DoD's $69.3M sensor mast contract awarded to L3 Technologies, Inc. lacked competition

Contract Overview

Contract Amount: $69,329,810 ($69.3M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-05-31

End Date: 2016-01-01

Contract Duration: 3,502 days

Daily Burn Rate: $19.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SENSOR MAST FOR SSN780

Place of Performance

Location: NORTHAMPTON, HAMPSHIRE County, MASSACHUSETTS, 01060

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $69.3 million to L3 TECHNOLOGIES, INC. for work described as: SENSOR MAST FOR SSN780 Key points: 1. The contract awarded to L3 Technologies, Inc. for sensor masts represents a significant investment in naval defense systems. 2. The lack of competition raises concerns about potential overpricing and limited innovation. 3. The long duration of the contract (over 9 years) suggests a sustained need for these specialized components. 4. The firm-fixed-price structure aims to transfer some cost risk to the contractor. 5. The contract's value places it within a substantial spending category for defense instrumentation. 6. The absence of small business involvement is noted, with no set-aside or subcontracting reported.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. The $69.3 million awarded over its lifespan suggests a high per-unit cost, especially given the 'NOT COMPETED' status. Without comparable contract data or market analysis, it's difficult to definitively assess if the government received optimal value for its investment. The firm-fixed-price contract type offers some predictability, but the absence of competition limits the ability to verify pricing against market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning L3 Technologies, Inc. was the only bidder considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. The lack of competition suggests potential barriers to entry for other firms or a specific justification for awarding directly to L3 Technologies, Inc. This can lead to less favorable pricing and reduced opportunities for innovation from a broader market.

Taxpayer Impact: Taxpayers may have paid a premium for this sensor mast system due to the absence of competitive pressure. Without multiple bids, there's less assurance that the price reflects the lowest possible cost for the required technology.

Public Impact

The primary beneficiaries are the U.S. Navy, receiving critical sensor technology for its vessels. The contract delivers specialized sensor masts essential for search, detection, navigation, and guidance systems on naval platforms. The geographic impact is national, supporting naval operations and defense infrastructure across various locations. Workforce implications include specialized engineering, manufacturing, and technical support roles within L3 Technologies, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can stifle innovation by limiting market entry.
Long contract duration without re-competition might not reflect current market efficiencies.
Absence of small business participation limits broader economic impact.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
L3 Technologies, Inc. is an established defense contractor with relevant expertise.
The contract addresses a critical and sustained need for naval sensor technology.

Sector Analysis

The defense instrumentation sector, specifically focusing on search, detection, navigation, guidance, and related systems, is characterized by high technological complexity and significant government investment. Companies like L3 Technologies, Inc. operate in a market often dominated by a few large prime contractors and a specialized supply chain. Spending in this area is driven by national security requirements and the continuous need to upgrade and maintain advanced military hardware. Comparable spending benchmarks are difficult to ascertain without specific system details, but contracts for complex electronic systems can range from tens to hundreds of millions of dollars.

Small Business Impact

This contract did not include any small business set-asides, nor is there any indication of subcontracting to small businesses. The prime contractor, L3 Technologies, Inc., is a large corporation. This means the economic benefits of this substantial contract were not intentionally directed towards the small business ecosystem. Consequently, opportunities for small businesses to participate in the supply chain or benefit from this specific award were likely minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures, potentially involving the Defense Contract Management Agency (DCMA) for contract administration. Given the sole-source nature, oversight would focus on ensuring performance against contract terms and managing any contract modifications. Transparency is limited by the lack of competitive bidding, making public scrutiny of pricing and justification more difficult. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Ship Systems
Defense Electronics Manufacturing
Navigation and Guidance Systems
Search and Detection Equipment
Military Sensor Technology

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Innovation Incentive
No Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.3 million to L3 TECHNOLOGIES, INC.. SENSOR MAST FOR SSN780

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $69.3 million.

What is the period of performance?

Start: 2006-05-31. End: 2016-01-01.

What is the specific function and importance of the SSN780 sensor mast?

The SSN780 sensor mast is a critical component for naval vessels, likely providing advanced capabilities for search, detection, navigation, and guidance. Its inclusion in the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code indicates its role in enhancing situational awareness and operational effectiveness. For submarines like the SSN780 class (if applicable), such masts are vital for gathering intelligence and maintaining navigation while remaining submerged or at periscope depth. The substantial contract value underscores its technological sophistication and essential nature for modern naval operations.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The data indicates the contract was 'NOT COMPETED,' suggesting a sole-source award. Common justifications for sole-sourcing include unique capabilities possessed by only one contractor, urgent and compelling needs where competition is impractical, or specific follow-on work to a previous contract where only the original vendor has the necessary knowledge or tooling. Without further documentation from the awarding agency, the precise reason for bypassing competition remains unclear. This lack of transparency limits the ability to assess if competition was genuinely not feasible or if other options were overlooked, potentially impacting cost-effectiveness.

How does the firm-fixed-price (FFP) contract type affect risk and cost for this sensor mast acquisition?

A Firm-Fixed-Price (FFP) contract is designed to provide the government with cost certainty, as the price is set and generally not subject to adjustment based on the contractor's cost experience. This shifts the risk of cost overruns to the contractor, L3 Technologies, Inc. For the government, this means the total expenditure is predictable. However, in a sole-source scenario, the 'fixed' price might be higher than it would be under competitive conditions. The FFP structure incentivizes the contractor to control costs efficiently to maximize profit, but the lack of competition limits the government's ability to verify if the fixed price is reasonable.

What is the historical spending trend for similar sensor mast systems within the Department of Defense?

Analyzing historical spending trends for this specific 'SENSOR MAST FOR SSN780' is challenging without more granular data. However, the broader category of 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511) consistently represents a significant portion of the Department of Defense's procurement budget. Spending in this sector is driven by technological advancements and the need to equip naval fleets with state-of-the-art systems. The $69.3 million awarded over approximately 9.5 years suggests an average annual expenditure of around $7.3 million for this particular system, which is substantial but needs to be viewed within the context of overall defense electronics procurement.

What are the potential risks associated with a long-duration, sole-source contract like this one?

A significant risk of a long-duration, sole-source contract is the potential for complacency and reduced incentive for innovation from the contractor, as there is no competitive pressure to improve products or processes. Furthermore, the government may be locked into potentially outdated technology or suboptimal pricing for an extended period. Without periodic re-competition or market research, the contract price may drift away from fair market value over time. There's also a risk of vendor lock-in, making it difficult and costly to switch to alternative solutions or suppliers in the future.

Does L3 Technologies, Inc. have a strong track record with similar defense contracts?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a long history as a major defense contractor, involved in a wide array of electronic systems, sensors, and communication equipment for military applications. Their portfolio typically includes complex systems for various branches of the U.S. military, including naval platforms. While this specific contract was sole-sourced, the company's general track record suggests they possess the technical capabilities and manufacturing capacity required for such specialized defense procurements. However, the performance specifics and value received on this particular $69.3 million contract, due to its non-competitive nature, are less transparent.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

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

Address: 50 PRINCE ST, NORTHAMPTON, MA, 01060

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $94,542,021

Exercised Options: $78,748,863

Current Obligation: $69,329,810

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline