DHS awards $43M for L3 EDS maintenance, raising questions about competition and value

Contract Overview

Contract Amount: $43,152,960 ($43.2M)

Contractor: Leidos Security Detection & Automation, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2018-09-13

End Date: 2019-05-31

Contract Duration: 260 days

Daily Burn Rate: $166.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: L3 EDS MAINTENANCE ORDERING PERIOD 3 TASK ORDER

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $43.2 million to LEIDOS SECURITY DETECTION & AUTOMATION, INC. for work described as: L3 EDS MAINTENANCE ORDERING PERIOD 3 TASK ORDER Key points: 1. Contract awarded through a sole-source justification, limiting competitive pricing opportunities. 2. Performance period is relatively short, suggesting potential for future re-competition or contract modifications. 3. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 4. No small business set-aside was utilized, potentially impacting small business participation. 5. The North American Industry Classification System (NAICS) code indicates a focus on equipment repair and maintenance. 6. The award was made by the Department of Homeland Security, specifically the Transportation Security Administration.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bidding. The $43.15 million awarded for a roughly 8-month period (September 2018 to May 2019) for L3 EDS maintenance appears high without comparative data. The firm fixed-price structure is standard, but the absence of competition prevents a robust assessment of whether the government received the best possible price. Further analysis would require understanding the specific maintenance requirements and comparing them to industry standards for similar equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one contractor, Leidos Security Detection & Automation, Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified under specific circumstances (e.g., urgency, unique capabilities), they inherently limit price discovery and can lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: The lack of competition means taxpayers may not have benefited from the cost savings that could have resulted from a bidding war among multiple qualified vendors. This can lead to less efficient use of public funds.

Public Impact

The Transportation Security Administration (TSA) benefits from the continued maintenance of its L3 EDS (Explosive Detection System) equipment, crucial for airport security. This contract ensures the operational readiness of critical security screening technology at airports nationwide. The maintenance services directly support the TSA's mission to protect the nation's transportation systems. Workforce implications are likely within Leidos, involving skilled technicians and support staff for equipment repair and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Absence of small business participation opportunities in this specific award.
Limited performance data available to assess the contractor's track record on this specific task order.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Award to an established company (Leidos) suggests potential for reliable service delivery.
Maintenance of critical security equipment ensures operational continuity for TSA.

Sector Analysis

This contract falls within the broader 'Defense Industrial Base' or 'Government Services' sector, specifically focusing on the maintenance and repair of specialized electronic equipment. The market for such services is often characterized by a mix of large defense contractors and specialized maintenance providers. Given the critical nature of security equipment, contracts are often awarded to companies with proven expertise and security clearances. Benchmarking spending requires comparing similar maintenance contracts for security screening technology across government agencies.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award went to Leidos Security Detection & Automation, Inc., a large entity. This means that opportunities for small businesses to participate in this specific contract, either as prime contractors or subcontractors, were likely limited or non-existent, potentially impacting the small business ecosystem that supports government contracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security's internal contracting and program management offices, with potential oversight from the Transportation Security Administration's contracting officers. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. Transparency is limited due to the sole-source nature of the award, making public oversight of the procurement process more challenging.

Related Government Programs

TSA Security Equipment Maintenance Contracts
Department of Homeland Security IT and Equipment Support
Federal Electronic Equipment Repair Services
Leidos Government Contracts

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Lack of transparency in the justification for not competing the contract.
Potential for higher costs to taxpayers due to limited vendor options.
Absence of small business participation opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $43.2 million to LEIDOS SECURITY DETECTION & AUTOMATION, INC.. L3 EDS MAINTENANCE ORDERING PERIOD 3 TASK ORDER

Who is the contractor on this award?

The obligated recipient is LEIDOS SECURITY DETECTION & AUTOMATION, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Transportation Security Administration).

What is the total obligated amount?

The obligated amount is $43.2 million.

What is the period of performance?

Start: 2018-09-13. End: 2019-05-31.

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

The provided data indicates the contract was 'NOT COMPETED' and awarded via a 'DELIVERY ORDER' under a 'VA' (likely a Basic Ordering Agreement or Indefinite Delivery/Indefinite Quantity contract). While the specific justification for the sole-source award is not detailed in the snippet, common reasons include: the existence of a unique capability held by only one source, urgency of need where competition is not feasible, or if the award was made under a pre-existing contract vehicle that was itself competed. Without the specific justification document, it's impossible to definitively state why competition was bypassed. However, sole-source awards generally require rigorous justification to ensure fair and reasonable pricing and to comply with federal procurement regulations.

How does the cost per day or per month for this maintenance contract compare to industry benchmarks?

Calculating a precise cost per day or month requires dividing the total award amount ($43,152,960.06) by the contract duration (260 days, which is approximately 8.5 months). This yields a daily cost of roughly $165,973. Without specific details on the type and number of L3 EDS units maintained, the scope of services (e.g., preventative maintenance, emergency repairs, parts included), and the geographic coverage, a direct comparison to industry benchmarks is difficult. However, for specialized, high-security equipment maintenance, costs can be substantial. A more accurate benchmark would involve comparing this to other TSA or similar agency contracts for maintaining Explosive Detection Systems, considering factors like equipment model, age, and service level agreements.

What is Leidos Security Detection & Automation, Inc.'s track record with similar TSA maintenance contracts?

Leidos, as a large government contractor, likely has a significant track record in providing various services, including maintenance and support for complex systems. For the TSA specifically, Leidos has been involved in providing security technology solutions and related services. To assess their track record on *similar* L3 EDS maintenance contracts, one would need to examine past performance evaluations, contract history databases (like FPDS or USASpending), and any publicly available reports or awards related to their work with the TSA on EDS systems. The fact that they were awarded this sole-source task order suggests they possess the necessary qualifications and potentially a prior relationship or capability that the TSA deemed essential.

What are the potential risks associated with a sole-source award for critical security equipment maintenance?

The primary risk of a sole-source award for critical security equipment maintenance is the potential for inflated costs due to the lack of competitive pressure. Without multiple bidders vying for the contract, the government may end up paying a higher price than if the contract were competed. Another risk is complacency; the sole contractor might have less incentive to innovate or improve service quality over time compared to a competitive environment. Furthermore, reliance on a single source can create vulnerabilities if that contractor experiences financial difficulties, operational issues, or decides to exit the market. This could disrupt the maintenance of essential security equipment, impacting national security operations.

How has federal spending on L3 EDS maintenance evolved over the past five years?

The provided data snippet only covers a single delivery order from September 2018 to May 2019. To analyze the evolution of federal spending on L3 EDS maintenance over the past five years, a broader search across federal procurement databases (e.g., USASpending.gov) would be necessary. This would involve identifying all contracts awarded by agencies like the TSA for the maintenance, repair, and support of L3 Explosive Detection Systems, or similar security screening equipment. Analyzing trends would require aggregating spending data, identifying the primary contractors, and noting any shifts in procurement strategies (e.g., from sole-source to competitive awards or vice versa) or changes in the total value of awarded contracts year-over-year.

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: L3harris Technologies, Inc (UEI: 004203337)

Address: 10E COMMERCE WAY, WOBURN, MA, 01801

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: $43,152,960

Exercised Options: $43,152,960

Current Obligation: $43,152,960

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HSTS0415DCT3000

IDV Type: IDC

Timeline