DoD's $215M contract for electronic equipment repair awarded to EXELIS SYSTEMS CORPORATION shows fair value

Contract Overview

Contract Amount: $21,532,655 ($21.5M)

Contractor: Exelis Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2003-10-01

End Date: 2010-09-30

Contract Duration: 2,556 days

Daily Burn Rate: $8.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: BILOXI, HARRISON County, MISSISSIPPI, 39534

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $21.5 million to EXELIS SYSTEMS CORPORATION for work described as: Key points: 1. Contract value of $215.3M over 7 years suggests a significant need for specialized repair services. 2. Awarded via full and open competition, indicating a competitive bidding process. 3. The firm-fixed-price contract type shifts risk to the contractor, potentially benefiting the government. 4. Performance period of 7 years allows for sustained support but requires careful monitoring. 5. The North American Industry Classification System (NAICS) code 811219 covers a broad range of electronic repair services. 6. Contract awarded to EXELIS SYSTEMS CORPORATION, a known entity in defense contracting.

Value Assessment

Rating: good

The contract's total value of $215.3 million over approximately seven years averages to about $30.7 million annually. Without specific benchmarks for this exact type of repair service across the entire defense sector, it's challenging to definitively state if this represents the absolute best value. However, the firm-fixed-price structure is generally favorable for the government, as it caps costs. The number of bids received (6) suggests a reasonable level of competition that likely contributed to a fair price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. Six bids were received, indicating a healthy level of interest and competition for this requirement. This competitive environment is generally expected to drive down prices and encourage innovation from the bidders, leading to better overall value for the government.

Taxpayer Impact: The full and open competition process, with multiple bidders, suggests that taxpayer dollars were likely used efficiently, as the government benefited from competitive pricing. This approach minimizes the risk of overpayment compared to sole-source or limited competition scenarios.

Public Impact

The Department of Defense, specifically the Air Force, is the primary beneficiary, receiving critical repair and maintenance services for electronic and precision equipment. This contract ensures the operational readiness and longevity of vital military hardware. The services are likely delivered within the continental United States, supporting Air Force installations. The contract supports a workforce skilled in electronic repair and maintenance, contributing to specialized employment within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical complexities arise within the firm-fixed-price structure.
Long-term contract duration may lead to vendor lock-in if not managed proactively.
Dependence on a single contractor for critical repair services could pose a risk if the contractor faces financial or operational difficulties.

Positive Signals

Firm-fixed-price contract type transfers cost overrun risk to the contractor.
Awarded through full and open competition, suggesting competitive pricing.
Contract duration allows for sustained, predictable support for essential equipment.
The contractor, EXELIS SYSTEMS CORPORATION, has experience in defense contracting.

Sector Analysis

The defense sector relies heavily on specialized maintenance and repair services to ensure the operational readiness of complex electronic and precision equipment. This contract falls under the broader category of defense logistics and sustainment services. The market for such services is competitive, with numerous firms capable of providing specialized technical support. Benchmarking this contract's value against similar sustainment contracts within the DoD would provide further insight into its cost-effectiveness.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (sb: false). While the prime contractor is EXELIS SYSTEMS CORPORATION, there is no explicit information on subcontracting plans for small businesses within this data. Further investigation into subcontracting reports would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program management office within the Department of the Air Force. Performance metrics and quality assurance surveillance plans would be key accountability measures. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be sensitive.

Related Government Programs

Defense Logistics Agency (DLA) Repair and Maintenance Contracts
Air Force Sustainment and Logistics Support
Electronic Equipment Maintenance Services
Precision Equipment Repair Contracts

Risk Flags

Long contract duration may outpace technological advancements.
Firm-fixed-price contracts can pose risks if costs escalate unexpectedly for the contractor.
Potential for vendor lock-in over the 7-year period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.5 million to EXELIS SYSTEMS CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is EXELIS SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $21.5 million.

What is the period of performance?

Start: 2003-10-01. End: 2010-09-30.

What is the historical spending trend for similar electronic repair services by the Department of Defense?

Analyzing historical spending on similar electronic repair services by the Department of Defense reveals a consistent and substantial investment in maintaining the operational readiness of its vast array of equipment. Over the past decade, DoD spending in this category has fluctuated based on geopolitical factors, technological advancements, and budget allocations. Contracts for repair and maintenance of electronic and precision equipment are critical for ensuring that aircraft, communication systems, surveillance technology, and other vital assets remain functional. While specific figures vary year to year, the overall trend indicates a sustained need, often resulting in multi-year, high-value contracts awarded through competitive processes. Factors influencing spending include the lifecycle of existing equipment, the introduction of new technologies requiring specialized support, and the strategic decisions regarding outsourcing versus organic repair capabilities. Understanding these patterns helps in benchmarking current contract values and anticipating future requirements.

How does the per-unit cost of repair for this contract compare to industry benchmarks?

Determining the precise per-unit cost of repair for this contract and comparing it to industry benchmarks is complex without granular data on the specific types of electronic and precision equipment being serviced and the nature of the repairs performed. The contract's total value of $215.3 million is spread over a significant period and covers a wide range of potential services. Industry benchmarks for electronic repair can vary dramatically based on the complexity of the equipment (e.g., radar systems vs. communication devices), the criticality of the component, and the required turnaround time. Firm-fixed-price contracts aim to establish a price upfront, but the 'unit' could be a specific repair action, a component replacement, or a service hour. Without a standardized definition of 'unit' and detailed cost breakdowns, a direct comparison to external benchmarks is challenging. However, the presence of six bidders in a full and open competition suggests that the pricing was likely scrutinized and influenced by market competition, implying a reasonable alignment with prevailing market rates for comparable, albeit broadly defined, services.

What is EXELIS SYSTEMS CORPORATION's track record with similar DoD contracts?

EXELIS SYSTEMS CORPORATION, and its predecessor entities, have a significant track record of performing contracts for the Department of Defense, including those involving maintenance, repair, and logistics support for electronic and precision equipment. Historically, the company has been involved in various aspects of defense sustainment, often securing large-scale, multi-year agreements. Performance reviews and past contract awards can be found in federal procurement databases, offering insights into their reliability, quality of service, and adherence to contract terms. While specific performance metrics for every contract are not always publicly detailed, the continued award of substantial contracts suggests a generally satisfactory performance history. However, as with any large contractor, there may be instances of performance issues or disputes on specific contracts, which would be documented in contract performance reports and potentially in litigation records. A thorough review would involve examining contract close-out data and any performance ratings available.

What are the primary risks associated with a 7-year firm-fixed-price contract for electronic repair?

A 7-year firm-fixed-price (FFP) contract for electronic repair presents several key risks, primarily centered around cost predictability and technological evolution. For the contractor, the main risk is underestimating the true cost of performing the repairs over the extended period. Unforeseen technical challenges, rising labor costs, or the need for specialized parts not initially accounted for can erode profit margins. For the government, the risk lies in potential obsolescence; technology can advance rapidly, making the equipment or repair techniques covered by the contract outdated before the contract term ends. If the FFP structure is too rigid, the government might be paying for repairs on equipment that is no longer strategically relevant or for processes that have been superseded by more efficient methods. Additionally, long-term FFP contracts can sometimes disincentivize innovation from the contractor if they feel locked into a specific, potentially less efficient, methodology. Ensuring robust contract management and incorporating flexibility clauses where appropriate are crucial mitigation strategies.

How does the competition level (6 bidders) impact the value for taxpayers?

A competition level of six bidders for this contract is generally considered favorable for taxpayers. A higher number of bidders typically indicates a more robust and dynamic marketplace for the required services. This increased competition puts downward pressure on prices as contractors vie for the award, potentially leading to more cost-effective solutions. It also provides the government with a wider range of technical approaches and pricing structures to evaluate, increasing the likelihood of selecting the best overall value. Furthermore, a competitive process helps ensure that the awarded price is reflective of fair market value, reducing the risk of overpayment that can occur in sole-source or limited-competition scenarios. The presence of multiple bidders suggests that the government received proposals that were likely well-researched and competitively priced, ultimately benefiting the taxpayer through efficient use of funds.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: ITT Corporation (UEI: 001216845)

Address: 4410 E FOUNTAIN BLVD, COLORADO SPRIN, CO

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline