DoD's $34.9M counter-UAS contract to SRC Inc. raises questions on competition and value

Contract Overview

Contract Amount: $34,871,152 ($34.9M)

Contractor: SRC Inc

Awarding Agency: Department of Defense

Start Date: 2017-07-31

End Date: 2019-01-31

Contract Duration: 549 days

Daily Burn Rate: $63.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: IGF::OT::IGF UNDEFINITIZED CONTRACT ACTION FOR COUNTER-UNMANNED AERIAL SYSTEMS JOINT URGENT OPERATIONAL NEED LOW, SLOW, SMALL UNMANNED AERIAL VEHICLE INTEGRATED DEFEAT SYSTEM PHASE 0, BLOCK 2 UPGRADES

Place of Performance

Location: SYRACUSE, ONONDAGA County, NEW YORK, 13212

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $34.9 million to SRC INC for work described as: IGF::OT::IGF UNDEFINITIZED CONTRACT ACTION FOR COUNTER-UNMANNED AERIAL SYSTEMS JOINT URGENT OPERATIONAL NEED LOW, SLOW, SMALL UNMANNED AERIAL VEHICLE INTEGRATED DEFEAT SYSTEM PHASE 0, BLOCK 2 UPGRADES Key points: 1. Contract awarded without competition, limiting price discovery and potentially increasing costs. 2. The undefinitized contract action suggests an urgent need, but lacks detailed performance metrics. 3. Engineering services for counter-UAS systems are critical for national security. 4. The contract's duration and cost-plus-no-fee structure warrant scrutiny for value. 5. Limited public information on the specific upgrades makes performance assessment difficult. 6. The sole source nature of this award bypasses opportunities for small business participation.

Value Assessment

Rating: questionable

The contract's cost-no-fee (CNF) structure, while common for urgent needs, offers limited incentive for the contractor to control costs. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of defined scope in the initial undefinitized contract action (UCA) also makes a precise value assessment challenging. Further analysis would require understanding the specific services rendered and the justification for the CNF structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically used when only one source is capable of meeting the requirement, often due to urgency or unique capabilities. The lack of competition means that the government did not benefit from multiple bids, which could have driven down prices and spurred innovation. The justification for this sole-source award is critical for understanding why competitive avenues were not pursued.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no competitive pressure to reduce costs. This can lead to higher overall spending for the government.

Public Impact

The Department of the Army benefits from upgraded counter-unmanned aerial systems (C-UAS) capabilities. Services delivered include engineering support for integrated defeat systems against low, slow, small UAS threats. The contract supports national defense and security interests, with potential geographic impact across deployed military operations. Workforce implications include specialized engineering roles within SRC Inc. and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Undefinitized contract action (UCA) structure can obscure final costs and scope.
Cost-plus-no-fee contract type offers minimal incentive for contractor cost control.
Limited public details on specific upgrades hinder performance and value assessment.
Sole-source award bypasses opportunities for small business participation and innovation.

Positive Signals

Addresses a critical and evolving national security threat (counter-UAS).
Awarded to a contractor with existing expertise in defense systems.
The contract aims to provide essential upgrades to existing defeat systems.
Supports the Department of the Army's operational readiness.

Sector Analysis

The defense sector, particularly in areas related to electronic warfare and integrated defense systems, is experiencing significant growth driven by evolving threats. Counter-unmanned aerial systems (C-UAS) represent a rapidly developing market segment. Spending in this area is often characterized by urgent operational needs and technological advancements, leading to a mix of competed and sole-source awards. Benchmarking this contract's value is challenging without comparable sole-source engineering service contracts for similar C-UAS upgrades.

Small Business Impact

This contract was not competed and did not include small business set-asides. The sole-source nature means that opportunities for small businesses to participate as prime contractors or through subcontracting were likely limited. Without specific subcontracting plans mandated or disclosed, the impact on the small business ecosystem in this specialized defense engineering field remains unclear. Future contracts in this area could benefit from incorporating small business participation goals.

Oversight & Accountability

As an undefinitized contract action (UCA), this award likely falls under the oversight of the Department of Defense's contracting and program management offices. The Inspector General's office may conduct audits or investigations into the contract's execution and cost. Transparency is limited due to the sole-source nature and the lack of detailed public reporting on the specific services and costs. Accountability relies heavily on internal DoD oversight mechanisms and the eventual definitization of the contract.

Related Government Programs

Counter-UAS Systems
Electronic Warfare Systems
Department of the Army Procurement
Engineering Services Contracts
Undefinitized Contract Actions

Risk Flags

Sole-source award
Undefinitized Contract Action (UCA)
Cost-Plus-No-Fee (CNF) pricing
Lack of competition
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.9 million to SRC INC. IGF::OT::IGF UNDEFINITIZED CONTRACT ACTION FOR COUNTER-UNMANNED AERIAL SYSTEMS JOINT URGENT OPERATIONAL NEED LOW, SLOW, SMALL UNMANNED AERIAL VEHICLE INTEGRATED DEFEAT SYSTEM PHASE 0, BLOCK 2 UPGRADES

Who is the contractor on this award?

The obligated recipient is SRC 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 $34.9 million.

What is the period of performance?

Start: 2017-07-31. End: 2019-01-31.

What is the track record of SRC Inc. in delivering counter-UAS solutions to the DoD?

SRC Inc. has a documented history of providing defense electronics and systems, including capabilities relevant to counter-unmanned aerial systems. They have been involved in various programs related to electronic warfare, radar, and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance). While specific details on their C-UAS product performance and reliability in operational environments are often classified or proprietary, their long-standing presence in the defense sector suggests a level of established expertise. The DoD's decision to award this contract, even sole-source, implies a confidence in SRC's ability to meet the urgent operational need for C-UAS upgrades. Further insight could be gained by examining past performance reviews or contract awards related to similar technologies.

How does the $34.9 million contract value compare to similar counter-UAS engineering service contracts?

Directly comparing this $34.9 million contract value is challenging due to its sole-source nature and the specific context of an undefinitized contract action (UCA) for Phase 0, Block 2 upgrades. Competitive contracts for C-UAS systems can vary widely in price depending on the scope, technology maturity, and quantity. However, for specialized engineering services in defense, especially for rapidly evolving technologies like C-UAS, costs can be substantial. Without knowing the exact deliverables, the number of systems affected, and the specific engineering tasks involved, a precise benchmark is difficult. The cost-plus-no-fee (CNF) structure also means the final cost is not fixed, making comparisons to fixed-price contracts less meaningful. It is crucial to analyze the definitized contract and its associated costs once finalized.

What are the primary risks associated with this sole-source, undefinitized contract action?

The primary risks associated with this sole-source, undefinitized contract action (UCA) are multifaceted. Firstly, the sole-source award eliminates competitive pressure, potentially leading to higher costs for the government than if the contract had been competed. Taxpayers may not be receiving the best value. Secondly, the UCA structure means the full scope, cost, and schedule are not yet finalized, introducing uncertainty regarding the final price and delivery timeline. This can lead to cost overruns and delays. Thirdly, the cost-plus-no-fee (CNF) pricing model provides limited incentive for the contractor to control costs efficiently. Finally, the lack of transparency inherent in sole-source awards makes it difficult for external observers to assess the necessity of the expenditure and the fairness of the pricing.

How effective are counter-UAS systems in addressing the threat of small, low, and slow drones?

The effectiveness of counter-unmanned aerial systems (C-UAS) against small, low, and slow drones (sUAS) is a critical and evolving area of defense technology. These systems aim to detect, track, identify, and defeat drone threats. Effectiveness varies significantly based on the specific C-UAS technology employed (e.g., radar, electro-optical/infrared sensors, acoustic sensors, electronic warfare jammers, kinetic defeat mechanisms) and the characteristics of the threat drones. While C-UAS technology has advanced considerably, sUAS can still pose a challenge due to their small size, low altitude, and unpredictable flight paths, making them difficult to detect and track. Integrated systems that combine multiple detection and defeat methods generally offer higher effectiveness. Continuous upgrades, like those intended by this contract, are necessary to keep pace with the rapidly advancing capabilities of adversary drones.

What is the historical spending trend for counter-UAS technologies within the Department of Defense?

Historical spending trends for counter-unmanned aerial systems (C-UAS) within the Department of Defense (DoD) show a significant and accelerating increase over the past decade. Initially, spending was relatively modest, focusing on research and development and early-stage procurement of basic detection systems. As the threat posed by sUAS became more apparent and widespread, particularly in asymmetric warfare scenarios, DoD spending on C-UAS capabilities surged. This includes investments in a wide array of technologies, from advanced sensors and electronic warfare systems to directed energy weapons and kinetic defeat solutions. Budgets allocated to C-UAS programs have grown substantially, reflecting the high priority placed on countering this threat across all branches of the military. This trend is expected to continue as the technology evolves and new threats emerge.

What does the 'Phase 0, Block 2 Upgrades' designation imply for the contract's scope and objectives?

The designation 'Phase 0, Block 2 Upgrades' suggests a specific stage and nature of development and enhancement for the counter-unmanned aerial systems (C-UAS) integrated defeat system. 'Phase 0' typically refers to the earliest stage of a program, often involving concept development, feasibility studies, and initial prototyping or foundational work. 'Block 2 Upgrades' indicates that this contract is intended to enhance an existing system (likely a 'Block 1' or earlier version) rather than developing a completely new one. This implies that the core C-UAS technology is already in place, and the contract focuses on improving its capabilities, performance, or features. The upgrades could encompass software enhancements, hardware modifications, integration of new sensors or effectors, or improvements in system reliability and user interface. The 'urgent operational need' context suggests these upgrades are critical for current military operations.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 7502 ROUND POND RD, NORTH SYRACUSE, NY, 13212

Business Categories: Category Business, Corporate Entity Tax Exempt, Manufacturer of Goods, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $40,474,575

Exercised Options: $40,474,575

Current Obligation: $34,871,152

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $4,875,519

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline