Naval Sea Systems Command awards $187.8M contract for electrical equipment, with L3 Technologies as prime

Contract Overview

Contract Amount: $18,776,941 ($18.8M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-01-25

End Date: 2011-08-16

Contract Duration: 2,029 days

Daily Burn Rate: $9.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200604!309071!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C4200 !A!N! !N! ! !20060125!20110125!606237220!606237220!008898843!N!HENSCHEL INC !9 MALCOLM HOYT DR !NEWBURYPORT !MA!01950!45245!009!25!NEWBURYPORT !ESSEX !MASS !+000007648000!N!N!000039314356!5998!ELECTRICAL & ELCT BOARDS, CARDS & ASSCTED HRDWRE !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !334290!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!J!2!001!B! !A!N!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y!1700!N00024!0001! !

Place of Performance

Location: AYER, MIDDLESEX County, MASSACHUSETTS, 01432

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $18.8 million to L3 TECHNOLOGIES, INC. for work described as: 200604!309071!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C4200 !A!N! !N! ! !20060125!20110125!606237220!606237220!008898843!N!HENSCHEL INC !9 MALCOLM HOYT DR !NEWBURYPORT !MA!01950!45245!009!25!NEWBURYPORT !ESSE… Key points: 1. Contract awarded for electrical and electronic boards, cards, and associated hardware. 2. Significant value suggests a critical need for naval systems. 3. Prime contractor L3 Technologies has a substantial presence in defense contracting. 4. Contract duration of over 5 years indicates a long-term requirement. 5. Geographic concentration in Massachusetts for the contractor. 6. The award falls under the 'Other Communications Equipment Manufacturing' NAICS code.

Value Assessment

Rating: good

The contract value of $187.8 million over approximately 5 years represents a significant investment in naval electronic hardware. Benchmarking against similar contracts for specialized electronic components is challenging without more specific technical details. However, the firm fixed-price nature of the contract suggests that the government sought to control costs upfront, with the contractor bearing the risk of cost overruns. The award to a large, established defense contractor like L3 Technologies implies a level of confidence in their capability and pricing structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but full and open competition generally fosters a competitive environment, which can lead to better pricing and innovation. The government's decision to use this procurement method suggests a belief that sufficient market capacity existed to meet the requirement.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it maximizes the potential for cost savings through a robust bidding process.

Public Impact

Naval operations and readiness are directly supported by the provision of critical electrical and electronic hardware. The U.S. Navy benefits from the availability of specialized components for its vessels. The contract supports the defense industrial base, particularly in the electronics manufacturing sector. Workforce in Massachusetts, specifically in Essex County, may be impacted by this contract through employment at HENSCHEL INC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for sole-source subcontracting if HENSCHEL INC. is the primary manufacturer and not a distributor.
Dependence on a single contractor for critical naval electronic components could pose a supply chain risk.
The long contract duration might lead to complacency or reduced innovation if not actively managed.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
Firm Fixed Price contract structure shifts cost risk to the contractor.
Prime contractor L3 Technologies is a well-established entity with significant defense experience.
Contract supports a critical national defense requirement for the U.S. Navy.

Sector Analysis

This contract falls within the broader electronics and communication equipment manufacturing sector. The market for specialized naval electronic components is often characterized by high barriers to entry due to stringent performance requirements, security clearances, and long qualification processes. Spending in this area is driven by defense modernization efforts and the need to maintain and upgrade existing naval fleets. Comparable spending benchmarks would typically be found within other Department of Defense contracts for similar electronic systems and hardware.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses. The prime contractor, L3 Technologies, is a large corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in this data.

Oversight & Accountability

The contract is managed by the Naval Sea Systems Command (NAVSEA), a major component of the Department of the Navy responsible for acquiring and maintaining naval ships and systems. Oversight would typically involve contract administration by the Defense Contract Management Agency (DCMA). Transparency is generally facilitated through contract award databases like FPDS. Inspector General oversight would apply to ensure compliance and prevent fraud, waste, and abuse.

Related Government Programs

Naval Ship Systems
Defense Electronics Manufacturing
Electronic Warfare Systems
Naval Communications Equipment
Shipboard Combat Systems

Risk Flags

Potential for technological obsolescence over the contract duration.
Supply chain risks for specialized electronic components.
Contractor performance and quality control over a long period.
Dependence on a single prime contractor for critical naval systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.8 million to L3 TECHNOLOGIES, INC.. 200604!309071!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C4200 !A!N! !N! ! !20060125!20110125!606237220!606237220!008898843!N!HENSCHEL INC !9 MALCOLM HOYT DR !NEWBURYPORT !MA!01950!45245!009!25!NEWBURYPORT !ESSEX !MASS !+000007648000!N!N!000039314356!5998!ELECTRICAL & ELCT BOARDS, CARDS & ASSCTED HRDWRE !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !334290!E! !3! ! ! ! ! !999

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 $18.8 million.

What is the period of performance?

Start: 2006-01-25. End: 2011-08-16.

What is the specific nature of the 'ELECTRICAL & ELCT BOARDS, CARDS & ASSCTED HRDWRE' being procured, and how does it relate to naval operations?

The Product Service Code (PSC) '5998' and the NAICS code '334290' (Other Communications Equipment Manufacturing) suggest the procurement is for specialized electronic components, likely including printed circuit boards, integrated assemblies, and related hardware. For naval operations, these components are critical for a wide array of systems, including navigation, communication, radar, sonar, fire control, and other shipboard electronics. The specific nature of these boards and cards would determine their application, but they are fundamental building blocks for the complex electronic infrastructure of modern naval vessels. The contract's value and duration imply these are not commodity items but rather highly specialized, potentially custom-designed or rigorously tested components essential for the reliable functioning of naval platforms.

How does the $187.8 million contract value compare to historical spending on similar naval electronic hardware?

Comparing the $187.8 million contract value requires context regarding the specific type of electrical and electronic hardware procured. If these are highly specialized, mission-critical components for major naval platforms (e.g., aircraft carriers, submarines, destroyers), this value might be considered moderate to significant over a five-year period. Historical spending on similar items can vary widely based on technological advancements, platform upgrades, and the number of vessels being equipped or modernized. Without knowing the exact specifications and quantity, it's difficult to provide a precise benchmark. However, given the prime contractor's profile and the duration, it suggests a substantial and ongoing requirement within the Navy's procurement strategy for electronic systems.

What are the potential risks associated with a five-year contract for specialized electronic components?

Several risks are associated with a long-term contract for specialized electronic components. Technological obsolescence is a primary concern; the technology procured at the start of the contract might be outdated by its end, potentially impacting future naval capabilities. Supply chain disruptions, especially if HENSCHEL INC. (the listed contractor, though L3 Technologies is the prime) relies on specific suppliers or faces manufacturing challenges, could delay critical deliveries. Contractor performance risk also exists; while L3 Technologies is experienced, unforeseen issues in production, quality control, or delivery schedules could arise. Furthermore, a fixed-price contract, while good for cost control, places the burden of cost increases on the contractor, which could lead to pressure to cut corners on quality if not managed carefully. Finally, the long duration might reduce the incentive for continuous innovation unless explicitly built into the contract.

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

L3 Technologies, Inc. (now part of L3Harris Technologies) has a long and extensive track record of fulfilling complex defense contracts for the U.S. military and allied nations. They are a major defense contractor known for providing a wide range of products and services, including electronic systems, sensors, communication systems, and avionics. Their experience spans numerous platforms, including naval vessels, aircraft, and ground systems. Given their size and scope, they have demonstrated capabilities in managing large, multi-year programs, adhering to stringent quality and performance standards, and navigating complex regulatory environments. Their history suggests a strong capacity to handle contracts of this magnitude and technical complexity, although specific performance on any single contract would require detailed review.

How does the competition level ('full-and-open') typically influence the final price paid by the government for such hardware?

A 'full-and-open' competition generally leads to a more competitive pricing environment, which is typically beneficial for the government and taxpayers. When multiple qualified bidders are allowed to compete, they are incentivized to offer their best pricing and most innovative solutions to win the contract. This process allows the government to solicit proposals, evaluate them based on defined criteria (which usually include price, technical merit, and past performance), and select the offer that provides the best overall value. In theory, this process should drive down prices compared to sole-source or limited competition scenarios where the government has fewer options and less leverage. The effectiveness of this price reduction depends on the number of capable bidders and the specific evaluation criteria used.

What are the implications of the contract being a 'DEFINITIVE CONTRACT' with a 'FIRM FIXED PRICE' type?

A 'Definitive Contract' is a standard contract type used for significant procurements, establishing the rights and obligations of both parties. The 'Firm Fixed Price' (FFP) pricing arrangement is significant because it places the primary responsibility for cost control and management on the contractor (HENSCHEL INC. / L3 Technologies). Under an FFP contract, the agreed-upon price is not subject to adjustment based on the contractor's cost experience. This provides the government with maximum certainty regarding the total cost of the acquisition. However, it also means the contractor assumes the risk of any cost overruns. Conversely, if the contractor can perform the work for less than the fixed price, they realize a higher profit margin. This structure is often preferred by the government for procurements where the scope of work is well-defined and risks can be reasonably assessed.

Industry Classification

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

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 9 MALCOLM HOYT DR, NEWBURYPORT, MA, 01950

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline