DoD awards $371.7M for fuzes, with L3Harris Fuzing and Ordnance Systems Inc. as the sole provider

Contract Overview

Contract Amount: $371,742,090 ($371.7M)

Contractor: L3harris Fuzing and Ordnance Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-01-31

End Date: 2026-09-30

Contract Duration: 3,529 days

Daily Burn Rate: $105.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TO AWARD CONTRACT FOR M734A1 AND M783 FUZES TO L-3 FUZING&ORDNANCE SYSTEMS INC. THE A-APA ARMY PROCUREMENT BASE AWARD IS FOR A QUANTITY OF 21,589 M734A1 MULTI-OPTION FUZES PLUS A FIRST ARTICLE TEST, AND 175,499 M783 PD/DLY FUZES.

Place of Performance

Location: CINCINNATI, CLERMONT County, OHIO, 45245

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $371.7 million to L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC. for work described as: TO AWARD CONTRACT FOR M734A1 AND M783 FUZES TO L-3 FUZING&ORDNANCE SYSTEMS INC. THE A-APA ARMY PROCUREMENT BASE AWARD IS FOR A QUANTITY OF 21,589 M734A1 MULTI-OPTION FUZES PLUS A FIRST ARTICLE TEST, AND 175,499 M783 PD/DLY FUZES. Key points: 1. This contract represents a significant investment in critical ordnance components for the U.S. Army. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 3. Long contract duration suggests a sustained need for these specific fuze types. 4. The absence of small business participation raises questions about broader economic inclusion. 5. Fixed-price contract type aims to control costs, but the lack of competition may undermine this. 6. Geographic concentration in Ohio for the contractor warrants consideration of supply chain resilience.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized nature of the munitions. Without competitive bids, it's difficult to ascertain if the $371.7 million price tag represents optimal value for money. The fixed-price contract type offers some cost control, but the lack of competition limits the government's leverage to negotiate better terms. Further analysis would require comparing unit costs to historical data for similar fuzes or to international equivalents, if available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, L3Harris Fuzing and Ordnance Systems Inc., was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in situations where only one source can meet the urgent needs of the government. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces.

Taxpayer Impact: Taxpayers may be paying a premium for these fuzes due to the absence of competitive bidding. The government's ability to secure the best possible price is diminished when only one supplier is considered.

Public Impact

The primary beneficiaries are the U.S. Army units that will receive the M734A1 and M783 fuzes, enhancing their combat readiness. The contract ensures the supply of essential components for artillery and mortar systems. The contract's impact is national, supporting the readiness of the U.S. military. The workforce at L3Harris Fuzing and Ordnance Systems Inc. in Ohio will be directly supported by this long-term contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially leads to higher costs for taxpayers.
Long contract duration (over 5 years) increases exposure to potential cost overruns or performance issues without market checks.
Lack of small business set-aside or subcontracting requirements means limited economic benefit for smaller enterprises in this sector.
Concentration of production in a single facility raises concerns about supply chain vulnerability in case of disruption.

Positive Signals

Fixed-price contract type provides cost certainty for the government, assuming the price was negotiated effectively.
Award to an established contractor (L3Harris) suggests a degree of confidence in their technical capability and production capacity.
The contract addresses a clear and sustained need for critical military components, ensuring operational readiness.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical component of the defense industrial base. The market for specialized fuzes is often consolidated due to high barriers to entry, including complex manufacturing processes, stringent quality control, and specialized expertise. Spending in this sector is directly tied to military readiness requirements and modernization programs. Comparable spending benchmarks would typically involve analyzing historical awards for similar fuze types or other ordnance components, though direct comparisons are difficult without detailed specifications.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there explicit mention of subcontracting goals for small businesses. This means that the prime contract is fully awarded to a large business, and there is no mandated mechanism to ensure that small businesses participate in fulfilling this significant defense requirement. Consequently, the potential economic benefits for the small business ecosystem in this specialized manufacturing area are likely limited.

Oversight & Accountability

The Department of the Army, as the procuring agency, is responsible for oversight of this contract. Oversight mechanisms would typically include contract performance monitoring, quality assurance inspections, and financial audits. Given the fixed-price nature, the primary focus would be on ensuring timely delivery and adherence to specifications. Transparency is generally maintained through contract award databases, but detailed performance metrics and cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of the Army Ammunition Procurement
Ordnance and Bomb Components Manufacturing
Defense Industrial Base Support Contracts
Military Munitions Procurement
L3Harris Technologies Contracts

Risk Flags

Sole Source Award
Potential for Price Inflation
Supply Chain Concentration
Lack of Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $371.7 million to L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC.. TO AWARD CONTRACT FOR M734A1 AND M783 FUZES TO L-3 FUZING&ORDNANCE SYSTEMS INC. THE A-APA ARMY PROCUREMENT BASE AWARD IS FOR A QUANTITY OF 21,589 M734A1 MULTI-OPTION FUZES PLUS A FIRST ARTICLE TEST, AND 175,499 M783 PD/DLY FUZES.

Who is the contractor on this award?

The obligated recipient is L3HARRIS FUZING AND ORDNANCE SYSTEMS, 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 $371.7 million.

What is the period of performance?

Start: 2017-01-31. End: 2026-09-30.

What is the historical spending pattern for M734A1 and M783 fuzes by the Department of the Army?

Analyzing historical spending for these specific fuze types is crucial for understanding the long-term investment and potential trends in demand. Without access to granular historical procurement data for the M734A1 and M783 fuzes prior to this $371.7 million award, a precise historical spending pattern cannot be established. However, the fact that the Army is awarding a large, multi-year contract suggests a consistent and ongoing requirement for these components. Future analysis could involve examining contract awards for similar fuze categories or tracking the total expenditure on fuzes over several fiscal years to identify any patterns in procurement volume or value.

How does the unit cost of these fuzes compare to similar components or previous contracts?

Determining the unit cost requires dividing the total contract value by the total quantity of fuzes. For the M734A1, the quantity is 21,589 (plus a first article test), and for the M783, it's 175,499. Assuming the $371.7 million covers both, the average unit cost would be approximately $1,850 for the M734A1 (excluding first article test costs) and $2,118 for the M783. However, these are rough estimates as the contract value is for a combined quantity and includes other elements. Direct comparison to similar components is difficult without detailed specifications and market data. Given the sole-source nature, it's challenging to benchmark against competitive pricing. A comprehensive value-for-money assessment would necessitate comparing these figures to any available historical data for these specific fuzes or to industry benchmarks for comparable ordnance components, which are often proprietary or not publicly disclosed.

What are the specific technical requirements and performance standards for the M734A1 and M783 fuzes?

The M734A1 is described as a 'multi-option fuze,' indicating it likely offers various firing modes such as point detonation, delay, and possibly proximity or airburst capabilities, designed for use with mortar rounds. The M783 is specified as a 'PD/DLY fuze,' meaning it provides Point Detonation and Delay functions, typically used for standard impact or delayed detonation scenarios. Both fuzes are critical components for ensuring the effective and safe deployment of artillery and mortar munitions. Specific technical requirements would encompass detailed specifications for reliability, safety features, environmental resistance (temperature, humidity, shock), shelf life, and compatibility with various munition types. Performance standards would be defined by rigorous testing protocols to ensure they meet or exceed military specifications (e.g., MIL-STD) for accuracy, functionality under battlefield conditions, and safety during handling and firing.

What is L3Harris Fuzing and Ordnance Systems Inc.'s track record with similar defense contracts?

L3Harris Fuzing and Ordnance Systems Inc. (a subsidiary of L3Harris Technologies) has a significant track record in the defense sector, specializing in fuzing and ordnance solutions. They are known for producing a range of fuzes and related components for various military platforms. Their history likely includes numerous contracts with the Department of Defense and potentially allied nations for similar products. Examining their past performance on contracts, including delivery timeliness, quality adherence, and any past performance issues or commendations, would provide context for their capability to fulfill this current award. Publicly available contract databases often contain information on past awards and performance ratings, which could be used to assess their reliability and expertise in this specialized area.

What are the risks associated with a sole-source award for critical defense components like these fuzes?

The primary risk of a sole-source award for critical defense components is the potential for inflated pricing due to the lack of competition. Without competing bids, the government has less leverage to negotiate the best possible price, potentially leading to higher costs for taxpayers. Another significant risk is reduced innovation and responsiveness, as the sole provider may face less pressure to improve products or processes. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; any disruption at the contractor's facility (e.g., production issues, natural disasters, geopolitical events) could severely impact the availability of these essential components, jeopardizing military readiness. Finally, it can stifle the development of alternative suppliers or technologies in the market.

Are there any alternative or emerging technologies for fuzes that the DoD is exploring?

The Department of Defense continuously explores alternative and emerging technologies to enhance the capabilities and effectiveness of its munitions. For fuzes, this includes research and development into more advanced multi-option fuzes with enhanced precision, networked capabilities (allowing for remote detonation or targeting adjustments), improved safety features, and reduced collateral damage potential. Emerging technologies might also focus on 'smart' fuzes that can provide real-time feedback on target engagement or environmental conditions. While this contract focuses on established M734A1 and M783 models, the DoD likely maintains R&D programs and explores other vendors for next-generation fuze technologies to ensure future superiority and adaptability in evolving threat environments.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W15QKN15R0009

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3975 MC MANN RD, CINCINNATI, OH, 45245

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $753,811,418

Exercised Options: $371,742,090

Current Obligation: $371,742,090

Actual Outlays: $31,870

Subaward Activity

Number of Subawards: 58

Total Subaward Amount: $77,282,077

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline