DoD's $16.18M Photonics Depot Services contract awarded to L3 Technologies, Inc. with no competition

Contract Overview

Contract Amount: $16,175,915 ($16.2M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-09-20

End Date: 2029-09-16

Contract Duration: 1,822 days

Daily Burn Rate: $8.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PHOTONICS DEPOT SERVICES

Place of Performance

Location: NORTHAMPTON, HAMPSHIRE County, MASSACHUSETTS, 01060

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $16.2 million to L3 TECHNOLOGIES, INC. for work described as: PHOTONICS DEPOT SERVICES Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract type is Cost Plus Fixed Fee, which can incentivize cost overruns. 3. Performance period spans over 4 years, indicating a long-term need for these services. 4. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector. 5. The contract value is significant, suggesting a critical role in the Department of Defense's operations. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: questionable

Benchmarking the value of this Cost Plus Fixed Fee contract is challenging without detailed cost breakdowns and comparison to similar sole-source awards. The lack of competition suggests that taxpayers may not be receiving the best possible price. The fixed fee component provides some cost control, but the overall cost-plus nature warrants scrutiny to ensure efficiency and prevent unnecessary expenditures.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one vendor can provide the required goods or services. The absence of multiple bidders means that the government did not benefit from competitive pricing, potentially leading to a higher cost than if the contract had been competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure to drive down costs. Without a competitive bidding process, there is a reduced incentive for the contractor to offer the most cost-effective solution.

Public Impact

The Department of Defense benefits from specialized photonics depot services, crucial for maintaining and supporting advanced systems. These services likely support the operational readiness of military assets, particularly in navigation, guidance, and detection systems. The contract's impact is primarily within the defense sector, ensuring the functionality of critical military equipment. Workforce implications may include specialized technical roles within L3 Technologies, Inc. for the duration of the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not closely monitored.
Lack of small business participation may limit opportunities for smaller, innovative firms in this specialized sector.

Positive Signals

Award to an established contractor (L3 Technologies, Inc.) suggests a known capability and potential for reliable service delivery.
The contract duration indicates a sustained need and commitment to supporting critical defense systems.
The specific NAICS code suggests a focus on high-technology manufacturing, aligning with advanced defense needs.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a niche within the broader aerospace and defense industry. This sector is characterized by high R&D investment, specialized manufacturing capabilities, and significant government procurement. Comparable spending in this area is often project-specific and tied to defense modernization efforts. The market is typically dominated by a few large, specialized contractors.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The sole-source nature further limits the direct involvement of small businesses in this specific award. This could mean missed opportunities for small businesses to contribute to specialized defense manufacturing and services, potentially concentrating this work among larger prime contractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to ensure that costs are reasonable and the fixed fee is justified. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Department of Defense Procurement
Naval Systems Support Contracts
Aerospace and Defense Manufacturing
Photonics Technology Procurement
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.2 million to L3 TECHNOLOGIES, INC.. PHOTONICS DEPOT SERVICES

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 Navy).

What is the total obligated amount?

The obligated amount is $16.2 million.

What is the period of performance?

Start: 2024-09-20. End: 2029-09-16.

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

L3 Technologies, Inc. (now part of L3Harris Technologies) has a significant history of performing complex defense contracts, including those awarded on a sole-source basis. Their experience often spans advanced electronics, communication systems, and sensor technologies, which align with the photonics domain. While specific details on past sole-source performance require deeper analysis of contract databases, their established presence suggests a capacity to handle such requirements. However, the lack of competition in sole-source awards necessitates careful monitoring of performance metrics and cost controls to ensure value for money, regardless of the contractor's general reputation.

How does the $16.18 million contract value compare to similar photonics depot services contracts awarded by the DoD?

Direct comparison of this $16.18 million contract value to similar photonics depot services contracts is difficult without access to a comprehensive database of comparable sole-source awards and detailed service scopes. Photonics depot services can encompass a wide range of activities, from maintenance and repair to specialized manufacturing and testing. Given the sole-source nature and the Cost Plus Fixed Fee structure, the price is less indicative of market rates and more a reflection of negotiated terms. To assess value, one would need to benchmark against contracts with similar service definitions, contractor capabilities, and contract types, ideally those that have undergone competitive bidding to establish a clearer market price.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for specialized manufacturing services?

The primary risks associated with a sole-source, Cost Plus Fixed Fee contract for specialized manufacturing services are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs as the contractor faces no direct market alternatives. Taxpayers may not receive the best possible price. Secondly, the Cost Plus Fixed Fee structure, while providing a defined profit margin (the fixed fee), can incentivize the contractor to incur higher costs to achieve that fee, especially if cost controls are not robust. This can lead to cost overruns beyond initial estimates if the 'cost' portion escalates significantly. Effective oversight, detailed cost auditing, and clear performance metrics are critical to mitigate these risks.

What is the strategic importance of photonics depot services to the Department of the Navy's operational readiness?

Photonics depot services are strategically vital to the Department of the Navy's operational readiness as they directly support the maintenance, repair, and sustainment of advanced systems that rely on optical technologies. These systems are critical for navigation, detection, guidance, and communication across various naval platforms, including ships, submarines, and aircraft. Ensuring these complex photonic components and systems are functional and up-to-date through specialized depot services directly impacts the Navy's ability to execute its missions effectively and maintain a technological advantage. Disruptions or degradation in these services could compromise the performance of key military assets.

What historical spending patterns exist for photonics-related services within the Department of Defense, and how does this contract fit?

Historical spending patterns for photonics-related services within the Department of Defense are often fragmented across various program offices and agencies, reflecting the technology's application in diverse areas like intelligence, surveillance, reconnaissance (ISR), missile defense, and communications. While a consolidated 'photonics services' spending category might not be readily apparent, significant investments are made in systems incorporating photonic components. This $16.18 million contract for 'Photonics Depot Services' appears to represent a specific, consolidated effort to ensure the sustainment and operational capability of such systems, likely within the Navy's purview. Its value suggests a substantial, ongoing requirement rather than a one-off procurement, fitting into the broader DoD strategy of maintaining technological superiority through robust lifecycle support.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6660423R0385

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 50 PRINCE ST, NORTHAMPTON, MA, 01060

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: $95,131,027

Exercised Options: $40,766,894

Current Obligation: $16,175,915

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N6660424DR400

IDV Type: IDC

Timeline