Homeland Security awards $57.8M for airport security equipment, raising questions about competition and value

Contract Overview

Contract Amount: $57,823,153 ($57.8M)

Contractor: Smiths Detection Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2018-10-01

End Date: 2024-09-28

Contract Duration: 2,189 days

Daily Burn Rate: $26.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER 70T04018J9CAP1112 (DO #1) IS ISSUED AGAINST IDIQ CONTRACT 70T04018D9CAP1035 FOR THE PURCHASE OF SMITHS DETECTION CTX 9800 MS EDS SEIO UNITS AND INSTALLATION AT SEVERAL AIRPORTS.

Place of Performance

Location: NEWARK, ALAMEDA County, CALIFORNIA, 94560

State: California Government Spending

Plain-Language Summary

Department of Homeland Security obligated $57.8 million to SMITHS DETECTION INC. for work described as: DELIVERY ORDER 70T04018J9CAP1112 (DO #1) IS ISSUED AGAINST IDIQ CONTRACT 70T04018D9CAP1035 FOR THE PURCHASE OF SMITHS DETECTION CTX 9800 MS EDS SEIO UNITS AND INSTALLATION AT SEVERAL AIRPORTS. Key points: 1. The contract for advanced explosive detection systems was awarded without competition, potentially limiting price discovery. 2. The duration of the contract, nearly six years, suggests a long-term need for these specialized security units. 3. The sole-source nature of this award warrants scrutiny to ensure fair market value was obtained. 4. The Transportation Security Administration (TSA) is the primary beneficiary, enhancing airport security infrastructure. 5. The contract falls under the Irradiation Apparatus Manufacturing sector, indicating specialized technology procurement. 6. The absence of small business set-asides or subcontracting plans may limit opportunities for smaller firms.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. The price of $57.8 million for Smiths Detection CTX 9800 MS EDS SEIO units and installation across multiple airports needs further investigation. Without comparable contract data or market analysis, it's difficult to definitively assess if this represents a fair price. The long contract duration (nearly six years) could also inflate costs if not managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Smiths Detection Inc., was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they reduce the government's ability to leverage competition to secure the best possible pricing and terms.

Taxpayer Impact: Taxpayers may be paying a premium for this equipment and installation due to the lack of competitive pressure. Without a bidding process, there's less assurance that the government secured the most cost-effective solution available in the market.

Public Impact

Aviation security personnel at various airports will utilize the new detection systems. Passengers at airports receiving these units will benefit from enhanced security screening. The contract supports the TSA's mission to protect the nation's transportation systems. The installation and deployment of this equipment will likely involve specialized technicians, potentially impacting the workforce in the security technology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and transparency.
Long contract duration could lead to cost overruns if not managed diligently.
Lack of small business participation may not fully leverage the broader industrial base.

Positive Signals

Procurement of advanced security technology to enhance national safety.
Long-term contract provides stability for equipment supply and maintenance.
Supports a critical government agency (TSA) in its core mission.

Sector Analysis

This contract falls within the broader defense and security sector, specifically focusing on specialized equipment for transportation security. The market for advanced threat detection systems is characterized by high technological barriers to entry and a limited number of specialized manufacturers. Comparable spending benchmarks are difficult to establish without more detailed cost breakdowns and market intelligence on similar systems.

Small Business Impact

This contract does not appear to include any specific small business set-asides or subcontracting requirements. The sole-source nature of the award means that opportunities for small businesses to participate, either as prime contractors or subcontractors, were likely not explored or mandated. This could limit the economic benefits for the small business ecosystem in this specialized technology area.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security's internal procurement and program management offices, as well as the Transportation Security Administration. Transparency is limited due to the sole-source nature. Inspector General reviews could be initiated if specific concerns regarding waste, fraud, or abuse arise, but proactive oversight is less likely without a competitive process.

Related Government Programs

Transportation Security Administration (TSA) Equipment Procurement
Airport Security Technology Contracts
Explosive Detection Systems
Department of Homeland Security (DHS) Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for overpayment due to lack of competition.
Limited transparency in procurement process.
Long contract duration requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $57.8 million to SMITHS DETECTION INC.. DELIVERY ORDER 70T04018J9CAP1112 (DO #1) IS ISSUED AGAINST IDIQ CONTRACT 70T04018D9CAP1035 FOR THE PURCHASE OF SMITHS DETECTION CTX 9800 MS EDS SEIO UNITS AND INSTALLATION AT SEVERAL AIRPORTS.

Who is the contractor on this award?

The obligated recipient is SMITHS DETECTION 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 $57.8 million.

What is the period of performance?

Start: 2018-10-01. End: 2024-09-28.

What is the track record of Smiths Detection Inc. with the TSA and DHS for similar equipment?

Smiths Detection Inc. has a history of providing security screening equipment to government agencies, including the TSA. They are a known provider of advanced threat detection systems. Researching past contracts with the TSA and DHS for CTX models or similar EDS (Explosive Detection System) units would reveal their performance history, including delivery timeliness, system reliability, and any past issues or successes. This historical data is crucial for understanding their capability and reliability in fulfilling this current sole-source award.

How does the per-unit cost of the CTX 9800 MS EDS compare to market rates or previous procurements?

Determining the exact per-unit cost is difficult without a detailed breakdown of the $57.8 million award, which includes both equipment and installation. However, given this is a sole-source contract, a direct comparison to market rates or previous competitive procurements is essential for assessing value. If previous, similar procurements were competed and resulted in lower per-unit costs, or if independent market research indicates significantly lower prices for comparable systems, it would suggest this contract may not be cost-effective for the government. The long-term nature of the contract also necessitates an analysis of total cost of ownership.

What are the specific risks associated with a sole-source award for critical security infrastructure?

The primary risk of a sole-source award for critical security infrastructure like airport EDS units is the potential for inflated pricing due to the lack of competition. This can lead to a suboptimal use of taxpayer funds. Additionally, it can reduce the incentive for the sole provider to innovate or offer the most advanced technology at the best price. There's also a risk of vendor lock-in, making it difficult and costly to switch providers in the future if performance issues arise or better alternatives become available. Ensuring robust contract management and performance monitoring becomes even more critical in sole-source situations.

How effective are the Smiths Detection CTX 9800 MS EDS units in meeting current airport security threat levels?

The effectiveness of the CTX 9800 MS EDS units is a critical factor in assessing the value of this contract. These systems are designed to detect a wide range of threats, including explosives. Their effectiveness is typically measured by detection rates, false alarm rates, and throughput speed. Information from the TSA's operational testing and evaluation, as well as independent security assessments, would provide insight into how well these units perform against current and evolving security threats. The contract's success hinges on the system's ability to reliably identify threats while maintaining efficient passenger flow.

What has been the historical spending trend for similar airport security equipment by the TSA?

Analyzing historical spending trends for similar airport security equipment by the TSA is crucial for context. This involves examining past budgets allocated for EDS, baggage screening, and other security technology procurements. Understanding whether spending has increased, decreased, or remained stable provides insight into the agency's investment priorities and the market dynamics. If spending on comparable systems has historically been lower, or if previous competitive procurements yielded better value, it raises questions about the current $57.8 million sole-source award. This trend analysis helps in evaluating the reasonableness of the current expenditure.

Are there any alternative technologies or vendors that could have met the TSA's requirements?

The justification for a sole-source award typically requires demonstrating that no other vendor or technology could meet the specific requirements. Investigating whether alternative technologies or vendors exist that could fulfill the TSA's needs for explosive detection systems is key. This might involve reviewing industry reports, competitor offerings, and previous TSA solicitations. If viable alternatives were overlooked or dismissed without proper evaluation, it strengthens the argument that the sole-source decision may not have been optimal, potentially costing taxpayers more and limiting access to innovation.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Irradiation Apparatus Manufacturing

Product/Service Code: ALARM, SIGNAL, SECURITY DETECTION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2202 LAKESIDE BLVD, EDGEWOOD, MD, 21040

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $57,823,153

Exercised Options: $57,823,153

Current Obligation: $57,823,153

Actual Outlays: $3,756,408

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: 70T04018D9CAP1035

IDV Type: IDC

Timeline