Navy awards $51.7M for hybrid electric drives, with L3 Technologies Inc. securing the contract

Contract Overview

Contract Amount: $51,735,075 ($51.7M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-09-27

End Date: 2022-07-15

Contract Duration: 3,578 days

Daily Burn Rate: $14.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: HYBRID ELECTRIC DRIVE

Place of Performance

Location: CAMDEN, CAMDEN County, NEW JERSEY, 08102

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $51.7 million to L3 TECHNOLOGIES, INC. for work described as: HYBRID ELECTRIC DRIVE Key points: 1. The contract value of $51.7 million over approximately 9.8 years suggests a significant investment in advanced propulsion systems. 2. Competition dynamics appear robust with 5 bidders, potentially leading to favorable pricing for the government. 3. The fixed-price with economic price adjustment contract type introduces some risk related to fluctuating material costs. 4. Performance context is tied to motor and generator manufacturing, a critical component for naval modernization. 5. This contract positions the Navy within the broader defense sector's push for more efficient and sustainable technologies.

Value Assessment

Rating: good

The contract value of $51.7 million for hybrid electric drives appears reasonable given the duration and specialized nature of the technology. Benchmarking against similar advanced propulsion system contracts would provide a clearer picture of value for money. The fixed-price with economic price adjustment structure, while common for long-term procurements, introduces potential cost escalations that warrant monitoring.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with five distinct bidders participating. This level of competition is generally positive, indicating a healthy market for these specialized hybrid electric drive systems and suggesting that the government likely received competitive proposals. The presence of multiple bidders helps ensure a broader range of technical solutions and pricing options are considered.

Taxpayer Impact: A competitive bidding process for this contract is beneficial for taxpayers, as it drives down costs and encourages innovation among contractors vying for the award.

Public Impact

The U.S. Navy is the primary beneficiary, receiving advanced hybrid electric drive systems to enhance its fleet's operational capabilities. Services delivered include the manufacturing and potentially integration of critical propulsion components for naval vessels. The geographic impact is centered in New Jersey, where L3 Technologies, Inc. is located, potentially supporting local jobs and the regional economy. Workforce implications include skilled labor in advanced manufacturing, electrical engineering, and marine propulsion systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the economic price adjustment clause, which allows for adjustments based on economic factors.
Reliance on a single contractor for a critical component could pose supply chain risks if not managed proactively.

Positive Signals

Awarded under full and open competition, indicating a competitive market and potentially good value.
The contract duration of nearly 10 years suggests a long-term commitment to modernizing naval propulsion systems.
The technology itself, hybrid electric drives, represents a move towards greater efficiency and potentially reduced environmental impact for naval operations.

Sector Analysis

The defense sector is increasingly investing in advanced technologies to improve operational efficiency, reduce reliance on fossil fuels, and enhance platform capabilities. Hybrid electric drive systems are a key component of this modernization effort, offering potential benefits in fuel savings, reduced noise signatures, and improved maneuverability. Comparable spending in this area can vary widely depending on the specific application and scale, but significant investments are being made across various branches of the military for next-generation platforms.

Small Business Impact

This contract was not set aside for small businesses, and there is no explicit indication of subcontracting requirements for small businesses within the provided data. The primary contractor, L3 Technologies, Inc., is a large defense contractor. Further analysis would be needed to determine if small businesses are involved in the supply chain or as subcontractors for specific components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including performance standards and payment schedules. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Ship Systems
Propulsion Systems
Electric Motors Manufacturing
Defense Procurement
Hybrid Vehicle Technology

Risk Flags

Potential cost escalation due to Economic Price Adjustment clause.
Long contract duration may introduce unforeseen technological obsolescence or requirement changes.
Dependence on a single supplier for critical components could pose supply chain risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.7 million to L3 TECHNOLOGIES, INC.. HYBRID ELECTRIC DRIVE

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, 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 $51.7 million.

What is the period of performance?

Start: 2012-09-27. End: 2022-07-15.

What is the historical spending pattern for hybrid electric drive systems by the Department of Defense?

Historical spending on hybrid electric drive systems by the Department of Defense is not readily available as a distinct category in public databases. However, spending on naval propulsion systems, electric motors, and related advanced technologies has been substantial over the years. The Navy, in particular, has been investing in modernizing its fleet with more efficient and sustainable power solutions. This $51.7 million contract represents a significant, specific investment in this technology, but it is part of a broader trend of technological upgrades within the defense sector. Analyzing aggregated spending on 'Shipbuilding and Conversion, Navy' or specific procurement lines for propulsion equipment would provide a wider context for such investments.

How does the per-unit cost of these hybrid electric drives compare to similar systems in the commercial sector?

A direct per-unit cost comparison between these naval hybrid electric drives and commercial sector systems is challenging without detailed specifications of the technology being procured. Naval systems often require higher durability, redundancy, and performance under extreme conditions, which typically leads to higher costs. Commercial hybrid systems, such as those found in buses or trucks, are produced at much higher volumes, benefiting from economies of scale. While the $51.7 million contract value provides a total cost, breaking it down to a per-unit cost requires knowing the number of units procured. Even then, the specialized nature and stringent requirements of military applications mean direct commercial benchmarking may not be entirely applicable.

What are the key performance indicators (KPIs) for this contract, and how is contractor performance being measured?

The specific Key Performance Indicators (KPIs) for this contract are not detailed in the provided data. However, typical KPIs for such a contract would likely include metrics related to system efficiency (e.g., fuel savings, power output), reliability (e.g., mean time between failures), durability, performance under various operational conditions (e.g., speed, maneuverability), and adherence to delivery schedules. Contractor performance is generally measured against these KPIs through regular progress reports, technical reviews, and potentially independent testing and evaluation by the Navy. Contractual clauses would outline remedies for non-performance or failure to meet specified standards.

What is the track record of L3 Technologies, Inc. in delivering complex defense systems, particularly propulsion-related technologies?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a substantial track record in delivering complex defense systems, including avionics, sensors, communication systems, and power and propulsion solutions. They have been a significant contractor for various branches of the U.S. military. While specific details on their past performance solely on hybrid electric drives for naval applications are not provided here, their broader experience in aerospace and defense manufacturing suggests a capability to handle sophisticated technological procurements. Past performance evaluations and contract histories available through government databases would offer a more granular view of their specific successes and challenges in delivering similar propulsion technologies.

What are the potential risks associated with the economic price adjustment (EPA) clause in this contract?

The primary risk associated with the Economic Price Adjustment (EPA) clause in this fixed-price contract is the potential for cost overruns for the government. EPAs are designed to protect the contractor from unforeseen increases in the cost of labor, materials, or other economic factors beyond their control. However, if these economic factors escalate significantly, the final cost to the government could exceed initial projections. This necessitates careful monitoring of market indices and cost drivers by the Navy to ensure that adjustments are justified and reasonable. The specific indices and caps defined within the EPA clause are critical in mitigating this risk.

Industry Classification

NAICS: Manufacturing › Electrical Equipment Manufacturing › Motor and Generator Manufacturing

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002411R4207

Offers Received: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 9 MALCOLM HOYT DR, NEWBURYPORT, MA, 01950

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: $347,627,668

Exercised Options: $54,654,205

Current Obligation: $51,735,075

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline