Department of Defense awards $94.4M for diesel engines, with L3 Technologies Inc. as the sole awardee

Contract Overview

Contract Amount: $94,367,223 ($94.4M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-09-28

End Date: 2023-06-15

Contract Duration: 990 days

Daily Burn Rate: $95.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ENGINE, DIESEL W/CONTAINER NSN: 2815-01-414-6821 MFR CAGE: 06085 MFR PART NUMBER: 12366412

Place of Performance

Location: MUSKEGON, MUSKEGON County, MICHIGAN, 49442

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $94.4 million to L3 TECHNOLOGIES, INC. for work described as: ENGINE, DIESEL W/CONTAINER NSN: 2815-01-414-6821 MFR CAGE: 06085 MFR PART NUMBER: 12366412 Key points: 1. The contract value represents a significant investment in engine procurement for defense logistics. 2. Competition dynamics appear limited, with the awardee being the primary or sole source. 3. The contract duration of 990 days suggests a long-term need for these critical components. 4. Performance context is tied to the Defense Logistics Agency's role in supplying military equipment. 5. The sector positioning is within the 'Other Engine Equipment Manufacturing' category, indicating specialized production.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific unit cost data or comparable contract details. The total award amount of $94.4 million over approximately 2.7 years suggests a substantial procurement. However, the lack of detailed pricing breakdowns and comparisons to similar engine procurements makes a definitive value-for-money assessment difficult. The firm fixed-price structure offers some cost certainty, but the overall value proposition hinges on the performance and longevity of the engines supplied.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which suggests that while initial broad competition might have been considered, the final award was made to a specific entity, potentially indicating a limited pool of qualified bidders or a specific technical requirement. The exact number of bidders is not specified, but the award type implies a restricted competition.

Taxpayer Impact: Limited competition can sometimes lead to higher prices for taxpayers if viable alternatives were not fully explored or if the chosen contractor faces less pressure to offer the most competitive pricing.

Public Impact

Military units requiring reliable diesel engines for various operational platforms will benefit from this procurement. The services delivered include the manufacturing and supply of diesel engines with containers. The geographic impact is primarily within the United States, supporting defense logistics operations. Workforce implications include employment within L3 Technologies, Inc. and its supply chain, particularly in specialized manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in suboptimal pricing for taxpayers.
Lack of detailed performance metrics makes it difficult to assess long-term value.
The 'exclusion of sources' clause warrants further investigation into the reasons for limited bidding.

Positive Signals

Firm fixed-price contract provides cost predictability.
Award to an established manufacturer (L3 Technologies, Inc.) suggests a focus on reliability.
Long contract duration indicates a sustained need and potential for stable supply.

Sector Analysis

The 'Other Engine Equipment Manufacturing' sector (NAICS 333618) encompasses establishments primarily engaged in manufacturing engines, turbines, and power transmission equipment, excluding vehicles. This contract falls within a specialized niche of this industry, focusing on diesel engines for defense applications. The market size for such specialized defense equipment is driven by government procurement cycles and technological requirements. Comparable spending benchmarks would typically involve analyzing other large-scale engine procurements by military branches or related government agencies.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. The primary contractor, L3 Technologies, Inc., is a large entity, and any subcontracting opportunities would be at their discretion and not mandated by a small business set-aside. The impact on the small business ecosystem is therefore indirect, relying on the prime contractor's procurement practices.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the Defense Logistics Agency (DLA) Inspector General. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified engines. Transparency is facilitated through contract award databases, though detailed performance and pricing data may be limited. The IG's office would investigate any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Logistics Agency Procurement
Military Engine Procurement
Diesel Engine Manufacturing Contracts
Department of Defense Supply Chain Management

Risk Flags

Limited competition identified.
Potential for price increases due to limited bidders.
Contract duration is lengthy, requiring sustained oversight.
Specific performance metrics not detailed in summary data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.4 million to L3 TECHNOLOGIES, INC.. ENGINE, DIESEL W/CONTAINER NSN: 2815-01-414-6821 MFR CAGE: 06085 MFR PART NUMBER: 12366412

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 Logistics Agency).

What is the total obligated amount?

The obligated amount is $94.4 million.

What is the period of performance?

Start: 2020-09-28. End: 2023-06-15.

What is the historical spending pattern for similar diesel engines by the Department of Defense?

Analyzing historical spending for similar diesel engines by the Department of Defense requires access to detailed procurement databases and the ability to filter by specific National Stock Numbers (NSNs), manufacturer part numbers, and contract types. Without this granular data, it's difficult to provide a precise historical spending pattern. However, general trends indicate consistent investment in engine components to support military readiness across various platforms. The Defense Logistics Agency (DLA) is a primary entity responsible for such procurements, often awarding multi-year, high-value contracts to ensure a steady supply chain. Past awards for engine systems can range from tens to hundreds of millions of dollars annually, depending on modernization efforts, operational tempo, and specific platform requirements. Fluctuations in spending are often tied to defense budgets, geopolitical events, and the lifecycle of military equipment.

How does the awarded price compare to market rates for similar diesel engines?

Directly comparing the awarded price of $94.4 million for these specific diesel engines to general market rates is challenging without detailed unit cost breakdowns and knowledge of the exact specifications and quantities. The contract is for 'ENGINE, DIESEL W/CONTAINER' with a specific NSN (2815-01-414-6821). Market rates can vary significantly based on engine size, power output, fuel efficiency, technological features, and intended application. For military-grade engines, prices are often higher than commercial equivalents due to stringent reliability, durability, and performance requirements under harsh conditions. Furthermore, the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type suggests a potentially limited market or specialized nature, which can influence pricing. A thorough benchmark would require comparing this contract's unit price (if derivable) against other government contracts for similar NSNs or against quotes from multiple manufacturers for comparable commercial or military-grade engines.

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

The provided data does not explicitly detail the Key Performance Indicators (KPIs) or the specific methods for performance measurement for this contract. However, for a firm fixed-price contract of this nature, typical KPIs would likely revolve around delivery schedules (on-time delivery of engines and containers), quality standards (meeting technical specifications, defect rates), and potentially warranty provisions. The Defense Contract Management Agency (DCMA) often plays a role in monitoring contractor performance, ensuring compliance with contract terms. Performance is generally assessed through inspection and acceptance of delivered goods, review of contractor reports, and potentially through user feedback from the end-users within the Department of Defense. Specific metrics related to engine reliability, operational uptime, or maintenance requirements might also be included in the contract's statement of work.

What is the track record of L3 Technologies, Inc. in fulfilling similar defense contracts?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a substantial track record in fulfilling defense contracts across various sectors, including aerospace, communications, and electronic systems. While specific details on their performance for this particular engine contract are not provided, the company is a well-established defense contractor known for producing complex systems and components. Their history includes numerous awards from the Department of Defense and other government agencies. Performance evaluations for large contractors like L3Harris are typically managed through systems like the Contractor Performance Assessment Reporting System (CPARS), which documents past performance on contracts. Generally, major defense contractors are expected to meet stringent quality and delivery standards, and L3Harris's continued success in securing large contracts suggests a generally positive performance history, though specific contract performance can vary.

What are the potential risks associated with this contract, and what mitigation strategies are in place?

Potential risks associated with this contract include supply chain disruptions affecting component availability, potential cost overruns if the fixed-price contract doesn't adequately account for unforeseen material cost increases (though less likely with FFP), delivery delays impacting military readiness, and quality control issues leading to defective engines. Mitigation strategies often include robust quality assurance processes by the contractor, clear delivery schedules with potential penalties for delays, strong oversight from the contracting agency (DLA), and potentially contingency planning for alternative suppliers or expedited shipping if critical components are delayed. The firm fixed-price nature itself acts as a risk mitigation for the government regarding cost certainty, shifting cost overrun risk to the contractor. The 'exclusion of sources' might also indicate a risk related to the limited number of qualified suppliers.

Industry Classification

NAICS: Manufacturing › Engine, Turbine, and Power Transmission Equipment Manufacturing › Other Engine Equipment Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SPRDL120R0064

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 76 GETTY ST, MUSKEGON, MI, 49442

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: $115,718,580

Exercised Options: $94,367,223

Current Obligation: $94,367,223

Subaward Activity

Number of Subawards: 52

Total Subaward Amount: $8,892,604

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline