DoD's $2.2B ITT Industries Contract for Electronic Systems Shows Fair Value Amidst Limited Competition
Contract Overview
Contract Amount: $2,226,709,933 ($2.2B)
Contractor: L3harris Technologies, Inc.
Awarding Agency: Department of Defense
Start Date: 2002-01-30
End Date: 2024-09-29
Contract Duration: 8,278 days
Daily Burn Rate: $269.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE
Sector: IT
Official Description: 200204!000024!5700!GV59 !ESC/NDK !F1962802C0010 !A!N! !N! !20020130!20020930!052819732!052819732!001216845!N!ITT INDUSTRIES, INC , SYSTEMS !4410 E FOUNTAIN BLVD !COLORADO SPRIN !CO!80916!16000!041!08!COLORADO SPRINGS !EL PASO !COLORADO !+000003175920!N!N!000519009204!J099!MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !3GWQ!474L BMEWS !541512!E! !3! ! ! ! ! !99990909!B! ! !B! !A!N!R!2!002!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!D!N! ! ! ! ! ! !0001!
Place of Performance
Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80916
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $2.23 billion to L3HARRIS TECHNOLOGIES, INC. for work described as: 200204!000024!5700!GV59 !ESC/NDK !F1962802C0010 !A!N! !N! !20020130!20020930!052819732!052819732!001216845!N!ITT INDUSTRIES, INC , SYSTEMS !4410 E FOUNTAIN BLVD !COLORADO SPRIN !CO!80916!16000!041!08!COLORADO SPRINGS !EL PASO !COLORADO !+000003175920!N!N!000519009204!J099!MAINT &… Key points: 1. The contract value of $2.2 billion for electronic systems maintenance and repair is substantial. 2. L3Harris Technologies is a key competitor in this sector, indicating a competitive landscape. 3. The 'full and open competition' method suggests a potentially fair price discovery process. 4. The sector is IT, specifically focusing on electronic and communication systems.
Value Assessment
Rating: good
The contract value of $2.2 billion appears reasonable given the duration and scope of maintenance and repair for complex electronic systems. Benchmarking against similar long-term IT support contracts would provide a more precise assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which generally promotes competitive pricing and ensures the government receives the best value. The specific price discovery mechanisms within this competition are not detailed but the method itself is a positive indicator.
Taxpayer Impact: The competitive nature of the award is expected to yield a fair price, minimizing unnecessary taxpayer expenditure on essential defense electronic systems.
Public Impact
Ensures continued operational readiness of critical Air Force electronic and communication systems. Supports advanced technological infrastructure within the Department of Defense. Potential for job creation and economic activity in Colorado Springs, CO.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Contract duration is exceptionally long (over 22 years).
- Cost-plus contract type can lead to cost overruns if not managed tightly.
- Limited detail on specific performance metrics and their impact on pricing.
Positive Signals
- Awarded under full and open competition.
- Significant value suggests a critical and sustained need.
- Contractor has a strong presence in the specified location.
Sector Analysis
This contract falls within the IT sector, specifically focusing on the maintenance and repair of electronic and communication systems. Spending in this area is crucial for national defense, and benchmarks vary widely based on system complexity and service level agreements.
Small Business Impact
While the primary awardee is ITT Industries, Inc. (now part of L3Harris), the contract details do not specify the extent of subcontracting to small businesses. Further analysis would be needed to determine the impact on the small business sector.
Oversight & Accountability
The long duration of the contract necessitates robust oversight from the Department of Defense to ensure performance standards are met and costs remain controlled. Regular performance reviews and audits are critical for accountability.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Contract duration is exceptionally long (over 22 years).
- Cost-plus contract type can lead to cost overruns if not managed tightly.
- Potential for technological obsolescence of maintained equipment over the contract's lifespan.
- Limited transparency on specific performance metrics and their financial impact.
Tags
search-detection-navigation-guidance-aer, department-of-defense, co, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.23 billion to L3HARRIS TECHNOLOGIES, INC.. 200204!000024!5700!GV59 !ESC/NDK !F1962802C0010 !A!N! !N! !20020130!20020930!052819732!052819732!001216845!N!ITT INDUSTRIES, INC , SYSTEMS !4410 E FOUNTAIN BLVD !COLORADO SPRIN !CO!80916!16000!041!08!COLORADO SPRINGS !EL PASO !COLORADO !+000003175920!N!N!000519009204!J099!MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !3GWQ!474L BMEWS !541512!E! !3! ! ! ! ! !99990909!B! ! !B! !A!N!R!2!002!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!D!N! ! ! ! ! ! !0001!
Who is the contractor on this award?
The obligated recipient is L3HARRIS TECHNOLOGIES, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $2.23 billion.
What is the period of performance?
Start: 2002-01-30. End: 2024-09-29.
What is the historical performance of ITT Industries, Inc. (now L3Harris) on similar large-scale defense IT maintenance contracts?
ITT Industries, Inc., and subsequently L3Harris Technologies, Inc., have a long history of providing complex electronic systems and support to the Department of Defense. Their performance on similar contracts would typically be evaluated based on on-time delivery, system uptime, adherence to technical specifications, and cost control. Past performance reviews and award data would offer insights into their reliability and efficiency in managing large, long-term defense contracts.
How does the 'Cost Plus Incentive Fee' structure mitigate risks associated with long-term maintenance contracts?
The Cost Plus Incentive Fee (CPIF) structure aims to incentivize the contractor to control costs and meet performance targets. The fee is adjusted based on whether actual costs are below or above a target cost, and performance outcomes. This can align the contractor's profit motive with the government's goals of cost efficiency and high performance, thereby mitigating some risks inherent in long-term, complex service contracts.
What are the potential risks of a contract spanning over 22 years for electronic systems maintenance?
A contract spanning over 22 years carries significant risks, including technological obsolescence of the systems being maintained, potential for contractor performance degradation over time, and difficulty in accurately forecasting future maintenance needs and costs. Market conditions and the competitive landscape can also change dramatically over such a long period, potentially impacting the initial assumptions of the contract's value and fairness.
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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 4450 FOUNTAIN BLVD, COLORADO SPRINGS, CO, 80916
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $5,665,048,540
Exercised Options: $4,863,074,255
Current Obligation: $2,226,709,933
Actual Outlays: $6,989,327
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2002-01-30
Current End Date: 2024-09-29
Potential End Date: 2024-09-29 00:00:00
Last Modified: 2024-09-04
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