DoD awards $131M for EV4 Applique System, a sole-source contract for electronic computer manufacturing

Contract Overview

Contract Amount: $131,082,417 ($131.1M)

Contractor: DRS Network & Imaging Systems, LLC

Awarding Agency: Department of Defense

Start Date: 2007-07-16

End Date: 2008-10-31

Contract Duration: 473 days

Daily Burn Rate: $277.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ORDER FOR ADDITIONAL LINE REPLACEABLE UNITS OF THE EV4 APPLIQUE SYSTEM

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32901

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $131.1 million to DRS NETWORK & IMAGING SYSTEMS, LLC for work described as: ORDER FOR ADDITIONAL LINE REPLACEABLE UNITS OF THE EV4 APPLIQUE SYSTEM Key points: 1. The contract's sole-source nature raises questions about potential overpricing and lack of competitive pressure. 2. Performance is tied to a firm-fixed-price structure, which typically shifts risk to the contractor. 3. The contract duration of 473 days suggests a focused, short-term need for the additional units. 4. The award was made to DRS Network & Imaging Systems, LLC, indicating a specific capability requirement. 5. The absence of small business set-asides or subcontracting plans warrants further investigation into broader economic impact.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money on this $131 million award. The firm-fixed-price contract type is generally favorable for the government in controlling costs, but the lack of competition means there's no market validation of the pricing. Comparisons to similar applique systems or previous contracts for the EV4 system would be necessary to assess if the pricing is reasonable. The sole-source nature inherently limits the government's ability to secure the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This typically occurs when a specific technology or capability is unique to a single provider, or in cases of urgent need where competition is not feasible. The lack of multiple bidders means there was no opportunity for price discovery through a competitive process, potentially leading to higher costs for the government compared to a competed award.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competition. The government did not benefit from the cost savings that typically arise from multiple vendors bidding against each other.

Public Impact

The primary beneficiaries are the Department of the Army and potentially end-users of the EV4 Applique System, likely within military operations. The contract delivers additional replaceable units for the EV4 Applique System, crucial for maintaining operational readiness. The geographic impact is concentrated in Florida (ST), where the contractor is located, suggesting potential local economic benefits. Workforce implications are likely within DRS Network & Imaging Systems, LLC, supporting manufacturing and related roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
No indication of small business participation or subcontracting opportunities.
Contract duration is relatively short, raising questions about long-term sustainment planning.
Limited public information on the specific capabilities and necessity of the EV4 Applique System.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Award to an established entity (DRS Network & Imaging Systems, LLC) suggests a known supplier.
The contract addresses a specific need for additional units, implying operational requirements are being met.
The system is identified as 'EV4 Applique System', suggesting a defined product line.

Sector Analysis

The contract falls within the Electronic Computer Manufacturing sector, a critical component of the broader defense industrial base. This sector is characterized by high R&D investment, complex supply chains, and significant government procurement. Spending in this area is often driven by technological advancements and the need for specialized electronic systems for defense applications. Comparable spending benchmarks would typically involve analyzing other sole-source or competed awards for similar electronic systems or components within the Department of Defense.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there information regarding subcontracting plans. The award to a single, likely large, contractor suggests that small businesses may not have been directly involved in fulfilling this specific order. This could represent a missed opportunity to leverage the small business industrial base and foster competition among smaller, specialized firms.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified units at an agreed-upon price. Transparency is limited due to the sole-source nature and the lack of publicly available detailed justification. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Procurement
Electronic Systems Manufacturing
Military Hardware Procurement
Sole-Source Contracts
Army Aviation Systems

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited transparency regarding system necessity and procurement rationale.
No small business participation identified.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $131.1 million to DRS NETWORK & IMAGING SYSTEMS, LLC. ORDER FOR ADDITIONAL LINE REPLACEABLE UNITS OF THE EV4 APPLIQUE SYSTEM

Who is the contractor on this award?

The obligated recipient is DRS NETWORK & IMAGING SYSTEMS, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $131.1 million.

What is the period of performance?

Start: 2007-07-16. End: 2008-10-31.

What is the specific function and importance of the EV4 Applique System?

The EV4 Applique System is an electronic component or module used within Department of Defense (DoD) platforms. While specific details are often classified or proprietary, 'applique' systems generally refer to add-on or supplementary hardware designed to enhance or modify the capabilities of a primary system. In this context, the 'EV4' designation likely refers to a specific generation or type of applique. The need for 'additional line replaceable units' (LRUs) indicates that these are components designed to be easily swapped out during maintenance or upgrades. Their importance lies in ensuring the operational readiness and potentially the enhanced functionality of the larger systems they are integrated into, which are critical for military effectiveness.

Why was this contract awarded on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. The justification for sole-sourcing typically falls into categories such as: unique capabilities possessed by only one contractor, urgent and compelling needs where competition is impractical, or follow-on work to a previously competed contract where only the original contractor can provide necessary compatibility or integration. Without further documentation (like a Justification and Approval document), the precise reason remains unknown. However, for electronic systems, it often relates to proprietary technology, specialized manufacturing processes, or critical interoperability requirements with existing platforms.

How does the firm-fixed-price (FFP) contract type benefit the government in this sole-source scenario?

Even in a sole-source situation, a Firm-Fixed-Price (FFP) contract is generally advantageous for the government. It establishes a definitive price for the goods or services, and the contractor bears the responsibility for any cost overruns. This provides cost certainty for the government, as the final price will not exceed the agreed-upon amount, regardless of the contractor's actual expenses. While the absence of competition might mean the initial FFP is higher than it would be in a competitive bid, the FFP structure still protects the government from unexpected cost increases during contract performance, unlike cost-reimbursement contracts.

What is the historical spending trend for the EV4 Applique System or similar components?

The provided data only details this specific award of $131,082,417 for additional LRUs of the EV4 Applique System, awarded on July 16, 2007, with an end date of October 31, 2008. It does not provide historical spending data for this system or similar components. To determine historical trends, one would need to access contract databases (like FPDS or SAM.gov) to search for prior awards to DRS Network & Imaging Systems, LLC, or other contractors for the EV4 Applique System, or comparable applique systems, across different fiscal years. This would reveal patterns in award amounts, contract types, and competition levels over time.

What are the potential risks associated with a sole-source award for critical military hardware?

Sole-source awards for critical military hardware carry several risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures inherent in a bidding process. Secondly, it can stifle innovation, as there is less incentive for the sole provider to develop more cost-effective or technologically superior solutions if they are guaranteed the contract regardless. Thirdly, it creates a dependency on a single supplier, which can be problematic if that supplier faces financial difficulties, production issues, or geopolitical challenges. This dependency can also limit the government's flexibility in adapting to changing requirements or integrating newer technologies.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA (UEI: 428869465)

Address: 1110 HIBISCUS BLVD W, MELBOURNE, FL, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $131,082,417

Exercised Options: $131,082,417

Current Obligation: $131,082,417

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15P7T06DJ405

IDV Type: IDC

Timeline