L3 Technologies awarded $85.3M contract for ammunition manufacturing, highlighting defense sector spending

Contract Overview

Contract Amount: $85,316,632 ($85.3M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-10-26

End Date: 2012-10-31

Contract Duration: 2,197 days

Daily Burn Rate: $38.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MONEY

Place of Performance

Location: CAMDEN, CAMDEN County, NEW JERSEY, 08102

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $85.3 million to L3 TECHNOLOGIES, INC. for work described as: MONEY Key points: 1. Contract value of $85.3 million indicates significant investment in defense supply chain. 2. Full and open competition suggests a potentially competitive bidding process. 3. Fixed-price contract structure shifts risk to the contractor. 4. Contract duration of nearly 6 years points to long-term defense needs. 5. Awarded by the Department of the Army, underscoring its role in equipping forces. 6. Manufacturing of ammunition (except small arms) is a critical component of military readiness.

Value Assessment

Rating: good

The contract value of $85.3 million for ammunition manufacturing appears reasonable given the duration and scope. Benchmarking against similar large-scale defense manufacturing contracts would provide further context. The firm fixed-price nature suggests the contractor bears cost overruns, which is generally favorable for the government. Without specific per-unit cost data, a precise value-for-money assessment is challenging, but the competitive award process likely contributed to a fair price.

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. The presence of 2 bidders suggests a moderate level of competition for this specialized manufacturing requirement. While more bidders could potentially drive prices lower, two offers often provide sufficient price discovery for complex defense procurements.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by encouraging multiple companies to offer their best terms. This approach helps ensure the government is not overpaying for essential defense materiel.

Public Impact

The U.S. Army benefits from a reliable supply of ammunition, crucial for training and operational readiness. This contract supports the manufacturing of essential munitions, contributing to national defense capabilities. The contract's impact is primarily within the defense industrial base, potentially supporting jobs in New Jersey. Workforce implications include skilled labor in manufacturing and logistics within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Reliance on a single contractor for a critical defense component could pose a risk.
Ensuring consistent quality control for ammunition manufacturing is paramount.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Firm fixed-price contract aligns contractor incentives with government objectives.
Long contract duration provides stability for both the government and the contractor.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The defense industrial base is a critical component of national security, involving specialized manufacturing capabilities and significant government investment. The market for ammunition is largely driven by government demand, with stringent quality and performance requirements. Comparable spending benchmarks would involve looking at other large-scale contracts for munitions or related defense equipment.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to a large prime contractor suggests that the primary focus was on specialized manufacturing capabilities rather than small business participation. This may limit opportunities for small businesses to directly engage in this specific defense supply chain segment.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm fixed-price structure, requiring the contractor to meet specifications and delivery schedules. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Army Combat Ammunition Systems
Defense Manufacturing Industrial Base
Ordnance and Ammunition Manufacturing Contracts

Risk Flags

Potential for supply chain disruption
Single point of failure risk
Long-term price escalation risk
Dependence on contractor's technological innovation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.3 million to L3 TECHNOLOGIES, INC.. MONEY

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, 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 $85.3 million.

What is the period of performance?

Start: 2006-10-26. End: 2012-10-31.

What is the historical spending trend for ammunition manufacturing contracts by the Department of the Army?

Analyzing historical spending on ammunition manufacturing by the Department of the Army reveals a consistent and substantial investment, driven by ongoing military operations, training requirements, and strategic stockpiling. Over the past decade, spending has fluctuated based on global security postures and specific modernization programs. For instance, periods of heightened conflict or new weapons system introductions often correlate with increased demand and contract awards for specific types of ammunition. The total annual expenditure can range from several hundred million to over a billion dollars, depending on the strategic environment and budgetary allocations. Contracts like the one awarded to L3 Technologies are part of this larger, continuous effort to maintain a robust and ready ammunition supply chain, ensuring that the Army has the necessary munitions for all contingencies. Benchmarking this $85.3 million award against the broader historical context suggests it represents a significant, but not unprecedented, investment within the overall defense budget for ordnance.

How does the per-unit cost of ammunition under this contract compare to industry benchmarks?

Determining the precise per-unit cost of ammunition under this $85.3 million contract is not possible with the provided data, as it lacks specific quantity details for the munitions being manufactured. However, the nature of ammunition production involves complex manufacturing processes, specialized materials, and stringent quality control, which inherently leads to higher per-unit costs compared to simpler manufactured goods. Industry benchmarks for ammunition vary widely based on caliber, type (e.g., training vs. combat, guided vs. unguided), and quantity ordered. Large-scale government contracts, especially those awarded through full and open competition, generally aim to achieve economies of scale, potentially lowering per-unit costs. Without knowing the exact types and quantities of ammunition, a direct comparison to industry benchmarks is speculative. However, the firm fixed-price nature of the contract implies that L3 Technologies has factored in its production costs and profit margins to arrive at a price that is competitive within the defense market.

What are the key performance indicators (KPIs) used to evaluate contractor performance on this ammunition contract?

Key performance indicators (KPIs) for ammunition manufacturing contracts typically focus on several critical areas to ensure mission success and taxpayer value. Primary KPIs often include on-time delivery, ensuring that munitions are produced and delivered according to the contract schedule to meet operational demands. Quality assurance is paramount; this involves metrics related to defect rates, adherence to stringent military specifications (e.g., MIL-SPEC), and successful completion of rigorous testing protocols. Production efficiency and cost control are also monitored, particularly within the framework of a firm fixed-price contract, to ensure the contractor is managing resources effectively. Furthermore, compliance with safety regulations during manufacturing and handling of potentially hazardous materials is a crucial KPI. The Department of the Army would likely have specific metrics for yield rates, material traceability, and adherence to environmental standards. Performance is typically assessed through regular reviews, quality audits, and delivery performance reports.

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

L3 Technologies, Inc. (now part of L3Harris Technologies) has a substantial track record in fulfilling a wide array of defense manufacturing contracts for various branches of the U.S. military and allied nations. Their expertise spans numerous areas, including aerospace systems, electronic warfare, communications, and, relevantly, munitions and ordnance production. Historically, the company has demonstrated capabilities in complex manufacturing, systems integration, and program management for large-scale defense procurements. While specific performance details for every contract are not publicly available, L3Harris's continued success in securing significant defense contracts suggests a generally positive performance history and a reputation for meeting demanding technical and delivery requirements. Their involvement in ammunition manufacturing aligns with their broader portfolio of providing critical components and systems for national defense. Any evaluation of their track record would involve reviewing past performance reports and contract completion data available through government procurement databases.

What are the potential risks associated with relying on a single contractor for a critical defense supply like ammunition?

Relying on a single contractor for a critical defense supply like ammunition presents several potential risks. Foremost is the risk of supply chain disruption; if the sole contractor experiences production issues, labor strikes, natural disasters, or financial instability, the entire supply of essential munitions could be jeopardized, impacting military readiness. This dependency also reduces the government's leverage in price negotiations over time, potentially leading to higher costs in subsequent contract renewals as competition may be limited. Furthermore, a single point of failure can hinder the adoption of new technologies or manufacturing processes if the contractor is slow to innovate or unwilling to invest. National security could be compromised if the contractor's operations are targeted by adversaries or if geopolitical events affect their ability to deliver. To mitigate these risks, the Department of Defense often employs strategies such as maintaining strategic stockpiles, encouraging dual-sourcing where feasible, and closely monitoring the financial health and operational stability of critical suppliers.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W52P1J06R0150

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)

Address: 2 FEDERAL ST, CAMDEN, NJ, 01

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

Financial Breakdown

Contract Ceiling: $85,316,632

Exercised Options: $85,316,632

Current Obligation: $85,316,632

Contract Characteristics

Cost or Pricing Data: YES

Timeline