DoD awards $42.9M for thermal receiver units, raising questions about competition and value

Contract Overview

Contract Amount: $42,932,496 ($42.9M)

Contractor: DRS Network & Imaging Systems LLC

Awarding Agency: Department of Defense

Start Date: 2022-06-17

End Date: 2026-12-31

Contract Duration: 1,658 days

Daily Burn Rate: $25.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS IS A REQUIREMENT FOR PM BRADLEY FOR THE PROCUREMENT OF SECOND GENERATION FORWARD LOOKING INFRARED (2GF) THERMAL RECEIVER UNITS(TRU) AND CCAS.

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32935

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $42.9 million to DRS NETWORK & IMAGING SYSTEMS LLC for work described as: THIS IS A REQUIREMENT FOR PM BRADLEY FOR THE PROCUREMENT OF SECOND GENERATION FORWARD LOOKING INFRARED (2GF) THERMAL RECEIVER UNITS(TRU) AND CCAS. Key points: 1. The contract's value of $42.9M for thermal receiver units warrants scrutiny due to the lack of competitive bidding. 2. Limited competition for this procurement may have led to suboptimal pricing and reduced value for taxpayers. 3. The sole-source nature of this award presents a risk indicator for potential cost overruns or reduced innovation. 4. Performance context is limited, but the duration of the contract (over 4 years) suggests a significant operational need. 5. This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. 6. The absence of small business set-asides or subcontracting plans raises concerns about broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this $42.9M contract is challenging without comparable sole-source procurements. The firm-fixed-price structure offers some cost certainty, but the lack of competition prevents a direct comparison to market rates or other potential suppliers. Without a competitive process, it's difficult to ascertain if the pricing reflects optimal value for the government and taxpayers. Further analysis would require understanding the specific technical requirements and the availability of alternative solutions.

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, or in cases of urgent need. The lack of multiple bidders significantly limits price discovery and may result in higher costs than if the contract had been competed. It also reduces the government's leverage in negotiating terms and pricing.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as competition is a key driver for cost savings. This procurement method bypasses the opportunity for multiple companies to bid, potentially leading to higher overall expenditure for the government.

Public Impact

The Department of the Army is the primary beneficiary, receiving critical thermal receiver units for its operations. The contract delivers Second Generation Forward Looking Infrared (2GF) Thermal Receiver Units (TRU) and CCAS. The contract is associated with the state of Florida, indicating potential regional economic impact or logistical considerations. The procurement supports the defense industrial base, potentially impacting specialized manufacturing workforces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about price reasonableness and potential for inflated costs.
Sole-source awards can limit opportunities for innovation and alternative technological solutions.
Absence of small business participation may reduce the economic benefits distributed to smaller enterprises.
The long contract duration (over 4 years) could mask inefficiencies or lead to complacency without regular re-evaluation.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
The specific nature of the equipment (2GF Thermal Receiver Units) suggests a critical and potentially specialized need.
The award is to a known entity (DRS NETWORK & IMAGING SYSTEMS LLC), implying some level of established capability.

Sector Analysis

This contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry (NAICS 334511). This sector is characterized by high technological complexity and significant government procurement, particularly from the Department of Defense. The market for advanced infrared and thermal imaging systems is specialized, with a limited number of key players. Comparable spending benchmarks would typically involve other defense contracts for similar sensor or imaging technologies.

Small Business Impact

The contract data indicates no explicit small business set-aside (ss: false) or subcontracting requirements (sb: false). This suggests that opportunities for small businesses to participate in this procurement, either as prime contractors or subcontractors, are limited. The absence of such provisions may mean that the economic benefits of this large contract are concentrated among larger corporations, potentially bypassing the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations. The firm-fixed-price nature provides some level of financial oversight. Transparency is limited due to the sole-source award, making detailed public scrutiny of the procurement process difficult. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Procurement
Thermal Imaging Systems
Military Sensor Technology
Army Aviation Support Equipment
Defense Advanced Research Projects Agency (DARPA) Programs

Risk Flags

Sole-source award lacks competitive justification.
Potential for non-competitive pricing.
Limited transparency in procurement process.
No stated small business subcontracting requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.9 million to DRS NETWORK & IMAGING SYSTEMS LLC. THIS IS A REQUIREMENT FOR PM BRADLEY FOR THE PROCUREMENT OF SECOND GENERATION FORWARD LOOKING INFRARED (2GF) THERMAL RECEIVER UNITS(TRU) AND CCAS.

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 $42.9 million.

What is the period of performance?

Start: 2022-06-17. End: 2026-12-31.

What is the specific operational requirement driving the need for these Second Generation Forward Looking Infrared (2GF) Thermal Receiver Units (TRU) and CCAS?

The provided data does not specify the exact operational requirement for the 2GF TRU and CCAS. However, 'Forward Looking Infrared' (FLIR) systems are typically used for surveillance, target acquisition, and navigation in various conditions, including low light and adverse weather. The 'Second Generation' designation suggests an upgrade or a specific technological advancement over previous models. These systems are crucial for platforms like aircraft, ground vehicles, and potentially maritime vessels, enhancing situational awareness and operational effectiveness for the Department of the Army.

Why was this contract awarded on a sole-source basis instead of being competed?

The data explicitly states the contract was 'NOT COMPETED' and is a 'sole-source' award. While the specific justification for this sole-source determination is not provided, common reasons include: a) unique capabilities or proprietary technology held by only one vendor (DRS NETWORK & IMAGING SYSTEMS LLC in this case), b) urgent and compelling need where competition would cause unacceptable delays, or c) a lack of adequate competition among qualified sources. Without further documentation (like a Justification and Approval document), the precise rationale remains unclear, but it implies that the Army determined only this specific contractor could meet the requirement.

How does the $42.9 million price compare to similar thermal receiver unit procurements, especially those that were competed?

Direct price comparison is difficult due to the sole-source nature of this $42.9 million award. Competitive procurements typically yield lower prices due to market forces and bidder innovation. To benchmark this value, one would need to identify contracts for similar 'Second Generation Forward Looking Infrared (2GF) Thermal Receiver Units (TRU)' or comparable advanced thermal imaging systems awarded to different vendors through full and open competition. Analyzing the unit cost, quantity, and contract duration of those comparable contracts would reveal if the $42.9 million represents a fair market price or potentially an inflated cost due to the lack of competition.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

Sole-source contracts, especially for a significant amount like $42.9 million and a duration extending to December 2026, carry several risks. Firstly, there's a heightened risk of cost overruns or 'contract creep' as the government lacks the leverage of competitive bidding to ensure the lowest possible price. Secondly, innovation may be stifled, as the incumbent contractor may have less incentive to develop more cost-effective or technologically superior solutions. Thirdly, there's a risk of vendor lock-in, making it difficult and costly to switch providers in the future. Finally, without competitive pressure, there's a potential for reduced quality or performance if the contractor faces fewer accountability mechanisms.

What is the track record of DRS NETWORK & IMAGING SYSTEMS LLC in fulfilling similar defense contracts?

DRS Network & Imaging Systems LLC is a known entity within the defense sector, specializing in advanced sensor and imaging technologies, including infrared systems. While specific performance details for this exact contract are not yet available as it is ongoing, the company has a history of supplying similar components and systems to various branches of the U.S. military. Their track record typically involves complex manufacturing and integration for defense applications. A deeper dive would require reviewing past performance evaluations and contract histories for similar procurements to assess reliability, quality, and adherence to schedule and budget on previous projects.

What are the implications of this contract for the small business industrial base?

The implications for the small business industrial base appear limited based on the provided data. The contract does not indicate any small business set-aside provisions (ss: false) or mandatory subcontracting goals (sb: false). This suggests that the primary awardee, DRS Network & Imaging Systems LLC, is likely a large business, and there are no explicit requirements for them to engage small businesses as subcontractors for this specific procurement. Consequently, opportunities for small businesses to benefit from this $42.9 million in federal spending are likely minimal, potentially concentrating the economic impact among larger defense contractors.

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: $42,932,496

Exercised Options: $42,932,496

Current Obligation: $42,932,496

Subaward Activity

Number of Subawards: 96

Total Subaward Amount: $26,154,494

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W909MY18D0032

IDV Type: IDC

Timeline