DoD's $452M contract for electronic equipment repair awarded to ITT Industries Systems Div

Contract Overview

Contract Amount: $452,526,564 ($452.5M)

Contractor: ITT Industries Systems DIV

Awarding Agency: Department of Defense

Start Date: 1999-10-01

End Date: 2009-08-25

Contract Duration: 3,616 days

Daily Burn Rate: $125.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE AWARD FEE

Sector: Defense

Place of Performance

Location: KEKAHA, KAUAI County, HAWAII, 96752

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $452.5 million to ITT INDUSTRIES SYSTEMS DIV for work described as: Key points: 1. Contract value of $452.5M over 10 years suggests significant long-term need for electronic equipment maintenance. 2. Awarded under full and open competition, indicating a potentially competitive bidding process. 3. The fixed-price award fee structure aims to balance cost control with performance incentives. 4. Contract duration of 3616 days (approx. 10 years) points to a stable, long-term requirement. 5. The North American Industry Classification System (NAICS) code 811219 covers a broad range of electronic repair services. 6. Awarded by the Department of the Navy, highlighting a specific branch's reliance on these services.

Value Assessment

Rating: fair

The total contract value of $452.5 million over nearly 10 years averages to approximately $45.25 million annually. Without specific details on the scope of services or the number of units repaired, a direct per-unit cost comparison is challenging. However, the duration and scale suggest a substantial investment. Benchmarking against similar long-term, comprehensive electronic repair contracts would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors were likely invited to bid. The presence of two bids (no: 2) indicates some level of competition, though the exact number of interested parties and the rigor of the evaluation process are not detailed. A higher number of bidders typically leads to more competitive pricing and better value for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a more competitive environment, which can drive down prices and encourage innovation among contractors. The limited number of bidders in this instance warrants further investigation into whether the competition was as robust as possible.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational readiness, ensuring electronic equipment functions correctly. Services delivered include repair and maintenance for a wide array of electronic equipment critical to naval operations. The geographic impact is likely concentrated around naval bases and operational areas where the serviced equipment is deployed. Workforce implications include skilled technicians and support staff required for the specialized repair services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bidders could indicate potential market concentration or barriers to entry.
The long contract duration might reduce flexibility to adopt newer technologies or more cost-effective solutions if they emerge.
Fixed-price award fee contracts can sometimes lead to contractor focus on meeting minimum requirements rather than exceeding them, depending on the award fee criteria.

Positive Signals

Awarded under full and open competition, suggesting an effort to maximize the vendor pool.
The fixed-price award fee structure provides incentives for performance, potentially leading to higher quality service.
The substantial contract value indicates a significant and ongoing need, providing stability for the contractor and ensuring critical support for the Navy.

Sector Analysis

This contract falls within the broader defense electronics and maintenance sector. The market for electronic equipment repair and maintenance is substantial, driven by the continuous need to support complex systems across various government agencies, particularly the Department of Defense. Comparable spending benchmarks would involve analyzing other large-scale maintenance contracts for military hardware and electronic systems, considering factors like system complexity and service level agreements.

Small Business Impact

The data indicates that small business participation was not a primary focus, as the contract was not set aside for small businesses (sb: false) and the prime contractor is ITT Industries Systems Div., a large entity. There is no explicit information on subcontracting plans for small businesses. The impact on the small business ecosystem would depend on whether ITT Industries actively seeks small business subcontractors for specialized services or components.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the fixed-price award fee structure, which links contractor payment to performance metrics. Transparency is generally facilitated through contract award databases, though detailed performance reports may be less publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Maintenance and Repair Contracts
Naval Electronic Systems Support
Fixed-Price Award Fee Contracts
Defense Industrial Base Services

Risk Flags

Potential for technological obsolescence over the contract's long duration.
Limited competition (2 bidders) may impact price discovery and value.
Reliance on a single contractor for critical electronic equipment maintenance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $452.5 million to ITT INDUSTRIES SYSTEMS DIV. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is ITT INDUSTRIES SYSTEMS DIV.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $452.5 million.

What is the period of performance?

Start: 1999-10-01. End: 2009-08-25.

What specific types of electronic equipment are covered under this contract, and what is the historical performance of ITT Industries Systems Div. with similar DoD contracts?

The contract falls under NAICS code 811219, which encompasses 'Electronic and Precision Equipment Repair and Maintenance.' This broad category can include a wide range of equipment such as communication systems, radar, navigation equipment, computers, and other specialized electronic devices. Without access to the contract's Statement of Work (SOW), the precise equipment list remains unspecified. ITT Industries Systems Division, now part of L3Harris Technologies, has a long history of supporting defense contracts. Historical performance data, including past performance evaluations and any contract disputes or awards, would be crucial for a comprehensive assessment. Reviewing past performance questionnaires and CPARS (Contractor Performance Assessment Reporting System) reports, if available, would provide insights into their reliability, quality of service, and adherence to schedule and cost targets on previous engagements.

How does the average annual value of this contract compare to other large-scale electronic maintenance contracts within the DoD or other federal agencies?

The contract's total value of $452.5 million over approximately 10 years equates to an average annual value of roughly $45.25 million. This figure places it as a significant, but not exceptionally large, contract within the context of major defense spending. For comparison, large-scale sustainment contracts for major weapon systems or extensive IT infrastructure maintenance can often run into hundreds of millions or even billions of dollars annually. For instance, contracts for maintaining aircraft fleets, naval vessels, or large IT networks frequently exceed this annual average. To provide a precise benchmark, one would need to compare it against contracts with similar scope (e.g., breadth of equipment types, level of service required) and duration, specifically within the electronic repair and maintenance domain across different military branches and agencies.

What are the key performance indicators (KPIs) and award fee criteria used to evaluate ITT Industries Systems Div.'s performance under this contract?

The contract utilizes a 'Fixed Price Award Fee' (FPAF) structure, which means a portion of the total potential payment is contingent upon the contractor meeting or exceeding specific performance objectives. The key performance indicators (KPIs) and award fee criteria are defined within the contract's Statement of Work (SOW) and the Award Fee Plan. These typically include metrics related to response time for repair requests, equipment uptime/availability, quality of repairs (e.g., defect rates), adherence to maintenance schedules, and potentially cost-saving initiatives. The government's evaluation of these KPIs determines the amount of the award fee the contractor receives, incentivizing high performance. Without the specific SOW and Award Fee Plan, the exact criteria remain confidential, but they are designed to align the contractor's efforts with the Navy's operational needs and expectations.

Given the contract's duration and value, what are the potential risks associated with technological obsolescence or the emergence of more efficient repair methodologies?

A contract spanning nearly a decade carries inherent risks related to technological obsolescence and evolving repair methodologies. Electronic equipment, especially in the defense sector, can advance rapidly. If the contract does not include provisions for incorporating newer technologies or adapting to updated repair techniques, the Navy might end up paying for maintenance of outdated systems or using less efficient methods. Mitigation strategies within the contract could include periodic reviews, flexibility clauses allowing for technology insertion, or performance incentives tied to adopting innovative solutions. The fixed-price nature, while providing cost certainty, could also disincentivize the contractor from proactively investing in new technologies if not explicitly rewarded. Regular dialogue and contract modifications based on technological advancements are crucial to manage this risk.

What is the historical spending trend for this specific type of electronic equipment repair service by the Department of the Navy, and how does this $452M contract fit into that trend?

Analyzing historical spending trends for NAICS code 811219 by the Department of the Navy would reveal the consistent demand for electronic repair services. This $452.5 million contract, awarded in 1999 with an end date in 2009, represents a significant, long-term investment during that period. If the Navy has continued to award similar large contracts for electronic repair, it indicates a sustained requirement. Conversely, if spending in this category has decreased or shifted to different contract vehicles (e.g., performance-based logistics, integrated product support), it might suggest changes in procurement strategies or technology adoption. Understanding the historical context helps assess whether this contract represented a typical or exceptional level of investment for the Navy's electronic maintenance needs during its performance period.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Address: 1 GATEWAY PLZ, COLORADO SPRIN, CO

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline