DoD awards $61.2M for Melody II ASICs, a critical component for precision guidance kits

Contract Overview

Contract Amount: $61,199,465 ($61.2M)

Contractor: L3harris Fuzing and Ordnance Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-06-28

End Date: 2021-06-30

Contract Duration: 733 days

Daily Burn Rate: $83.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS CONTRACT IS FOR THE PURCHASE OF MELODY II ASICS WITH TWO OPTIONS FOR UP TO AN ADDITIONAL 100,000 CHIPS. THE MELODY II ASIC IS A CHIP-LEVEL REPLACEMENT FOR CURRENT SELECTIVE AVAILABILITY ANTI-SPOOFING MODULE (SAASM) RHAPSODY ASIC CURRENTLY USED IN THE PRECISION GUIDANCE KIT (PGK).

Place of Performance

Location: CINCINNATI, CLERMONT County, OHIO, 45245

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $61.2 million to L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC. for work described as: THIS CONTRACT IS FOR THE PURCHASE OF MELODY II ASICS WITH TWO OPTIONS FOR UP TO AN ADDITIONAL 100,000 CHIPS. THE MELODY II ASIC IS A CHIP-LEVEL REPLACEMENT FOR CURRENT SELECTIVE AVAILABILITY ANTI-SPOOFING MODULE (SAASM) RHAPSODY ASIC CURRENTLY USED IN THE PRECISION GUIDANCE KIT (… Key points: 1. The contract focuses on advanced anti-spoofing technology for GPS, enhancing accuracy and security. 2. This award represents a significant investment in modernizing military navigation and guidance systems. 3. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies. 4. The duration of the contract suggests a long-term need for these specialized components. 5. The geographic location of the contractor in Ohio may have local economic implications.

Value Assessment

Rating: fair

The contract value of $61.2 million for 100,000 chips (with options) suggests a per-unit cost of approximately $612. Without specific details on the Melody II ASIC's capabilities compared to its predecessor or market alternatives, it is difficult to definitively benchmark value. However, given the specialized nature of military-grade navigation components, this price point may be within a reasonable range, though a lack of competition limits price discovery.

Cost Per Unit: Approximately $612 per unit (based on base award and options), N/A for market comparison due to specialized nature.

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning L3Harris was the only vendor considered. This approach is typically justified when a specific technology is proprietary, a unique capability is required, or there's a critical need that cannot be met through competitive bidding. The lack of competition means that the government did not benefit from potential price reductions or innovative solutions that might have emerged from a bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, potentially leading to higher costs than if multiple vendors had vied for the contract.

Public Impact

The primary beneficiaries are the U.S. Army units utilizing the Precision Guidance Kit (PGK) for enhanced targeting accuracy. The contract delivers advanced Melody II ASICs, crucial for improving the anti-spoofing capabilities of GPS receivers. This technology directly supports the warfighter by ensuring reliable and secure navigation and guidance in contested environments. The procurement bolsters the technological edge of U.S. military assets reliant on precise positioning.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Lack of transparency in the justification for sole-source procurement.
Potential for vendor lock-in with specialized technology.
Long contract duration could mask inefficiencies if not actively managed.

Positive Signals

Addresses a critical need for advanced anti-spoofing technology in military navigation.
Upgrades existing systems (PGK) with improved chip-level performance.
Contract awarded to an established defense contractor with relevant expertise.
Potential for enhanced operational effectiveness and mission success due to improved GPS security.

Sector Analysis

The market for defense electronics, particularly components for navigation and guidance systems, is highly specialized. This contract falls within the broader sector of aerospace and defense manufacturing, specifically focusing on semiconductor and electronic systems for military applications. The demand is driven by the need for advanced, secure, and reliable positioning, navigation, and timing (PNT) solutions. Competitors in this space often require significant R&D investment and possess unique intellectual property, which can lead to concentrated market structures and sole-source awards.

Small Business Impact

This contract does not appear to include specific small business set-asides. Given the sole-source nature and the specialized technology involved, it is unlikely that small businesses would be primary awardees. However, L3Harris, as a large prime contractor, may be expected to engage small businesses for subcontracting opportunities, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on L3Harris's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The contract type (Firm Fixed Price) provides some cost control, but the sole-source nature necessitates rigorous performance monitoring to ensure delivery of specified capabilities. Transparency is limited due to the non-competitive award. The Defense Contract Audit Agency (DCAA) may conduct audits if deemed necessary, and the Inspector General's office could investigate any allegations of impropriety.

Related Government Programs

Precision Guidance Kit (PGK)
Selective Availability Anti-Spoofing Module (SAASM)
GPS/GNSS Receivers
Military Navigation Systems
Defense Electronics Manufacturing

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Dependency on a single supplier for critical technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.2 million to L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC.. THIS CONTRACT IS FOR THE PURCHASE OF MELODY II ASICS WITH TWO OPTIONS FOR UP TO AN ADDITIONAL 100,000 CHIPS. THE MELODY II ASIC IS A CHIP-LEVEL REPLACEMENT FOR CURRENT SELECTIVE AVAILABILITY ANTI-SPOOFING MODULE (SAASM) RHAPSODY ASIC CURRENTLY USED IN THE PRECISION GUIDANCE KIT (PGK).

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 $61.2 million.

What is the period of performance?

Start: 2019-06-28. End: 2021-06-30.

What is the specific technological advancement of the Melody II ASIC compared to the Rhapsody ASIC it replaces?

The Melody II ASIC represents an upgrade to the Selective Availability Anti-Spoofing Module (SAASM) technology used in the Precision Guidance Kit (PGK). While specific technical details are often proprietary, upgrades in this domain typically focus on enhanced resistance to jamming and spoofing, improved signal acquisition in challenging environments, lower power consumption, and potentially increased processing capabilities for more sophisticated navigation algorithms. The Melody II likely offers superior performance in terms of accuracy, security, and reliability compared to the Rhapsody ASIC, justifying its development and integration into critical military systems.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source award. Justifications for sole-source procurements in defense typically include situations where only one responsible source can provide the required supplies or services, such as when the technology is proprietary, unique, or essential for interoperability with existing systems. For the Melody II ASIC, it's probable that L3Harris possesses the exclusive rights, patents, or specialized manufacturing capabilities required to produce this specific chip, making it the only viable option for the Department of the Army to fulfill its requirement for the PGK.

How does the per-unit cost of the Melody II ASIC compare to industry benchmarks for similar advanced navigation chips?

The estimated per-unit cost for the Melody II ASIC, based on the contract value and potential quantity, is approximately $612. Benchmarking this against the broader semiconductor industry is challenging due to the highly specialized nature of military-grade anti-spoofing modules. Standard commercial GPS chips are significantly less expensive. However, within the niche market of secure, military-certified PNT components, this price may be competitive, especially considering the R&D, stringent testing, and low-volume production typical of such systems. A lack of competitive bidding prevents a definitive comparison to market rates.

What are the potential risks associated with a sole-source contract for critical defense components?

Sole-source contracts for critical defense components like the Melody II ASIC carry several risks. Primarily, the absence of competition can lead to higher costs for the government compared to a competitively bid scenario. There's also a reduced incentive for the sole provider to innovate or improve efficiency once the contract is secured. Furthermore, it creates vendor dependency, making the government reliant on a single supplier for a crucial technology, which can be a vulnerability in terms of supply chain disruptions or future price negotiations. Oversight becomes paramount to mitigate these risks.

What is the historical spending trend for similar navigation and guidance system components within the Department of Defense?

Historical spending on navigation and guidance system components within the DoD has been substantial and generally increasing, driven by the need to maintain technological superiority and counter evolving threats. Investments in technologies like SAASM and its successors are critical for ensuring the accuracy and security of precision munitions and platforms. While specific figures for ASIC procurements vary, the overall trend reflects a continuous effort to upgrade PNT capabilities. The DoD's budget consistently allocates significant resources to modernize systems, including those that rely on advanced microelectronics for guidance and targeting.

What is the expected lifespan and obsolescence risk for the Melody II ASIC technology?

The expected lifespan for advanced microelectronics like the Melody II ASIC in military applications is typically measured in years, often aligning with the service life of the platforms they are integrated into, such as the PGK. However, the rapid pace of technological advancement in the semiconductor industry presents an ongoing obsolescence risk. While the Melody II is an upgrade, future threats and technological breakthroughs may necessitate even more advanced solutions. The DoD manages this risk through continuous technology insertion programs and by planning for future generations of components, ensuring that critical systems can be updated or replaced before they become obsolete.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W15QKN19R0104

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc (UEI: 004203337)

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: $61,199,465

Exercised Options: $61,199,465

Current Obligation: $61,199,465

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $2,210,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline