DoD's $97.8M contract for photonics mast sensors awarded to L3 Technologies, Inc. without competition

Contract Overview

Contract Amount: $97,827,307 ($97.8M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-12-29

End Date: 2019-12-10

Contract Duration: 3,268 days

Daily Burn Rate: $29.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: PHOTONICS MAST SENSOR-MTI FOR SSN784-791

Place of Performance

Location: NORTHAMPTON, HAMPSHIRE County, MASSACHUSETTS, 01060

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $97.8 million to L3 TECHNOLOGIES, INC. for work described as: PHOTONICS MAST SENSOR-MTI FOR SSN784-791 Key points: 1. The contract value represents a significant investment in advanced sensor technology for naval applications. 2. The sole-source award raises questions about potential price overruns and lack of market-driven cost efficiencies. 3. The duration of the contract (over 8 years) suggests a long-term need for these specialized components. 4. The absence of competition limits opportunities for innovation and cost reduction through alternative providers. 5. Performance context is limited due to the lack of competitive benchmarks. 6. The contract falls within the specialized sector of navigation and guidance system manufacturing.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized technology. Without competitive bids, it's difficult to ascertain if the $97.8 million represents a fair market price. The fixed-price incentive (FPI) contract type suggests an attempt to control costs, but the lack of competition inherently reduces pressure on the contractor to optimize pricing. Further analysis would require access to cost breakdowns and comparisons with similar, albeit likely scarce, sole-source procurements.

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 vendor considered. The justification for sole-source procurement is not provided in the data, but typically it implies that only one responsible source is available or capable of meeting the requirement. This lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium for this system due to the absence of competitive pressure. The government had limited leverage to negotiate the best possible price.

Public Impact

The primary beneficiaries are the Department of Defense, specifically naval operations requiring advanced sensor capabilities. The contract delivers critical photonics mast sensor technology essential for submarine navigation and situational awareness. The geographic impact is primarily within defense installations and naval bases, though the end-use is global for naval deployments. The contract supports a specialized segment of the defense manufacturing workforce involved in high-tech sensor production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the sole-source justification could mask underlying issues.
Long contract duration without competitive re-evaluation may lead to complacency and reduced efficiency.
Specialized nature of the technology makes it difficult to find alternative solutions or benchmark pricing.

Positive Signals

Award to an established contractor (L3 Technologies) may indicate reliability and proven capability.
Fixed-price incentive contract type aims to align contractor and government interests in cost control.
The technology addresses a critical defense need, ensuring national security capabilities.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, classified under NAICS code 334511. This is a highly specialized niche within the broader aerospace and defense industry. The market is characterized by high barriers to entry due to technological complexity and significant R&D investment. Comparable spending benchmarks are difficult to establish due to the unique nature of photonics mast sensors and the prevalence of sole-source or limited competition awards in such critical defense systems.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no specific information regarding subcontracting plans. Given the specialized nature of photonics mast sensors and the sole-source award to a large prime contractor, it is unlikely that small businesses played a significant role as direct awardees. However, L3 Technologies may engage small businesses as subcontractors for specific components or services, but this is not explicitly detailed.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations, managed by the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the contract terms, particularly the fixed-price incentive structure which links profit to performance and cost targets. Transparency is limited due to the sole-source nature; however, contract awards are generally reported in federal databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Systems
Submarine Technology
Defense Electronics
Sensor Manufacturing
Navigation Systems
Guidance Systems

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $97.8 million to L3 TECHNOLOGIES, INC.. PHOTONICS MAST SENSOR-MTI FOR SSN784-791

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 $97.8 million.

What is the period of performance?

Start: 2010-12-29. End: 2019-12-10.

What is the specific justification for awarding this contract on a sole-source basis to L3 Technologies, Inc.?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under circumstances such as unique capabilities, urgent needs, or when only one responsible source can fulfill the requirement. For a specialized item like photonics mast sensors, it's possible that L3 Technologies holds proprietary technology or is the sole qualified manufacturer. A full justification would normally be documented by the procuring agency (Department of Defense) and may be subject to review by oversight bodies to ensure it meets regulatory requirements for non-competitive awards.

How does the fixed-price incentive (FPI) contract type aim to manage costs in this sole-source scenario?

A Fixed-Price Incentive (FPI) contract establishes a target cost, target profit, and a price ceiling. The final price is determined by the relationship between the final incurred cost and the target cost, with adjustments to profit. If the final cost is below the target, both the contractor and the government share in the savings (often at a pre-negotiated ratio). If the final cost exceeds the target cost, the contractor's profit is reduced, and the government's share of the cost overrun increases, up to the price ceiling. In this sole-source context, the FPI aims to incentivize L3 Technologies to control costs by sharing potential savings and limiting the government's exposure to unlimited cost increases, although the lack of competition still limits the overall cost-saving potential compared to a competitive bid.

What are the potential risks associated with a sole-source award for critical defense technology like photonics mast sensors?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to higher prices than might be achieved in a competitive environment. This reduces the government's purchasing power and potentially increases the financial burden on taxpayers. Another risk is reduced innovation, as the sole contractor may have less incentive to invest in developing more advanced or cost-effective solutions. Furthermore, dependence on a single supplier can create supply chain vulnerabilities; if the contractor experiences production issues or goes out of business, the government may face significant disruptions. Finally, without competitive benchmarking, it's harder to assess the true value for money received.

Can the performance of L3 Technologies, Inc. on similar contracts be used to assess the risk of this award?

Assessing L3 Technologies, Inc.'s past performance on similar contracts could provide valuable insights into their reliability, quality of work, and ability to meet cost and schedule targets. However, the utility of this data is limited in this specific case. Since this is a sole-source award for a specialized technology, direct comparisons to other contracts may be difficult. While their overall track record as a large defense contractor is likely extensive, the unique nature of photonics mast sensors and the absence of competition mean that past performance alone cannot fully mitigate the risks associated with this specific procurement. A review of their performance on prior sole-source or sole-bid contracts, if available, would be more relevant.

What is the historical spending trend for photonics mast sensors or similar navigation/guidance systems within the Department of Defense?

The provided data focuses on a single contract and does not offer historical spending trends. However, general knowledge of defense procurement suggests that spending on specialized systems like photonics mast sensors is often project-driven and can fluctuate based on technological advancements, platform upgrades (like submarine modernization), and evolving defense strategies. Such systems typically represent a small fraction of the overall DoD budget but are critical for specific mission capabilities. Analyzing historical spending would require accessing broader contract databases and budget documents related to naval systems and sensor technology over multiple fiscal years to identify patterns, significant investments, or shifts in procurement priorities.

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

Solicitation ID: N0002409R6210

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 50 PRINCE ST, NORTHAMPTON, MA, 01060

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

Financial Breakdown

Contract Ceiling: $151,319,707

Exercised Options: $121,183,168

Current Obligation: $97,827,307

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $482,892

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline