DoD's $43.4M contract with Federal Prison Industries for SINCGARS kits lacked competition, raising value concerns
Contract Overview
Contract Amount: $43,440,145 ($43.4M)
Contractor: Federal Prison Industries, Inc
Awarding Agency: Department of Defense
Start Date: 2008-12-08
End Date: 2009-11-05
Contract Duration: 332 days
Daily Burn Rate: $130.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: LETTER CONTRACT WITH FEDERAL PRISONS INDUSTRIES TO PROCURE SINCGARS INSTALLATION KITS
Place of Performance
Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20534
Plain-Language Summary
Department of Defense obligated $43.4 million to FEDERAL PRISON INDUSTRIES, INC for work described as: LETTER CONTRACT WITH FEDERAL PRISONS INDUSTRIES TO PROCURE SINCGARS INSTALLATION KITS Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. No competition was documented, suggesting a lack of market research or strategic sourcing. 3. The contract duration was relatively short, indicating a specific, potentially urgent need. 4. The firm-fixed-price structure shifts cost risk to the government. 5. Federal Prison Industries' unique position as a government-affiliated entity may influence pricing and availability. 6. The absence of small business participation is noted, with no set-aside or subcontracting requirements.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to its sole-source nature and the unique supplier. Without competitive bids, it's difficult to ascertain if the $43.4 million price reflects fair market value. The lack of comparable contracts awarded through open competition makes a direct price comparison impossible. The government accepted the price offered by Federal Prison Industries without a competitive process to drive it down.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded to Federal Prison Industries, Inc. without competition. The documentation indicates a sole-source award, meaning only one vendor was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors vying for the contract. The lack of competition means the government did not benefit from the price reductions and innovation that can arise from a competitive environment.
Taxpayer Impact: Taxpayers may have paid a premium for these installation kits due to the absence of competitive pressure to lower prices. The government's ability to secure the best possible value was likely diminished.
Public Impact
The primary beneficiary is the Department of the Army, which receives SINCGARS installation kits. These kits are crucial for the functionality and deployment of secure communication systems for military personnel. The contract supports the operational readiness of communication units within the Army. The contract's impact on the broader defense industrial base is limited due to its sole-source nature.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition raises concerns about potential overpayment and suboptimal value for taxpayer funds.
- Sole-source awards can stifle innovation by not encouraging market exploration for alternative solutions or better pricing.
- Reliance on a single supplier, even a government entity, can create supply chain vulnerabilities.
- The firm-fixed-price contract places all cost overrun risk on the government.
- No small business participation was mandated, potentially excluding smaller innovative firms from contributing.
Positive Signals
- Ensures a supply of critical communication equipment for the Department of the Army.
- Utilizes a government-affiliated entity, potentially aligning with broader government objectives.
- The firm-fixed-price contract provides cost certainty for the government once awarded.
- The contract was awarded to a domestic entity, supporting domestic industrial capacity.
Sector Analysis
This contract falls within the broader telecommunications equipment manufacturing sector. The market for military communication systems is specialized, often involving high-security requirements and specific technical standards. While the North American Industry Classification System (NAICS) code 334220 covers Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing, military-specific systems like SINCGARS represent a niche within this larger industry. Spending in this sector is driven by defense modernization efforts and the need for secure, reliable communication capabilities.
Small Business Impact
This contract did not include any small business set-aside provisions, nor does it appear to have requirements for subcontracting to small businesses. The award to Federal Prison Industries, Inc., a government entity, means that opportunities for small businesses to participate in this specific procurement were non-existent. This approach bypasses the typical mechanisms designed to foster small business participation in federal contracting.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and approval process would be subject to review. Transparency is limited due to the lack of a competitive bidding process. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract's execution.
Related Government Programs
- SINCGARS Communication Systems
- Department of Defense Tactical Communications
- Military Radio Equipment Procurement
- Federal Prison Industries Manufacturing Contracts
Risk Flags
- Sole-source award lacks competitive justification.
- Potential for non-competitive pricing.
- Limited transparency in procurement process.
- No small business participation.
Tags
defense, department-of-defense, department-of-the-army, sole-source, firm-fixed-price, communications-equipment, radio-and-television-broadcasting-and-wireless-communications-equipment-manufacturing, federal-prison-industries, district-of-columbia, not-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $43.4 million to FEDERAL PRISON INDUSTRIES, INC. LETTER CONTRACT WITH FEDERAL PRISONS INDUSTRIES TO PROCURE SINCGARS INSTALLATION KITS
Who is the contractor on this award?
The obligated recipient is FEDERAL PRISON INDUSTRIES, INC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $43.4 million.
What is the period of performance?
Start: 2008-12-08. End: 2009-11-05.
What is the track record of Federal Prison Industries, Inc. in supplying similar military communication equipment?
Federal Prison Industries, Inc. (FPI), also known as UNICOR, has a mandate to employ and train federal prisoners in various industries. While FPI produces a range of goods and services, its specific track record in supplying advanced military communication equipment like SINCGARS installation kits is not widely publicized in the same manner as traditional defense contractors. Their primary focus is on providing vocational training and employment for inmates. The nature of their production, often driven by inmate labor and specific government mandates, may differ from the highly competitive and technologically advanced defense electronics market. Information regarding their performance on specific military contracts, beyond this single instance, is limited, making a comprehensive assessment of their track record in this niche difficult without further detailed contract history analysis.
How does the $43.4 million cost compare to market rates for similar installation kits, considering the lack of competition?
Directly comparing the $43.4 million cost to market rates is inherently difficult because this contract was awarded on a sole-source basis to Federal Prison Industries, Inc. Without competitive bids, there is no market-driven price discovery to establish a benchmark. Traditional defense contractors competing for similar equipment might offer different pricing structures based on volume, technological advancements, and their own competitive positioning. The absence of competition means the government accepted FPI's price without the usual pressure to negotiate or find a lower-cost alternative. Therefore, while the dollar amount is fixed, its alignment with 'market rates' in a truly competitive sense is unknown and likely higher than it might have been under open competition.
What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis to Federal Prison Industries?
The primary risks associated with this sole-source award to Federal Prison Industries (FPI) include potential overpayment due to the lack of competitive pricing, limited access to technological innovation that might be offered by other specialized defense contractors, and potential supply chain inflexibility. Since FPI operates under a specific mandate related to inmate employment, its production capacity and responsiveness might differ from commercial entities driven purely by market demand. Furthermore, the firm-fixed-price nature of the contract shifts all cost overrun risks to the government. The lack of competition also means less opportunity for FPI to benchmark its performance against industry standards, potentially impacting long-term efficiency and value.
What is the expected program effectiveness or outcome of procuring SINCGARS installation kits through this contract?
The expected program effectiveness of this contract is the successful procurement and delivery of SINCGARS installation kits to the Department of the Army. These kits are essential components for deploying and utilizing the SINCGARS (Single Channel Ground and Airborne Radio System), a critical tactical radio system used by the U.S. military for secure voice and data communications. By fulfilling this contract, the Army aims to ensure its communication infrastructure remains operational and up-to-date, supporting troop readiness and mission effectiveness in various operational environments. The effectiveness is measured by the timely delivery of functional kits that meet the required technical specifications, thereby enabling the seamless operation of the SINCGARS network.
How does this contract's spending compare to historical spending on SINCGARS or similar communication equipment by the Department of Defense?
Comparing this $43.4 million contract to historical spending on SINCGARS or similar equipment requires access to detailed historical procurement data, which is not fully available in the provided snippet. However, SINCGARS are a long-standing and widely used tactical radio system within the DoD, implying that cumulative spending over decades has been substantial. Individual contract values can fluctuate significantly based on the quantity of kits procured, the specific configuration, and the prevailing market conditions at the time of award. A sole-source award like this one, especially if it represents a specific upgrade or a particular batch of kits, might not be directly comparable to competitively awarded contracts for larger quantities or different system generations. Without broader historical context on DoD's SINCGARS procurement volumes and pricing trends, it's difficult to definitively state how this specific contract's spending aligns with past patterns.
What are the implications of the 'NOT COMPETED' status for future procurements of this nature?
The 'NOT COMPETED' status for this contract signifies that the Department of the Army did not conduct a competitive bidding process. This implies that either a justification for other than full and open competition was approved (e.g., sole-source provider, urgent need, specific capability), or the procurement was handled through a mechanism that bypasses standard competition. For future procurements of SINCGARS installation kits or similar equipment, this status raises questions about whether competition was adequately explored. If similar needs arise, agencies are generally encouraged to pursue competitive strategies to ensure best value. A history of sole-source awards might prompt increased scrutiny from oversight bodies or necessitate a more robust justification for any future non-competitive actions, potentially leading to more competitive solicitations if feasible.
Industry Classification
NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing
Product/Service Code: COMM/DETECT/COHERENT RADIATION
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: Government of the United States (UEI: 161906193)
Address: 320 1ST ST NW, WASHINGTON, DC, 98
Business Categories: Category Business, Government, Manufacturer of Goods, U.S. National Government, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $43,440,145
Exercised Options: $43,440,145
Current Obligation: $43,440,145
Contract Characteristics
Cost or Pricing Data: NO
Timeline
Start Date: 2008-12-08
Current End Date: 2009-11-05
Potential End Date: 2009-11-05 00:00:00
Last Modified: 2009-04-07
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