DoD awards $36.6M for infrared systems, with competition impacting value and long-term support

Contract Overview

Contract Amount: $36,610,994 ($36.6M)

Contractor: DRS Network & Imaging Systems LLC

Awarding Agency: Department of Defense

Start Date: 2024-12-17

End Date: 2029-06-30

Contract Duration: 1,656 days

Daily Burn Rate: $22.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS DELIVERY ORDER PROCURES EQUIPMENT AND SPARES IN SUPPORT OF THE SECOND GENERATION FORWARD LOOKING INFRARED SYSTEM.

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32935

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $36.6 million to DRS NETWORK & IMAGING SYSTEMS LLC for work described as: THIS DELIVERY ORDER PROCURES EQUIPMENT AND SPARES IN SUPPORT OF THE SECOND GENERATION FORWARD LOOKING INFRARED SYSTEM. Key points: 1. Value for money hinges on the effectiveness of the competitive process in securing favorable pricing for advanced infrared equipment and spares. 2. Competition dynamics appear robust, with a 'full and open competition after exclusion of sources' indicating a deliberate effort to maximize bidder participation. 3. Risk indicators include the long performance period, potentially exposing the contract to obsolescence or changing technological requirements. 4. Performance context is tied to the critical 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. 5. Sector positioning places this contract within the broader defense technology landscape, specifically supporting advanced sensor systems.

Value Assessment

Rating: good

The contract value of $36.6 million for infrared equipment and spares appears reasonable given the specialized nature of the technology and the long performance period extending over five years. Benchmarking against similar procurements for advanced sensor systems would provide a clearer picture of value, but the firm-fixed-price structure suggests a degree of cost certainty for the government. The specific equipment and spares procured will be a key determinant of overall value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This suggests that while the intent was broad competition, specific circumstances led to the exclusion of certain potential sources. The number of bidders is not specified, but this approach aims to balance broad market access with specific requirements. The level of competition achieved will directly influence price discovery and the government's ability to secure competitive pricing.

Taxpayer Impact: The competitive approach, even with exclusions, aims to ensure that taxpayers receive fair market value by encouraging multiple vendors to bid. A well-executed limited competition can still yield significant savings compared to sole-source awards.

Public Impact

The Department of the Army benefits from enhanced capabilities provided by the Second Generation Forward Looking Infrared System. This contract delivers essential equipment and spare parts, ensuring the operational readiness and effectiveness of critical defense systems. The geographic impact is primarily associated with the contractor's location in Florida, though the end-use of the equipment will be within military operations. Workforce implications may include specialized manufacturing and technical support roles within DRS Network & Imaging Systems LLC and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for technological obsolescence over the contract's extended duration.
Dependence on a single contractor for specialized equipment and spares could create supply chain risks.
The 'exclusion of sources' in the competition may limit long-term cost-saving opportunities if not carefully managed.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
The procurement supports a critical defense system, indicating strategic importance.
The long-term nature of the contract allows for sustained support and potential for economies of scale in production.

Sector Analysis

This contract falls within the Defense industry, specifically the advanced sensor and imaging technology sub-sector. The market for infrared systems is characterized by high barriers to entry due to specialized R&D and manufacturing requirements. Comparable spending benchmarks would likely be found in other advanced military electronics procurements, where unit costs can be significant due to technological sophistication and stringent performance standards.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not explicitly provided in the data. However, given the specialized nature of the technology, it is possible that larger prime contractors like DRS Network & Imaging Systems LLC may engage small businesses for specific components or support services. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight will likely be managed by the Department of the Army contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified equipment and spares. Transparency is facilitated through contract award databases, though detailed performance metrics may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Advanced Sensor Systems Procurement
Infrared Technology Development
Military Equipment Sustainment
Department of Defense Logistics
Night Vision and Targeting Systems

Risk Flags

Potential for technological obsolescence
Long contract duration risks
Limited competition due to source exclusion
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.6 million to DRS NETWORK & IMAGING SYSTEMS LLC. THIS DELIVERY ORDER PROCURES EQUIPMENT AND SPARES IN SUPPORT OF THE SECOND GENERATION FORWARD LOOKING INFRARED 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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $36.6 million.

What is the period of performance?

Start: 2024-12-17. End: 2029-06-30.

What is the specific nature of the 'Second Generation Forward Looking Infrared System' and its operational importance to the Department of the Army?

The Second Generation Forward Looking Infrared (FLIR) System is a crucial component for various military platforms, providing advanced thermal imaging capabilities. These systems enable soldiers to detect, identify, and track targets in various conditions, including low light, smoke, and adverse weather. Their operational importance lies in enhancing situational awareness, improving targeting accuracy, and increasing survivability for personnel and equipment. The FLIR system is integral to intelligence, surveillance, and reconnaissance (ISR) missions, as well as direct combat operations, making its reliable supply and maintenance a high priority for the Army.

How does the 'Full and Open Competition After Exclusion of Sources' procurement method impact the potential for cost savings compared to a standard full and open competition?

The 'Full and Open Competition After Exclusion of Sources' (FOUACES) method is a variation of full and open competition where certain sources are excluded from consideration. This typically occurs when specific capabilities or past performance are required, and only a limited number of contractors can meet those stringent criteria. While it aims for broader competition than a sole-source award, the exclusion of potential bidders can limit the number of offers received. This reduced competition might lead to less aggressive pricing compared to a scenario where all qualified sources could participate, potentially resulting in higher costs for the government and taxpayers. The effectiveness of FOUACES in achieving cost savings depends heavily on the justification for exclusions and the remaining competitive landscape.

What are the potential risks associated with the long contract duration (over 5 years) for procuring advanced infrared equipment?

A contract duration extending over five years for advanced technology like infrared systems presents several risks. Firstly, technological obsolescence is a significant concern; the pace of innovation in sensor technology is rapid, and equipment procured today might be outdated or less effective by the end of the contract. Secondly, maintenance and sustainment costs could escalate if unforeseen issues arise or if spare parts become difficult to source due to manufacturing changes or discontinuation. Thirdly, market conditions and component availability can fluctuate, potentially impacting the contractor's ability to deliver at the initially agreed-upon price or schedule. Finally, the government's requirements might evolve over this period, making the procured system less aligned with current operational needs.

Can the firm-fixed-price (FFP) contract type mitigate risks related to cost overruns for this infrared system procurement?

Yes, the firm-fixed-price (FFP) contract type is designed to mitigate risks related to cost overruns for the government. Under an FFP contract, the contractor assumes the primary responsibility for all costs incurred to deliver the specified goods or services. The price is fixed and generally not subject to adjustment unless there are changes to the contract scope or unforeseen circumstances explicitly allowed for in the contract terms. This provides the government with cost certainty and predictability. However, the contractor may build in higher profit margins or contingency reserves to account for potential risks, which could lead to a higher initial price compared to other contract types like cost-plus. For specialized equipment like infrared systems, the FFP structure incentivizes the contractor to manage their costs efficiently.

What is the typical market size and competitive landscape for advanced infrared systems used in defense applications?

The market for advanced infrared systems in defense applications is substantial and highly specialized. It is characterized by a relatively small number of key players with significant research and development capabilities, advanced manufacturing expertise, and established relationships with government agencies. The market size is driven by ongoing military modernization programs, the need for enhanced surveillance and targeting capabilities, and the replacement of aging systems. Competition is often intense among these specialized firms, but barriers to entry are high due to the technical complexity, stringent quality requirements, and long development cycles. Government procurement strategies, including competitive bidding and sole-source awards for unique technologies, significantly shape the competitive dynamics within this sector.

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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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: $36,610,994

Exercised Options: $36,610,994

Current Obligation: $36,610,994

Subaward Activity

Number of Subawards: 46

Total Subaward Amount: $8,255,230

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W909MY19D0004

IDV Type: IDC

Timeline