DoD awards $32.9M for thermal receiver units, raising questions about competition and value

Contract Overview

Contract Amount: $32,924,826 ($32.9M)

Contractor: DRS Network & Imaging Systems LLC

Awarding Agency: Department of Defense

Start Date: 2019-01-18

End Date: 2022-05-31

Contract Duration: 1,229 days

Daily Burn Rate: $26.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PURCHASE OF 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 $32.9 million to DRS NETWORK & IMAGING SYSTEMS LLC for work described as: PURCHASE OF SECOND GENERATION FLIR THERMAL RECEIVER UNITS. Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure on pricing. 2. The duration of the contract (1229 days) suggests a long-term need for these specialized units. 3. The absence of a small business set-aside raises questions about opportunities for smaller firms. 4. The fixed-price contract type shifts some risk to the contractor, but the sole-source nature may inflate costs. 5. The procurement falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code, indicating a specialized defense technology area.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized equipment involved. Without competitive bids, it's difficult to ascertain if the $32.9 million price reflects fair market value. The contract's duration and the lack of publicly available comparable contract data make a precise value-for-money assessment difficult. However, sole-source procurements often carry a premium compared to competed contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not solicit bids from multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or when urgency dictates. The lack of competition means that pricing was likely negotiated directly with DRS Network & Imaging Systems LLC, potentially leading to higher costs than if multiple companies had competed.

Taxpayer Impact: Taxpayers may have paid a premium for these thermal receiver units due to the absence of competitive bidding. The government lost the opportunity to leverage market forces to secure the best possible price.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will utilize the second-generation FLIR thermal receiver units for operational purposes. The contract delivers specialized thermal imaging technology crucial for surveillance, reconnaissance, and situational awareness in various operational environments. The geographic impact is primarily within the Department of Defense's operational theaters, with potential implications for personnel stationed globally. The contract supports jobs within DRS Network & Imaging Systems LLC and its supply chain, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the negotiation process for a sole-source contract.
Specialized nature of the equipment may create long-term reliance on a single supplier.

Positive Signals

Procurement of advanced thermal imaging technology enhances warfighter capabilities.
Firm fixed-price contract type provides cost certainty once negotiated.
Contract awarded to a known entity (DRS Network & Imaging Systems LLC) with presumed expertise in the field.

Sector Analysis

This contract falls within the defense sector, specifically focusing on advanced sensor and imaging technology. The market for such specialized defense electronics is often characterized by high barriers to entry due to R&D costs, intellectual property, and stringent performance requirements. Comparable spending benchmarks are difficult to establish without more detailed specifications and market analysis, but defense spending on advanced surveillance and targeting systems represents a significant portion of the overall defense budget.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This suggests that opportunities for small businesses to participate in this specific procurement were limited. The prime contractor, DRS Network & Imaging Systems LLC, is likely a large business, and the nature of the specialized technology may not lend itself easily to subcontracting with smaller entities in this instance.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would include adherence to the firm fixed-price terms and delivery schedules. Transparency is limited due to the sole-source nature of the award, with less public information available compared to competed contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Procurement
Army Aviation Systems
Thermal Imaging Technology
Defense Electronics Manufacturing
Sole-Source Contracts
Search and Detection Systems

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Lack of small business participation noted.
Specialized technology may lead to long-term vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.9 million to DRS NETWORK & IMAGING SYSTEMS LLC. PURCHASE OF 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 $32.9 million.

What is the period of performance?

Start: 2019-01-18. End: 2022-05-31.

What is the specific operational advantage provided by these second-generation FLIR thermal receiver units compared to previous versions or alternative technologies?

The 'second-generation' designation implies an improvement over prior models, likely offering enhanced resolution, sensitivity, range, or reduced size/weight/power consumption. FLIR (Forward-Looking Infrared) technology allows for detection of heat signatures, enabling operations in low-light, adverse weather, and battlefield obscurant conditions. These units are critical for platforms such as aircraft, ground vehicles, or individual soldier systems, providing enhanced situational awareness, target identification, and navigation capabilities. Without specific technical specifications or comparative performance data, the exact operational advantage remains qualitative, but it is presumed to be significant enough to warrant a substantial investment by the Department of the Army.

Can the government provide justification for awarding this contract on a sole-source basis, citing specific regulations or circumstances?

Sole-source awards are typically justified under specific exceptions to full and open competition, often found in the Federal Acquisition Regulation (FAR). Common justifications include: (1) only one responsible source exists (e.g., unique technology, proprietary data); (2) an urgent and compelling need where delays associated with competitive procurement would result in unacceptable delays or costs; or (3) specific statutory authority. For this contract, the justification would likely stem from the unique technological capabilities of DRS Network & Imaging Systems LLC, proprietary rights to the technology, or a determination that no other vendor could meet the Army's requirements within the necessary timeframe. A formal Justification for Other Than Full and Open Competition (JOFOC) document would typically be required and may be publicly accessible, though often with redacted sensitive information.

What is the historical spending pattern for similar thermal receiver units by the Department of Defense or Department of the Army?

Analyzing historical spending patterns for similar thermal receiver units is crucial for benchmarking. While specific data for 'second-generation FLIR thermal receiver units' from DRS Network & Imaging Systems LLC is limited without deeper database access, the Department of Defense consistently invests heavily in advanced sensor and imaging technologies. Spending in this category often spans multiple programs and platforms, including aircraft, ground vehicles, and soldier-worn equipment. Trends typically show increasing investment in higher resolution, multi-spectral capabilities, and networked sensors. Without access to detailed contract histories for comparable systems from other vendors or previous generations, it's difficult to establish a precise historical trend for this specific item, but the overall defense investment in infrared and thermal imaging technology has been substantial and growing.

What are the key performance indicators (KPIs) used to measure the success and effectiveness of these thermal receiver units post-delivery?

Key Performance Indicators (KPIs) for advanced defense systems like thermal receiver units typically focus on operational effectiveness, reliability, and maintainability. For these FLIR units, KPIs might include: Mean Time Between Failures (MTBF) to assess reliability; detection range and accuracy under various environmental conditions (e.g., fog, smoke, darkness); image quality metrics (e.g., resolution, contrast); power consumption efficiency; system integration success with host platforms; and ease of operation/maintenance. The Department of the Army would likely have specific technical performance requirements outlined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS), against which the contractor's product would be evaluated during testing and operational use. User feedback from deployed personnel would also be a critical qualitative KPI.

What is the potential for obsolescence of this technology given the rapid pace of advancements in sensor technology?

The potential for obsolescence is a significant consideration for any technology procurement, especially in rapidly evolving fields like sensor technology. While 'second-generation' implies a current state-of-the-art, the pace of innovation means that newer, more capable technologies are constantly under development. The lifespan of these units will depend on the specific rate of advancement in FLIR and related sensor fields, as well as the operational tempo and environment they are deployed in. The Department of Defense likely mitigates this risk through robust technology insertion plans, sustainment strategies that include upgrades, and by planning for future procurements of next-generation systems. The contract's duration (over three years) suggests a planned operational life within that timeframe, but future obsolescence beyond that period is a certainty.

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

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: $32,924,826

Exercised Options: $32,924,826

Current Obligation: $32,924,826

Actual Outlays: $2,343,588

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $117,239

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W909MY18D0032

IDV Type: IDC

Timeline