DoD's $1.3B contract for electronic components saw limited competition, raising value concerns

Contract Overview

Contract Amount: $1,325,911,302 ($1.3B)

Contractor: Jvys

Awarding Agency: Department of Defense

Start Date: 2006-03-02

End Date: 2013-12-31

Contract Duration: 2,861 days

Daily Burn Rate: $463.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $1.33 billion to JVYS for work described as: Key points: 1. The contract's value, exceeding $1.3 billion, warrants scrutiny due to limited competition. 2. Limited competition suggests potential for higher costs and reduced innovation. 3. The 'NOT AVAILABLE FOR COMPETITION' status is a significant risk indicator. 4. Performance context is difficult to assess without clear benchmarks or competitive data. 5. This contract falls within the 'Other Electronic Component Manufacturing' sector. 6. The long duration of the contract (2006-2013) may have impacted its overall value proposition.

Value Assessment

Rating: questionable

Benchmarking the value of this $1.3 billion contract is challenging due to the lack of competitive data. The 'NOT AVAILABLE FOR COMPETITION' designation implies that a fair market price may not have been established through a competitive process. Without comparable contracts or detailed cost breakdowns, it's difficult to definitively assess if the government received good value for its investment. The cost-plus-fixed-fee structure can also lead to cost overruns if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly designated as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. This means the Department of the Army did not solicit bids from multiple vendors. The reasons for this designation are not provided, but it significantly limits price discovery and potentially leads to higher costs for the government compared to a fully competed contract. The absence of a competitive bidding process means taxpayers did not benefit from potential cost savings that competition typically drives.

Taxpayer Impact: Sole-source awards mean taxpayers may have paid a premium, as there was no competitive pressure to drive down prices. This lack of competition also limits transparency in pricing.

Public Impact

The Department of Defense (DoD) benefits from the acquisition of essential electronic components. These components are crucial for various military systems and operations. The contract's geographic impact is noted as 'AL' (Alabama), suggesting a concentration of activity or the contractor's location. Workforce implications are likely within the specialized field of electronic component manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can reduce transparency in government spending.
Long contract duration without clear performance metrics can obscure value.
Cost-plus-fixed-fee contracts carry inherent risks of cost escalation.

Positive Signals

The contract addresses a critical need for electronic components within the Department of Defense.
The award was made to a single entity, potentially indicating specialized capabilities required.
The contract was awarded by the Department of the Army, a major component of the DoD.

Sector Analysis

This contract falls under the 'Other Electronic Component Manufacturing' sector (NAICS 334419). This broad category includes establishments primarily engaged in manufacturing semiconductors and related devices, passive components, and other electronic components. The market for electronic components is vast and critical for numerous industries, including defense, consumer electronics, and telecommunications. Federal spending in this sector often supports national security interests and technological advancement. Comparable spending benchmarks are difficult to establish without knowing the specific type of components procured.

Small Business Impact

Information regarding small business set-asides or subcontracting is not available for this contract. The 'ss' and 'sb' fields are false, indicating no explicit small business set-aside. Without subcontracting plans or data, the impact on the small business ecosystem cannot be determined.

Oversight & Accountability

Oversight mechanisms for this contract are not detailed in the provided data. As a Department of Defense contract, it would likely fall under the purview of the DoD Inspector General. However, the effectiveness of oversight, accountability measures, and transparency are difficult to assess without specific information on reporting requirements, audits, and performance reviews conducted during the contract's lifecycle.

Related Government Programs

Department of Defense Procurement
Electronic Component Manufacturing Contracts
Sole-Source Defense Contracts
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Lack of competition
Limited transparency on justification
No performance metrics provided
Cost-plus contract type carries inherent risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.33 billion to JVYS. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is JVYS.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $1.33 billion.

What is the period of performance?

Start: 2006-03-02. End: 2013-12-31.

What specific types of electronic components were procured under this contract?

The provided data does not specify the exact types of electronic components procured under this $1.3 billion contract. The NAICS code 334419, 'Other Electronic Component Manufacturing,' is broad and encompasses a wide range of products, including semiconductors, integrated circuits, resistors, capacitors, and other passive or active electronic parts. Without further details, it is impossible to determine the specific nature of these components, their criticality, or their technological sophistication. This lack of specificity hinders a thorough analysis of the contract's purpose and value.

What was the justification for awarding this contract on a sole-source basis?

The data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION,' which is a designation for sole-source procurements. However, the specific justification for this sole-source award is not provided. Common reasons for sole-source contracts include unique capabilities of a single provider, urgent and compelling needs where competition is impractical, or when only one source is capable of meeting the requirements. Without the official justification, it is impossible to assess whether this sole-source award was appropriate or if it represented a missed opportunity for competitive bidding and potential cost savings for the taxpayer.

How did the final cost compare to the initial estimated cost, given it was a Cost Plus Fixed Fee contract?

The provided data does not include information on the initial estimated cost or the final incurred cost for this contract. As a Cost Plus Fixed Fee (CPFF) contract, the government agrees to pay the contractor's actual costs plus a fixed fee representing profit. While the fee is fixed, the total cost can vary significantly based on the contractor's actual expenses. Without knowing the initial estimate and the final expenditure, it's impossible to assess cost control effectiveness or whether the government received value commensurate with the final price paid. CPFF contracts inherently carry a risk of cost overruns if not rigorously managed and overseen.

What performance metrics were used to evaluate the contractor's success?

The provided data does not contain any information regarding the performance metrics or evaluation criteria established for this contract. For a contract of this magnitude and duration (2006-2013), clear performance standards and key performance indicators (KPIs) are essential for ensuring the government receives the intended goods or services effectively and efficiently. The absence of this information makes it difficult to assess the contractor's performance, the quality of the electronic components delivered, and the overall success of the procurement in meeting the Department of the Army's needs.

What is the historical spending pattern for similar electronic components within the Department of Defense?

The provided data does not offer historical spending patterns for similar electronic components within the Department of Defense. To establish a benchmark for value and understand trends, one would need to analyze spending on comparable components over time, across different contracts, and potentially across various military branches. This contract's $1.3 billion value and sole-source nature make direct comparisons difficult without more context. Analyzing historical data would help determine if this contract's pricing was in line with market rates or if it represented an outlier, potentially due to the lack of competition or specific technological requirements.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 7272 GOVERNORS WEST, HUNTSVILLE, AL, 35806

Business Categories: 8(a) Program Participant, Category Business, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Financial Breakdown

Contract Ceiling: $109,506

Exercised Options: $109,506

Current Obligation: $1,325,911,302

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline