DoD awards Thales $55M for radio production, raising questions on value and competition

Contract Overview

Contract Amount: $55,082,531 ($55.1M)

Contractor: Thales Defense & Security Inc

Awarding Agency: Department of Defense

Start Date: 2021-09-22

End Date: 2026-05-01

Contract Duration: 1,682 days

Daily Burn Rate: $32.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LEADER RADIO FULL RATE PRODUCTION 1 (FRP-1) AWARD IN SUPPORT OF ACAT IC PEO-C3T/PM-TR/PDM-HMS

Place of Performance

Location: CLARKSBURG, MONTGOMERY County, MARYLAND, 20871

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $55.1 million to THALES DEFENSE & SECURITY INC for work described as: LEADER RADIO FULL RATE PRODUCTION 1 (FRP-1) AWARD IN SUPPORT OF ACAT IC PEO-C3T/PM-TR/PDM-HMS Key points: 1. The contract's value appears high relative to the limited scope of goods provided. 2. Competition was full and open, but only two bids were received, potentially limiting price discovery. 3. The firm-fixed-price contract type offers some cost certainty but may not fully mitigate risks. 4. Performance is tied to specific program needs, suggesting a focused but potentially niche application. 5. The award falls within the broader defense electronics sector, characterized by high R&D and specialized manufacturing. 6. Small business participation is not explicitly mandated, warranting further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking this contract's value is challenging without detailed cost breakdowns. However, the $55 million award for radio and wireless communications equipment manufacturing over approximately 4.5 years suggests a significant per-unit cost. Compared to similar defense contracts for specialized electronics, the pricing warrants scrutiny to ensure it reflects fair market value and efficient use of taxpayer funds. The lack of detailed cost information makes a definitive value assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. However, only two offers were received. This limited number of bidders, despite open competition, could suggest potential barriers to entry for other firms, a highly specialized market, or that the solicitation was not widely disseminated. The limited competition may have impacted the government's ability to secure the most competitive pricing.

Taxpayer Impact: While the competition was open, the low number of bids suggests that taxpayers may not have benefited from the full potential of a competitive market, potentially leading to higher costs than if more vendors had participated.

Public Impact

The primary beneficiaries are the Department of the Army and potentially other Department of Defense entities requiring advanced radio and wireless communications equipment. The contract delivers production of specific radio and wireless communications equipment, likely for tactical military operations. The geographic impact is primarily within the United States, where the contractor operates and potentially where the equipment is deployed. Workforce implications include employment opportunities within Thales Defense & Security Inc. and its potential subcontractors in manufacturing, engineering, and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition despite open solicitation may indicate market concentration or barriers to entry.
Lack of detailed cost breakdowns hinders a thorough value-for-money assessment.
The long performance period could expose the contract to risks associated with technological obsolescence or changing requirements.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Awarded under full and open competition, adhering to procurement principles.
Contractor is an established defense supplier, suggesting a degree of reliability.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically the segment focused on electronic warfare and communications equipment manufacturing. The market is characterized by high technological sophistication, significant R&D investment, and long product development cycles. Spending in this sector is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to ascertain without specific product details, but defense electronics contracts can range from millions to billions of dollars depending on complexity and scale.

Small Business Impact

The data indicates that small business participation was not a specific set-aside requirement for this contract (ss: false, sb: false). While the prime contractor, Thales Defense & Security Inc., is a large business, there may be opportunities for small businesses to participate as subcontractors. Further analysis would be needed to determine the extent of small business subcontracting plans and their impact on the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army's contracting and program management offices. The firm-fixed-price nature of the contract provides some inherent accountability for the contractor to deliver specified goods within the agreed price. Transparency regarding specific performance metrics and detailed cost breakdowns is limited in the provided data. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Tactical Radio Systems
Defense Communications Equipment
Wireless Communications Manufacturing
Acquisition Category IC Programs
PEO C3T Programs

Risk Flags

Limited competition despite open solicitation.
Potential for high unit costs due to limited bidders.
Lack of detailed cost transparency.
Risk of technological obsolescence over contract duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.1 million to THALES DEFENSE & SECURITY INC. LEADER RADIO FULL RATE PRODUCTION 1 (FRP-1) AWARD IN SUPPORT OF ACAT IC PEO-C3T/PM-TR/PDM-HMS

Who is the contractor on this award?

The obligated recipient is THALES DEFENSE & SECURITY INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $55.1 million.

What is the period of performance?

Start: 2021-09-22. End: 2026-05-01.

What is the specific type of radio and wireless communications equipment being produced under this contract, and what are its intended operational uses?

The contract data indicates the award is for 'LEADER RADIO FULL RATE PRODUCTION 1 (FRP-1) AWARD IN SUPPORT OF ACAT IC PEO-C3T/PM-TR/PDM-HMS'. While specific technical specifications are not detailed, the context suggests it pertains to advanced radio and wireless communication systems for tactical military use, likely supporting programs managed by the Program Executive Office for Command, Control, Communications, Computers, and Information Technology (PEO C3T), specifically within the Product Manager for Tactical Radios (PM-TR) and Product Director for HMS (Handheld, Manpack, and Small Form Fit radios). These systems are crucial for maintaining battlefield communication networks, enabling soldiers to communicate securely and effectively in diverse operational environments.

How does the awarded amount of $55 million compare to historical spending on similar radio production contracts by the Department of the Army?

Direct comparison to historical spending on identical or highly similar radio production contracts is difficult without more granular data on the specific capabilities and quantities involved. However, $55 million for a full-rate production award over approximately 4.5 years suggests a substantial investment. Historical data for tactical radio systems can vary widely; simpler systems might cost less per unit, while highly advanced, secure, and networked systems can command higher prices. The 'ACAT IC' designation implies a program of significant cost and complexity, suggesting this award is within the expected range for such programs, but a detailed benchmark against comparable systems would require access to classified or more detailed procurement history.

What are the key performance indicators (KPIs) or metrics used to assess the contractor's performance and ensure the quality of the delivered equipment?

The provided data does not specify the key performance indicators (KPIs) or metrics for this contract. However, for defense contracts involving equipment production, typical KPIs often include on-time delivery rates, adherence to technical specifications and quality standards (e.g., defect rates, reliability testing), production throughput, and compliance with security requirements. The firm-fixed-price nature implies that meeting the defined specifications and delivery schedule is paramount. The government's quality assurance representatives (QARs) would likely conduct inspections and testing at various stages of production to ensure compliance.

What is the track record of Thales Defense & Security Inc. in delivering similar complex defense electronics or communication systems to the U.S. military?

Thales Defense & Security Inc. is a well-established entity within the defense industry, known for providing a range of advanced defense electronics, communication systems, and related services to military organizations globally, including the U.S. military. They have a history of delivering complex systems, including tactical radios, electronic warfare systems, and surveillance equipment. While specific performance details on past contracts are often proprietary, their continued presence and ability to win significant contracts like this one suggest a generally positive track record in meeting program requirements and delivering sophisticated defense technology.

Given the limited number of bidders (two) in a full and open competition, what are the potential risks to the government regarding future pricing or innovation?

The risk associated with limited competition, even in a full and open solicitation, is that the government may not achieve the most favorable pricing due to reduced competitive pressure. This could lead to higher unit costs than might be realized with more bidders. Furthermore, a concentrated market with few players might stifle innovation over the long term, as contractors may have less incentive to invest heavily in next-generation technologies if they perceive a stable, limited customer base. The government might also face challenges if one of the two bidders experiences performance issues or exits the market, leaving limited options.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Thales

Address: 22605 GATEWAY CENTER DR, CLARKSBURG, MD, 20871

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: $55,106,229

Exercised Options: $55,106,229

Current Obligation: $55,082,531

Subaward Activity

Number of Subawards: 128

Total Subaward Amount: $92,449,350

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15P7T15D0015

IDV Type: IDC

Timeline