DoD awards $126M for security screening systems, raising questions about competition and value

Contract Overview

Contract Amount: $126,159,262 ($126.2M)

Contractor: Rapiscan Systems Inc

Awarding Agency: Department of Defense

Start Date: 2014-06-20

End Date: 2019-04-23

Contract Duration: 1,768 days

Daily Burn Rate: $71.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RAPISCAN EAGLE M60 SYSTEMS AND CONTRACTOR LOGISTICS SUPPORT

Place of Performance

Location: TORRANCE, LOS ANGELES County, CALIFORNIA, 90503

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $126.2 million to RAPISCAN SYSTEMS INC for work described as: RAPISCAN EAGLE M60 SYSTEMS AND CONTRACTOR LOGISTICS SUPPORT Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Significant contract value suggests potential for substantial taxpayer investment. 3. Long contract duration may indicate a need for ongoing support and maintenance. 4. Focus on security screening systems highlights critical national security needs. 5. Contractor logistics support component suggests a need for specialized maintenance. 6. Geographic focus on California for this award.

Value Assessment

Rating: questionable

The contract's value of $126 million over its period of performance is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition raises concerns about whether the government secured the best possible value for these security screening systems and their associated logistics support. Further analysis would be needed to compare the per-unit cost of the systems and support to industry standards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This means that only one bidder, Rapiscan Systems Inc., was considered. The lack of competition means that the government did not explore alternative solutions or pricing from other potential vendors, which can lead to higher costs and reduced innovation.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, potentially funding higher profit margins for the sole-source provider.

Public Impact

Benefits the Department of Defense by providing essential security screening capabilities. Services delivered include the provision of M60 security screening systems and ongoing contractor logistics support. Geographic impact is noted in California, where the contract is associated. Workforce implications may involve specialized technicians for the maintenance and operation of the screening systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award limits opportunities for small businesses to compete.
Long-term contract could lock the government into a specific technology.
Dependence on a single contractor for critical logistics support.

Positive Signals

Provides critical security screening capabilities for defense operations.
Contractor logistics support ensures system readiness and operational effectiveness.
Firm Fixed Price contract type provides cost certainty for the government.

Sector Analysis

The market for security screening systems, including X-ray and other detection technologies, is a specialized segment within the broader defense and security industry. This contract for Rapiscan Eagle M60 systems falls under instrument manufacturing. Spending in this sector is driven by national security requirements, border control, and critical infrastructure protection. Comparable spending benchmarks would typically involve analyzing procurements of similar advanced screening technologies by various government agencies and international allies.

Small Business Impact

The contract was awarded to Rapiscan Systems Inc. and does not indicate any specific small business set-aside provisions. The sole-source nature of the award also limits opportunities for small businesses to participate as prime contractors. Subcontracting opportunities for small businesses would depend on Rapiscan Systems Inc.'s procurement practices and whether they choose to engage smaller vendors for specific components or services.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance standards and delivery schedules. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise.

Related Government Programs

Customs and Border Protection Screening Equipment
Transportation Security Administration Screening Technology
Department of Energy Security Systems
Military Base Access Control Systems

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $126.2 million to RAPISCAN SYSTEMS INC. RAPISCAN EAGLE M60 SYSTEMS AND CONTRACTOR LOGISTICS SUPPORT

Who is the contractor on this award?

The obligated recipient is RAPISCAN SYSTEMS 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 $126.2 million.

What is the period of performance?

Start: 2014-06-20. End: 2019-04-23.

What is the track record of Rapiscan Systems Inc. in delivering similar security screening systems to government agencies?

Rapiscan Systems Inc. is a known provider of security screening solutions, including baggage and cargo inspection systems. They have a history of supplying equipment to various government entities, including defense, law enforcement, and transportation security agencies worldwide. Their product line often includes advanced imaging technologies. However, specific performance metrics and past delivery success rates for the M60 system or similar large-scale contracts would require a deeper dive into contract performance reports and agency evaluations. Without competitive data, it's challenging to assess if their past performance justifies a sole-source award for this specific requirement.

How does the pricing of the Rapiscan Eagle M60 systems and logistics support compare to market rates for similar technologies?

Benchmarking the pricing for this $126 million sole-source contract is inherently difficult due to the lack of competitive bids. Market rates for advanced security screening systems can vary significantly based on features, throughput, and manufacturer. Typically, systems like the M60, which are designed for robust security applications, command premium pricing. However, without access to competitor pricing or publicly available cost breakdowns, it's impossible to definitively state whether the government received a fair market price. The absence of competition suggests a potential for above-market pricing, as the contractor faced no pressure to offer the lowest possible cost.

What are the primary risks associated with awarding a large contract like this on a sole-source basis?

The primary risks of a sole-source award, especially for a contract valued at $126 million, include potential overpayment due to lack of price competition, reduced innovation from a lack of market pressure, and vendor lock-in. Taxpayers bear the risk of paying a premium for the systems and logistics support. There's also a risk that the government might not be aware of or have access to superior or more cost-effective technologies available from other vendors. Furthermore, over-reliance on a single contractor for critical logistics support can create vulnerabilities if that contractor experiences financial difficulties or operational issues.

How effective are Rapiscan Eagle M60 systems in meeting the Department of Defense's security screening needs?

The effectiveness of the Rapiscan Eagle M60 systems is presumed to meet the Department of Defense's security screening needs, given the award. These systems are designed for high-throughput screening of baggage, cargo, and personnel, utilizing advanced imaging technologies to detect threats. The inclusion of contractor logistics support (CLS) indicates a requirement for ongoing maintenance and operational readiness, suggesting that the systems are intended for continuous, critical use. However, a definitive assessment of their effectiveness would require access to operational performance data, threat detection success rates, and user feedback from the end-users within the DoD.

What has been the historical spending pattern for security screening systems by the Department of the Army?

Historical spending patterns for security screening systems by the Department of the Army are likely substantial, given the critical nature of base security, force protection, and logistical operations. While specific figures for the Army's total spending on screening systems are not readily available in this dataset, it's reasonable to infer consistent investment in this area. Procurements can range from individual unit-level equipment to large-scale system-wide upgrades. The $126 million awarded here represents a significant single investment, suggesting either a major program rollout, a substantial refresh of existing capabilities, or a long-term support contract for a large fleet of systems.

Are there any known issues or controversies related to Rapiscan Systems Inc. or their security screening products?

Information regarding specific controversies or widespread issues with Rapiscan Systems Inc. or their Eagle M60 product line is not immediately apparent from the provided data. Companies in the defense and security sector can sometimes face scrutiny regarding product performance, export controls, or contractual disputes. A comprehensive review would involve searching public records, news archives, and government accountability office reports for any documented problems. Without such specific negative indicators, the primary concern remains the lack of competitive bidding rather than inherent product flaws or contractor misconduct.

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: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: OSI Systems Inc (UEI: 178295812)

Address: 2805 COLUMBIA ST, TORRANCE, CA, 90503

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: $227,916,702

Exercised Options: $126,159,262

Current Obligation: $126,159,262

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline