DoD's $121M optical instrument contract to Harris Corporation shows fair value with 2 bidders

Contract Overview

Contract Amount: $121,000,436 ($121.0M)

Contractor: Harris Corporation

Awarding Agency: Department of Defense

Start Date: 2009-02-05

End Date: 2012-08-31

Contract Duration: 1,303 days

Daily Burn Rate: $92.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FUNDING CLIN

Place of Performance

Location: ROANOKE, ROANOKE County, VIRGINIA, 24019

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $121.0 million to HARRIS CORPORATION for work described as: FUNDING CLIN Key points: 1. Contract awarded at 92.8% of estimated value, indicating reasonable pricing. 2. Limited competition with two bidders suggests potential for price inflation. 3. Contract duration of 1303 days is substantial, requiring ongoing performance monitoring. 4. Fixed-price contract type shifts risk to the contractor. 5. Awarded to a large business, with no small business set-aside noted. 6. The contract falls within the optical instrument and lens manufacturing sector.

Value Assessment

Rating: good

The contract was awarded at $121,001,436, which was 92.8% of the estimated value. This suggests that the pricing was competitive and that the government achieved a good value. While specific benchmarks for similar optical instrument contracts are not provided, the award percentage indicates favorable negotiation. The firm fixed-price structure further supports value by capping the government's financial exposure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with two bids received. While full and open competition is generally preferred, the low number of bidders (two) may indicate a concentrated market or high barriers to entry for potential competitors. This level of competition could lead to less aggressive pricing than if more bidders had participated.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the most competitive pricing possible. However, the award at 92.8% of the estimated value suggests that the government still secured a reasonable price.

Public Impact

The Department of the Army is the primary beneficiary, receiving advanced optical instruments. These instruments likely support critical defense and surveillance missions. The contract's geographic impact is primarily tied to the contractor's facilities and the end-users within the Department of Defense. Workforce implications include employment at Harris Corporation and its subcontractors, likely in specialized manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) could result in higher prices than a more robust bidding process.
Long contract duration (1303 days) necessitates sustained oversight to ensure continued performance and value.
No indication of small business subcontracting opportunities, potentially limiting broader economic impact.

Positive Signals

Award at 92.8% of estimated value indicates strong negotiation and cost control.
Firm fixed-price contract type effectively transfers cost overrun risk to the contractor.
Awarded under full and open competition, adhering to procurement best practices.

Sector Analysis

The optical instrument and lens manufacturing sector (NAICS 333314) is characterized by specialized production and high technological requirements. This contract, valued at over $121 million, represents a significant procurement within this niche. Comparable spending benchmarks are difficult to establish without more specific details on the type of optical instruments, but this award is substantial for a single contract in this industry.

Small Business Impact

This contract did not include a small business set-aside, and there is no explicit mention of subcontracting goals for small businesses. The award went to Harris Corporation, a large defense contractor. This suggests that the primary economic benefit for small businesses would be through potential subcontracting opportunities, which are not detailed in the provided data.

Oversight & Accountability

The contract was awarded under firm fixed-price terms, which inherently provides a level of cost certainty and oversight by placing the financial risk on the contractor. Specific oversight mechanisms, such as performance reviews, quality assurance checks, and reporting requirements, would be detailed in the contract itself. Transparency is generally maintained through contract award databases, though detailed performance data may be less accessible.

Related Government Programs

Department of Defense Procurement
Optical and Electro-Optical Equipment Manufacturing
Defense Industrial Base Contracts
Tactical and Strategic Systems Procurement

Risk Flags

Limited competition
Long contract duration
Potential for cost escalation if market prices rise significantly
Lack of explicit small business subcontracting requirements

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $121.0 million to HARRIS CORPORATION. FUNDING CLIN

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 $121.0 million.

What is the period of performance?

Start: 2009-02-05. End: 2012-08-31.

What specific types of optical instruments were procured under this contract?

The provided data indicates the contract falls under NAICS code 333314, 'Optical Instrument and Lens Manufacturing.' However, it does not specify the exact types of optical instruments. These could range from sophisticated surveillance and targeting systems to components for imaging or measurement devices used by the Department of the Army. Further details would require examining the contract's statement of work or technical specifications.

How does the award percentage of 92.8% compare to typical award percentages for similar DoD contracts?

An award percentage of 92.8% (meaning the contract was awarded at 92.8% of its estimated value) generally indicates favorable negotiation for the government. While 'typical' varies widely by contract type, complexity, and market conditions, achieving an award below the estimated value suggests competitive pricing or effective negotiation. For firm-fixed-price contracts, especially those with limited competition, award percentages closer to 100% might be more common if the estimate was accurate and the market tight. This 92.8% suggests either a conservative estimate or successful price competition.

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

The primary risk with a firm-fixed-price (FFP) contract, especially one lasting over three years (1303 days), is that the contractor may face unforeseen cost increases (e.g., material prices, labor rates) that erode their profit margin. This could incentivize the contractor to cut corners on quality or performance to maintain profitability, necessitating robust government oversight. Conversely, if costs decrease significantly, the government might have overpaid relative to the contractor's actual costs. The long duration also means the technology or requirements could become outdated before contract completion.

Given only two bidders, what is the likelihood of contractor performance issues or future price increases?

With only two bidders, there's a heightened risk of performance issues if one contractor lacks the capacity or expertise, potentially leading to delays or quality problems. For future procurements, limited competition often leads to higher prices as the incumbent contractor faces less pressure to be cost-competitive. The government might also face challenges finding alternative sources if the incumbent's performance is unsatisfactory. This scenario underscores the importance of strong contract management and performance monitoring during the current contract's life.

What is Harris Corporation's track record with similar DoD contracts?

Harris Corporation (now L3Harris Technologies) is a major defense contractor with a long history of supplying complex systems, including electro-optical and communication technologies, to the Department of Defense. While this specific contract data doesn't detail their performance history, L3Harris generally holds a significant portfolio of DoD contracts. Their track record typically involves large-scale, technologically advanced projects. Performance on specific contracts can vary, and a deeper dive into past performance ratings and contract modifications would be needed for a comprehensive assessment.

How does this contract's value compare to overall DoD spending on optical instruments?

The $121 million value of this single contract is substantial but represents a fraction of the Department of Defense's overall budget. DoD spending encompasses a vast array of equipment, services, and research, including numerous categories related to optics, sensors, and imaging systems. While this contract is significant for the specific items procured, it is one component within a much larger defense procurement ecosystem. Benchmarking against total DoD optical spending would require aggregating data across multiple contracts and fiscal years.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens 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: ITT Corporation (UEI: 001216845)

Address: 7635 PLANTATION RD, ROANOKE, VA, 06

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $121,000,436

Exercised Options: $121,000,436

Current Obligation: $121,000,436

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W9124Q05D0821

IDV Type: IDC

Timeline