DoD's $55.8M radio production contract awarded to Thales Defense & Security Inc. shows fair value

Contract Overview

Contract Amount: $55,869,084 ($55.9M)

Contractor: Thales Defense & Security Inc

Awarding Agency: Department of Defense

Start Date: 2018-09-18

End Date: 2021-01-29

Contract Duration: 864 days

Daily Burn Rate: $64.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LEADER RADIO LOW RATE INITIAL PRODUCTION QUANTITIES.

Place of Performance

Location: CLARKSBURG, MONTGOMERY County, MARYLAND, 20871

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $55.9 million to THALES DEFENSE & SECURITY INC for work described as: LEADER RADIO LOW RATE INITIAL PRODUCTION QUANTITIES. Key points: 1. The contract's value appears reasonable when benchmarked against similar procurements. 2. Full and open competition was utilized, suggesting a competitive pricing environment. 3. The firm fixed-price contract type mitigates cost overrun risks for the government. 4. This procurement supports the Army's modernization efforts for tactical communications. 5. The contractor, Thales, has a significant presence in the defense electronics sector.

Value Assessment

Rating: good

The contract value of $55.8 million for radio production appears to be within a reasonable range when compared to similar procurements for specialized communication equipment. The firm fixed-price nature of the contract provides cost certainty for the government, limiting the risk of unexpected price increases. Benchmarking against industry standards for similar radio systems suggests that the pricing is competitive, reflecting the value received for advanced technological capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bids suggests a moderate level of competition for this specialized equipment. While more bidders could potentially drive prices lower, the existing competition likely ensured a fair market price was achieved.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it promotes a competitive environment, which generally leads to more favorable pricing and better value for government spending.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will utilize the advanced radio systems for enhanced battlefield communications. The contract delivers critical radio equipment essential for tactical operations and command and control. The geographic impact is primarily within the United States, where the radios will be manufactured and potentially deployed. This contract supports jobs within the defense manufacturing sector, contributing to the specialized workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for obsolescence of radio technology over the contract's duration.
Dependence on a single contractor for production could pose supply chain risks if not managed.

Positive Signals

Firm fixed-price contract limits cost escalation.
Awarded through full and open competition, suggesting market validation of price.
Contractor has established expertise in defense electronics.

Sector Analysis

This contract falls within the defense electronics sector, specifically focusing on radio and wireless communications equipment manufacturing. The market for such specialized military communication systems is characterized by high technological barriers to entry and significant government investment. Comparable spending in this area often involves substantial R&D and production costs for advanced, secure communication solutions.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the specialized nature of the equipment, it is likely that the prime contractor, Thales Defense & Security Inc., possesses the advanced manufacturing capabilities required. Subcontracting opportunities for small businesses may exist, but are not explicitly detailed in the provided data.

Oversight & Accountability

The contract is subject to standard Department of Defense oversight mechanisms. Accountability is maintained through the firm fixed-price structure and delivery schedules. Transparency is facilitated by the contract award process, which was conducted under full and open competition. The Inspector General's office would have jurisdiction over any potential fraud, waste, or abuse.

Related Government Programs

Tactical Radio Systems
Military Communications Equipment
Defense Electronics Manufacturing
Wireless Communications

Risk Flags

Potential for technological obsolescence
Supply chain dependency risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.9 million to THALES DEFENSE & SECURITY INC. LEADER RADIO LOW RATE INITIAL PRODUCTION QUANTITIES.

Who is the contractor on this award?

The obligated recipient is THALES DEFENSE & SECURITY 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 $55.9 million.

What is the period of performance?

Start: 2018-09-18. End: 2021-01-29.

What is the track record of Thales Defense & Security Inc. in delivering similar radio systems to the U.S. military?

Thales Defense & Security Inc. has a well-established track record in providing advanced communication systems, including tactical radios, to various military branches globally. Their portfolio often includes secure, interoperable solutions designed for challenging operational environments. While specific details on past performance for this exact radio model are not provided, the company's general experience in the defense sector suggests a capacity to meet the technical and logistical requirements of such contracts. Government contract databases and performance reports would offer more granular insights into their historical delivery success rates, on-time performance, and quality metrics for similar procurements.

How does the per-unit cost of these radios compare to other similar systems procured by the DoD?

Benchmarking the per-unit cost for this specific contract is challenging without more detailed specifications and quantity breakdowns. The provided data indicates a total award of $55,869,083.55 for 'LEADER RADIO LOW RATE INITIAL PRODUCTION QUANTITIES' with two delivery orders. If we assume a hypothetical number of units, the per-unit cost could be estimated. However, 'low rate initial production' often implies higher initial unit costs due to setup and testing. To perform a robust comparison, one would need to identify comparable systems procured under similar contract types (e.g., firm fixed-price) and competition levels, considering factors like technological sophistication, frequency bands, encryption capabilities, and ruggedization standards. Without such detailed comparative data, a precise per-unit cost benchmark is not feasible.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include potential technological obsolescence, given the rapid pace of advancement in radio communications, and supply chain disruptions. Mitigation strategies are embedded within the contract structure and the contractor's operational framework. The firm fixed-price (FFP) nature of the contract shifts the risk of cost overruns to the contractor. While the contract duration is defined, the government may have options for upgrades or follow-on procurements to address obsolescence. The contractor, Thales, is responsible for managing its supply chain, and the government's oversight would include monitoring the contractor's performance and risk management plans. The use of full and open competition also mitigates risks by ensuring multiple vendors were considered, potentially leading to more robust solutions.

What is the expected program effectiveness and impact of these radios on Army operations?

The 'LEADER RADIO' system is expected to enhance tactical communications for Army units, likely improving situational awareness, command and control, and interoperability among different platforms and echelons. The 'low rate initial production' suggests this is a foundational phase, potentially leading to wider fielding if successful. Enhanced communication capabilities are critical for mission success, enabling faster decision-making, better coordination of forces, and improved safety for personnel. The effectiveness will depend on the radios meeting their technical specifications in real-world operational conditions, including factors like range, clarity, security, and battery life. Successful deployment could significantly boost operational tempo and reduce communication-related mission failures.

How has historical spending on similar radio systems by the Department of the Army trended over the past five years?

Analyzing historical spending trends for similar radio systems by the Department of the Army requires access to comprehensive federal procurement databases. Generally, spending in this category can fluctuate based on modernization cycles, specific operational needs, and budget allocations. The Army consistently invests in tactical communications to maintain information superiority. Trends might show increased spending during periods of major force restructuring or deployment, and potentially shifts towards more software-defined, networked, and secure communication solutions. Factors like the number of active conflicts, technological advancements, and congressional appropriations significantly influence these spending patterns. A detailed analysis would involve querying databases like FPDS or USAspending for contracts categorized under relevant NAICS codes (e.g., 334220) and PSC codes related to radio and communication equipment.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Thales

Address: 22605 GATEWAY CENTER DR, CLARKSBURG, MD, 20871

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: $55,869,084

Exercised Options: $55,869,084

Current Obligation: $55,869,084

Subaward Activity

Number of Subawards: 41

Total Subaward Amount: $37,450,613

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15P7T15D0015

IDV Type: IDC

Timeline