DHS awards $4.97M for VTOL UAV system development, a sole-source contract with a 22-month duration

Contract Overview

Contract Amount: $49,700,000 ($49.7M)

Contractor: Integrated Coast Guard Systems LLC

Awarding Agency: Department of Homeland Security

Start Date: 2004-02-04

End Date: 2005-11-30

Contract Duration: 665 days

Daily Burn Rate: $74.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SYSTEM DEVELOPMENT OF THE VTOL UAV

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20003

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $49.7 million to INTEGRATED COAST GUARD SYSTEMS LLC for work described as: SYSTEM DEVELOPMENT OF THE VTOL UAV Key points: 1. Contract awarded for system development of a Vertical Take-Off and Landing (VTOL) Unmanned Aerial Vehicle (UAV). 2. The contract was sole-sourced, raising questions about potential price competition. 3. Performance period spans 22 months, from February 2004 to November 2005. 4. The contract value is $4.97 million, with a base award of $747,370. 5. The North American Industry Classification System (NAICS) code is 334511, related to instrument manufacturing. 6. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 7. The award was a delivery order, suggesting it's part of a larger contract vehicle.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its specific nature and the lack of publicly available comparable sole-source awards for VTOL UAV system development during that period. The initial award of $747,370 out of a potential $4.97 million suggests significant future work or options, the pricing of which would require detailed cost analysis. Without competitive bids, it's difficult to ascertain if the government secured the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor was solicited. This approach is typically used when only one source is capable of meeting the requirement, or in cases of urgent need. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to achieve cost savings for taxpayers. The absence of multiple bids means there's no direct price comparison to ensure the selected price is the most advantageous.

Public Impact

The primary beneficiary is the U.S. Coast Guard, which will receive the developed VTOL UAV system. The system is intended for search, detection, navigation, guidance, and related aeronautical/nautical operations. The geographic impact is likely focused on areas where the Coast Guard operates, potentially including coastal regions and maritime patrol zones. The contract supports the development of advanced unmanned aerial vehicle technology, potentially enhancing operational capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
Lack of competition may reduce incentives for the contractor to optimize performance or delivery timelines.
Specific details on the technical requirements and performance metrics are not readily available for independent assessment.
The contract duration of 22 months for system development could be subject to delays without competitive pressure.

Positive Signals

Firm Fixed Price contract structure shifts cost overrun risks to the contractor.
The contract is for system development, indicating a focus on innovation and advanced capabilities.
The award is for a critical function (search and detection) for the U.S. Coast Guard.

Sector Analysis

The contract falls within the aerospace and defense sector, specifically focusing on unmanned aerial systems (UAS) or drones. The market for UAS is rapidly growing, with significant government investment in surveillance, reconnaissance, and operational support capabilities. This contract for VTOL UAV system development aligns with broader trends in military and homeland security applications of drone technology. Comparable spending benchmarks would typically involve R&D contracts for advanced aviation systems.

Small Business Impact

There is no indication that this contract involved small business set-asides. As a sole-source award for specialized system development, it is likely that the prime contractor is a larger entity. Subcontracting opportunities for small businesses would depend on the prime contractor's procurement practices, which are not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would fall under the Department of Homeland Security's procurement and program management offices. As a delivery order, it might be subject to the oversight of the contracting activity that established the parent contract vehicle. Transparency is limited due to the sole-source nature and the age of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Unmanned Aerial Vehicle (UAV) Development Programs
Homeland Security Technology Acquisition
Coast Guard Aviation Systems
Search and Detection Technology Contracts

Risk Flags

Sole-source award raises concerns about price competition.
Lack of transparency regarding the justification for sole-sourcing.
Potential for cost overruns if unforeseen technical challenges arise under FFP.
Limited public information on contractor performance for this specific award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $49.7 million to INTEGRATED COAST GUARD SYSTEMS LLC. SYSTEM DEVELOPMENT OF THE VTOL UAV

Who is the contractor on this award?

The obligated recipient is INTEGRATED COAST GUARD SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $49.7 million.

What is the period of performance?

Start: 2004-02-04. End: 2005-11-30.

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

Sole-source awards are typically justified when only one responsible source is available to meet the agency's needs. This could be due to unique capabilities, proprietary technology, or urgent and compelling circumstances that preclude full and open competition. For this specific contract, the justification would likely stem from the specialized nature of VTOL UAV system development and the perceived unique qualifications of Integrated Coast Guard Systems LLC. Without access to the official Justification for Other Than Full and Open Competition (JOFOC) document, the precise reasons remain speculative but would center on the contractor's ability to fulfill a highly specific technical requirement that other firms could not meet at the time.

How does the $4.97 million contract value compare to similar VTOL UAV system development contracts awarded around 2004-2005?

Directly comparing the $4.97 million value of this sole-source VTOL UAV system development contract to similar awards from 2004-2005 is difficult without access to a comprehensive database of contemporaneous contracts, especially those also awarded on a sole-source basis for specialized R&D. The market for advanced UAV systems was less mature then compared to today. However, for system development, especially involving novel technologies like VTOL capabilities, multi-million dollar awards were not uncommon for defense and homeland security applications. The value would be considered reasonable if it reflected the complexity, innovation, and specific performance requirements of the system being developed, assuming the contractor possessed unique expertise.

What are the primary risks associated with a sole-source contract for system development?

The primary risks associated with a sole-source contract for system development include a lack of price competition, which can lead to inflated costs for the government. There's also a reduced incentive for the contractor to innovate aggressively or maintain strict cost controls, as they face no direct competitive pressure. Furthermore, the government may be locked into a specific technology or vendor, limiting future flexibility. Performance risks can also be elevated if the sole-source provider lacks robust project management or technical depth, as there are fewer external benchmarks for performance. Finally, sole-source awards can sometimes face public scrutiny regarding fairness and the efficient use of taxpayer funds.

What is the significance of the 'DELIVERY ORDER' contract award type?

The 'DELIVERY ORDER' designation indicates that this contract is likely a task order issued under a previously established indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar type of contract vehicle. This means that the basic terms, conditions, and pricing structure were likely negotiated and awarded earlier, possibly through a competitive process for the IDIQ. The delivery order then specifies the exact quantity, delivery schedule, and sometimes specific pricing for a particular segment of work. For this contract, it suggests that Integrated Coast Guard Systems LLC may have held a broader contract with the U.S. Coast Guard or DHS, and this order represents a specific call for the VTOL UAV system development.

How does the Firm Fixed Price (FFP) contract type impact cost control for this development project?

A Firm Fixed Price (FFP) contract type places the majority of the cost risk on the contractor. This means that the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. For a system development project, this can incentivize the contractor to manage their resources efficiently and control costs to maximize profit. However, it can also lead to contractors being hesitant to incorporate significant design changes or address unforeseen technical challenges if they believe it will increase their costs beyond the fixed price, potentially impacting the final system's capabilities or requiring contract modifications.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 300 M ST SE STE 685, WASHINGTON, DC, 20003

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $49,700,000

Exercised Options: $49,700,000

Current Obligation: $49,700,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: DTCG2302C2DW001

IDV Type: IDC

Timeline