DoD's $38M contract for optical instruments shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $38,182,114 ($38.2M)

Contractor: Teledyne Scientific & Imaging, LLC

Awarding Agency: Department of Defense

Start Date: 2006-05-26

End Date: 2008-06-30

Contract Duration: 766 days

Daily Burn Rate: $49.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: THOUSAND OAKS, VENTURA County, CALIFORNIA, 91360

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $38.2 million to TELEDYNE SCIENTIFIC & IMAGING, LLC for work described as: Key points: 1. Contract awarded to a single, established provider suggests potential for price efficiencies through long-term partnership. 2. The definitive contract structure with cost-plus-fixed-fee terms indicates a focus on managing project scope and contractor incentives. 3. A single award under full and open competition may point to specialized capabilities required, limiting broader market participation. 4. The contract duration of over two years provides stability for the contractor and ensures continuity of essential services. 5. While the contractor has a track record, the lack of multiple bids warrants scrutiny of the pricing and overall value. 6. The absence of small business set-asides suggests the nature of the requirement may not lend itself to smaller enterprise involvement.

Value Assessment

Rating: fair

The contract's total value of approximately $38.2 million over a 766-day period averages to roughly $50,000 per day. Benchmarking this against similar contracts for optical instruments is challenging without more specific service details. However, the cost-plus-fixed-fee structure implies that the government is paying for the contractor's costs plus a predetermined profit. This can be efficient if costs are well-managed, but it also carries risk if costs escalate. The single award nature, even under full and open competition, means there was no direct price comparison from multiple bidders at the time of award, making a definitive value assessment difficult.

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 broadly advertised and all responsible sources were permitted to submit offers. However, only one bid was received. This could suggest that the technical requirements were highly specialized, or that the market for such specific optical instruments is limited. While competition was technically open, the lack of multiple responsive bids reduces the opportunity for price discovery and potentially limits the government's leverage in negotiations.

Taxpayer Impact: A single bid, even from an open competition, means taxpayers did not benefit from the downward price pressure that typically arises from multiple competing offers. This could result in a higher price than if several companies had vied for the contract.

Public Impact

The Department of the Air Force benefits from the acquisition of specialized optical instruments, crucial for its operational capabilities. This contract supports the development and delivery of advanced optical systems, potentially impacting surveillance, targeting, or research functions. The geographic impact is primarily within California, where Teledyne Scientific & Imaging, LLC is located, suggesting a concentration of related economic activity. The contract likely supports a specialized workforce within the contractor's organization, including engineers, technicians, and manufacturing personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition resulting in a single bid could indicate potential market concentration or barriers to entry for other firms.
The cost-plus-fixed-fee contract type requires diligent oversight to ensure costs remain reasonable and the fixed fee is justified.
Lack of specific details on the optical instruments procured makes it difficult to assess if the technology is cutting-edge or potentially outdated.

Positive Signals

Awarded under full and open competition, ensuring a fair process for all eligible contractors.
The contractor, Teledyne Scientific & Imaging, LLC, is an established entity, suggesting a degree of reliability and expertise.
The contract duration provides program stability and allows for focused development or production of critical optical systems.

Sector Analysis

The contract falls within the Optical Instrument and Lens Manufacturing sector, a niche within the broader manufacturing industry. This sector is characterized by high technological requirements, significant R&D investment, and often serves specialized markets, including defense, scientific research, and medical devices. Spending in this area is driven by the need for advanced imaging and sensing capabilities. Comparable spending benchmarks would depend heavily on the specific type and complexity of the optical instruments required, but contracts in this domain can range from moderate to very high value depending on technological sophistication and production volume.

Small Business Impact

This contract did not include a small business set-aside, and the data indicates the prime contractor is not a small business. There is no explicit information on subcontracting plans for small businesses. The nature of specialized optical instrument manufacturing often requires significant infrastructure and expertise, which may naturally favor larger, established firms. Without specific subcontracting goals, the direct impact on the small business ecosystem is likely minimal, though opportunities might exist indirectly if the prime contractor sources components or services from smaller suppliers.

Oversight & Accountability

Oversight for this definitive contract would typically be managed by the contracting officer and their representatives within the Department of the Air Force. The cost-plus-fixed-fee structure necessitates close monitoring of incurred costs and the justification of the fixed fee. Transparency is generally provided through contract award databases, but detailed performance reports or audits are often not publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) research programs
Night Vision and Electronic Sensors Directorate (NVESD) procurements
National Reconnaissance Office (NRO) satellite optics
Air Force Research Laboratory (AFRL) sensor development

Risk Flags

Single bid received under full and open competition
Cost-plus-fixed-fee structure requires diligent cost oversight
Lack of small business subcontracting details

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.2 million to TELEDYNE SCIENTIFIC & IMAGING, LLC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is TELEDYNE SCIENTIFIC & IMAGING, LLC.

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 $38.2 million.

What is the period of performance?

Start: 2006-05-26. End: 2008-06-30.

What is the specific type and intended use of the optical instruments procured under this contract?

The provided data indicates the contract is for 'Optical Instrument and Lens Manufacturing' (NAICS code 333314) awarded to Teledyne Scientific & Imaging, LLC by the Department of the Air Force. However, the specific type and intended use of these optical instruments are not detailed in the summary data. Given the contractor's specialization and the defense agency's involvement, these instruments could range from components for surveillance systems, targeting pods, scientific research equipment for aerospace applications, or specialized imaging devices. Further analysis would require accessing the contract's statement of work or technical specifications to understand the precise nature of the optical hardware and its operational role within the Air Force.

How does the average daily cost of this contract compare to similar procurements for optical instruments?

The contract's total value is approximately $38.2 million over 766 days, equating to an average daily cost of roughly $49,869. Direct comparison to similar contracts is difficult without knowing the exact specifications and complexity of the optical instruments. However, this figure represents a significant investment. If these instruments are highly specialized, custom-built, or involve advanced technologies (e.g., high-resolution imaging, specific spectral ranges, extreme environmental resilience), the daily cost might be within a reasonable range for such niche procurements. Conversely, if the instruments are more standardized, this daily rate could indicate a premium price, potentially influenced by the limited competition.

What are the potential risks associated with a single bid received under full and open competition?

Receiving only one bid under a full and open competition, as seen in this $38.2 million contract, presents several risks. Primarily, it suggests a lack of robust market interest or capability among potential bidders, which could stem from overly restrictive requirements, insufficient notice, or a highly concentrated market. This situation significantly reduces the government's negotiating leverage, potentially leading to a higher price than if multiple bids were received. It also raises questions about whether the competition truly tested the market's full potential or if barriers prevented other qualified firms from participating. Furthermore, reliance on a single source, even if initially chosen through a competitive process, can create long-term dependency and limit future options.

What is Teledyne Scientific & Imaging, LLC's track record with government contracts, particularly with the Department of Defense?

Teledyne Scientific & Imaging, LLC, is a known entity within the defense contracting landscape. While specific details of their entire contract history are not provided here, companies within the Teledyne umbrella often hold numerous contracts with various government agencies, including the Department of Defense, for advanced technologies, sensors, and imaging systems. Their established presence suggests a level of experience and capability in delivering complex technological solutions. However, a thorough assessment would require examining their past performance ratings, any past performance issues or disputes, and the types and values of previous contracts awarded to them to fully gauge their reliability and expertise in fulfilling defense requirements.

How does the cost-plus-fixed-fee (CPFF) contract type influence the value and risk for this procurement?

The Cost-Plus-Fixed-Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. For this $38.2 million contract, the CPFF structure is often used when the scope of work cannot be precisely defined at the outset or involves significant research and development. The value proposition here is that it allows flexibility to adapt to evolving requirements. However, it shifts much of the financial risk to the government, as the contractor has less incentive to control costs beyond what is necessary to achieve the fixed fee. Effective oversight is crucial to scrutinize costs and ensure the fixed fee remains appropriate for the work performed. The value is realized if the required specialized instruments are successfully developed and delivered, despite the inherent cost uncertainty.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Teledyne Technologies Incorporated (UEI: 112358432)

Address: 1049 CAMINO DOS RIOS, THOUSAND OAKS, CA, 91360

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $30,894,911

Exercised Options: $38,182,114

Current Obligation: $38,182,114

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline