DoD spent over $401M on 538 E-Rovers from L3 Technologies, Inc. under a sole-source contract

Contract Overview

Contract Amount: $401,075,174 ($401.1M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-08-31

End Date: 2016-09-30

Contract Duration: 3,318 days

Daily Burn Rate: $120.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PURCHASE OF 538 EA E-ROVERS

Place of Performance

Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84116

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $401.1 million to L3 TECHNOLOGIES, INC. for work described as: PURCHASE OF 538 EA E-ROVERS Key points: 1. The contract awarded to L3 Technologies, Inc. for E-Rovers represents a significant investment in specialized equipment. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and lack of competitive pressure. 3. A long contract duration of 3318 days suggests a sustained need or a phased delivery approach. 4. The fixed-firm price contract type offers cost certainty for the government, shifting cost overrun risks to the contractor. 5. The absence of small business set-aside indicates this contract was not specifically targeted to boost small business participation. 6. The procurement falls under the Aircraft Manufacturing NAICS code, suggesting a complex, potentially high-value item.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the E-Rovers' capabilities and market alternatives. However, a sole-source award for over $401 million inherently raises questions about whether the government secured the best possible price. The lack of competition means there was no market pressure to drive down costs. Without comparable sole-source procurements or detailed cost breakdowns, it's difficult to definitively assess value for money, but the absence of competition is a significant risk factor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required goods or services. The implications for price discovery are significant, as the government did not benefit from the competitive bidding process that usually leads to lower prices and innovative solutions. The lack of multiple bidders means the government's negotiating position may have been weaker.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is a higher risk that the price was not optimized, potentially leading to less efficient use of public funds.

Public Impact

The Department of Defense is the primary beneficiary, acquiring specialized E-Rovers for its operational needs. The services delivered are the provision of 538 E-Rovers, a specific type of equipment likely for tactical or logistical support. The geographic impact is likely concentrated within military operational areas, though the specific deployment locations are not detailed. Workforce implications could include specialized training for personnel operating and maintaining the E-Rovers, and potential support roles for L3 Technologies, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Long contract duration could indicate potential for scope creep or cost overruns if not managed tightly.
Absence of small business participation may limit opportunities for smaller innovative firms.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to a single, established contractor (L3 Technologies, Inc.) may indicate reliability and proven capability.
The contract is for a specific, defined quantity of E-Rovers, providing clear deliverables.

Sector Analysis

The procurement of E-Rovers falls under the broader defense manufacturing sector, specifically within Aircraft Manufacturing (NAICS 336411). This sector is characterized by high technological complexity, significant R&D investment, and often involves large, long-term government contracts. The market for specialized defense equipment like E-Rovers can be limited, often leading to sole-source or limited competition awards. Comparable spending benchmarks are difficult to establish without knowing the specific capabilities and intended use of these E-Rovers, but large-scale equipment procurements in defense can run into hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Consequently, there are no direct subcontracting implications mandated by this specific award to benefit small businesses. The absence of a set-aside means that opportunities for small businesses to participate in this particular procurement were not actively pursued through this contract vehicle. This could mean that larger prime contractors or the sole-source awardee are expected to handle the entire scope of work.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. As a definitive contract, it is subject to standard government oversight mechanisms. Transparency regarding the justification for the sole-source award and the specific performance metrics would be key to assessing accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Tactical Vehicle Procurement
Specialized Military Equipment
Defense Logistics Support
Aircraft Manufacturing Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $401.1 million to L3 TECHNOLOGIES, INC.. PURCHASE OF 538 EA E-ROVERS

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $401.1 million.

What is the period of performance?

Start: 2007-08-31. End: 2016-09-30.

What specific capabilities do the E-Rovers provide to the Department of Defense?

The provided data does not specify the exact capabilities of the 'E-Rovers'. However, given the NAICS code 'Aircraft Manufacturing' (336411) and the context of a Department of Defense procurement, these E-Rovers are likely specialized vehicles or unmanned aerial systems designed for military operations. They could be used for reconnaissance, surveillance, light cargo transport, or as part of a larger integrated system. The significant investment of over $401 million suggests a sophisticated and critical role within the DoD's operational framework. Further investigation into the specific contract line items or technical specifications would be required to detail their precise functions and operational benefits.

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

The data indicates this contract was awarded as 'NOT COMPETED' (sole-source). While the specific justification is not provided, common reasons for sole-source awards in defense include the unique capabilities of a single contractor, national security concerns that preclude competition, or situations where only one vendor can meet urgent requirements. For a procurement of this magnitude and duration, the justification likely involved a detailed analysis by the Department of Defense demonstrating why L3 Technologies, Inc. was the only viable option. This could stem from proprietary technology, existing integration with other DoD systems, or specialized manufacturing expertise that cannot be replicated by other firms in the required timeframe.

How does the $401 million expenditure compare to other similar E-Rover procurements or defense vehicle contracts?

Direct comparison of the $401 million expenditure for these E-Rovers is difficult without knowing the specific type and capabilities of the 'E-Rovers' and identifying truly comparable procurements. However, as a sole-source award for over $400 million, it represents a substantial investment. In the defense sector, large-scale vehicle and equipment procurements frequently reach these figures, especially for technologically advanced or specialized systems. The lack of competition means this price cannot be benchmarked against market alternatives. To assess value, one would need to compare the unit cost and total value against similar systems procured competitively, or against the projected operational benefits and cost savings these E-Rovers are expected to deliver.

What are the potential risks associated with a sole-source contract of this size and duration?

A sole-source contract of this magnitude ($401M) and duration (3318 days) carries several risks. Primarily, the lack of competition can lead to inflated prices as the contractor faces no market pressure to offer the best value. There's also a risk of complacency from the contractor, potentially impacting innovation or responsiveness. For long-duration contracts, scope creep is a concern, where the project's requirements may expand beyond the original intent, leading to increased costs. Furthermore, reliance on a single source can create supply chain vulnerabilities if that contractor experiences financial difficulties or production issues. Effective government oversight is crucial to mitigate these risks.

What is the historical spending trend for E-Rovers or similar equipment by the Department of Defense?

The provided data only details a single contract for 538 E-Rovers totaling $401,075,174.34, awarded to L3 Technologies, Inc. It does not provide historical spending trends for this specific item or similar equipment. To understand historical spending, one would need to analyze past contract awards for 'E-Rovers' or functionally equivalent systems by the DoD. This would involve searching contract databases for previous procurements, noting quantities, prices, contractors, and contract types. Without this broader context, it's impossible to determine if this $401 million expenditure represents an increase, decrease, or stable level of spending compared to prior periods.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ07R0573

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 640 N 2200 W, SALT LAKE CITY, UT, 84116

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $401,075,174

Exercised Options: $401,075,174

Current Obligation: $401,075,174

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline