DoD awards $2.39M for analytical instruments, raising questions about competition and value

Contract Overview

Contract Amount: $2,391,912 ($2.4M)

Contractor: Cepheid

Awarding Agency: Department of Defense

Start Date: 2021-10-01

End Date: 2026-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $1.3K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: XPRSFLU-10 BASE YEAR AWARD

Place of Performance

Location: FORT HOOD, BELL County, TEXAS, 76544

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $2.4 million to CEPHEID for work described as: XPRSFLU-10 BASE YEAR AWARD Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract type offers some cost certainty but doesn't mitigate the risk of overpayment due to lack of competition. 3. The duration of the contract (5 years) is substantial, suggesting a long-term need for these analytical instruments. 4. The North American Industry Classification System (NAICS) code 334516 indicates a focus on analytical laboratory instrument manufacturing. 5. The award was made to CEPHEID, a single contractor, highlighting a lack of broader market engagement. 6. The contract's base year award is $2.39 million, providing a significant financial commitment.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source award and limited public data. Without competitive bids, it's difficult to ascertain if the $2.39 million for the base year represents a fair market price for analytical laboratory instruments. The fixed-price nature provides some cost control, but the absence of competition means the government may not be achieving the best possible value. Further analysis would require comparing this award to similar sole-source procurements or publicly available pricing for comparable instruments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed under the Simplified Acquisition Procedures (SAP), indicating it was likely awarded through a sole-source justification. The absence of multiple bidders means there was no direct price competition, which typically drives down costs for the government. The limited competition raises concerns about whether the government secured the most advantageous terms and pricing available in the market.

Taxpayer Impact: The lack of competition means taxpayers may have paid a premium for these analytical instruments, as there was no market pressure to offer the lowest possible price.

Public Impact

The Department of Defense, specifically the Department of the Army, is the primary beneficiary, likely for research, testing, or operational analysis. The contract will deliver analytical laboratory instruments, crucial for scientific and diagnostic purposes within military operations. The geographic impact is centered in Texas (ST), where the contractor is located, but the instruments' use could be widespread across military facilities. The contract may support specialized technical roles within the Army, requiring skilled personnel to operate and maintain the instruments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially inflates costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Long contract duration (5 years) without demonstrated competitive re-evaluation.
No indication of small business subcontracting goals or achievements.

Positive Signals

Fixed-price contract type provides some cost predictability.
Award to a specific contractor suggests a potentially specialized or critical need.
Contract supports the Department of Defense, a key government function.

Sector Analysis

The contract falls within the Analytical Laboratory Instrument Manufacturing sector, a niche within the broader scientific and medical equipment industry. This sector is characterized by high R&D investment, specialized manufacturing processes, and often, proprietary technology. Comparable spending benchmarks are difficult to establish without more specific details on the instruments, but the market typically involves a few key players supplying advanced analytical tools to government and commercial entities.

Small Business Impact

The data indicates that small business participation was not a stated factor in this award (SB: false, SS: false). There is no information regarding small business set-asides or subcontracting plans. This suggests that the procurement did not prioritize or leverage the small business industrial base, potentially missing opportunities to foster growth and innovation within that sector.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Transparency is limited due to the sole-source nature of the award. Accountability measures would be tied to the contractor's performance against the contract's specifications and delivery schedules. Inspector General jurisdiction may apply if performance issues or allegations of impropriety arise.

Related Government Programs

Department of Defense Research and Development Contracts
Army Medical and Research Procurement
Scientific and Laboratory Equipment Procurement
Sole-Source Justification Procurements

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Lack of transparency regarding the justification for sole-source procurement.
Potential for overpayment due to absence of competitive bidding over a 5-year term.
No clear indication of small business participation or subcontracting.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.4 million to CEPHEID. XPRSFLU-10 BASE YEAR AWARD

Who is the contractor on this award?

The obligated recipient is CEPHEID.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $2.4 million.

What is the period of performance?

Start: 2021-10-01. End: 2026-09-30.

What specific analytical laboratory instruments are being procured under this contract, and what is their intended use by the Department of the Army?

The provided data identifies the NAICS code as 334516 (Analytical Laboratory Instrument Manufacturing) and the contractor as CEPHEID. While the specific instruments are not detailed, this NAICS code typically covers devices such as spectrometers, chromatographs, microscopes, and other laboratory equipment used for analysis, measurement, and testing. For the Department of the Army, these instruments could be utilized in various capacities, including battlefield diagnostics, environmental monitoring, materials testing, medical research, or quality assurance for military supplies. The exact application would depend on the specific capabilities of the instruments supplied by Cepheid under this contract.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The data indicates the contract was 'NOT COMPETED UNDER SAP' and awarded as a 'PURCHASE ORDER' with a 'sole-source' designation. Typically, sole-source awards are justified when only one responsible source can provide the required supplies or services. This could be due to proprietary technology, unique capabilities, urgent and compelling needs where competition is not feasible, or if the requirement is a follow-on to a previous sole-source award where the original justification still holds. Without the specific justification document, it's impossible to determine the precise reason, but it implies that the Army determined that competition was not practicable or not in the government's best interest at the time of award.

How does the $2.39 million base year award compare to historical spending on similar analytical instruments by the Department of Defense?

Comparing the $2.39 million base year award to historical spending requires access to a broader dataset of DoD procurements for analytical laboratory instruments. The provided data is limited to this single contract. However, for a 5-year contract with a base year award of this magnitude, it suggests a significant investment. To benchmark effectively, one would need to analyze past contracts for similar instruments (e.g., by specific type or manufacturer) awarded to the DoD or other federal agencies, looking at both sole-source and competitively awarded contracts to understand typical price ranges and identify any outliers. Without this comparative data, it's difficult to definitively assess if this award represents a favorable or unfavorable historical spending trend.

What are the potential risks associated with a 5-year fixed-price contract awarded on a sole-source basis for analytical instruments?

A significant risk with a 5-year, sole-source, fixed-price contract is the potential for the government to overpay due to the lack of competitive pressure. While fixed-price offers cost certainty, the absence of competition means the contractor may not be incentivized to offer the lowest possible price. Over the 5-year term, market prices for similar instruments could decrease, or technological advancements could render the procured equipment less effective, yet the government remains obligated to the agreed-upon price. Furthermore, sole-source awards can limit the government's ability to leverage new technologies or suppliers that might emerge during the contract period. There's also a risk that the contractor's performance could degrade over time without the threat of losing future business to competitors.

What is Cepheid's track record as a government contractor, particularly for analytical laboratory instruments?

The provided data only identifies Cepheid as the contractor for this specific award. To assess their track record, a comprehensive review of federal procurement databases would be necessary. This would involve examining past contracts awarded to Cepheid, including their value, type (sole-source vs. competitive), performance history (if available), and the types of goods or services provided. Understanding their history with the Department of Defense and other agencies, especially for similar analytical instruments, would provide crucial context for evaluating their reliability, pricing, and overall performance as a government supplier.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Analytical Laboratory Instrument Manufacturing

Product/Service Code: LEASE/RENT EQUIPMENT › LEASE OR RENTAL OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: W81K0021Q0159

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Danaher Corporation

Address: 904, EAST CARIBBEAN DRIVE, SUNNYVALE, CA, 94089

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: $2,391,912

Exercised Options: $2,391,912

Current Obligation: $2,391,912

Actual Outlays: $224,701

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline