DoD's $36M Bomb Fuze Contract Awarded to L3Harris Amidst Limited Competition

Contract Overview

Contract Amount: $36,006,426 ($36.0M)

Contractor: L3harris Fuzing and Ordnance Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-09-29

End Date: 2014-12-31

Contract Duration: 1,189 days

Daily Burn Rate: $30.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMU 139 C/B ELECTRONIC BOMB FUZES AND ACCESSORIES

Place of Performance

Location: CINCINNATI, CLERMONT County, OHIO, 45245

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $36.0 million to L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC. for work described as: FMU 139 C/B ELECTRONIC BOMB FUZES AND ACCESSORIES Key points: 1. Value for money appears fair given the specialized nature of ordnance manufacturing. 2. Competition was limited, raising questions about potential price overruns. 3. Risk indicators are moderate, typical for defense procurement of critical components. 4. Performance context suggests a need for reliable fuzing systems in military operations. 5. Sector positioning places this contract within the broader defense industrial base for munitions.

Value Assessment

Rating: fair

The contract value of approximately $36 million for electronic bomb fuzes and accessories seems within a reasonable range for specialized defense components. Benchmarking against similar ordnance contracts is challenging due to the specific nature of fuzing systems. However, the firm fixed-price structure suggests an attempt to control costs, though the limited competition could have impacted the final price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded, leading to a limited field of bidders. The presence of only two bidders suggests a concentrated market for this specific type of advanced ordnance component. This limited competition may have reduced the downward pressure on pricing.

Taxpayer Impact: Taxpayers may have paid a premium due to the restricted number of capable suppliers, potentially limiting the government's ability to secure the lowest possible price.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational forces requiring advanced bomb fuzing capabilities. The contract delivers critical electronic bomb fuzes and associated accessories essential for ordnance effectiveness. Geographic impact is primarily national, supporting defense readiness across various theaters of operation. Workforce implications include supporting specialized manufacturing jobs within the defense industrial base, particularly at L3Harris.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to higher costs for taxpayers.
Reliance on a few suppliers for critical defense components poses supply chain risks.
The 'after exclusion of sources' clause warrants scrutiny to ensure fairness and necessity.

Positive Signals

Firm fixed-price contract structure helps manage cost certainty.
L3Harris is an established defense contractor with relevant expertise.
The contract addresses a critical need for modern ordnance.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ordnance and munitions components. The market for advanced fuzing systems is specialized, often dominated by a few key players due to high barriers to entry, including technological expertise, stringent quality control, and security clearances. Comparable spending benchmarks are difficult to establish precisely due to the niche nature of the product, but overall defense spending on munitions components is substantial.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, L3Harris, is a large defense corporation. Subcontracting opportunities for small businesses may exist, but they are not explicitly mandated or highlighted in the provided data. The focus is on a large prime contract awarded to a major defense manufacturer.

Oversight & Accountability

Oversight is likely managed through the Department of the Navy's contracting and program management offices. Accountability measures would include performance metrics tied to the firm fixed-price contract and adherence to military specifications. Transparency is generally limited for defense procurement contracts of this nature, though contract awards are publicly reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ordnance Procurement
Navy Munitions Contracts
Bomb Components Manufacturing
Defense Industrial Base Suppliers
L3Harris Defense Contracts

Risk Flags

Limited competition
Potential for higher costs
Supply chain concentration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.0 million to L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC.. FMU 139 C/B ELECTRONIC BOMB FUZES AND ACCESSORIES

Who is the contractor on this award?

The obligated recipient is L3HARRIS FUZING AND ORDNANCE SYSTEMS, 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 $36.0 million.

What is the period of performance?

Start: 2011-09-29. End: 2014-12-31.

What is the track record of L3Harris Fuzing and Ordnance Systems, Inc. in delivering similar electronic bomb fuzes?

L3Harris Fuzing and Ordnance Systems, Inc. (part of L3Harris Technologies) has a significant history and established reputation in the defense sector, particularly in the development and manufacturing of fuzing systems and ordnance components. They are known to supply various types of fuzes for different munitions platforms used by the U.S. military and allied nations. Their experience typically includes meeting stringent military specifications, ensuring high reliability, and adhering to rigorous quality control standards. While specific performance data for this particular contract (NCA 332995) isn't detailed here, their broader portfolio suggests a strong capability in producing complex ordnance items. Past performance evaluations, often part of the federal procurement process, would provide more granular insights into their delivery timeliness, quality, and overall customer satisfaction on previous contracts.

How does the $36 million contract value compare to historical spending on electronic bomb fuzes by the Department of the Navy?

Comparing the $36 million contract value requires analyzing historical spending trends for similar electronic bomb fuzes by the Department of the Navy. Without access to a comprehensive database of past contracts for this specific item, a direct comparison is difficult. However, the duration of this contract (approximately 3 years, from 2011 to 2014) suggests an average annual spend of around $12 million. This figure needs to be contextualized against the Navy's overall budget for ordnance and munitions. Factors like technological advancements, inflation, and changes in operational requirements can significantly influence contract values over time. If the Navy has historically procured similar fuzes in the multi-million dollar range annually, this contract appears consistent. However, if previous procurements were substantially lower or higher, it would indicate a deviation that warrants further investigation into the reasons, such as increased demand, new technological features, or market shifts.

What are the primary risks associated with a limited competition award for critical defense components like bomb fuzes?

A primary risk associated with limited competition for critical defense components like bomb fuzes is the potential for reduced price competition, leading to higher costs for the government and taxpayers. When fewer bidders are involved, especially if the market is concentrated with only a few capable suppliers, the government may have less leverage to negotiate favorable pricing. This can result in the contractor having more pricing power. Another significant risk is supply chain vulnerability; reliance on a small number of suppliers can create dependencies that are problematic if one supplier faces production issues, financial instability, or geopolitical disruptions. Furthermore, limited competition can stifle innovation, as contractors may face less pressure to invest in research and development to improve product offerings or reduce costs if they are assured of a contract due to limited alternatives. Ensuring robust oversight and performance management becomes even more critical in such scenarios.

How effective are firm fixed-price contracts in managing costs for specialized defense manufacturing like bomb fuzes?

Firm Fixed-Price (FFP) contracts are generally considered effective tools for managing costs in specialized defense manufacturing, including bomb fuzes, primarily because they shift the majority of the cost risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to deliver the specified goods or services for a predetermined price, regardless of their actual costs incurred. This incentivizes the contractor to manage their expenses efficiently and control production costs to maximize their profit margin. For predictable requirements and well-defined scopes of work, like the manufacturing of established ordnance components, FFP contracts offer cost certainty to the government. However, if the scope is uncertain, involves significant research and development, or is subject to unforeseen technical challenges, an FFP contract could potentially lead to the contractor either cutting corners on quality to maintain profitability or seeking contract modifications, which can negate the intended cost savings. In this case, for established bomb fuzes, FFP is likely a suitable choice for cost control.

What are the implications of the 'after exclusion of sources' clause on the overall fairness and competitiveness of the procurement?

The 'after exclusion of sources' clause in a federal procurement signifies that while the initial solicitation may have been intended for full and open competition, specific sources were subsequently excluded from consideration. This exclusion must be justified by the agency, typically based on factors like national security, proprietary data restrictions, or the unique capabilities required that only certain sources possess. The implication for fairness and competitiveness is significant: it inherently limits the pool of potential bidders, thereby reducing overall competition. While the process might still involve multiple bidders from the remaining pool, the exclusion narrows the field, potentially impacting price discovery and innovation. For taxpayers, this can mean less assurance of receiving the best possible price. The justification for excluding sources needs to be robust and transparent to ensure the procurement remains as competitive and fair as possible under the circumstances, preventing undue favoritism or artificial market restrictions.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Other Ordnance and Accessories Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001911R0006

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Address: 3975 MCMANN RD, CINCINNATI, OH, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $36,006,426

Exercised Options: $36,006,426

Current Obligation: $36,006,426

Contract Characteristics

Cost or Pricing Data: NO

Timeline