GSA awards $31.5M sole-source IDIQ for Link 16 systems, raising questions on competition and value

Contract Overview

Contract Amount: $31,514,792 ($31.5M)

Contractor: L3 Technologies, Inc.

Awarding Agency: General Services Administration

Start Date: 2024-08-19

End Date: 2029-08-18

Contract Duration: 1,825 days

Daily Burn Rate: $17.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: L3 SOLE SOURCE IDIQ TO38 ATEC VARIOUS AGENCY LINK 16

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

General Services Administration obligated $31.5 million to L3 TECHNOLOGIES, INC. for work described as: L3 SOLE SOURCE IDIQ TO38 ATEC VARIOUS AGENCY LINK 16 Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Significant contract value for specialized communication equipment. 3. Long performance period of five years suggests a sustained need. 4. No small business set-aside, potentially limiting opportunities for smaller firms. 5. Fixed-price contract type aims to control costs, but sole-source nature may inflate the base price. 6. Focus on wireless communications equipment manufacturing indicates a niche but critical technology area.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The $31.5 million award over five years for Link 16 systems suggests a high per-unit cost, typical for specialized defense or communication technology. Without comparable contracts or market data for similar sole-source procurements, it's difficult to definitively assess if the government is receiving excellent value for its money. The fixed-price nature provides some cost certainty, but the absence of competition is a primary concern.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means that potential alternative suppliers were not considered, and the government did not benefit from a bidding process that could drive down prices through market forces. The specific reasons for this sole-source determination would need to be examined to understand if it was fully justified.

Taxpayer Impact: Taxpayers may be paying a premium for this equipment due to the absence of competitive bidding. The government missed an opportunity to leverage market competition to secure potentially lower prices and better terms.

Public Impact

The primary beneficiaries are likely defense or government agencies requiring advanced secure communication systems like Link 16. The contract supports the acquisition and potential sustainment of critical wireless communication equipment. The geographic impact is primarily within Alabama, where the contractor is located, but the systems will be deployed nationally. Workforce implications may include specialized engineering, manufacturing, and technical support roles at the contractor's facility.

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 sole-source justification could mask opportunities for broader competition.
Long contract duration may reduce flexibility to adopt newer technologies if they emerge.
No explicit small business set-aside raises concerns about opportunities for smaller innovative firms in this sector.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Award to a single, potentially specialized vendor may ensure access to critical, unique technology.
The contract supports a specific, likely high-priority, communication capability (Link 16).

Sector Analysis

The contract falls within the Information Technology and Communications Equipment Manufacturing sector, specifically focusing on radio and wireless communication technologies. The market for such specialized systems, particularly those with military or national security applications like Link 16, is often characterized by a limited number of highly capable suppliers. This niche market can lead to higher prices and a greater reliance on sole-source or limited competition procurements. Comparable spending benchmarks are difficult to establish without more specific details on the exact Link 16 components and services procured.

Small Business Impact

This contract does not appear to include a small business set-aside. The sole-source nature of the award further limits the possibility of subcontracting opportunities for small businesses unless L3 Technologies voluntarily includes them. This could mean missed opportunities for the small business ecosystem to participate in the development or supply chain for these critical communication systems.

Oversight & Accountability

Oversight for this contract would primarily fall under the General Services Administration (GSA), specifically its Federal Acquisition Service. Accountability measures are inherent in the fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature; however, contract award details are publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Link 16 Network
Tactical Data Links
Defense Communications Systems
Wireless Communication Equipment
GSA Schedule Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $31.5 million to L3 TECHNOLOGIES, INC.. L3 SOLE SOURCE IDIQ TO38 ATEC VARIOUS AGENCY LINK 16

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: General Services Administration (Federal Acquisition Service).

What is the total obligated amount?

The obligated amount is $31.5 million.

What is the period of performance?

Start: 2024-08-19. End: 2029-08-18.

What is the specific justification for awarding this contract as sole-source to L3 Technologies, Inc.?

The provided data indicates the contract was awarded as 'NOT COMPETED' and is a 'SOLE SOURCE IDIQ'. A sole-source award typically requires a justification and approval (J&A) document, which must demonstrate that only one responsible source can satisfy the agency's needs. For Link 16 systems, this justification might stem from proprietary technology, unique manufacturing capabilities, or essential interoperability requirements with existing government systems that only L3 Technologies can meet. Without access to the specific J&A, the precise technical or market reasons remain unconfirmed, but common justifications include unique technical expertise, essential integration with existing platforms, or the limited number of manufacturers capable of producing such specialized equipment.

How does the $31.5 million contract value compare to similar Link 16 system procurements, and does it represent good value?

Directly comparing the $31.5 million value is difficult without knowing the exact scope of 'VARIOUS AGENCY' requirements and the specific Link 16 components or services included. Link 16 is a complex tactical data link system, and costs can vary significantly based on hardware, software, integration, training, and sustainment. As a sole-source award, there's an inherent risk that the price may not be as competitive as it would be in a fully open market. To assess value, one would need to benchmark against other sole-source awards for similar systems, analyze the contractor's cost breakdown if available, and consider the criticality and uniqueness of the capability provided. The five-year duration (1825 days) suggests an average annual value of approximately $6.3 million, which for specialized defense electronics, could be within a reasonable range, but definitive value assessment requires more granular data.

What are the primary risks associated with a sole-source award of this magnitude for critical communication systems?

The primary risks associated with a sole-source award of this magnitude include potential overpayment due to lack of price competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market pressure to offer the best possible terms. There's also a risk of vendor lock-in, where the agency becomes heavily reliant on a single supplier, making future transitions or upgrades more difficult and costly. Furthermore, if the sole-source justification was weak or based on outdated information, it could indicate a missed opportunity to foster competition and potentially discover more cost-effective or technologically superior solutions from other vendors. Ensuring robust oversight and performance management becomes even more critical in sole-source scenarios.

What is the expected performance and reliability of the Link 16 systems being procured under this contract?

The data provided does not specify the expected performance or reliability metrics for the Link 16 systems. However, Link 16 is a mature and widely adopted military tactical data link standard known for its robust, jam-resistant, and secure communication capabilities. Systems procured under this contract are expected to meet established Link 16 standards, ensuring interoperability with other Link 16-equipped platforms. Reliability would typically be defined by contract specifications, including Mean Time Between Failures (MTBF) or availability rates, and would be subject to government acceptance testing and ongoing performance monitoring throughout the contract's five-year period. The contractor, L3 Technologies, is expected to deliver systems that meet these stringent defense requirements.

How does this contract align with broader federal spending trends in defense communications and wireless technology?

This contract aligns with significant federal spending trends in defense communications and advanced wireless technologies. Agencies, particularly the Department of Defense, consistently invest heavily in secure, interoperable communication systems to maintain battlefield awareness and command and control. Link 16 is a cornerstone of this infrastructure. Spending in this area is driven by the need to counter evolving threats, modernize aging systems, and ensure seamless data sharing across different military branches and allied forces. While specific dollar amounts fluctuate based on program cycles and budget allocations, the demand for reliable tactical data links and related wireless equipment remains a consistent and substantial part of the federal acquisition landscape.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: IT AND TELECOM - NETWORK

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 47QFLA24Q0125

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 640 N 2200 W, SALT LAKE CITY, UT, 84116

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $99,969,657

Exercised Options: $99,969,657

Current Obligation: $31,514,792

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $936,162

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: 47QFLA20D0014

IDV Type: IDC

Timeline