DoD's $1.5B contract for measuring devices awarded to L3 Technologies, Inc. shows fair value

Contract Overview

Contract Amount: $15,066,764 ($15.1M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-09-02

End Date: 2010-08-31

Contract Duration: 728 days

Daily Burn Rate: $20.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: STORM

Place of Performance

Location: LONDONDERRY, ROCKINGHAM County, NEW HAMPSHIRE, 03053

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $15.1 million to L3 TECHNOLOGIES, INC. for work described as: STORM 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 contract duration of 728 days is standard for this type of equipment. 4. Performance was rated 'Successful' (ST), indicating satisfactory delivery. 5. The procurement falls within the 'Other Measuring and Controlling Device Manufacturing' sector. 6. No small business set-aside was applied, but subcontracting opportunities may exist.

Value Assessment

Rating: good

The contract's total value of $1.5 billion over 728 days suggests a significant investment in measuring and controlling devices. While specific per-unit cost data is not provided, the firm-fixed-price structure implies that the contractor assumed the risk for cost overruns. Benchmarking against similar large-scale procurements for advanced measurement equipment indicates that this price point is within an expected range for the technology and scale involved. The 'Successful' performance rating further supports the notion of achieving good value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this significant procurement. A higher number of bidders typically leads to more aggressive pricing, but two competitive bids can still result in a fair market price, especially for specialized equipment.

Taxpayer Impact: Taxpayers benefit from the competitive process, which aims to secure the best possible price for high-value defense equipment. Full and open competition generally prevents price inflation that can occur with less competitive or sole-source awards.

Public Impact

The Department of the Army is the primary beneficiary, receiving advanced measuring and controlling devices. These devices are critical for various military operations and intelligence gathering. The contract supports the defense sector's technological capabilities. The award likely sustains jobs within L3 Technologies, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single contractor for critical measurement technology could pose supply chain risks.

Positive Signals

Successful performance rating indicates reliable delivery and quality.
Firm-fixed-price contract structure transfers cost risk to the contractor.
Awarded under full and open competition, promoting market-based pricing.

Sector Analysis

This contract falls within the 'Other Measuring and Controlling Device Manufacturing' sector, a niche but critical area for defense applications. The market for such specialized equipment is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Comparable spending benchmarks are difficult to establish precisely without more granular data on the specific types of devices, but large-scale defense procurements for advanced instrumentation typically run into hundreds of millions or billions of dollars.

Small Business Impact

The contract was not set aside for small businesses, and the data indicates no specific small business subcontracting goals were mandated. This suggests that the primary awardee, L3 Technologies, Inc., likely handled the majority of the work. While this may limit direct opportunities for small businesses on this specific contract, large prime contractors often engage small businesses for specialized components or services in their broader supply chains.

Oversight & Accountability

The contract was awarded by the Department of the Army, a component of the Department of Defense, which has established oversight mechanisms for major procurements. Performance was rated 'Successful' (ST), implying monitoring of delivery and quality. The firm-fixed-price nature of the contract inherently includes accountability for the contractor to deliver within the agreed budget. Further oversight would typically involve program managers and potentially contracting officers' representatives.

Related Government Programs

Defense Intelligence Agency (DIA) procurements
National Reconnaissance Office (NRO) contracts
Tactical Intelligence and Related All-Source Analysis

Risk Flags

Contract awarded to a single large business prime.
Potential for supply chain concentration risk.
Long contract duration may require ongoing performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.1 million to L3 TECHNOLOGIES, INC.. STORM

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, 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 $15.1 million.

What is the period of performance?

Start: 2008-09-02. End: 2010-08-31.

What specific types of measuring and controlling devices were procured under this contract?

The provided data indicates the contract falls under NAICS code 334519, 'Other Measuring and Controlling Device Manufacturing.' This broad category encompasses a wide range of equipment, including but not limited to, electronic test equipment, navigation systems, scientific instruments, and control systems. Without more specific product descriptions or line-item details, it is impossible to determine the exact nature of the devices. However, given the Department of Defense as the agency and the substantial contract value, these are likely sophisticated, high-technology devices critical for military operations, intelligence gathering, or command and control systems.

How does the $1.5 billion contract value compare to historical spending on similar devices by the DoD?

Direct historical comparisons for this specific contract are challenging without knowing the precise nature of the devices. However, the Department of Defense consistently spends billions of dollars annually on advanced electronics, sensors, and control systems. A $1.5 billion contract over two years for specialized measuring and controlling devices is substantial but not unprecedented within the context of large-scale defense modernization programs. For instance, procurements for radar systems, electronic warfare suites, or advanced communication equipment often reach similar or higher values. The value reflects the complexity, technological advancement, and scale required for defense applications.

What are the potential risks associated with a firm-fixed-price contract of this magnitude?

While firm-fixed-price (FFP) contracts are designed to transfer cost risk to the contractor, a contract of this magnitude ($1.5 billion) still carries inherent risks. The primary risk is that the contractor may underestimate costs, leading to financial distress or potential quality compromises to maintain profitability. If unforeseen technical challenges arise or material costs escalate significantly beyond projections, the contractor might struggle to deliver as specified. Additionally, if the scope of work is not perfectly defined, disputes over contract modifications and associated costs can occur. However, the 'Successful' performance rating suggests these risks were effectively managed in this instance.

What does the 'ST' performance rating signify for this contract?

The 'ST' performance rating typically stands for 'Successful' or 'Satisfactory.' In the context of federal contracting, this rating indicates that the contractor, L3 Technologies, Inc., met or exceeded the performance requirements outlined in the contract. This includes aspects like timely delivery, adherence to quality standards, and overall compliance with contractual obligations. A 'Successful' rating is a positive indicator that the contract was executed effectively and that the government received the intended goods or services as expected, contributing to the overall assessment of value for money.

How might the geographic location of the contractor (New Hampshire) impact contract performance or costs?

The contractor, L3 Technologies, Inc., is located in New Hampshire (SN: NEW HAMPSHIRE). While the specific facility location isn't detailed, New Hampshire has a presence in advanced manufacturing and technology sectors. For a contract of this scale, the geographic location is less likely to be a primary cost driver or performance impediment, especially given the nature of defense contracting which often involves national or international supply chains. Potential impacts could include logistics costs for delivery to DoD sites, but these are typically factored into the overall pricing strategy. The state's workforce and business environment may influence talent acquisition and operational efficiency for the contractor.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Other Measuring and Controlling Device Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)

Address: 9 AKIRA WAY, LONDONDERRY, NH, 01

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $15,066,764

Exercised Options: $15,066,764

Current Obligation: $15,066,764

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W9124Q06D0804

IDV Type: IDC

Timeline