DoD awards $43.3M for spare parts, with no competition, raising value-for-money concerns

Contract Overview

Contract Amount: $43,302,652 ($43.3M)

Contractor: DRS Network & Imaging Systems LLC

Awarding Agency: Department of Defense

Start Date: 2020-09-24

End Date: 2025-12-31

Contract Duration: 1,924 days

Daily Burn Rate: $22.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: EIGHT (8) SPARE NSNS FOR THE IBAS WEAPON SYSTEM

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32803

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $43.3 million to DRS NETWORK & IMAGING SYSTEMS LLC for work described as: EIGHT (8) SPARE NSNS FOR THE IBAS WEAPON SYSTEM Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract type offers some cost certainty but doesn't mitigate sole-source risks. 3. Long performance period (over 6 years) requires careful monitoring for sustained value. 4. The specific item, 'spare NSNs for IBAS weapon system,' suggests a critical but niche defense component. 5. Lack of competition is a significant risk indicator for potential overpricing. 6. The contract is for a specific product (bare printed circuit boards), not a service, simplifying performance assessment.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The award amount of $43.3 million for spare parts over nearly two years suggests a significant investment. Without comparable contract data or market analysis for these specific spare parts, it's difficult to definitively assess if the pricing is fair. The absence of competition inherently raises concerns about whether taxpayers are receiving the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, DRS NETWORK & IMAGING SYSTEMS LLC, was solicited. This approach bypasses the standard competitive bidding process, which is typically designed to foster price reduction and innovation. The lack of competition means there was no opportunity for other qualified suppliers to offer their products or pricing, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that typically arise from a competitive bidding environment. This can result in higher overall expenditure for essential defense components.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units utilizing the IBAS weapon system, ensuring operational readiness. The contract delivers critical spare parts (bare printed circuit boards) necessary for maintaining the functionality of advanced weapon systems. The geographic impact is primarily within Florida, where the contractor is located, though the ultimate deployment of the weapon system is global. Workforce implications are likely concentrated at the contractor's facility in Florida, supporting manufacturing and supply chain roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to inflated costs.
Long contract duration increases the risk of price escalation or performance issues over time.
Lack of transparency in the sole-source justification requires scrutiny.
Dependence on a single supplier for critical components can create supply chain vulnerabilities.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established entity (DRS Network & Imaging Systems) may indicate reliability.
Specific NSN designation ensures the parts meet precise military specifications.

Sector Analysis

This contract falls within the Defense sector, specifically related to electronic components and weapon system sustainment. The market for specialized defense components like bare printed circuit boards is often characterized by high barriers to entry due to stringent quality requirements, intellectual property, and established relationships. While the overall market for bare PCBs is broad, the niche application for military weapon systems limits the pool of qualified and approved suppliers, often leading to less competitive environments.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the sole-source nature and the specialized product, it is unlikely that subcontracting opportunities for small businesses were mandated or actively pursued as part of the award. This contract does not appear to directly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA) and the Department of Defense's contracting oversight mechanisms. Accountability is managed through the firm fixed-price structure and delivery schedules. Transparency is limited due to the sole-source award, but contract details should be available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Spare Parts Procurement
Defense Logistics Agency Contracts
Weapon System Component Manufacturing
Bare Printed Circuit Board Supply

Risk Flags

Sole-source award lacks competitive pricing.
Potential for overpricing due to lack of competition.
Long contract duration increases long-term risk.
Dependence on a single supplier for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.3 million to DRS NETWORK & IMAGING SYSTEMS LLC. EIGHT (8) SPARE NSNS FOR THE IBAS WEAPON SYSTEM

Who is the contractor on this award?

The obligated recipient is DRS NETWORK & IMAGING SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $43.3 million.

What is the period of performance?

Start: 2020-09-24. End: 2025-12-31.

What is the specific IBAS weapon system, and why are these spare parts critical?

The IBAS (Infantry Brigade Advanced System) is a component of the U.S. Army's Future Combat Systems (FCS) program, though the FCS program itself has undergone significant restructuring and cancellation of many of its original elements. More broadly, IBAS can refer to various advanced systems integrated into infantry platforms. The specific spare parts, identified by National Stock Numbers (NSNs), are bare printed circuit boards (PCBs) essential for the electronic functionality of these advanced systems. PCBs are the backbone of most electronic devices, providing the substrate for mounting and interconnecting electronic components. For a weapon system, reliable and precisely manufactured PCBs are critical for sensor operation, targeting, communication, and control systems. Failure of these components could lead to degraded performance or complete system inoperability, directly impacting combat effectiveness and soldier safety.

Why was this contract awarded on a sole-source basis, and what is the justification?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when a compelling justification exists for urgency, standardization, or proprietary data. For spare parts of specialized weapon systems, the justification often centers on the need for exact compatibility, adherence to stringent military specifications, and the limited number of manufacturers capable of producing parts that meet these exacting standards. DRS Network & Imaging Systems LLC likely holds proprietary rights, specific manufacturing capabilities, or is the sole approved source for these particular NSNs for the IBAS system, making competition impractical or impossible without significant delays and costs associated with qualifying new sources.

How does the firm fixed-price (FFP) contract type mitigate risks in this sole-source scenario?

A Firm Fixed-Price (FFP) contract type establishes a ceiling price that the contractor must not exceed, regardless of their actual costs. In this sole-source scenario, the FFP structure provides the government with cost certainty, meaning the total amount paid will not exceed the $43.3 million award. While it doesn't address the potential for the initial price being too high due to lack of competition, it shifts the risk of cost overruns from the government to the contractor. The contractor is incentivized to manage their own costs efficiently to maximize profit. This is beneficial for the government as it prevents unexpected budget increases for these specific spare parts.

What are the potential risks associated with a long performance period (over 6 years) for spare parts?

A long performance period, such as the duration extending to December 2025 (over 5 years from the September 2020 start date), for spare parts introduces several risks. Firstly, the technology for electronic components can evolve rapidly; parts designed for older systems might become obsolete or difficult to source over an extended period, potentially leading to sustainment challenges. Secondly, the contractor's financial stability or manufacturing capabilities could change over such a long timeframe, impacting their ability to consistently deliver. Thirdly, without ongoing market surveillance or periodic re-competition, the initial pricing established at the award might become uncompetitive as market conditions or production costs change. Lastly, the government remains dependent on a single source for an extended duration, increasing vulnerability to supply chain disruptions or price hikes if the contractor faces unforeseen issues.

Are there any historical spending patterns or trends for these specific spare parts or the IBAS system?

Accessing detailed historical spending patterns for specific spare parts tied to niche weapon systems like the IBAS can be challenging without direct access to comprehensive government procurement databases and internal program cost histories. However, general trends in defense spending indicate a consistent need for sustainment and spare parts for existing and legacy weapon systems. The 'EIGHT (8) SPARE NSNS' designation suggests a catalog of specific items. If these NSNs have been procured previously, analyzing past award amounts, quantities, and competition levels for these same items would reveal trends. A history of sole-source awards for these parts would indicate a persistent lack of competition, while fluctuating prices or quantities could signal changes in system usage, maintenance schedules, or supply chain dynamics.

What is the role of the Defense Logistics Agency (DLA) in managing contracts for spare parts like these?

The Defense Logistics Agency (DLA) plays a crucial role in managing the supply chain and procurement of spare parts and equipment for all branches of the U.S. military. For contracts like this one, awarded by DLA, their responsibilities include identifying requirements, soliciting offers (though not in this sole-source case), awarding contracts, and overseeing contractor performance to ensure timely delivery of parts that meet stringent military specifications. DLA acts as a central procurement hub, leveraging its expertise and economies of scale to provide necessary materiel efficiently. They are responsible for ensuring that the parts procured are compatible with the designated weapon systems and that the acquisition process adheres to federal regulations and defense policies.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Bare Printed Circuit Board Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leonardo SPA

Address: 100 N BABCOCK ST, MELBOURNE, FL, 32935

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $43,302,652

Exercised Options: $43,302,652

Current Obligation: $43,302,652

Actual Outlays: $40,062,066

Subaward Activity

Number of Subawards: 93

Total Subaward Amount: $13,893,321

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRRA220D0012

IDV Type: IDC

Timeline