Awarding Agency: Department of Homeland Security

Start Date: 2024-09-15

End Date: 2026-04-26

Contract Duration: 588 days

Daily Burn Rate: $138.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: NON-INTRUSIVE INSPECTION DETECTION EQUIPMENT - MAINTENANCE AND REPAIR

Place of Performance

Location: ASHBURN, LOUDOUN County, VIRGINIA, 20147

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $81.4 million to RAPISCAN SYSTEMS INC for work described as: NON-INTRUSIVE INSPECTION DETECTION EQUIPMENT - MAINTENANCE AND REPAIR Key points: 1. Contract value of $81.4M over approximately 2 years for essential equipment maintenance. 2. Sole-source award raises concerns about potential overpayment and lack of competitive pricing. 3. High contract value suggests critical operational reliance on this equipment. 4. Maintenance and repair services are crucial for ensuring border security technology functions effectively. 5. Limited competition may hinder innovation and cost-saving opportunities. 6. Fixed-price contract type shifts some risk to the contractor, but price reasonableness is key.

Value Assessment

Rating: questionable

The contract value of $81.4 million for approximately 2 years of maintenance and repair for non-intrusive inspection detection equipment appears high, especially given the sole-source nature of the award. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The average annual value is over $40 million, which warrants scrutiny to ensure the government is receiving fair value for the services provided. The fixed-price nature of the contract provides some cost certainty, but the absence of competition makes it challenging to assess if the price is truly competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Rapiscan Systems Inc., was solicited. This approach is typically used when a unique product or service is required, or in cases of urgent need where competition is not feasible. However, for maintenance and repair services, a sole-source award often indicates a lack of market research or a potential over-reliance on a single provider, which can lead to higher costs and reduced innovation. The limited competition means there was no opportunity for other qualified vendors to offer their services, potentially at a lower price.

Taxpayer Impact: The sole-source nature of this award means taxpayers may be paying a premium for these maintenance services. Without competitive pressure, the contractor has less incentive to offer the most cost-effective solution, potentially leading to higher overall government expenditure.

Public Impact

U.S. Customs and Border Protection (CBP) personnel benefit from the reliable operation of non-intrusive inspection equipment. Services ensure the continued functionality of critical technology used for screening cargo and individuals at ports of entry. Geographic impact is nationwide, covering various border crossings and ports of entry where this equipment is deployed. Workforce implications include ensuring that CBP officers have the tools they need to perform their duties efficiently and effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs for taxpayers.
Lack of competition may reduce incentives for contractor efficiency and innovation.
High contract value necessitates rigorous oversight to ensure value for money.
Dependence on a single vendor for critical equipment maintenance poses a supply chain risk.

Positive Signals

Contract ensures continued operational readiness of essential border security technology.
Fixed-price contract provides some level of cost predictability for the government.
Maintenance services are vital for the effective functioning of non-intrusive inspection systems.

Sector Analysis

The market for non-intrusive inspection (NII) equipment and its maintenance is a specialized segment within the broader security and defense technology sector. This sector is characterized by high barriers to entry due to technological complexity and stringent government requirements. Companies like Rapiscan Systems Inc. often hold significant market share due to proprietary technology or established relationships. Comparable spending benchmarks are difficult to ascertain without more detailed service scope and pricing data, but significant investments are typical for maintaining advanced NII systems critical for national security.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. As a sole-source award to a large business, it does not directly benefit the small business ecosystem. The primary contractor, Rapiscan Systems Inc., is likely a large entity, and opportunities for small businesses would typically arise only if they are part of the prime contractor's supply chain, which is not specified here.

Oversight & Accountability

Oversight for this contract would fall under the Department of Homeland Security (DHS) and specifically U.S. Customs and Border Protection (CBP). Given the sole-source nature and significant value, robust oversight is crucial. This would involve regular performance reviews, monitoring of service delivery against contract requirements, and ensuring that the fixed-price remains reasonable throughout the contract term. Transparency would be enhanced through public contract databases and potentially through internal DHS reporting mechanisms. Inspector General jurisdiction would apply for any investigations into fraud, waste, or abuse.

Related Government Programs

Homeland Security Grants Program
Border Security Technology Modernization
Customs and Border Protection Operations Support
Federal Supply Schedule (FSS) Contracts for Maintenance

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
High contract value requires diligent oversight to ensure value for money.
Dependence on a single vendor for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $81.4 million to RAPISCAN SYSTEMS INC. NON-INTRUSIVE INSPECTION DETECTION EQUIPMENT - MAINTENANCE AND REPAIR

Who is the contractor on this award?

The obligated recipient is RAPISCAN SYSTEMS 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 $81.4 million.

What is the period of performance?

Start: 2024-09-15. End: 2026-04-26.

What is the track record of Rapiscan Systems Inc. in providing maintenance and repair services for non-intrusive inspection equipment to government agencies?

Rapiscan Systems Inc. is a known provider of non-intrusive inspection technology, including X-ray scanners and related systems, used by various government agencies, particularly in border security and cargo screening. Their track record typically involves supplying and maintaining these complex systems. Historical data from contract databases may reveal past performance ratings, any significant issues encountered on previous contracts, and their success in meeting delivery and performance metrics. Analyzing past contract awards and performance evaluations for Rapiscan Systems Inc. would provide insight into their reliability and capability in fulfilling such maintenance requirements. It's important to review if they have consistently met service level agreements and if there have been any disputes or contract modifications that indicate performance challenges.

How does the annual value of this contract compare to similar maintenance contracts for non-intrusive inspection equipment awarded to other vendors?

Comparing the annual value of this contract, approximately $40.7 million ($81.4M / 2 years), to similar maintenance contracts is challenging due to the sole-source nature of this award and the proprietary nature of specialized equipment. Typically, competitive procurements for similar services would provide a benchmark. If other agencies procure maintenance for comparable NII systems through competitive means, their contract values could serve as a reference point. However, differences in equipment type, volume, geographic coverage, and service level agreements can significantly impact pricing. Without access to a broader dataset of competitively bid contracts for similar NII maintenance, a direct, precise comparison is difficult. The absence of competition here suggests this figure might not reflect the lowest possible market price.

What are the specific risks associated with relying on a single vendor for the maintenance of critical border security equipment?

Relying on a single vendor, Rapiscan Systems Inc., for the maintenance of critical border security equipment presents several risks. Firstly, there's a risk of vendor lock-in, where the government becomes overly dependent on one supplier, potentially leading to escalating costs over time as the vendor faces less competitive pressure. Secondly, operational continuity is at risk; if the vendor experiences financial difficulties, labor disputes, or supply chain disruptions, it could directly impact the availability and functionality of essential inspection equipment, thereby compromising border security operations. Thirdly, there's a reduced incentive for the vendor to innovate or improve service quality beyond the contractually mandated minimums. Finally, the lack of competition limits the government's ability to leverage market dynamics for better pricing or service terms.

What is the expected impact of this contract on the operational effectiveness of U.S. Customs and Border Protection's inspection capabilities?

This contract is expected to ensure the continued operational effectiveness of U.S. Customs and Border Protection's (CBP) non-intrusive inspection (NII) capabilities. NII equipment, such as X-ray scanners, is vital for screening large volumes of cargo and conveyances efficiently and effectively, identifying threats without requiring manual inspection. Regular, high-quality maintenance and repair services are essential to minimize downtime and ensure these systems function optimally. By securing these services, CBP can maintain its ability to detect contraband, weapons, and other illicit materials, thereby supporting national security and facilitating legitimate trade. The contract's duration of approximately two years suggests a commitment to sustained operational readiness for these critical assets.

Has the Department of Homeland Security previously awarded sole-source contracts of similar magnitude for maintenance of NII equipment?

The Department of Homeland Security (DHS), including its component U.S. Customs and Border Protection (CBP), has a history of awarding sole-source or limited-competition contracts for specialized equipment maintenance, particularly for systems where a single vendor holds proprietary technology or significant market dominance. While specific data on the magnitude of all such past contracts requires detailed analysis of federal procurement databases, it is not uncommon for critical, high-tech security equipment to be maintained under such arrangements, especially if the original equipment manufacturer (OEM) is the only entity with the necessary expertise, parts, or certifications. The justification for sole-sourcing is typically based on factors like unique capabilities, urgent needs, or the lack of viable alternatives, which are often documented in contract award justifications.

Industry Classification

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: OSI Systems, Inc.

Address: 2805 COLUMBIA ST, TORRANCE, CA, 90503

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: $153,028,716

Exercised Options: $81,416,250

Current Obligation: $81,416,250

Actual Outlays: $42,691,549

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline