DoD's $34.9M Ophthalmic Goods contract to Harris Corporation shows fair value but limited competition

Contract Overview

Contract Amount: $34,916,180 ($34.9M)

Contractor: Harris Corporation

Awarding Agency: Department of Defense

Start Date: 2009-07-09

End Date: 2012-08-31

Contract Duration: 1,149 days

Daily Burn Rate: $30.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ENVG

Place of Performance

Location: ROANOKE, ROANOKE County, VIRGINIA, 24019

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $34.9 million to HARRIS CORPORATION for work described as: ENVG Key points: 1. Contract awarded for ophthalmic goods manufacturing, indicating a need for specialized optical equipment. 2. The firm-fixed-price contract type suggests a predictable cost structure for the government. 3. A duration of 1149 days points to a long-term requirement for these goods. 4. The contract was awarded under full and open competition, allowing for broad market participation. 5. The contractor, Harris Corporation, is a significant player in defense and aerospace. 6. The contract value of $34.9 million falls within a moderate spending range for such specialized equipment.

Value Assessment

Rating: good

The contract value of $34.9 million for ophthalmic goods over approximately three years appears reasonable when considering the specialized nature of the products and the contractor's established capabilities. Benchmarking against similar contracts for advanced optical systems or specialized medical equipment would provide a more precise value assessment. However, the firm-fixed-price structure generally indicates that the government secured a defined price, mitigating cost overrun risks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of two bids indicates a degree of competition, though a higher number of bidders would typically lead to more aggressive pricing and potentially better value. The open competition framework is a positive sign for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing due to the open competition, which aims to prevent overpayment for the required ophthalmic goods.

Public Impact

Military personnel requiring specialized vision correction or optical equipment will benefit from the delivered goods. The contract supports the Department of the Army's operational readiness by ensuring access to essential ophthalmic supplies. The geographic impact is primarily within the United States, where the contractor operates and supplies are delivered. The contract supports a segment of the manufacturing workforce involved in producing high-precision optical and ophthalmic products.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if follow-on contracts are not competed effectively.
Reliance on a single contractor for critical specialized equipment could pose supply chain risks.
The limited number of bidders (2) might suggest barriers to entry for smaller or newer competitors in this niche market.

Positive Signals

Awarded under full and open competition, maximizing potential vendor pool.
Firm-fixed-price contract provides cost certainty for the government.
Contractor has a strong track record in defense contracting, suggesting reliability.
The contract duration indicates a stable, long-term supply chain for essential goods.

Sector Analysis

The ophthalmic goods sector is a specialized segment within the broader healthcare and defense manufacturing industries. It involves the production of precision optical instruments, lenses, and related equipment. This contract fits within the Department of Defense's procurement of specialized medical and operational support equipment. Comparable spending benchmarks would likely be found in procurements for advanced optics, night vision components, or specialized medical devices.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information on subcontracting plans for small businesses. The award to a large prime contractor like Harris Corporation suggests that opportunities for small businesses would likely be through direct subcontracting relationships, the extent of which is not detailed in this data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the firm-fixed-price structure, requiring delivery of goods as specified. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Medical Equipment Manufacturing
Defense Ophthalmic Systems
Military Vision Support
Optical Instrument Procurement

Risk Flags

Limited Competition
Potential for Sole-Sourcing in Future
Reliance on Large Prime Contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.9 million to HARRIS CORPORATION. ENVG

Who is the contractor on this award?

The obligated recipient is HARRIS CORPORATION.

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: 2009-07-09. End: 2012-08-31.

What is the track record of Harris Corporation in fulfilling similar defense contracts, particularly those involving specialized optical or ophthalmic equipment?

Harris Corporation, now L3Harris Technologies, has a long and extensive history of serving the Department of Defense and other government agencies with a wide array of advanced technologies, including communications, electronic warfare, and space systems. Their portfolio often includes sophisticated optical and sensor systems. While specific details on ophthalmic goods contracts are not immediately apparent from this summary data, their general track record suggests a capacity for complex manufacturing and reliable delivery. The company's size and established presence in the defense sector imply a robust infrastructure for managing large-scale contracts and meeting stringent quality and performance requirements. Past performance reviews and contract histories available through government databases would offer a more granular view of their specific performance on similar, high-technology procurements.

How does the awarded value of $34.9 million compare to market rates for similar ophthalmic goods, considering the contract's duration and specifications?

Determining precise market rates for specialized ophthalmic goods is challenging without detailed specifications and volume data. However, $34.9 million over approximately three years for a government contract suggests a significant procurement. If these goods are standard-issue items, the price might be on the higher end, reflecting administrative costs and profit margins for a large contractor. If they are highly customized or technologically advanced systems (e.g., for specialized military applications), the value could be considered competitive or even favorable. Benchmarking against commercial equivalents or similar government procurements for advanced optical systems would be necessary for a definitive assessment. The firm-fixed-price nature implies that the government aimed to lock in a price, potentially absorbing some market fluctuation risk.

What are the primary risks associated with this contract, and what mitigation strategies were likely employed?

Primary risks include potential supply chain disruptions for specialized components, technological obsolescence if the goods are not cutting-edge, and performance issues if the contractor fails to meet stringent quality standards. Given the firm-fixed-price structure, a key risk for the contractor is cost overruns if production expenses exceed estimates. For the government, risks involve the possibility of receiving goods that do not fully meet evolving operational needs or are priced above what could have been achieved with broader competition. Mitigation strategies likely included thorough technical specifications, quality assurance protocols, performance metrics, and potentially, contingency planning for supply chain issues. The selection of an established contractor like Harris Corporation also mitigates some performance risk due to their presumed experience and resources.

What is the historical spending pattern for ophthalmic goods by the Department of the Army or the Department of Defense?

Historical spending on ophthalmic goods by the Department of the Army and the broader Department of Defense can fluctuate significantly based on operational needs, technological advancements, and specific program requirements. While this $34.9 million contract represents a substantial investment, it needs to be viewed within the context of the overall defense budget, which runs into hundreds of billions annually. Spending on medical and optical equipment is a consistent, albeit often specialized, part of the budget. Analyzing historical data from sources like the Federal Procurement Data System (FPDS) would reveal trends in contract values, awardees, and types of ophthalmic goods procured over time. This specific contract appears to be a significant, multi-year award for a particular category of goods, suggesting a sustained requirement.

How does the level of competition (2 bidders) impact the value and price discovery for this contract compared to contracts with more bidders?

A competition level with only two bidders generally offers less robust price discovery and potentially less competitive pricing compared to contracts with numerous bidders. With more bidders, the market dynamics typically drive prices down as companies vie for the contract. Two bidders suggest that the market for this specific type of ophthalmic good might be concentrated, or that barriers to entry (technical expertise, security clearances, manufacturing capabilities) are high. While 'full and open competition' was advertised, the low number of actual bids indicates that fewer entities were either able or willing to participate. This could mean the government secured a reasonable price under the circumstances, but it's less likely to be the absolute lowest possible price achievable in a more crowded market.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Ophthalmic Goods Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W91CRB05R0006

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: ITT Corporation (UEI: 001216845)

Address: 7635 PLANTATION RD, ROANOKE, VA, 24019

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $34,916,180

Exercised Options: $34,916,180

Current Obligation: $34,916,180

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91CRB05D0012

IDV Type: IDC

Timeline