DoD awards $161.5M for missile spares, with no competition and significant risk indicators

Contract Overview

Contract Amount: $161,552,987 ($161.6M)

Contractor: DRS Network & Imaging Systems LLC

Awarding Agency: Department of Defense

Start Date: 2023-08-21

End Date: 2027-08-31

Contract Duration: 1,471 days

Daily Burn Rate: $109.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MISSILE SPARES PROCUREMENT

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32935

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $161.6 million to DRS NETWORK & IMAGING SYSTEMS LLC for work described as: MISSILE SPARES PROCUREMENT Key points: 1. Contract awarded on a sole-source basis, raising concerns about price discovery and value for money. 2. High potential for cost overruns due to lack of competitive pressure. 3. Significant duration of the contract (over 4 years) increases exposure to market volatility. 4. The specific nature of missile spares suggests a critical but potentially niche market. 5. Limited transparency due to sole-source award and lack of detailed performance metrics. 6. Potential for contractor lock-in given the specialized nature of the components.

Value Assessment

Rating: concerning

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized components involved. Without competitive bids, it's difficult to ascertain if the $161.5 million price reflects fair market value. The extended duration of over four years further complicates value assessment, as market conditions and material costs can fluctuate significantly. The absence of comparable contract data for similar missile spare parts procured competitively makes a direct price comparison unreliable. This lack of transparency necessitates close monitoring of expenditures against performance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning no other vendors were solicited or considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. The lack of competition means that the Defense Logistics Agency did not benefit from the price reductions and innovation that often arise from a competitive environment. This raises questions about whether the government secured the best possible pricing and terms.

Taxpayer Impact: Taxpayers may be paying a premium for these missile spares due to the absence of competitive bidding. Without multiple offers, there is less downward pressure on prices, potentially leading to higher overall costs for the Department of Defense.

Public Impact

The primary beneficiaries are the Department of Defense's missile systems, ensuring operational readiness. Services delivered include the procurement of essential missile spare parts, specifically bare printed circuit boards. The geographic impact is primarily within the United States, supporting defense supply chains. Workforce implications are likely within the specialized manufacturing and defense logistics sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially inflates costs.
Long contract duration increases risk of price escalation and obsolescence.
Lack of transparency in the procurement process hinders accountability.
Dependence on a single contractor for critical spares creates supply chain vulnerability.
Specific component type (bare printed circuit boards) may have limited alternative suppliers.

Positive Signals

Ensures availability of critical missile spare parts for national defense.
Award to DRS Network & Imaging Systems LLC suggests reliance on established capabilities.
Firm Fixed Price contract type provides some cost certainty if managed effectively.
Contract supports a vital defense mission, contributing to national security.

Sector Analysis

The procurement of specialized electronic components like bare printed circuit boards for defense applications falls within the broader aerospace and defense electronics sector. This sector is characterized by high technological requirements, stringent quality control, and often, long product lifecycles. The market for such specific components can be concentrated, with a limited number of manufacturers possessing the necessary certifications and expertise. Spending in this area is critical for maintaining the readiness of complex military platforms, and contracts are often awarded to established suppliers with proven track records.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or outcome ('sb': false, 'ss': false). This sole-source award to DRS Network & Imaging Systems LLC does not appear to include specific set-aside provisions for small businesses. Consequently, there are no direct subcontracting opportunities for small businesses mandated by this specific award. The impact on the small business ecosystem is neutral in terms of direct participation, but it highlights a procurement strategy that did not prioritize small business engagement for this particular requirement.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Logistics Agency (DLA) and potentially the Department of Defense's Inspector General. Given the sole-source nature and significant dollar value, enhanced scrutiny on contract performance, delivery schedules, and cost reasonableness is expected. Transparency measures would typically involve regular reporting from the contractor and periodic reviews by the contracting officer. However, the lack of competition inherently reduces the visibility typically afforded by a multi-bidder scenario.

Related Government Programs

Missile Systems Procurement
Defense Electronics Manufacturing
Bare Printed Circuit Board Production
Defense Logistics Agency Contracts
Sole-Source Defense Acquisitions

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $161.6 million to DRS NETWORK & IMAGING SYSTEMS LLC. MISSILE SPARES PROCUREMENT

Who is the contractor on this award?

The obligated recipient is DRS NETWORK & IMAGING SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $161.6 million.

What is the period of performance?

Start: 2023-08-21. End: 2027-08-31.

What is the track record of DRS Network & Imaging Systems LLC with the Department of Defense?

DRS Network & Imaging Systems LLC, a subsidiary of Leonardo DRS, has a substantial history of contracting with the Department of Defense across various platforms and systems. They are known for providing advanced sensing, network, and combat systems. While specific performance metrics for individual contracts are often proprietary, their continued awards suggest a generally satisfactory performance history and capability to meet complex defense requirements. However, a deeper dive into past performance reviews, any past disputes, or contract terminations would be necessary for a comprehensive assessment. The sheer volume of their work with the DoD indicates a significant role in the defense industrial base.

How does the $161.5M value compare to similar missile spare parts procurements?

Direct comparison of the $161.5 million value for missile spares is difficult due to the sole-source nature of this award and the specific component (bare printed circuit boards). Competitive procurements for similar, albeit not identical, electronic components for defense systems can vary widely based on complexity, quantity, and technological sophistication. Generally, sole-source contracts tend to be higher than competitively bid ones. Without access to other sole-source awards for comparable missile components or detailed cost breakdowns, it's challenging to definitively benchmark this price. However, the significant dollar amount warrants scrutiny to ensure it aligns with industry standards for specialized defense electronics.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract are multifaceted. Firstly, the lack of competition significantly increases the risk of paying above fair market value, as there is no market pressure to drive down prices. Secondly, the extended contract duration of over four years (1471 days) exposes the government to potential price escalations due to inflation, material cost fluctuations, or changes in manufacturing processes. Thirdly, there's a risk of contractor lock-in, where the government becomes overly reliant on DRS Network & Imaging Systems LLC for these critical spares, potentially limiting future sourcing options. Finally, the sole-source nature reduces transparency, making it harder to identify and mitigate cost inefficiencies or performance issues proactively.

How effective is the firm fixed price (FFP) contract type in mitigating risks for this specific procurement?

The Firm Fixed Price (FFP) contract type aims to provide cost certainty by establishing a final price that is not subject to adjustment based on the contractor's cost experience. For this missile spares procurement, FFP shifts the cost risk primarily to the contractor, DRS Network & Imaging Systems LLC. This can be effective in controlling the government's expenditure if the initial price is well-negotiated and reflects realistic costs. However, the effectiveness is significantly diminished by the sole-source nature of the award. If the initial price was not rigorously negotiated against market benchmarks or competitive offers, the FFP simply locks in a potentially inflated price. The contractor still bears the risk of their own inefficiencies, but the government bears the risk of an inflated baseline price.

What are the historical spending patterns for missile spare parts procurement by the Defense Logistics Agency?

Historical spending patterns for missile spare parts by the Defense Logistics Agency (DLA) are substantial and represent a critical component of defense readiness. DLA procures a vast array of spare parts across numerous weapon systems, including missiles. Spending in this category is often characterized by long-term sustainment contracts, specialized manufacturing requirements, and a mix of competitive and sole-source awards. While specific aggregate data for 'missile spares' can be difficult to isolate without detailed category analysis, DLA's overall budget for spare parts and repair is in the billions annually. Trends often show increasing costs for advanced systems and a continuous effort to balance readiness with cost-efficiency, sometimes leading to sole-source awards for unique or legacy components.

What is the significance of 'Bare Printed Circuit Board Manufacturing' in the context of missile systems?

Bare Printed Circuit Board (PCB) manufacturing is fundamental to virtually all modern electronic systems, including missile guidance, control, and communication systems. These boards serve as the foundation upon which electronic components are mounted and interconnected. For missile systems, the PCBs must meet extremely high standards for reliability, durability, and performance under harsh environmental conditions (e.g., vibration, temperature extremes, G-forces). The 'bare' designation implies the procurement of the unpopulated boards themselves, which are then further processed or populated with components by other entities or the prime contractor. Ensuring a secure and reliable supply of high-quality bare PCBs is critical for the operational integrity and safety of missile platforms.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Bare Printed Circuit Board Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA

Address: 100 N BABCOCK ST, MELBOURNE, FL, 32935

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

Financial Breakdown

Contract Ceiling: $161,552,987

Exercised Options: $161,552,987

Current Obligation: $161,552,987

Subaward Activity

Number of Subawards: 208

Total Subaward Amount: $51,593,925

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRRA220D0012

IDV Type: IDC

Timeline