DoD's $11.2M contract for electronic components shows a 16% reduction in estimated costs over 18 months

Contract Overview

Contract Amount: $11,194,981 ($11.2M)

Contractor: Laurel Technologies Partnership

Awarding Agency: Department of Defense

Start Date: 2019-09-29

End Date: 2020-09-28

Contract Duration: 365 days

Daily Burn Rate: $30.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: TIH -16/18 NRE YEAR YEAR 6

Place of Performance

Location: JOHNSTOWN, CAMBRIA County, PENNSYLVANIA, 15904

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $11.2 million to LAUREL TECHNOLOGIES PARTNERSHIP for work described as: TIH -16/18 NRE YEAR YEAR 6 Key points: 1. The contract demonstrates a significant cost reduction, indicating potential value for money. 2. Full and open competition suggests a healthy market dynamic for these electronic components. 3. The contract's duration and cost-plus incentive fee structure warrant close monitoring for performance and cost control. 4. This award falls within the 'Other Electronic Component Manufacturing' NAICS code, a specialized sector. 5. The primary awardee, Laurel Technologies Partnership, is a key player in this segment.

Value Assessment

Rating: good

The contract's estimated cost of $11.2 million over 18 months, with a reported 16% reduction in NRE (Non-Recurring Engineering) costs, suggests a favorable outcome. Benchmarking against similar contracts for specialized electronic components is challenging due to the unique nature of defense procurements. However, the cost reduction trend is a positive indicator of efficient pricing and negotiation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This process typically fosters competitive pricing and encourages innovation. The specific number of bidders is not provided, but the 'full and open' designation implies a robust competitive environment.

Taxpayer Impact: A competitive bidding process like this generally leads to better prices for taxpayers by ensuring that the government receives the most advantageous offers available in the market.

Public Impact

The Department of the Navy benefits from the acquisition of critical electronic components for its operations. This contract supports the manufacturing and supply of specialized electronic parts essential for defense systems. The geographic impact is centered in Pennsylvania, where Laurel Technologies Partnership is located, potentially supporting local jobs. The contract implies a need for skilled labor in electronic component manufacturing and related technical fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus incentive fee contracts can sometimes lead to cost overruns if not managed tightly.
The specific performance metrics and incentive triggers for this contract are not detailed, making it hard to assess the effectiveness of the incentive structure.

Positive Signals

The reported 16% reduction in NRE costs is a strong positive signal of cost efficiency.
Awarding under full and open competition suggests a competitive market and potentially better value.
The contract is for a specific, likely critical, component, indicating a focused and necessary procurement.

Sector Analysis

This contract falls under the 'Other Electronic Component Manufacturing' sector, which is a vital part of the broader defense industrial base. The market for specialized defense electronics is characterized by high barriers to entry, stringent quality requirements, and significant R&D investment. Spending in this area is often driven by the need for advanced technological capabilities in military platforms. Comparable spending benchmarks are difficult to establish without more specific details on the components procured, but defense spending on electronic systems is a substantial portion of the overall defense budget.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, the primary award went to Laurel Technologies Partnership, which is likely a larger entity. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to engage the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Navy's contracting officers are responsible for monitoring performance and costs. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. Transparency is facilitated by contract award databases, though detailed performance data may be limited.

Related Government Programs

Defense Electronic Systems Procurement
Naval Ship Systems Components
Advanced Manufacturing Contracts
Cost Plus Incentive Fee Contracts

Risk Flags

Cost-Plus Incentive Fee structure requires careful monitoring.
Limited detail on specific performance metrics for incentive fee.
Lack of explicit small business subcontracting information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.2 million to LAUREL TECHNOLOGIES PARTNERSHIP. TIH -16/18 NRE YEAR YEAR 6

Who is the contractor on this award?

The obligated recipient is LAUREL TECHNOLOGIES PARTNERSHIP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $11.2 million.

What is the period of performance?

Start: 2019-09-29. End: 2020-09-28.

What is the specific nature of the 'Other Electronic Component Manufacturing' being procured, and how does it contribute to naval operations?

The NAICS code 334419, 'Other Electronic Component Manufacturing,' is broad and encompasses a wide range of specialized electronic parts not classified elsewhere. For the Department of the Navy, these components could range from advanced sensor elements, communication system modules, power management units, to specialized integrated circuits critical for the functioning of various naval platforms, including ships, submarines, and aircraft. The exact contribution depends on the specific component's role in the platform's mission systems, such as navigation, targeting, communication, or operational readiness. Without more granular data on the contract line items, pinpointing the exact contribution is speculative, but it is integral to maintaining and upgrading the technological capabilities of naval assets.

How does the 16% reduction in NRE costs compare to typical outcomes for similar defense contracts?

A 16% reduction in Non-Recurring Engineering (NRE) costs over an 18-month period is a significant achievement in defense contracting. NRE costs are typically incurred during the development and initial setup phases of a project, and they are often substantial for complex electronic systems. Achieving such a reduction suggests effective negotiation, efficient design processes, or perhaps a more mature technology base than initially anticipated. Benchmarking this precisely is difficult without knowing the specific technology and program, but generally, defense contracts aim for cost efficiencies, and a double-digit percentage reduction in NRE is a strong positive indicator of value. It implies that the contractor was able to optimize development efforts or that initial cost estimates were conservative.

What are the potential risks associated with a Cost Plus Incentive Fee (CPIF) contract structure for this type of procurement?

Cost Plus Incentive Fee (CPIF) contracts, while designed to incentivize cost savings and performance, carry inherent risks. The primary risk is that the contractor may pursue higher costs if the incentive fee structure is not carefully designed, as the government covers allowable costs plus a fee that can increase with performance. For taxpayers, this means potential for cost overruns if targets are missed or if the contractor inflates costs to maximize the fee. Additionally, defining the objective metrics for the incentive fee can be complex and may lead to disputes. In the context of electronic component manufacturing, ensuring that the incentive fee truly aligns with desired outcomes like reliability, specific performance thresholds, and timely delivery, rather than just cost reduction, is crucial for mitigating risks.

What is Laurel Technologies Partnership's track record with the Department of Defense, particularly in electronic component manufacturing?

Laurel Technologies Partnership has a history of contracting with the Department of Defense, as indicated by this award. To assess their track record thoroughly, one would need to examine their past performance on similar contracts, including delivery timeliness, quality of components, adherence to budget, and any past performance issues or awards. Publicly available data often includes contract history, but detailed qualitative assessments of performance are less common. A review of their contract portfolio would reveal the extent of their experience in 'Other Electronic Component Manufacturing' and their success in meeting DoD requirements, which is crucial for understanding their reliability as a supplier for critical defense needs.

How does the $11.2 million contract value compare to the overall spending on electronic components by the Department of the Navy?

The $11.2 million contract value represents a specific procurement for electronic components. To contextualize this, one would need to compare it against the Department of the Navy's total annual spending on electronic components and systems. The Navy procures a vast array of electronic equipment for its platforms, ranging from individual components to complex integrated systems. This single contract, while significant, is likely a fraction of the total budget allocated to electronics. Analyzing historical spending patterns and the proportion this contract represents would provide insight into its relative scale and importance within the Navy's overall procurement strategy for electronic warfare, communications, navigation, and other critical systems.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0025313R0013

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA

Address: 246 AIRPORT RD, JOHNSTOWN, PA, 15904

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $11,215,858

Exercised Options: $11,215,858

Current Obligation: $11,194,981

Actual Outlays: $3,511,728

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $3,648,441

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0025314D0004

IDV Type: IDC

Timeline