Naval Sea Systems Command awards $22.4M contract for submarine electronics, highlighting potential value concerns

Contract Overview

Contract Amount: $22,441,753 ($22.4M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2002-10-04

End Date: 2008-10-17

Contract Duration: 2,205 days

Daily Burn Rate: $10.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200304!030003!1700!BZ006 !NAVAL SEA SYSTEMS COMMAND !N0002403C6200 !A!N! !N! !20021004!20041130!041491895!041491895!024744476!N!KOLLMORGEN CORPORATION !347 KING ST !NORTHAMPTON !MA!01060!46330!015!25!NORTHAMPTON !HAMPSHIRE !MASS !+000009650756!N!N!000009650756!2090!MISCELLANEOUS SHIP AND MARINE EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !2SDN!SUBMARINE NUCLEAR-SSN !332510!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1A!A!Y!F!B !IT!N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: NORTHAMPTON, HAMPSHIRE County, MASSACHUSETTS, 01060

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $22.4 million to L3 TECHNOLOGIES, INC. for work described as: 200304!030003!1700!BZ006 !NAVAL SEA SYSTEMS COMMAND !N0002403C6200 !A!N! !N! !20021004!20041130!041491895!041491895!024744476!N!KOLLMORGEN CORPORATION !347 KING ST !NORTHAMPTON !MA!01060!46330!015!25!NORTHAMPTON !HAMPS… Key points: 1. Contract awarded for submarine electronics, a critical component for naval operations. 2. The contract was not competed, raising questions about price discovery and potential value. 3. The duration of the contract (over 6 years) suggests a long-term need for these specialized electronics. 4. The awarded amount of $22.4 million warrants further scrutiny for cost-effectiveness. 5. The contractor, Kollsman Inc., has a history with defense contracts, but specific performance on this deal needs review. 6. The use of a Firm Fixed Price contract type indicates a defined scope and cost, but doesn't guarantee optimal value.

Value Assessment

Rating: questionable

The contract value of $22.4 million for miscellaneous ship and marine equipment, specifically electronics and communication for submarines, appears substantial. Without direct comparable contracts for identical systems, it is difficult to benchmark the pricing definitively. However, the lack of competition suggests that the government may not have achieved the most favorable pricing. Further analysis would be needed to compare the per-unit cost or total value against similar procurements or industry standards for submarine electronics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' method, indicating a sole-source or limited competition scenario. The specific justification for this approach is not detailed in the provided data. Sole-source awards can lead to higher prices and reduced innovation as there is no competitive pressure to drive down costs or improve offerings. The absence of multiple bidders means the government did not benefit from a range of proposals and price points.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without competing the requirement, there is a risk that the selected contractor's price was not the lowest achievable, potentially leading to inefficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Navy's submarine fleet, ensuring operational readiness and technological capability. The contract delivers essential electronics and communication equipment vital for submarine operations. The geographic impact is primarily within the defense sector, supporting naval infrastructure and readiness. Workforce implications may include specialized manufacturing and technical support roles within the contractor's organization and potentially at naval facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in inflated costs for taxpayers.
The long contract duration could expose the government to risks if technology evolves rapidly or if contractor performance falters.
Limited transparency into the sole-source justification raises concerns about the procurement process.
Potential for cost overruns if the firm fixed price was not adequately negotiated based on market realities.

Positive Signals

The contract addresses a critical need for submarine modernization and operational capability.
The firm fixed price contract type provides cost certainty, assuming the initial price was fair.
The contractor, Kollsman Inc., is an established entity within the defense industry.
The contract supports the U.S. Navy's strategic defense objectives.

Sector Analysis

This contract falls within the Defense sector, specifically related to naval hardware manufacturing and electronics. The market for specialized submarine electronics is highly concentrated, often involving a limited number of contractors with the necessary security clearances and technical expertise. Spending in this niche can be significant, driven by the high cost of advanced military technology and the long lifecycle of naval assets. Comparable spending benchmarks would typically be found within other major defense procurements for similar complex systems.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The prime contractor, Kollsman Inc., is likely a large business, and any subcontracting opportunities would be at their discretion, not mandated by a set-aside program.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would include contract performance reviews, milestone tracking, and financial audits. Transparency is often limited in sole-source procurements, but contract awards are generally reported in federal databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Submarine Procurement Programs
Defense Electronics Manufacturing
Ship and Marine Equipment Procurement
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Long contract duration
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.4 million to L3 TECHNOLOGIES, INC.. 200304!030003!1700!BZ006 !NAVAL SEA SYSTEMS COMMAND !N0002403C6200 !A!N! !N! !20021004!20041130!041491895!041491895!024744476!N!KOLLMORGEN CORPORATION !347 KING ST !NORTHAMPTON !MA!01060!46330!015!25!NORTHAMPTON !HAMPSHIRE !MASS !+000009650756!N!N!000009650756!2090!MISCELLANEOUS SHIP AND MARINE EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !2SDN!SUBMARINE NUCLEAR-SSN !332510!E! !3! ! ! ! ! !99990909!B

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 $22.4 million.

What is the period of performance?

Start: 2002-10-04. End: 2008-10-17.

What is the track record of Kollsman Inc. with similar defense contracts, particularly those involving submarine electronics?

Kollsman Inc., now part of Elbit Systems of America, has a history of providing avionics and defense electronics. While specific details on their performance for submarine electronics under this particular NAVSEA contract (N0002403C6200) are not fully elaborated in the summary data, their broader experience in defense suggests a capability to meet technical requirements. However, a deeper dive into past performance reviews, contract modifications, and any disputes or terminations related to their government contracts would be necessary for a comprehensive assessment. The provided data indicates they were the awardee for this specific contract, suggesting they met the criteria at the time of award, but it doesn't detail the quality or efficiency of their execution over the contract's lifespan.

How does the $22.4 million contract value compare to industry benchmarks for similar submarine electronic systems?

Benchmarking the $22.4 million contract value for miscellaneous ship and marine equipment, specifically electronics and communication for submarines, is challenging without more granular data on the system's specifications and capabilities. The market for submarine-specific electronics is niche, with few comparable systems or publicly available pricing. Given the sole-source nature of the award, direct price comparisons are difficult. However, the significant investment suggests a complex and highly specialized system. Industry benchmarks for large-scale defense electronics often run into the tens or hundreds of millions, but the value-for-money assessment hinges on the specific technological advancements, performance requirements, and the lack of competitive pressure during procurement.

What are the primary risks associated with a sole-source award for critical submarine components?

The primary risks associated with a sole-source award for critical submarine components include inflated pricing due to the absence of competition, potentially leading to inefficient use of taxpayer funds. There's also a risk of reduced innovation, as the contractor may have less incentive to develop more cost-effective or technologically superior solutions. Furthermore, the government may have less leverage in negotiating terms and conditions. Dependence on a single supplier can create supply chain vulnerabilities and make it difficult to switch providers if performance issues arise or if the technology becomes obsolete. Ensuring robust oversight and negotiation is crucial to mitigate these risks.

What does the contract duration of over 6 years imply about the program's effectiveness and the technology involved?

The contract duration of approximately 6 years (from initial award date 2002-10-04 to final delivery 2004-11-30, with a potential period of performance extending beyond) suggests that the submarine electronics system is intended for long-term use and integration into naval operations. This extended timeline implies a significant investment in a technology deemed critical and likely complex, requiring substantial development, testing, and integration phases. It also indicates that the technology is not expected to become obsolete rapidly, or that the program anticipates ongoing support and potential upgrades over its lifecycle. Such long durations can also present risks related to technological obsolescence and contractor performance over time.

How does this contract fit into the broader spending patterns for naval electronics and submarine modernization?

This $22.4 million contract represents a specific procurement within the larger context of naval electronics and submarine modernization spending. The U.S. Navy consistently invests billions annually in maintaining and upgrading its submarine fleet, which includes significant expenditures on advanced electronics, communication systems, sonar, and combat systems. Contracts like this, even if sole-source, are essential for equipping submarines with the necessary technology for intelligence, surveillance, reconnaissance, and strategic deterrence missions. Analyzing this contract in isolation provides limited insight; it should be viewed alongside other NAVSEA procurements and the overall defense budget allocated to naval programs to understand its relative scale and strategic importance.

Industry Classification

NAICS: Manufacturing › Hardware Manufacturing › Hardware Manufacturing

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: L3harris Technologies, Inc (UEI: 004203337)

Address: 50 PRINCE ST, NORTHAMPTON, MA, 01060

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline