DoD's $45.5M contract for remanufactured transmissions awarded to L3 Technologies, Inc. without competition

Contract Overview

Contract Amount: $45,481,740 ($45.5M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-03-28

End Date: 2010-10-28

Contract Duration: 944 days

Daily Burn Rate: $48.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: REMANUFACTURED TRANSMISSION, EC - ECB

Place of Performance

Location: MUSKEGON, MUSKEGON County, MICHIGAN, 49442

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $45.5 million to L3 TECHNOLOGIES, INC. for work described as: REMANUFACTURED TRANSMISSION, EC - ECB Key points: 1. The contract value of $45.5 million represents a significant investment in vehicle parts. 2. Awarded without competition, raising questions about potential cost efficiencies and market alternatives. 3. The duration of 944 days suggests a substantial, long-term need for these parts. 4. The fixed-price contract type aims to control costs, but the lack of competition limits price discovery. 5. The specific North American Industry Classification System (NAICS) code 336350 points to a specialized manufacturing sector. 6. The contract was awarded by the Department of the Army, indicating a defense-related need.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available comparable contract data for remanufactured transmissions. The firm fixed-price structure suggests an attempt to cap costs, but without competitive bidding, it's difficult to ascertain if the $45.5 million represents a fair market price. The awarded amount is substantial, implying a significant quantity or high-value components within the remanufactured transmissions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, L3 Technologies, Inc., was considered. This approach bypasses the standard competitive bidding process, which typically involves soliciting offers from multiple qualified suppliers. Without competition, there is no direct comparison of pricing or technical solutions from other market participants, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium for these remanufactured transmissions due to the absence of competitive pressure to drive down prices. The government did not benefit from the potential cost savings and innovation that a competitive bidding process could have fostered.

Public Impact

The primary beneficiaries are the Department of Defense and its operational readiness, ensuring a supply of essential vehicle components. The services delivered involve the remanufacturing of transmissions, crucial for maintaining military vehicle fleets. The geographic impact is primarily within Michigan, where the contractor is located, potentially supporting local jobs and the manufacturing base. Workforce implications include the skilled labor required for the remanufacturing process, supporting jobs in the automotive parts sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing compared to a competitive award.
Sole-source awards can reduce transparency and limit opportunities for other capable vendors.
Reliance on a single source could pose supply chain risks if the contractor faces production issues.

Positive Signals

Firm fixed-price contract type helps to establish a ceiling on costs.
The contract duration indicates a sustained need and potential for a stable supply chain.
Awarding to an established entity like L3 Technologies, Inc. may leverage existing expertise and infrastructure.

Sector Analysis

The contract falls within the Motor Vehicle Transmission and Power Train Parts Manufacturing sector (NAICS 336350). This industry is characterized by specialized manufacturing processes and a focus on producing components for the automotive and defense industries. The market size for such parts is substantial, driven by both commercial vehicle production and the ongoing maintenance needs of large government fleets. This contract represents a significant portion of spending within this niche, particularly for remanufactured goods.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to L3 Technologies, Inc., a larger entity, suggests that opportunities for small businesses may be limited unless they are direct suppliers or subcontractors to the prime contractor. Further investigation into subcontracting plans would be needed to assess the full impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award, making it harder for the public to scrutinize the pricing and justification. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Vehicle Parts Procurement
Department of Defense Logistics and Sustainment
Automotive Parts Manufacturing Contracts
Remanufacturing Services Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited transparency in procurement process.
Supply chain risk associated with single-source dependency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.5 million to L3 TECHNOLOGIES, INC.. REMANUFACTURED TRANSMISSION, EC - ECB

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 $45.5 million.

What is the period of performance?

Start: 2008-03-28. End: 2010-10-28.

What is the track record of L3 Technologies, Inc. in fulfilling similar sole-source contracts for the Department of Defense?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a history of securing various contracts with the Department of Defense, including those for defense electronics, aerospace systems, and communications. While specific details on their track record for sole-source awards of remanufactured transmissions are not immediately available in this dataset, their general experience with the DoD suggests a capacity to manage complex government contracts. However, the absence of competition in this particular award warrants scrutiny of past performance and pricing on comparable sole-source agreements to ensure value for taxpayer money. A deeper dive into historical contract awards and performance reviews for L3 Technologies, Inc. related to vehicle parts would be necessary for a comprehensive assessment.

How does the awarded price of $45.5 million compare to market rates for remanufactured transmissions of similar specifications?

Directly comparing the $45.5 million award to market rates for remanufactured transmissions is difficult without specific details on the types, quantities, and specifications of the transmissions procured under this contract. The lack of competition means there isn't a benchmark price derived from multiple bids. Generally, remanufactured parts are expected to be less expensive than new parts, but the 'market rate' can vary significantly based on the complexity of the transmission, the extent of the remanufacturing process, and the warranty offered. Given the sole-source nature, it is plausible that the price could be higher than what might be achieved through a competitive process. Further analysis would require identifying comparable commercial or government contracts for similar transmission types.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with a sole-source award of this magnitude ($45.5 million) include potential overpayment due to the lack of competitive pricing pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. Taxpayers may not be receiving the best possible value for their money. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if L3 Technologies, Inc. experiences production issues, delays, or quality control problems, the Department of the Army's operational readiness could be significantly impacted. There's also a risk of 'vendor lock-in,' where the government becomes dependent on a single provider, making future procurements more difficult and potentially more expensive.

What is the expected program effectiveness or outcome of procuring remanufactured transmissions through this contract?

The expected program effectiveness hinges on the Department of the Army's ability to maintain its fleet of vehicles requiring these specific transmissions. By procuring remanufactured units, the Army likely aims to achieve cost savings compared to purchasing new transmissions while still ensuring functional and reliable components. The effectiveness will be measured by the operational availability of vehicles, the longevity and performance of the remanufactured transmissions, and the overall cost efficiency of fleet maintenance. A successful outcome would mean reduced downtime for critical vehicles and sustained operational readiness at a justifiable cost. The firm fixed-price nature suggests an expectation of predictable costs and delivery.

How does this contract's spending compare to historical patterns for similar vehicle parts within the Department of Defense?

Analyzing historical spending patterns for similar vehicle parts within the Department of Defense requires access to historical contract databases and spending reports. Without that data, it's impossible to definitively compare this $45.5 million contract. However, the Department of Defense is a massive organization with extensive vehicle fleets, and spending on parts, maintenance, and sustainment is consistently high. Contracts for major components like transmissions, especially when awarded without competition, can represent significant individual expenditures. Understanding the frequency and value of past awards for remanufactured transmissions, and whether they were also sole-source, would provide crucial context for assessing whether this contract aligns with or deviates from historical norms.

What justification was provided for awarding this contract on a sole-source basis instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. However, the specific justification for this determination is not included in the dataset. Typically, sole-source awards require a formal justification, often citing reasons such as urgency, unique capabilities of a single source, or that competition is not feasible or economical. For instance, if L3 Technologies, Inc. was the only entity capable of remanufacturing these specific transmissions to military specifications within the required timeframe, that could serve as a justification. Without the official justification document, it's impossible to verify the validity of the sole-source determination and assess whether it truly served the government's best interest.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Parts Manufacturing › Motor Vehicle Transmission and Power Train Parts Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV07R0914

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Address: 76 S GETTY ST, MUSKEGON, MI, 90

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

Financial Breakdown

Contract Ceiling: $45,509,411

Exercised Options: $45,481,740

Current Obligation: $45,481,740

Contract Characteristics

Cost or Pricing Data: YES

Timeline