DoD's $36.5M contract for lightweight MFDs and bezels awarded to Elbitamerica, Inc. lacked competition

Contract Overview

Contract Amount: $36,535,898 ($36.5M)

Contractor: Elbitamerica, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-12-31

End Date: 2014-09-30

Contract Duration: 2,465 days

Daily Burn Rate: $14.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF LIGHT WEIGHT MFDS AND BEZELS

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76179

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $36.5 million to ELBITAMERICA, INC. for work described as: PROCUREMENT OF LIGHT WEIGHT MFDS AND BEZELS Key points: 1. The contract utilized a firm-fixed-price structure, aiming to control costs. 2. Awarded as 'NOT COMPETED', raising questions about potential overpayment and lack of market price discovery. 3. The duration of the contract (2465 days) suggests a long-term need for these aircraft components. 4. The primary awardee, Elbitamerica, Inc., is a significant player in the defense electronics market. 5. The contract's value, while substantial, needs benchmarking against similar procurements for true value assessment. 6. The absence of small business set-asides or subcontracting plans is noted.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to definitively assess the value for money. The firm-fixed-price type suggests an attempt to cap costs, but the lack of competition means there was no market pressure to ensure the lowest possible price. Benchmarking against similar procurements for lightweight MFDs and bezels, if available, would be crucial to determine if the $36.5 million expenditure was reasonable. The absence of a competitive process inherently limits the ability to confirm optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of meeting the requirement, or in specific circumstances where competition is deemed not practicable. The lack of multiple bidders means that the government did not benefit from the price discovery and innovation that typically arises from a competitive bidding process.

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

Public Impact

The Department of the Army is the primary beneficiary, receiving critical aircraft components. The contract supports the maintenance and operational readiness of specific aircraft platforms. The geographic impact is primarily linked to Elbitamerica, Inc.'s operations in Texas. The contract likely supports specialized manufacturing roles within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to higher costs for taxpayers.
The long contract duration without re-competition raises concerns about sustained value.
No indication of small business participation or subcontracting opportunities.

Positive Signals

Firm-fixed-price contract type helps manage cost certainty.
Awardee is an established defense contractor with relevant expertise.
Contract supports critical Department of Defense operational needs.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized avionics components like Multi-Function Displays (MFDs) and bezels is often characterized by high technical barriers to entry and a limited number of qualified suppliers. Spending in this sub-sector is driven by military aircraft modernization, sustainment, and new platform development programs. Comparable spending benchmarks would ideally look at the unit cost and total value of similar avionics procurements across different branches of the military.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned. This suggests that opportunities for small businesses to participate in this specific procurement were likely limited, potentially excluding them from a significant portion of the $36.5 million in contract value. The absence of set-asides or subcontracting plans means there's no direct mechanism to boost the small business ecosystem through this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight structures. Given it was a definitive contract, standard reporting and auditing mechanisms would apply. Accountability measures would be tied to the contractor's adherence to the firm-fixed-price terms and delivery schedules. Transparency is limited by the 'NOT COMPETED' status, as the rationale for sole-sourcing and the basis of price negotiation are not publicly detailed.

Related Government Programs

Aircraft Parts Manufacturing
Avionics Systems Procurement
Department of the Army Contracts
Defense Electronics Manufacturing
Firm Fixed Price Contracts

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.5 million to ELBITAMERICA, INC.. PROCUREMENT OF LIGHT WEIGHT MFDS AND BEZELS

Who is the contractor on this award?

The obligated recipient is ELBITAMERICA, 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 $36.5 million.

What is the period of performance?

Start: 2007-12-31. End: 2014-09-30.

What is the specific nature and function of the 'lightweight MFDs and bezels' procured under this contract?

The 'lightweight MFDs and bezels' likely refer to Multi-Function Displays (MFDs) and their associated bezels, which are critical components of modern aircraft cockpits. MFDs are advanced electronic screens that can display a wide variety of information to pilots, such as navigation data, engine performance, flight controls, and tactical information, often consolidating multiple traditional instruments into a single display. The 'lightweight' designation suggests a focus on reducing aircraft weight, which is crucial for fuel efficiency and performance. Bezels are the protective frames or casings surrounding these displays. These components are essential for the operation and situational awareness of aircrews in various military aircraft platforms.

What is Elbitamerica, Inc.'s track record with the Department of Defense, particularly in supplying similar aircraft components?

Elbit America, Inc., a subsidiary of Elbit Systems Ltd., has a significant track record with the Department of Defense, supplying a range of defense electronics, avionics, and electro-optics systems. They are known for providing components for various aircraft platforms, including helicopters and fixed-wing aircraft. Their portfolio often includes displays, communication systems, and targeting systems. While specific details on their history supplying 'lightweight MFDs and bezels' to the Army are not detailed here, their general experience in the avionics sector suggests they possess the technical capabilities required for such procurements. A deeper dive into their contract history would reveal the extent and value of their past dealings with the DoD for similar product categories.

How does the $36.5 million contract value compare to industry benchmarks for similar avionics components?

Benchmarking the $36.5 million contract value for lightweight MFDs and bezels is challenging without more specific technical details and unit quantities. However, avionics components, especially advanced MFDs, can be high-value items due to their complex technology and stringent military specifications. The contract's duration of over 6 years (2465 days) means the annual spending averaged around $5.8 million. If this procurement involved a large number of units or highly sophisticated displays, the total value might be within a reasonable range for a sole-source award to a major defense contractor. Conversely, if the quantities were modest or the technology less advanced, the lack of competition could have inflated the per-unit cost significantly compared to what might have been achieved through competitive bidding.

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

The primary risk associated with awarding a $36.5 million contract on a sole-source (or 'NOT COMPETED') basis is the potential for inflated pricing and reduced value for money. Without competitive pressure, the contractor may not have an incentive to offer the lowest possible price, and the government lacks a benchmark to verify reasonableness. Other risks include a lack of innovation, as there's no competitive drive to develop better or more cost-effective solutions. Furthermore, sole-source awards can create dependency on a single supplier, potentially leading to supply chain vulnerabilities or difficulties in future procurements if the contractor's circumstances change. There's also a perception risk, as sole-source awards can be viewed as less transparent and potentially less equitable than competitively awarded contracts.

What has been the historical spending trend for similar aircraft parts or avionics by the Department of the Army?

Historical spending by the Department of the Army on aircraft parts and avionics is substantial, reflecting the significant investment required to maintain and modernize its vast fleet. The Army procures a wide array of components, from basic structural parts to highly sophisticated electronic systems like MFDs, radar, and communication equipment. Spending in this category fluctuates based on modernization programs, sustainment needs, and the retirement of older aircraft. While this specific $36.5 million contract is for a defined period, the Army's overall annual expenditure on aircraft components and avionics likely runs into billions of dollars, spread across numerous contracts and suppliers. Analyzing past spending patterns for MFDs and similar avionics would reveal trends in pricing, technology adoption, and the prevalence of competitive versus sole-source awards.

What are the implications of this contract being a 'firm fixed price' type awarded without competition?

A 'firm fixed price' (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience. This is generally favorable to the government as it provides cost certainty. However, when an FFP contract is awarded without competition, the benefit of cost certainty is weighed against the risk that the fixed price itself may be higher than it would have been under competitive conditions. The contractor assumes all the risk of cost overruns, but without competition, the government doesn't have the assurance that the price reflects the lowest achievable market rate. Therefore, while the FFP structure offers budget predictability, the sole-source nature raises concerns about whether that predictable price represents good value for taxpayer money.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ07R0264

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Elbit Systems Ltd (UEI: 514421098)

Address: 4700 MARINE CREEK PKWY, FORT WORTH, TX, 76179

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

Financial Breakdown

Contract Ceiling: $36,535,898

Exercised Options: $36,535,898

Current Obligation: $36,535,898

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline