DoD's $15M contract for communications equipment manufacturing awarded to L3 Technologies, Inc. with no competition

Contract Overview

Contract Amount: $15,004,319 ($15.0M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2005-04-29

End Date: 2011-01-12

Contract Duration: 2,084 days

Daily Burn Rate: $7.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200507!000368!5700!FA8620!ASC/RAK !FA862005C4303 !A!N! !N! ! !20050429!20080430!008983355!008898884!008898843!N!L 3 COMMUNICATIONS CORPORATION!640 N 2200 W !SALT LAKE CITY !UT!84116!67000!035!49!SALT LAKE CITY !SALT LAKE !UTAH !+000012504328!N!N!000012504328!AC65!RDTE/ELECTRONICS & COMMUNICATION EQ-ENG/MANUF DEV !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334290!E! !3! ! ! ! ! !20200930!B! ! !N!Z!D!N!J!1!001!N!6A!Z!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84116

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $15.0 million to L3 TECHNOLOGIES, INC. for work described as: 200507!000368!5700!FA8620!ASC/RAK !FA862005C4303 !A!N! !N! ! !20050429!20080430!008983355!008898884!008898843!N!L 3 COMMUNICATIONS CORPORATION!640 N 2200 W !SALT LAKE CITY !UT!84116!67000!035!49!SALT LAKE CITY !SALT… Key points: 1. The contract was awarded on a sole-source basis, raising questions about potential overpricing and lack of value for money. 2. Limited competition suggests a potential for higher costs compared to a fully competed contract. 3. The contract's duration of over 6 years (2084 days) indicates a long-term commitment for specialized equipment. 4. The award to a single large business raises concerns about small business participation and subcontracting opportunities. 5. The 'NOT COMPETED' status is a significant risk indicator for price discovery and efficient resource allocation. 6. The contract falls under the 'Other Communications Equipment Manufacturing' NAICS code, indicating a specific niche within the defense sector.

Value Assessment

Rating: questionable

The contract's value is difficult to benchmark due to its sole-source nature. Without competitive bids, it's challenging to determine if the $15 million price tag represents a fair market value for the 'Other Communications Equipment Manufacturing' services. The lack of competition prevents a direct comparison with similar contracts awarded through open bidding processes, which typically yield better pricing for the government. The government may have paid a premium due to the absence of a competitive environment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' strategy, meaning there was no open competition. This typically occurs when only one source is capable of meeting the requirement, or in specific circumstances like urgent needs or follow-on work. The lack of bidders means the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to less favorable pricing.

Taxpayer Impact: Taxpayers may have incurred higher costs due to the absence of competitive pressure to drive down prices. The government's ability to secure the best possible value is diminished when competition is not pursued.

Public Impact

The primary beneficiaries are likely the Department of Defense (DoD) units requiring specialized communications equipment. The contract delivers essential electronics and communication equipment, crucial for military operations and readiness. The geographic impact is primarily centered around the contractor's location in Salt Lake City, Utah, and the DoD facilities receiving the equipment. Workforce implications include employment at L3 Technologies, Inc. and potentially its subcontractors, contributing to the skilled labor market in the defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may result in higher costs for taxpayers.
Lack of transparency in the procurement process due to 'NOT COMPETED' status.
Potential for reduced innovation and efficiency gains that often arise from competitive environments.
Limited opportunities for small businesses to participate as prime contractors or through subcontracting.

Positive Signals

Award to an established contractor (L3 Technologies, Inc.) suggests a degree of reliability in meeting requirements.
The contract addresses a specific need for specialized communications equipment within the defense sector.
Firm Fixed Price contract type provides cost certainty for the government once awarded.

Sector Analysis

This contract falls within the broader 'Electronics and Communication Equipment' manufacturing sector. The North American Industry Classification System (NAICS) code 334290, 'Other Communications Equipment Manufacturing,' signifies a specialized segment of this industry. The defense sector often requires highly customized and technologically advanced communication systems, making this a critical area for national security. Spending in this sector can be substantial, driven by the continuous need for upgrades and specialized equipment for military applications. Benchmarking this contract's value is challenging without comparable sole-source awards, but it represents a significant investment in a niche manufacturing capability.

Small Business Impact

The contract was awarded to L3 Technologies, Inc., a large business, and there is no indication of a small business set-aside. The 'NOT COMPETED' status further suggests that opportunities for small businesses, either as prime contractors or subcontractors, may have been limited. Without a competitive process that specifically encourages small business participation, it is less likely that subcontracting goals were actively pursued or met, potentially impacting the small business ecosystem within this specialized manufacturing area.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and oversight mechanisms, potentially involving the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods. 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 Communications Equipment Procurement
Defense Electronics Manufacturing Contracts
Sole-Source Defense Contracts
Other Communications Equipment Manufacturing
L3 Technologies, Inc. Government Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.0 million to L3 TECHNOLOGIES, INC.. 200507!000368!5700!FA8620!ASC/RAK !FA862005C4303 !A!N! !N! ! !20050429!20080430!008983355!008898884!008898843!N!L 3 COMMUNICATIONS CORPORATION!640 N 2200 W !SALT LAKE CITY !UT!84116!67000!035!49!SALT LAKE CITY !SALT LAKE !UTAH !+000012504328!N!N!000012504328!AC65!RDTE/ELECTRONICS & COMMUNICATION EQ-ENG/MANUF DEV !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334290!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $15.0 million.

What is the period of performance?

Start: 2005-04-29. End: 2011-01-12.

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

L3 Technologies, Inc. (now part of L3Harris Technologies) has a substantial history of performing defense contracts, including those related to communications equipment, electronics, and manufacturing. Their experience often involves complex systems integration and production for various branches of the U.S. military. While specific performance metrics for this particular contract are not detailed here, the company's general profile suggests a capacity to handle significant defense manufacturing requirements. However, the 'NOT COMPETED' nature of this award means that its success was likely evaluated based on meeting the specific, pre-defined requirements rather than through a comparative performance assessment against other potential providers.

How does the $15 million value compare to similar sole-source contracts for communications equipment?

Directly comparing the $15 million value to similar sole-source contracts for communications equipment is challenging without access to a comprehensive database of all sole-source awards and their specific technical scopes. Sole-source contracts are, by definition, not subject to the price competition that would establish a clear market rate. Factors such as the uniqueness of the technology, the required volume, and the specific performance specifications heavily influence pricing. However, a $15 million award for specialized communications equipment manufacturing is a significant sum, underscoring the potential for higher costs when competition is absent. Government auditors and contracting officers would typically conduct extensive price analyses, including cost breakdowns and comparisons to commercial item pricing where applicable, to justify such awards.

What are the primary risks associated with a 'NOT COMPETED' contract of this magnitude?

The primary risks associated with a 'NOT COMPETED' contract of this magnitude ($15 million) include: 1. **Price Risk:** The government may pay more than necessary due to the lack of competitive bidding. Without competing offers, there's no market pressure to ensure the lowest possible price. 2. **Performance Risk:** While the contractor may have a good track record, the absence of competition might reduce the incentive to innovate or exceed basic performance expectations. 3. **Scope Creep Risk:** Sole-source contracts can sometimes be more susceptible to scope creep if not managed meticulously, potentially increasing the overall cost beyond the initial $15 million. 4. **Limited Alternatives:** If the contractor fails to perform or faces issues, the government has limited immediate alternatives due to the specialized nature and sole-source award.

What does the contract's duration (2084 days) imply about the program's effectiveness and future needs?

A contract duration of 2084 days (approximately 5.7 years) implies that the communications equipment being procured is intended for long-term use and is likely part of a sustained program or operational requirement within the Department of Defense. This extended timeline suggests that the equipment is not for a short-term or temporary need, but rather for ongoing military operations, strategic initiatives, or a planned technology lifecycle. The effectiveness of the program will be judged by the equipment's reliability, performance in operational environments, and its contribution to the DoD's mission over this extended period. The duration also indicates a significant commitment of resources and suggests that the DoD anticipates continued reliance on this type of equipment.

How does this contract fit into the broader spending patterns for defense communications equipment?

This $15 million contract represents a specific investment within the vast landscape of Department of Defense spending on communications equipment. Defense spending in this category is consistently high, driven by the need for secure, reliable, and advanced communication systems across global operations. Contracts like this, even when sole-source, are part of a larger strategy to equip military personnel with necessary technology. While this single contract is a fraction of the total defense budget, it highlights the ongoing procurement of specialized 'Other Communications Equipment.' Broader spending patterns often show a mix of competed and sole-source awards, with sole-source being reserved for unique capabilities or specific circumstances. Analyzing historical spending data for NAICS code 334290 within the DoD would provide context on the frequency and scale of such procurements.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

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

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

Address: 640 N 2200 W, SALT LAKE CITY, UT, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline