DoD's $243.7M contract for missile defense systems shows strong competition and long-term R&D focus

Contract Overview

Contract Amount: $24,377,346 ($24.4M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2002-04-25

End Date: 2013-09-30

Contract Duration: 4,176 days

Daily Burn Rate: $5.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: 200208!001621!2100!SG60 !USA SPACE AND STRATEGIC DEF CDR !DASG6002D0015 !A!N! !Y!0007 !20020425!20050423!618019632!008898884!008898843!N!L-3 COMMUNICATIONS CORPORATION!1 FEDERAL ST !CAMDEN !NJ!08103!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000000490500!N!N!000000000000!AC23!RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV !A2 !MISSILE AND SPACE SYSTEMS !1CAA!BALLISTIC MISSILE DEFENSE SYS !541710!E! !5!B!M! !A! !99990909!B! ! !A! !A!U!Y!2!007!B! !Z!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: CAMDEN, CAMDEN County, NEW JERSEY, 08102

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $24.4 million to L3 TECHNOLOGIES, INC. for work described as: 200208!001621!2100!SG60 !USA SPACE AND STRATEGIC DEF CDR !DASG6002D0015 !A!N! !Y!0007 !20020425!20050423!618019632!008898884!008898843!N!L-3 COMMUNICATIONS CORPORATION!1 FEDERAL ST !CAMDEN !NJ!08103!37000!089!01!HUNTSVILLE !MADIS… Key points: 1. Contract awarded through full and open competition, indicating a robust market. 2. Long contract duration (over 11 years) suggests a sustained need for missile defense technology. 3. Significant portion of contract value allocated to Research, Development, Test, and Evaluation (RDTE). 4. Contractor has a track record in advanced technology development for defense. 5. Geographic concentration of contract performance in New Jersey and Alabama. 6. Contract type (Time and Materials) may pose cost control challenges if not managed effectively.

Value Assessment

Rating: good

The total award of $243.7 million over an 11-year period for missile and space systems development appears reasonable given the specialized nature of the work. Benchmarking against similar advanced R&D contracts in missile defense is challenging due to the unique technological requirements. However, the contract's long duration and the nature of the services suggest a significant investment in cutting-edge capabilities. The contractor, L3 Technologies, Inc., is a known entity in the defense sector, implying a certain level of established expertise.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors were able to bid. The presence of 7 bids indicates a healthy level of interest and competition for this advanced technology development. This competitive environment is generally favorable for price discovery and can lead to more cost-effective solutions for the government.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely drove down prices and encouraged innovation, ensuring the government receives the best value for its investment in critical missile defense technology.

Public Impact

The primary beneficiaries are the U.S. military, specifically units involved in ballistic missile defense. Services delivered include research, development, testing, and evaluation of advanced missile and space systems. Geographic impact is concentrated in New Jersey (contractor's primary location) and Alabama (performance location). Workforce implications include highly skilled engineers, scientists, and technicians in the aerospace and defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type can lead to cost overruns if not closely monitored.
Long contract duration may not adapt well to rapidly evolving technological landscapes.
Concentration of work in specific geographic areas could limit broader economic impact.

Positive Signals

Awarded through full and open competition, ensuring broad market participation.
Contractor is an established player in the defense technology sector.
Focus on advanced R&D aligns with national security priorities.
Long-term nature of the contract provides stability for critical defense programs.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically focusing on Research and Development for missile and space systems. The North American Industry Classification System (NAICS) code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences,' encompasses a broad range of scientific and technical services. Spending in this area is critical for maintaining technological superiority in national defense. Comparable spending benchmarks are difficult to establish precisely due to the highly specialized and often classified nature of missile defense R&D, but this contract represents a significant investment in a key strategic capability.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'N' for 'Small Business Set-Aside'. Furthermore, the 'N' for 'Subcontracting Plan' suggests that there may not be a formal requirement for the prime contractor to subcontract with small businesses. This could limit opportunities for small businesses to participate in this large defense contract, potentially impacting the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The contract's long duration and R&D nature necessitate continuous monitoring of progress, adherence to technical specifications, and cost control. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is generally limited for advanced defense R&D contracts due to national security considerations, but programmatic reviews and audits would be standard oversight mechanisms.

Related Government Programs

Ballistic Missile Defense System (BMDS)
Advanced Technology Development
Missile and Space Systems
Research and Development Contracts
Department of Defense Procurement

Risk Flags

Long contract duration may not align with rapidly evolving technology.
Time and Materials contract type poses potential cost overrun risks.
Lack of small business subcontracting plan may limit opportunities for SMBs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.4 million to L3 TECHNOLOGIES, INC.. 200208!001621!2100!SG60 !USA SPACE AND STRATEGIC DEF CDR !DASG6002D0015 !A!N! !Y!0007 !20020425!20050423!618019632!008898884!008898843!N!L-3 COMMUNICATIONS CORPORATION!1 FEDERAL ST !CAMDEN !NJ!08103!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000000490500!N!N!000000000000!AC23!RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV !A2 !MISSILE AND SPACE SYSTEMS !1CAA!BALLISTIC MISSILE DEFENSE SYS !541710!E! !5!B!M! !A! !99990909!B

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 $24.4 million.

What is the period of performance?

Start: 2002-04-25. End: 2013-09-30.

What is the historical spending trend for missile defense R&D by the Department of Defense over the last decade?

Historical spending on missile defense R&D by the Department of Defense has generally shown an increasing trend over the last decade, driven by evolving geopolitical threats and technological advancements. While specific figures fluctuate annually based on budget allocations and program priorities, the overall investment reflects a sustained commitment to developing and enhancing defensive capabilities. Factors such as the development of new interceptor technologies, sensor systems, and command and control architectures contribute to this sustained high level of expenditure. Analyzing specific program budgets within the broader missile defense portfolio, such as the Ground-based Midcourse Defense (GMD) system or the Aegis Ballistic Missile Defense system, reveals significant, multi-billion dollar investments over time. This contract, awarded in 2002 and ending in 2013, represents a portion of that historical investment in advanced R&D during that period.

How does the per-unit cost of the delivered technology compare to industry benchmarks for similar missile defense components?

Determining a precise per-unit cost for the technology developed under this contract is not feasible with the provided data. The contract is for Research, Development, Test, and Evaluation (RDTE) of 'Missile and Space Systems - Advanced Tech Dev,' not for the production of a specific number of standardized units. RDTE contracts are inherently variable, with costs dependent on the complexity of the research, the number of prototypes developed, and the testing required. Benchmarking is further complicated by the proprietary and often classified nature of advanced defense technologies. Unlike commercial products, the 'units' here are likely prototypes, experimental systems, or specialized components whose value is in their technological advancement rather than mass production cost. Therefore, a direct per-unit cost comparison to industry benchmarks is not applicable in this context.

What is L3 Technologies, Inc.'s track record with similar advanced R&D contracts for the Department of Defense?

L3 Technologies, Inc. (and its predecessor entities) has a significant track record of performing advanced research and development contracts for the Department of Defense, spanning various technological domains including aerospace, communications, and defense systems. The company has historically been involved in complex engineering, system integration, and technology development projects. While specific details of past performance on contracts directly analogous to this missile defense R&D effort would require deeper investigation into their contract history, their established presence in the defense sector suggests a familiarity with the requirements, security protocols, and technical challenges associated with such programs. Their portfolio often includes work on sensor systems, electronic warfare, and space-based technologies, which are often foundational or complementary to missile defense capabilities.

What are the key performance indicators (KPIs) used to measure the success of this advanced technology development contract?

For an advanced technology development contract like this one, key performance indicators (KPIs) would typically focus on technical milestones, research progress, and the successful demonstration of new capabilities rather than purely on delivery schedules or unit production. Specific KPIs might include the achievement of defined technological thresholds (e.g., accuracy, speed, range improvements), successful completion of critical design reviews, validation of theoretical models through experimentation, and the performance of prototypes in simulated or actual test environments. Adherence to budget and schedule for R&D phases, while important, often takes a secondary role to achieving the core technological objectives. The ultimate measure of success would be the transition of the developed technology into a viable system or component for operational deployment within the broader missile defense architecture.

How has the scope of work or funding for this contract evolved since its initial award?

The provided data indicates an initial award date of 2002-04-25 and an ultimate completion date of 2013-09-30, with a total award amount of $243,773,464.80. The contract type is 'Time and Materials' (PT), and it was awarded under 'Full and Open Competition' (CT). The data also shows a 'Number of Bids' (NO) of 7. While this information provides a snapshot of the contract's final parameters, it does not detail the evolution of the scope of work or funding over its 11-year duration. Time and Materials contracts, by their nature, can accommodate changes in scope and effort, often through contract modifications (e.g., task orders or change orders) that adjust the ceiling price or estimated hours. To understand the evolution, one would need to examine the contract's modification history, which would detail any changes to the statement of work, funding levels, or delivery schedules throughout its lifecycle.

What is the potential risk associated with the 'Time and Materials' contract type for a long-term R&D project?

The 'Time and Materials' (T&M) contract type, while offering flexibility for R&D projects where the scope may not be fully defined at the outset, carries inherent risks for long-term engagements. The primary risk for the government is cost control. In a T&M contract, the government pays the contractor for the actual labor hours at specified hourly rates and for the actual cost of materials. If the project takes longer than anticipated, or if labor rates increase significantly, costs can escalate beyond initial estimates. For a long-term R&D project, this risk is amplified. Effective oversight, robust monitoring of labor hours and material costs, and clear definitions of 'materials' are crucial to mitigate these risks. Without stringent management, T&M contracts can become more expensive than fixed-price alternatives, especially if the contractor's efficiency is not closely tracked or if the project scope expands without corresponding adjustments to oversight.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 7

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

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

Address: 1 FEDERAL ST, CAMDEN, NJ, 01

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,257,478

Exercised Options: $1,257,478

Current Obligation: $24,377,346

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DASG6002D0015

IDV Type: IDC

Timeline