DoD awards $23M+ for ammunition manufacturing, with limited competition impacting price discovery

Contract Overview

Contract Amount: $23,062,948 ($23.1M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-06-14

End Date: 2016-09-30

Contract Duration: 1,569 days

Daily Burn Rate: $14.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AWARD OF M935 FUZE DELIVERY ORDER 0002

Place of Performance

Location: CAMDEN, CAMDEN County, NEW JERSEY, 08102

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $23.1 million to L3 TECHNOLOGIES, INC. for work described as: AWARD OF M935 FUZE DELIVERY ORDER 0002 Key points: 1. Value for money is fair, given the firm fixed-price contract type, but limited competition raises concerns. 2. Competition dynamics show a preference for specific sources, potentially limiting price discovery and innovation. 3. Risk indicators include potential overpricing due to limited competition and reliance on a single source. 4. Performance context is a multi-year delivery order for ammunition manufacturing, suggesting a sustained need. 5. Sector positioning places this contract within the defense industrial base, specifically ammunition manufacturing.

Value Assessment

Rating: fair

The firm fixed-price contract type provides some cost certainty. However, the limited competition aspect, where sources were excluded, suggests that the government may not have achieved the best possible pricing. Benchmarking against similar ammunition manufacturing contracts would be necessary for a more definitive value assessment, but the limited competition inherently reduces the likelihood of optimal value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were intentionally excluded. This approach limits the pool of potential bidders and can impact the effectiveness of price discovery. The fact that only two bids were received further underscores the limited nature of the competition.

Taxpayer Impact: The exclusion of sources and limited number of bidders mean taxpayers may not have benefited from the most competitive pricing achievable through a broader competition.

Public Impact

The Department of Defense benefits from a sustained supply of ammunition. Services delivered include the manufacturing of ammunition, crucial for military readiness. The geographic impact is primarily in New Jersey, where the contractor is located. Workforce implications include job creation and maintenance within the defense manufacturing sector in New Jersey.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher costs for taxpayers.
Exclusion of sources raises questions about fairness and potential market distortion.
Reliance on a limited number of bidders could create supply chain vulnerabilities.

Positive Signals

Firm fixed-price contract provides cost predictability.
Contract addresses a critical defense need for ammunition.
Contract duration of over four years suggests a stable, long-term requirement.

Sector Analysis

This contract falls within the defense industrial base, specifically the manufacturing of ammunition. The market for defense-related manufacturing is often characterized by specialized capabilities and government-driven demand. Comparable spending benchmarks would involve analyzing other contracts for similar ammunition types and quantities awarded by the Department of Defense or other allied nations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have significant subcontracting implications for small businesses based on the provided information. The contractor, L3 Technologies, Inc., is a large defense contractor. Therefore, the direct impact on the small business ecosystem is likely minimal, though large prime contractors often engage small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the firm fixed-price structure, which shifts cost risk to the contractor. Transparency is generally provided through contract award databases, though the specifics of the 'exclusion of sources' may require further investigation through official channels or Inspector General reports if concerns arise.

Related Government Programs

Department of Defense Ammunition Procurement
Defense Industrial Base Manufacturing
Ammunition (except Small Arms) Manufacturing Contracts
Firm Fixed Price Defense Contracts

Risk Flags

Limited competition
Exclusion of sources
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.1 million to L3 TECHNOLOGIES, INC.. AWARD OF M935 FUZE DELIVERY ORDER 0002

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 $23.1 million.

What is the period of performance?

Start: 2012-06-14. End: 2016-09-30.

What is the track record of L3 Technologies, Inc. in fulfilling defense contracts, particularly for ammunition?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a significant history of performing defense contracts across various domains, including aerospace, communications, and electronic systems. For ammunition-related contracts, their experience would likely involve manufacturing, integration, and potentially sustainment services. A detailed review of their past performance ratings, any contract disputes, or quality issues related to similar ammunition production would provide a clearer picture of their reliability and capability in this specific area. Analyzing their financial stability and capacity to handle large-scale production orders is also crucial for assessing their track record.

How does the awarded price compare to market rates for similar ammunition manufacturing services?

Determining the precise value for money requires a detailed comparison against market rates for similar ammunition manufacturing services. Factors such as the specific type of ammunition, quantity, required specifications, and production complexity significantly influence pricing. Given that this was a 'Full and Open Competition After Exclusion of Sources' with only two bids, the price may not reflect the most competitive market rate achievable. Benchmarking against publicly available pricing data for comparable defense contracts, or consulting industry cost analysis reports, would be necessary to assess if the $23 million award represents a fair market price or if potential overpricing occurred due to limited competition.

What are the specific risks associated with the 'exclusion of sources' in this contract award?

The primary risk associated with excluding sources in a competitive bidding process is the potential for reduced competition, which can lead to higher prices for the government and taxpayers. It may also limit the government's access to innovative solutions or specialized capabilities that excluded vendors might offer. Furthermore, if the exclusion was not adequately justified or documented, it could raise concerns about fairness, transparency, and potential favoritism. This practice can also create barriers to entry for new or smaller companies seeking to compete for defense contracts, potentially impacting the broader defense industrial base.

What is the historical spending pattern for ammunition manufacturing by the Department of the Army, and how does this award fit in?

The Department of the Army, as a major component of the DoD, consistently spends significant amounts on ammunition procurement to maintain readiness. Historical spending patterns for ammunition manufacturing are typically characterized by multi-year contracts, often awarded through competitive processes, though sometimes with specific source exclusions for specialized items. This $23 million award for fuze delivery order appears to be a component of a larger, ongoing ammunition supply chain. Analyzing historical spending data for similar ammunition types and quantities would reveal whether this award is within the expected range or represents an outlier, potentially indicating changes in demand, production costs, or contracting strategies.

What are the implications of a 'firm fixed price' contract type for this ammunition manufacturing requirement?

A 'firm fixed price' (FFP) contract type is generally preferred by the government when the scope of work is well-defined and the risks can be reasonably estimated. For ammunition manufacturing, an FFP contract means that the contractor, L3 Technologies, Inc., is obligated to complete the work for a predetermined price, regardless of their actual costs. This shifts the cost risk from the government to the contractor. It provides budget certainty for the Department of the Army and incentivizes the contractor to control costs and improve efficiency to maximize profit. However, if the initial cost estimates were inaccurate or if unforeseen issues arise, the contractor might incur losses, potentially impacting future performance or willingness to bid on similar contracts.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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, 08102

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

Financial Breakdown

Contract Ceiling: $23,062,948

Exercised Options: $23,062,948

Current Obligation: $23,062,948

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J12D0047

IDV Type: IDC

Timeline