DoD's $56M contract for optical instruments awarded to Elbit America shows fair competition and potential value
Contract Overview
Contract Amount: $56,063,627 ($56.1M)
Contractor: Elbitamerica, Inc.
Awarding Agency: Department of Defense
Start Date: 2006-05-26
End Date: 2011-05-26
Contract Duration: 1,826 days
Daily Burn Rate: $30.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Place of Performance
Location: MERRIMACK, HILLSBOROUGH County, NEW HAMPSHIRE, 03054
Plain-Language Summary
Department of Defense obligated $56.1 million to ELBITAMERICA, INC. for work described as: Key points: 1. Contract awarded through full and open competition, suggesting a competitive pricing environment. 2. Fixed-price contract type helps mitigate cost overrun risks for the government. 3. The contract duration of 5 years indicates a long-term need for these optical instruments. 4. Awarded by the Department of the Navy, aligning with defense procurement priorities. 5. The specific product code (PSC) is not detailed, making direct benchmarking challenging. 6. No small business set-aside was utilized, indicating potential missed opportunities for smaller firms.
Value Assessment
Rating: good
The total award amount of $56 million over five years suggests a significant investment in optical instruments. Without specific details on the units or types of instruments procured, a precise per-unit cost benchmark is difficult. However, the firm fixed-price nature of the contract provides cost certainty. Comparing this to similar, albeit unspecified, defense contracts for optical systems, the pricing appears to be within a reasonable range, assuming the instruments meet the required specifications and performance standards.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of 4 bids indicates a moderate level of competition for this requirement. A higher number of bidders typically leads to more aggressive pricing and better value for the government. While 4 bidders is not a low number, it suggests that the market for these specific optical instruments is not overly saturated.
Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it encourages multiple companies to compete, driving down prices and ensuring the government receives the best possible value for its investment.
Public Impact
Naval personnel and potentially other Department of Defense branches benefit from advanced optical instruments. The contract supports the delivery of specialized optical equipment essential for defense operations. The geographic impact is primarily linked to the Department of the Navy's operational areas. The contract likely supports jobs within Elbit America and its supply chain, contributing to the defense industrial workforce.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of detailed product specifications makes it hard to assess if the best possible technology was procured.
- The absence of small business participation could limit innovation and economic opportunities for smaller firms.
- Long-term contracts can sometimes lead to complacency if not actively managed and reviewed.
- Reliance on a single primary contractor for a significant duration may pose supply chain risks if not diversified.
Positive Signals
- Awarded through full and open competition, ensuring a broad range of potential suppliers were considered.
- Firm fixed-price contract type provides cost predictability and limits the government's exposure to cost overruns.
- The contract duration suggests a stable, long-term requirement, allowing for efficient planning and production.
- Elbit America is a known entity in the defense sector, implying a degree of established capability and reliability.
Sector Analysis
The optical instrument and lens manufacturing sector is critical for defense, encompassing a wide range of products from basic lenses to complex imaging systems. This contract falls within a specialized niche of this sector, likely supporting advanced surveillance, targeting, or reconnaissance capabilities for the Navy. The defense industry's demand for high-performance optical equipment is substantial, with significant government spending allocated annually. Benchmarking this contract's value is challenging without precise product details, but it represents a portion of the broader defense procurement in advanced optics.
Small Business Impact
This contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific procurement were limited to competing as prime contractors under the full and open competition. The absence of set-asides or subcontracting goals may mean that a portion of the contract value did not flow down to the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is generally maintained through contract award databases, though specific performance metrics and detailed spending breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Department of Defense Optical and Electro-Optical Systems Procurement
- Navy Advanced Sensor Systems Contracts
- Tactical Optics and Imaging Systems
- Defense Research and Development - Optics
Risk Flags
- Potential for technological obsolescence due to 5-year contract duration.
- Lack of small business participation may limit economic benefits.
- Specific product details are missing, hindering in-depth value analysis.
Tags
defense, department-of-defense, department-of-the-navy, optical-instrument-manufacturing, firm-fixed-price, full-and-open-competition, large-contract, long-term-contract, elbit-america, new-hampshire
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $56.1 million to ELBITAMERICA, INC.. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is ELBITAMERICA, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $56.1 million.
What is the period of performance?
Start: 2006-05-26. End: 2011-05-26.
What specific types of optical instruments were procured under this contract, and what are their intended military applications?
The provided data indicates the contract is for 'Optical Instrument and Lens Manufacturing' (NAICS 333314) and was awarded to Elbit America. However, the specific types of optical instruments are not detailed. These could range widely from basic optical components to sophisticated systems like night vision devices, targeting pods, periscopes, or advanced imaging sensors. Their intended military applications would directly correlate with the type of instrument, likely supporting naval operations, reconnaissance, surveillance, targeting, or navigation systems. Without further details on the product line item or technical specifications, a precise determination of the instruments and their specific roles cannot be made.
How does the $56 million award value compare to historical spending on similar optical instruments by the Department of the Navy?
Comparing the $56 million award value to historical spending requires access to detailed historical procurement data for similar optical instruments by the Department of the Navy. The provided data does not include this historical context. However, a contract of this magnitude over a five-year period suggests a significant and ongoing requirement for these specific optical capabilities. To perform a robust comparison, one would need to identify comparable contracts based on product type, quantity, and performance specifications, and then analyze their award values and durations. This would help determine if the current contract represents an increase, decrease, or stable level of investment in this area.
What are the key performance indicators (KPIs) or quality assurance measures associated with this contract to ensure the optical instruments meet military standards?
The provided data does not specify the key performance indicators (KPIs) or quality assurance measures for this contract. However, for defense contracts involving critical equipment like optical instruments, stringent quality assurance protocols are typically established. These often include detailed technical specifications, acceptance testing procedures, reliability and durability testing, and adherence to military standards (e.g., MIL-SPEC). The firm fixed-price nature of the contract implies that the contractor is responsible for meeting these specifications. The Department of the Navy would likely have a quality assurance representative (QAR) overseeing production and acceptance to ensure compliance with the contract's technical requirements.
What is Elbit America's track record with similar defense contracts, particularly in the realm of optical systems?
Elbit America, as a subsidiary of Elbit Systems, has a significant track record in providing defense electronics, including electro-optical systems, surveillance, and reconnaissance solutions. While specific details on their performance for this exact contract are not provided, the company is a known supplier to the U.S. military. Their broader portfolio includes advanced imaging and targeting systems, which are relevant to optical instrument manufacturing. A thorough assessment of their track record would involve reviewing past performance evaluations, any reported contract disputes or terminations, and their history of delivering complex defense systems on time and within budget for similar requirements.
Given the 5-year duration, what are the potential risks associated with technological obsolescence of the optical instruments?
The risk of technological obsolescence for optical instruments procured under a 5-year contract is a valid concern, especially in rapidly advancing fields like defense technology. While 5 years is a substantial period, the pace of innovation in optics and sensor technology can be rapid. To mitigate this risk, the contract likely includes provisions for technical refresh or upgrade options, or it may specify instruments designed for a certain lifespan and operational tempo. Alternatively, the procured instruments might be foundational components that are less susceptible to rapid obsolescence, or they may be part of a larger system where upgrades are managed separately. The specific design and intended use of the instruments would determine the actual risk level.
How does the competition level (4 bidders) for this contract compare to the average competition for similar defense optical system procurements?
The data indicates 4 bidders participated in this full and open competition. To assess if this is typical, one would need to analyze the average number of bidders for comparable Department of Defense contracts for optical instruments and related systems. Generally, for specialized defense procurements, the number of qualified bidders can vary significantly. A moderate number like 4 suggests a reasonably competitive market, but it might be lower than for more commoditized defense items. If the average for similar high-tech defense optics is significantly higher, it could indicate barriers to entry or a more concentrated market for this specific type of equipment. Conversely, if the average is lower, then 4 bidders represent healthy competition.
Industry Classification
NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing
Product/Service Code: FIRE CONTROL EQPT.
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Elbit Systems Ltd (UEI: 514421098)
Address: 220 DANIEL WEBSTER HWY, MERRIMACK, NH, 01
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Cost or Pricing Data: NO
Timeline
Start Date: 2006-05-26
Current End Date: 2011-05-26
Potential End Date: 2011-05-26 00:00:00
Last Modified: 2014-01-23
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