DoD awards $75.2M for LRU delivery, raising questions about competition and value

Contract Overview

Contract Amount: $75,217,898 ($75.2M)

Contractor: DRS Network & Imaging Systems, LLC

Awarding Agency: Department of Defense

Start Date: 2009-01-14

End Date: 2011-09-23

Contract Duration: 982 days

Daily Burn Rate: $76.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FFP DELIVERY ORDER FOR LRUS

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32901

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $75.2 million to DRS NETWORK & IMAGING SYSTEMS, LLC for work described as: FFP DELIVERY ORDER FOR LRUS Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract's duration of nearly three years suggests a significant need for the delivered items. 3. Fixed-price contract type mitigates cost overrun risk for the government. 4. The award value of $75.2 million indicates a substantial investment in electronic computer manufacturing. 5. Lack of competition raises concerns about whether the government received the best possible value. 6. The specific nature of 'LRUs' (Line Replaceable Units) suggests critical components for military systems.

Value Assessment

Rating: questionable

The contract's value of $75.2 million for electronic computer manufacturing components needs further benchmarking. Without competitive bids, it's difficult to assess if the price paid was fair market value. The fixed-price nature is a positive, but the lack of competition prevents a robust value-for-money assessment. Comparing this to similar sole-source awards for LRUs would be necessary to determine if the pricing is within an acceptable range.

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 among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means there was no opportunity for price negotiation or comparison among different suppliers, which can lead to higher prices than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium for these LRUs due to the absence of competitive bidding. The government missed out on potential cost savings that could have been achieved through a competitive process.

Public Impact

The Department of the Army benefits from the delivery of critical Line Replaceable Units (LRUs). These LRUs are essential for the maintenance and operational readiness of military electronic systems. The contract supports the defense industrial base, specifically within electronic computer manufacturing. The workforce implications are likely within the manufacturing and supply chain sectors related to defense electronics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for vendor lock-in if LRUs are highly specialized and difficult to source elsewhere.

Positive Signals

Fixed-price contract type helps control costs and reduces risk of budget overruns.
Awarding to DRS Network & Imaging Systems, LLC suggests reliance on established capabilities.
Delivery of critical LRUs ensures operational readiness of military equipment.

Sector Analysis

This contract falls within the Electronic Computer Manufacturing sector, a critical component of the broader defense industrial base. The market for specialized LRUs is often characterized by high barriers to entry due to technical expertise and security requirements. Spending in this area is driven by the need for advanced military hardware and its ongoing maintenance. Comparable spending benchmarks would involve analyzing other sole-source or competed contracts for similar electronic components within the Department of Defense.

Small Business Impact

The contract data indicates that this was not a small business set-aside, nor does it appear to involve significant subcontracting to small businesses based on the provided information. The sole-source nature further limits opportunities for small businesses to participate in this specific procurement. The impact on the small business ecosystem for this contract is likely minimal, as it was awarded directly to a single, presumably larger, entity.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight bodies. Accountability measures are inherent in the fixed-price contract type, 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. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Procurement
Electronic Component Manufacturing
Military Hardware Sustainment
Sole-Source Contracts
Line Replaceable Units (LRUs)

Risk Flags

Sole-source award raises concerns about fair pricing and value for taxpayer money.
Lack of competition limits transparency and potential for cost savings.
Contract duration and value indicate significant reliance on this specific vendor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.2 million to DRS NETWORK & IMAGING SYSTEMS, LLC. FFP DELIVERY ORDER FOR LRUS

Who is the contractor on this award?

The obligated recipient is DRS NETWORK & IMAGING SYSTEMS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $75.2 million.

What is the period of performance?

Start: 2009-01-14. End: 2011-09-23.

What is the specific nature of the LRUs being procured, and what military systems do they support?

The provided data abbreviates the item as 'FFP DELIVERY ORDER FOR LRUS,' which stands for Firm Fixed Price Delivery Order for Line Replaceable Units. LRUs are standardized, interchangeable components designed to be easily replaced in the field during maintenance. While the exact LRUs and the specific military systems they support are not detailed in this data snippet, they are typically critical electronic modules or parts for aircraft, vehicles, or communication equipment. Their function is to ensure the rapid restoration of operational capability by allowing maintenance personnel to quickly swap out faulty units without extensive diagnostics or repair on-site. The Department of the Army's procurement of these suggests they are vital for maintaining the readiness of its electronic systems, potentially for command and control, sensor, or communication platforms.

Why was this contract awarded on a sole-source basis, and what was the justification?

The data explicitly states 'CT: NOT COMPETED,' indicating a sole-source award. The justification for a sole-source procurement typically falls under specific exceptions to full and open competition, such as the availability of only one responsible source, urgent and compelling needs, or specific national security requirements. Without further documentation, the exact reason for this sole-source award remains unknown. However, for LRUs, it's common that a particular manufacturer holds the intellectual property, proprietary manufacturing processes, or unique technical specifications that make them the only viable source. The Department of the Army would have had to formally document and justify this decision to relevant procurement authorities.

How does the contract's fixed-price nature mitigate risk for the government?

The contract is designated as 'PT: FIRM FIXED PRICE,' which is a significant risk mitigation factor for the government. In a firm fixed-price (FFP) contract, the price is set and not subject to adjustment based on the contractor's cost experience. This means the contractor assumes the primary responsibility for all costs incurred and any cost overruns. For the government, this provides budget certainty, as the total expenditure is known upfront, assuming the scope of work remains unchanged. This contrasts with cost-reimbursement contracts, where the government pays the contractor's actual costs plus a fee, potentially leading to higher-than-expected expenditures if costs escalate.

What is the historical spending pattern for similar LRU procurements by the Department of the Army?

The provided data snippet focuses on a single contract award from 2009-2011. To understand historical spending patterns for similar LRU procurements by the Department of the Army, a broader analysis of federal procurement databases would be necessary. This would involve searching for contracts with similar Product Service Codes (PSCs), North American Industry Classification System (NAICS) codes (like 334111 for Electronic Computer Manufacturing), and keywords related to 'Line Replaceable Units' or specific military platforms. Analyzing trends in award values, competition levels (competed vs. sole-source), contract types, and durations over several fiscal years would reveal patterns. It would be important to see if sole-source awards are common for these types of components and how pricing has evolved.

What is the potential impact of this sole-source award on the broader market for electronic computer manufacturing?

A sole-source award, especially for a significant value like $75.2 million, can have a mixed impact on the broader market for electronic computer manufacturing. On one hand, it solidifies the position of the awarded contractor, DRS Network & Imaging Systems, LLC, potentially allowing them to invest further in specialized capabilities. However, it also signals to other potential competitors that opportunities may be limited if procurements are consistently awarded without competition. This can disincentivize new entrants or smaller firms from developing the necessary capabilities or pursuing government contracts in this niche. Over time, a pattern of sole-source awards can lead to reduced innovation and less competitive pricing across the sector if viable alternatives are not given a chance to compete.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA (UEI: 428869465)

Address: 1110 HIBISCUS BLVD W, MELBOURNE, FL, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $75,217,898

Exercised Options: $75,217,898

Current Obligation: $75,217,898

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T06DJ405

IDV Type: IDC

Timeline