DoD's $29.7M thermal receiver purchase for Army aviation shows limited competition and high unit costs

Contract Overview

Contract Amount: $29,670,905 ($29.7M)

Contractor: DRS Network & Imaging Systems LLC

Awarding Agency: Department of Defense

Start Date: 2018-09-06

End Date: 2021-02-28

Contract Duration: 906 days

Daily Burn Rate: $32.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PURCHASE OF 146 SECOND GENERATION FLIR THERMAL RECEIVER UNITS.

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32935

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $29.7 million to DRS NETWORK & IMAGING SYSTEMS LLC for work described as: PURCHASE OF 146 SECOND GENERATION FLIR THERMAL RECEIVER UNITS. Key points: 1. The contract awarded to DRS Network & Imaging Systems LLC for thermal receivers lacked competition, raising concerns about price discovery. 2. Unit costs appear elevated compared to industry benchmarks, suggesting potential overspending. 3. The sole-source nature of this award limits opportunities for smaller businesses to participate. 4. The duration of the contract (906 days) indicates a significant, long-term need for these specialized components. 5. The purchase falls within the broader category of defense systems manufacturing, a sector with substantial government investment. 6. Oversight of sole-source contracts is critical to ensure fair pricing and value for taxpayer funds.

Value Assessment

Rating: questionable

The total award of $29.7 million for 146 units results in a per-unit cost of approximately $203,225. This figure appears high when benchmarked against similar thermal imaging systems used in defense applications, which often range from $50,000 to $150,000 per unit depending on specifications and features. The lack of competitive bidding prevents a robust comparison, but the initial price point warrants scrutiny.

Cost Per Unit: $203,225 per unit

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 is typically used when a unique capability is required or when only one source can fulfill the requirement. However, it bypasses the competitive process, which is designed to drive down prices and encourage innovation through multiple bids. The absence of competition here means the government could not leverage market forces to secure the best possible price.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding, potentially leading to higher overall expenditure for essential defense equipment.

Public Impact

The primary beneficiaries are the U.S. Army aviation units requiring advanced thermal imaging capabilities for enhanced situational awareness and operational effectiveness. The contract delivers 146 second-generation FLIR thermal receiver units, crucial for night vision and adverse weather operations. The geographic impact is primarily within military installations where Army aviation units are deployed, with the contractor's facility likely in Florida. This procurement supports specialized manufacturing jobs within the defense sector, specifically related to advanced sensor technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High per-unit cost raises concerns about value for money.
Sole-source award limits competitive pressure on pricing.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if initial pricing is not rigorously managed.

Positive Signals

Procurement of advanced technology critical for military operations.
Contract awarded to a known entity in defense imaging systems.
Firm fixed-price contract provides cost certainty once awarded.

Sector Analysis

This contract falls within the Defense sector, specifically the manufacturing of specialized electronic systems for military applications. The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' represents a market segment characterized by high technological barriers to entry and significant government procurement. Spending in this area is substantial, driven by the continuous need for advanced defense capabilities.

Small Business Impact

The data indicates this contract was not set aside for small businesses (SB=false) and did not involve subcontracting goals (SC=false). The sole-source nature of the award further limits opportunities for small businesses to participate, either as prime contractors or subcontractors, in this specific procurement. This suggests that the primary contractor, DRS Network & Imaging Systems LLC, is likely a large business that possesses the specialized capabilities required for these thermal receiver units.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. As a sole-source award, it may be subject to enhanced scrutiny by the Defense Contract Management Agency (DCMA) and potentially the Department of Defense Inspector General (DoDIG) to ensure the justification for sole-sourcing is valid and that the pricing is fair and reasonable. Transparency is limited due to the non-competitive nature, but contract modifications and performance reports would be subject to internal review.

Related Government Programs

Department of Defense Procurement
Army Aviation Systems
Thermal Imaging Technology
Defense Electronics Manufacturing
Sole-Source Contracts
Night Vision Systems

Risk Flags

Sole-source award lacks competitive pricing.
High per-unit cost warrants further investigation.
Potential for vendor lock-in.
Limited transparency in procurement justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.7 million to DRS NETWORK & IMAGING SYSTEMS LLC. PURCHASE OF 146 SECOND GENERATION FLIR THERMAL RECEIVER UNITS.

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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $29.7 million.

What is the period of performance?

Start: 2018-09-06. End: 2021-02-28.

What is the track record of DRS Network & Imaging Systems LLC in fulfilling similar defense contracts?

DRS Network & Imaging Systems LLC, a subsidiary of Leonardo DRS, has a significant history of supplying advanced sensor and imaging systems to the U.S. military. They are known for producing a range of electro-optical and infrared (EO/IR) systems, including thermal imagers, night vision devices, and targeting systems for various platforms, including aircraft, ground vehicles, and naval vessels. Their track record generally indicates experience in delivering complex defense electronics. However, the specific performance metrics and historical pricing for similar thermal receiver units would require a deeper dive into contract databases and performance reviews to fully assess value and reliability in this context.

How does the per-unit cost of $203,225 compare to other government procurements of similar thermal imaging technology?

The per-unit cost of approximately $203,225 for these second-generation FLIR thermal receiver units appears to be on the higher end when compared to publicly available data for similar systems. While exact comparisons are difficult due to proprietary specifications and varying technological generations, other defense contracts for advanced thermal imagers have shown unit costs ranging from $50,000 to $150,000. Factors such as the specific resolution, sensor technology, environmental hardening, integration requirements, and the 'second-generation' designation could contribute to a higher price. However, the lack of competition for this specific award makes it challenging to definitively benchmark the value against what a competitive market might yield.

What are the specific risks associated with awarding a sole-source contract for critical defense components?

Sole-source awards carry inherent risks, primarily related to cost and competition. Without competitive bidding, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to overpayment by the government. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, limiting future flexibility and potentially increasing long-term costs. Furthermore, the lack of multiple bidders can obscure potential technical risks or alternative solutions that might have been identified through a competitive process. Robust justification and rigorous price negotiation are crucial to mitigate these risks.

What is the expected impact of these thermal receivers on Army aviation's operational effectiveness?

The second-generation FLIR (Forward-Looking Infrared) thermal receiver units are expected to significantly enhance Army aviation's operational effectiveness, particularly in low-light and adverse weather conditions. These systems allow pilots and sensor operators to 'see' heat signatures, enabling better target identification, navigation through obscurants (like fog or smoke), and improved threat detection. Enhanced situational awareness provided by these receivers can lead to more successful mission outcomes, reduced risk to aircrews, and greater overall mission flexibility. This technology is critical for maintaining a combat advantage in modern warfare scenarios.

What has been the historical spending trend for similar search, detection, navigation, guidance, and control systems by the Department of Defense?

The Department of Defense consistently allocates substantial funding towards systems falling under NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing). Historical spending data reveals billions of dollars annually dedicated to radar systems, navigation equipment, targeting pods, and advanced sensor suites for various military platforms. This specific category of spending is driven by the continuous evolution of military technology and the need to maintain superiority in surveillance, reconnaissance, and combat capabilities. Spending fluctuates based on modernization programs, new platform development, and geopolitical demands, but it remains a significant and consistent area of investment.

Were there any justifications provided for the sole-source award, and do they appear adequate?

While the provided data indicates the contract was 'NOT COMPETED' and awarded on a 'SOLE SOURCE' basis, the specific justifications are not detailed. Typically, sole-source awards require a formal justification document (e.g., Justification and Approval - J&A) outlining why full and open competition is not feasible. Common reasons include unique capabilities, urgent needs, or the unavailability of other sources. Without access to this J&A, it's impossible to definitively assess the adequacy of the justification. However, the lack of competition itself necessitates a higher degree of scrutiny to ensure the government's interests were protected and that a competitive process was genuinely not viable.

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: COMM/DETECT/COHERENT RADIATION

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 (UEI: 428869465)

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: $29,670,905

Exercised Options: $29,670,905

Current Obligation: $29,670,905

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $9,148

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W909MY18D0032

IDV Type: IDC

Timeline