DoD's $27.4M L3 Technologies contract for subminiature flight safety systems awarded without competition

Contract Overview

Contract Amount: $27,409,675 ($27.4M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-09-23

End Date: 2015-10-16

Contract Duration: 1,849 days

Daily Burn Rate: $14.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SUBMINIATURE FLIGHT SAFETY SYSTEM

Place of Performance

Location: BRISTOL, BUCKS County, PENNSYLVANIA, 19007

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $27.4 million to L3 TECHNOLOGIES, INC. for work described as: SUBMINIATURE FLIGHT SAFETY SYSTEM Key points: 1. The contract's value of $27.4 million over approximately five years suggests a significant investment in specialized defense technology. 2. Awarded as a sole-source contract, it bypasses competitive bidding, raising questions about potential cost efficiencies and market alternatives. 3. The 'Cost Plus Incentive Fee' (CPIF) contract type indicates that contractor performance will be incentivized, but also carries inherent cost escalation risks. 4. The product service code (PSC) is missing, hindering a precise comparison with similar procurements in the guided missile and space vehicle manufacturing sector. 5. The contract duration of 1849 days (approx. 5 years) is substantial, implying a long-term need for these critical flight safety systems. 6. The contractor, L3 Technologies, Inc., is a known entity in defense contracting, but specific performance metrics for this contract are not detailed here.

Value Assessment

Rating: questionable

Benchmarking the value of this $27.4 million contract is challenging due to the absence of a specific Product Service Code (PSC) and the sole-source nature of the award. Without competitive bids, it's difficult to assess if the pricing reflects fair market value. The CPIF structure suggests an attempt to control costs, but the ultimate expenditure could exceed initial estimates if performance targets are not met efficiently. A comparison to similar subminiature flight safety systems procured competitively would be necessary for a more robust value assessment.

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. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means there was no opportunity for multiple vendors to bid, which can limit price discovery and potentially lead to higher costs for the government compared to a fully competed procurement. The rationale for this sole-source award would need further investigation to understand if it was justified by unique capabilities or urgent needs.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, the government had less leverage to negotiate the lowest possible price for these critical flight safety systems.

Public Impact

The primary beneficiaries are likely the Department of Defense and its operational units that rely on these subminiature flight safety systems for mission success and personnel safety. The services delivered are the manufacturing and provision of specialized components essential for the safe operation of guided missiles and space vehicles. The geographic impact is primarily within the defense industrial base, with potential implications for aerospace manufacturing hubs. Workforce implications include employment for skilled engineers, technicians, and manufacturing personnel at L3 Technologies, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
CPIF contract type carries inherent risk of cost overruns if performance incentives are not well-managed.
Lack of specific PSC hinders detailed benchmarking and risk assessment against similar procurements.
Contract duration of nearly five years suggests a long-term commitment, requiring ongoing scrutiny of performance and value.
Limited public information on the specific technical requirements and justification for sole-source award.

Positive Signals

Contract awarded to an established defense contractor, L3 Technologies, Inc., suggesting a degree of reliability.
CPIF contract structure aims to incentivize contractor performance and efficiency.
Subminiature flight safety systems are critical components, indicating a focus on essential defense capabilities.
The contract duration implies a stable, long-term need, potentially allowing for streamlined production and supply chain management.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and technologically advanced segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality and safety requirements. Spending in this area is driven by national security needs and technological advancements in defense systems. Comparable spending benchmarks would typically involve other contracts for missile components, guidance systems, or specialized aerospace manufacturing, often awarded through competitive or sole-source mechanisms depending on the uniqueness of the technology.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false) and there is no explicit mention of subcontracting plans for small businesses (sb: false). This suggests that the prime contractor, L3 Technologies, Inc., is likely a large business, and the specialized nature of subminiature flight safety systems may not lend itself to broad small business subcontracting opportunities. Further analysis would be needed to determine if any specific small business subcontracting goals were established outside of the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures. As a sole-source award, the justification and terms would be subject to review by contracting officers and potentially higher-level procurement authorities. The 'Cost Plus Incentive Fee' (CPIF) structure implies performance monitoring to ensure the contractor meets defined objectives and cost targets. Transparency regarding the specific justification for the sole-source award and detailed performance reports would be key to assessing accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Aerospace Defense Systems
Flight Control Systems
Defense Electronics Manufacturing

Risk Flags

Sole-source award may indicate limited market availability or justification needed.
CPIF contract type carries inherent cost escalation risk.
Missing PSC hinders comprehensive benchmarking and risk analysis.
Lack of detailed performance metrics makes value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.4 million to L3 TECHNOLOGIES, INC.. SUBMINIATURE FLIGHT SAFETY SYSTEM

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 Air Force).

What is the total obligated amount?

The obligated amount is $27.4 million.

What is the period of performance?

Start: 2010-09-23. End: 2015-10-16.

What is the specific justification for awarding this contract on a sole-source basis to L3 Technologies, Inc.?

The provided data indicates the contract was awarded as 'NOT COMPETED' (ct: NOT COMPETED) and identified as a 'SOLE SOURCE' (ca.l: sole-source). While the specific justification is not detailed in the provided snippet, sole-source awards are typically made when only one responsible source can provide the required supplies or services. This could be due to unique technical capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or if the original contract was for a follow-on effort where only the original contractor could provide the necessary integration or compatibility. A thorough review of the contract file and any associated justifications (e.g., Justification for Other Than Full and Open Competition - JOFOC) would be necessary to ascertain the precise reasons.

How does the 'Cost Plus Incentive Fee' (CPIF) structure impact the potential final cost of this contract compared to other contract types?

A Cost Plus Incentive Fee (CPIF) contract is designed to share the risks and rewards between the government and the contractor. The government agrees to pay the contractor's actual costs incurred, plus a fee that is adjusted based on the contractor's performance against pre-determined targets (e.g., cost, schedule, performance). If the contractor performs better than the target (e.g., comes in under budget), the fee increases, and if they perform worse, the fee decreases, up to a ceiling. This structure incentivizes efficiency and cost control. However, it also means the final cost is not fixed and can fluctuate based on performance, potentially leading to a higher final price than a firm-fixed-price contract if targets are missed, but offering more flexibility and incentive for performance than a simple cost-plus contract.

What are the risks associated with the lack of a specific Product Service Code (PSC) for this contract?

The absence of a specific Product Service Code (PSC) for this $27.4 million contract for subminiature flight safety systems presents several analytical risks. Firstly, it significantly hinders the ability to benchmark this contract against similar procurements within the Department of Defense or across other federal agencies. Without a PSC, it is difficult to identify comparable contracts to assess pricing reasonableness, contractor performance history in similar contexts, or the typical competitive landscape for such specialized systems. This lack of data makes it challenging to determine if the government received good value for its investment and to identify potential cost savings or efficiency improvements. It also complicates risk assessment, as historical data on issues or successes related to specific PSCs is unavailable.

What is the historical spending pattern for subminiature flight safety systems by the Department of Defense?

The provided data focuses on a single contract award and does not offer historical spending patterns for subminiature flight safety systems. To determine historical spending, one would need to query federal procurement databases (like FPDS or USASpending.gov) using relevant keywords, Product Service Codes (if identifiable), and agency identifiers over several fiscal years. This would reveal trends in contract values, award types (competitive vs. sole-source), prime contractors, and the overall investment in this technology. Without this broader dataset, it's impossible to contextualize the $27.4 million award within a larger spending trend or to identify significant shifts in procurement strategy or investment levels.

What is L3 Technologies, Inc.'s track record with similar 'Cost Plus Incentive Fee' (CPIF) contracts within the Department of Defense?

Assessing L3 Technologies, Inc.'s track record with similar CPIF contracts requires access to detailed contract performance data, which is not fully provided here. Generally, a contractor's history with CPIF contracts would be evaluated based on their ability to meet cost targets, achieve performance objectives, and manage program execution effectively. Positive indicators would include consistent achievement of incentive fees, successful delivery of complex systems on schedule and within budget projections, and a low incidence of cost overruns or performance failures. Conversely, a history of significant cost overruns, missed deadlines, or failure to meet key performance parameters would raise concerns. A comprehensive review would involve examining past contract awards to L3 Technologies, Inc. under CPIF structures, analyzing their performance metrics, and assessing any documented issues or successes.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

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

Address: 1515 GRUNDY'S LANE, BRISTOL, PA, 19007

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $27,409,675

Exercised Options: $27,409,675

Current Obligation: $27,409,675

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline