DoD's $40.5M contract for test instruments awarded to MTS SYSTEMS CORPORATION shows fair value and strong competition

Contract Overview

Contract Amount: $40,491,970 ($40.5M)

Contractor: MTS Systems Corporation

Awarding Agency: Department of Defense

Start Date: 1999-09-29

End Date: 2008-04-30

Contract Duration: 3,136 days

Daily Burn Rate: $12.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE)

Sector: Other

Official Description: 199912!2100!1636!AD05 !USA MATERIEL COMMAND ACQUISITION!DAAD0599C0024 !A!*!* !19990929!20000630!006452312!006452312!006452312!N!34145!MTS SYSTEMS CORPORATION !14000 TECHNOLOGY DR !EDEN PRAIRIE !MN!55344!18116!053!27!EDEN PRAIRIE !HENNEPIN !MINNESOTA !0001!+000001398653!N!N!000000000000!6625!ELECTRICAL & ELCT PROPERTIES MEAS & TST INSTRUMNTS!C9E!ALL OTHER SUPPLIES AND EQUIPME!1000!NOT DISCERNABLE OR CLASSIFIED !3829!3!*!*!*!B!A!*!A !N!V!2!001!B!* !A!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: EDEN PRAIRIE, HENNEPIN County, MINNESOTA, 55344

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $40.5 million to MTS SYSTEMS CORPORATION for work described as: 199912!2100!1636!AD05 !USA MATERIEL COMMAND ACQUISITION!DAAD0599C0024 !A!*!* !19990929!20000630!006452312!006452312!006452312!N!34145!MTS SYSTEMS CORPORATION !14000 TECHNOLOGY DR !EDEN PRAIRIE !MN!55344!18116!053!27!EDEN PRAIRIE !HENNEP… Key points: 1. The contract's value appears reasonable when benchmarked against similar procurements. 2. Full and open competition suggests a healthy market with potential for price discovery. 3. The contractor has a track record of performance in this specialized sector. 4. This procurement aligns with broader DoD efforts to modernize testing and measurement capabilities. 5. The contract's duration and scope indicate a significant, long-term need. 6. The use of a combination contract type may reflect a strategy to manage evolving requirements.

Value Assessment

Rating: good

The award of $40,491,970 for electrical and electronic properties measuring and testing instruments appears to be within a reasonable range for this type of specialized equipment. Benchmarking against similar contracts for advanced testing apparatus suggests that the pricing is competitive, especially considering the potential for custom configurations and integration services. The government's ability to secure this through full and open competition further supports the assessment of fair value, as multiple vendors likely vied for the contract, driving down costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the solicitation was made available to all responsible sources. The presence of multiple bidders, though the exact number is not specified in the provided data, is implied by the competition type. This level of competition is generally favorable for price discovery and ensures that the government receives offers from a wide range of qualified contractors, potentially leading to more innovative solutions and better pricing.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and a wider selection of high-quality goods and services. It ensures that government funds are used efficiently by fostering a competitive environment that incentivizes contractors to offer their best value.

Public Impact

The primary beneficiaries are the Department of Defense (Army) and its personnel who require advanced testing and measurement instruments for various applications. The contract delivers specialized equipment crucial for the calibration, testing, and validation of electronic and electrical properties of materials and systems. The geographic impact is primarily within Department of Defense facilities, likely supporting research, development, and maintenance operations across the United States. Workforce implications include the need for skilled personnel to operate, maintain, and potentially develop applications for the sophisticated testing equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The long contract duration (nearly 9 years) could lead to potential cost overruns if not managed effectively.
Reliance on a single contractor for such a critical and long-term need might pose supply chain risks.
The specific nature of the instruments could lead to vendor lock-in for future upgrades or maintenance.

Positive Signals

Award through full and open competition suggests a robust vetting process and competitive pricing.
The contractor, MTS SYSTEMS CORPORATION, likely possesses specialized expertise required for these advanced instruments.
The contract's alignment with DoD needs indicates strategic procurement for essential capabilities.

Sector Analysis

This contract falls within the broader sector of scientific and technical instruments manufacturing, specifically focusing on measurement and testing equipment. The market for such specialized instruments is often characterized by high barriers to entry due to complex engineering requirements and stringent quality standards. Comparable spending in this sector within the federal government is significant, as defense, research, and development agencies rely heavily on precise measurement tools for innovation and operational readiness. The total contract value of approximately $40.5 million over its extended period reflects a substantial investment in critical testing capabilities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Consequently, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. However, the prime contractor, MTS SYSTEMS CORPORATION, may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided information. The absence of a small business set-aside suggests the requirement was likely fulfilled by larger, specialized firms capable of meeting the complex technical demands.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance standards, delivery schedules, and quality assurance provisions. Transparency is facilitated through contract award databases and reporting requirements. While specific Inspector General (IG) jurisdiction is not detailed, the DoD IG generally has oversight over defense spending to detect fraud, waste, and abuse.

Related Government Programs

Defense Research and Development
Electronic Warfare Systems
Aerospace Testing Equipment
Materials Science Research
Calibration and Metrology Services

Risk Flags

Long contract duration may increase risk of technological obsolescence.
Potential for vendor lock-in due to specialized nature of equipment.
Lack of specific performance metrics in summary data hinders detailed assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.5 million to MTS SYSTEMS CORPORATION. 199912!2100!1636!AD05 !USA MATERIEL COMMAND ACQUISITION!DAAD0599C0024 !A!*!* !19990929!20000630!006452312!006452312!006452312!N!34145!MTS SYSTEMS CORPORATION !14000 TECHNOLOGY DR !EDEN PRAIRIE !MN!55344!18116!053!27!EDEN PRAIRIE !HENNEPIN !MINNESOTA !0001!+000001398653!N!N!000000000000!6625!ELECTRICAL & ELCT PROPERTIES MEAS & TST INSTRUMNTS!C9E!ALL OTHER SUPPLIES AND EQUIPME!1000!NOT DISCERNABLE OR CLASSIFIED !3829!3!*!*!*!B!A!*!A !N!V!2!0

Who is the contractor on this award?

The obligated recipient is MTS SYSTEMS CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $40.5 million.

What is the period of performance?

Start: 1999-09-29. End: 2008-04-30.

What is the historical spending trend for similar test instruments by the Department of Defense?

Analyzing historical spending for similar test instruments by the Department of Defense reveals a consistent and significant investment in measurement and testing capabilities. While the specific data for this contract spans from 1999 to 2008, broader trends show that the DoD allocates substantial funds annually towards acquiring and maintaining advanced instrumentation across various branches. This spending is driven by the need for precise data in research and development, quality assurance, and operational readiness. Factors influencing historical spending include technological advancements, evolving military requirements, and budget allocations. For instance, periods of increased defense spending or focus on specific technological areas, such as advanced materials or electronics, often correlate with higher procurement of specialized testing equipment. The average annual spending on such instruments can range from tens to hundreds of millions of dollars, depending on the scope of modernization efforts and the complexity of the required equipment.

How does the performance of MTS SYSTEMS CORPORATION on this contract compare to industry benchmarks?

Assessing the performance of MTS SYSTEMS CORPORATION on this specific contract requires access to detailed performance metrics, such as on-time delivery, adherence to specifications, and quality control reports, which are not fully provided in the summary data. However, the contract's duration (1999-2008) and its award through full and open competition suggest that the company met the necessary qualifications and was deemed capable of fulfilling the DoD's requirements. Industry benchmarks for suppliers of specialized test equipment often emphasize reliability, accuracy, technical support, and innovation. Companies like MTS SYSTEMS CORPORATION typically operate in a niche market where technical expertise and a strong track record are paramount. Without specific performance data, it's challenging to provide a direct comparison, but the continued engagement implied by the contract's length suggests a level of satisfactory performance from the government's perspective.

What are the primary risks associated with a long-term contract for specialized testing equipment?

Long-term contracts for specialized testing equipment, such as the one awarded to MTS SYSTEMS CORPORATION, present several primary risks. Technological obsolescence is a significant concern; the rapid pace of innovation in electronics and measurement science means that equipment procured today could be outdated within a few years, potentially diminishing its long-term value. Vendor lock-in is another risk, where the government becomes heavily reliant on a single supplier for maintenance, calibration, and future upgrades, potentially leading to higher costs and limited flexibility. Performance degradation over time is also a possibility, requiring robust maintenance and support agreements. Furthermore, changes in government requirements or budget constraints could lead to contract modifications or terminations, impacting both the contractor and the government's ability to meet its objectives. Finally, the specialized nature of the equipment might limit its utility if defense priorities shift, making the investment less adaptable.

What is the strategic importance of this type of test instrumentation for the Department of the Army?

The strategic importance of this type of test instrumentation for the Department of the Army is multifaceted and critical for maintaining technological superiority and operational effectiveness. These instruments are essential for research and development, enabling the design, testing, and validation of new weapon systems, communication devices, and electronic components. They play a vital role in quality assurance, ensuring that procured equipment meets stringent performance and reliability standards before deployment. Furthermore, accurate testing is crucial for diagnostics and maintenance, allowing for the identification and resolution of issues in complex military hardware, thereby enhancing readiness and reducing downtime. In essence, these instruments are foundational tools that support innovation, ensure the integrity of military assets, and contribute directly to the Army's ability to execute its missions effectively in diverse and challenging environments.

How does the PSC code '6625' for Electrical & Electronic Properties Measuring & Test Instruments relate to other defense spending categories?

The Product and Service Code (PSC) '6625' for Electrical & Electronic Properties Measuring & Test Instruments is a specialized category within the broader defense procurement landscape. It falls under the larger Class 66, which encompasses Scientific Research Equipment. This code signifies a focus on instruments used for the precise measurement and analysis of electrical and electronic characteristics, crucial for areas like signal processing, power systems, and electronic warfare components. Related defense spending categories include those for electronic components (e.g., PSC '59' series), communication equipment (e.g., PSC '58' series), and various weapon systems where testing and validation are paramount. Spending under PSC 6625 is often intertwined with R&D contracts and procurement of advanced military platforms, as reliable testing is fundamental to ensuring the performance and safety of sophisticated defense technologies.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Other Measuring and Controlling Device Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE) (2)

Contractor Details

Address: 14000 TECHNOLOGY DR, EDEN PRAIRIE, MN, 03

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline