DoD awards $45M+ for non-recurring engineering services, with limited competition and a 5-year duration

Contract Overview

Contract Amount: $45,077,249 ($45.1M)

Contractor: L3harris Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-09-25

End Date: 2025-12-31

Contract Duration: 1,923 days

Daily Burn Rate: $23.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NON-RECURRING ENGINEERING SERVICES FOR LRU-21 IN SUPPORT OF AN/ALQ-172.

Place of Performance

Location: CLIFTON, PASSAIC County, NEW JERSEY, 07014

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $45.1 million to L3HARRIS TECHNOLOGIES, INC. for work described as: NON-RECURRING ENGINEERING SERVICES FOR LRU-21 IN SUPPORT OF AN/ALQ-172. Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing. 2. Long contract duration of over 5 years may indicate complex or evolving requirements. 3. Cost-plus fixed-fee contract type can incentivize cost overruns if not closely monitored. 4. Services are for specialized electronic warfare support, indicating a niche but critical capability. 5. The contract is a definitive contract, suggesting a clear scope of work. 6. Awarded by the Department of the Air Force, highlighting a specific military need.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed cost breakdowns and comparisons to similar non-recurring engineering efforts. The Cost Plus Fixed Fee (CPFF) structure, while common for R&D and complex services, carries inherent risk of cost escalation if not managed diligently. The lack of competition further complicates a direct value assessment, as there's no market-driven price discovery. However, the contract's duration and the specialized nature of the work suggest a significant investment in a critical capability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where full and open competition is not feasible. The lack of multiple bidders means there was no direct price competition, which can sometimes lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing, potentially resulting in higher expenditures for taxpayers.

Public Impact

The primary beneficiary is the Department of the Air Force, which will receive specialized engineering services. These services are crucial for the sustainment and potential upgrades of the AN/ALQ-172 electronic warfare system. The contract supports advanced defense capabilities, contributing to national security. Work is anticipated to be performed in New Jersey, potentially impacting the local high-tech workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus fixed-fee contract type can lead to cost overruns if not managed.
Long contract duration may indicate evolving requirements or potential for scope creep.
Specialized nature of services means limited alternative providers.
Lack of transparency on specific cost elements due to sole-source nature.

Positive Signals

Award to a known entity (L3Harris) suggests potential for established performance.
Definitive contract implies a defined scope, aiding management.
Services support critical defense electronic warfare capabilities.
Long duration allows for sustained development and integration.
Contracting for non-recurring engineering addresses foundational development needs.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense electronics and electronic warfare systems. The market for such specialized services is often characterized by a limited number of highly capable contractors due to the technical expertise and security clearances required. Spending in this area is driven by the need to maintain and modernize sophisticated military hardware, with significant government investment allocated to research, development, and sustainment of advanced defense technologies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the sole-source nature of the award suggests that subcontracting opportunities for small businesses may be limited and dependent on the prime contractor's discretion. Without specific subcontracting plans or goals mandated, the direct impact on the small business ecosystem is likely minimal, though L3Harris may engage small businesses for specific components or support services.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring are essential to control costs and ensure the delivery of required services. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the agency should provide accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

AN/ALQ-172 Electronic Warfare System
Defense Electronic Warfare Programs
Aerospace Engineering Services
Department of Defense Research and Development

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.1 million to L3HARRIS TECHNOLOGIES, INC.. NON-RECURRING ENGINEERING SERVICES FOR LRU-21 IN SUPPORT OF AN/ALQ-172.

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 $45.1 million.

What is the period of performance?

Start: 2020-09-25. End: 2025-12-31.

What is the track record of L3Harris Technologies, Inc. in performing similar non-recurring engineering services for the Department of Defense?

L3Harris Technologies, Inc. has a significant track record in providing advanced electronic warfare systems and related engineering services to the Department of Defense. They are a major defense contractor with extensive experience in areas such as electronic warfare, communications, and avionics. For non-recurring engineering (NRE) services specifically, their history includes development and integration of complex systems, often involving proprietary technologies. While specific NRE contracts for the AN/ALQ-172 system are not detailed here, L3Harris's overall portfolio suggests a capability to handle such specialized, high-value engineering efforts. Performance on past contracts, including adherence to schedule, budget, and technical specifications, would be a key factor in assessing their suitability for this award. Government contract databases and performance reports (e.g., CPARS) would provide more granular insights into their past performance.

How does the awarded amount of $45,077,249.02 compare to similar non-recurring engineering contracts for electronic warfare systems?

Comparing the $45 million award for non-recurring engineering (NRE) services for the LRU-21 in support of the AN/ALQ-172 to similar contracts is challenging without access to a comprehensive database of classified or specialized defense contracts. NRE costs can vary significantly based on the complexity of the system, the scope of the engineering effort (e.g., design, prototyping, testing, integration), and the specific technology involved. Electronic warfare systems are inherently complex and require specialized expertise, often leading to higher NRE costs compared to less sophisticated systems. The five-year duration of this contract also suggests a substantial scope of work. Without specific benchmarks for AN/ALQ-172 related NRE or comparable EW systems, it's difficult to definitively state if this amount is high or low. However, for advanced defense technology development, such figures are not uncommon.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for specialized engineering services?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to L3Harris, revolve around cost control and contractor incentive. In a CPFF structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. The risk for the government is that the contractor may have less incentive to control costs, as they are guaranteed to cover their expenses and receive their profit regardless of the final cost. This can lead to cost overruns if the government's oversight is not robust. Conversely, the contractor bears the risk if their actual costs exceed estimates, but the fixed fee mitigates this to some extent. Effective risk mitigation requires stringent cost monitoring, detailed audits, and clear performance metrics to ensure the contractor remains focused on efficiency and value delivery.

What is the significance of this contract for the sustainment and future development of the AN/ALQ-172 electronic warfare system?

This contract is highly significant for the sustainment and potential future development of the AN/ALQ-172 electronic warfare system. Non-recurring engineering (NRE) services are foundational, typically involving the initial design, development, prototyping, and testing of new components or modifications. Awarding NRE services suggests that the Air Force is investing in upgrades, enhancements, or critical sustainment engineering for the AN/ALQ-172. This could involve improving its performance, adapting it to new threats, integrating it with other systems, or ensuring its continued operational readiness over its lifecycle. The long duration (over 5 years) implies a comprehensive engineering effort, crucial for maintaining the system's effectiveness in a rapidly evolving threat environment.

How does the sole-source award impact the government's ability to achieve competitive pricing for these engineering services?

A sole-source award fundamentally limits the government's ability to achieve competitive pricing. When only one vendor is solicited, there is no direct price competition among multiple bidders vying for the contract. The government negotiates directly with the chosen contractor. While the government aims to negotiate a fair and reasonable price, the absence of competing offers means there is no market-driven benchmark to ensure the best possible value. This can potentially lead to higher prices than if the contract had been competed. The justification for a sole-source award typically rests on factors like unique capabilities, proprietary technology, or urgent needs, where the benefits of competition are outweighed by other considerations. However, from a pure pricing perspective, competition is generally the most effective tool for driving down costs.

What are the potential implications of the 1923-day contract duration on program management and budget predictability?

A contract duration of 1923 days (approximately 5 years and 3 months) has several implications for program management and budget predictability. For program management, it allows for a sustained focus on the complex engineering tasks involved, providing continuity and enabling the contractor to build deep expertise. It also allows for phased development and integration, accommodating potential changes or discoveries during the engineering process. However, such a long duration also increases the risk of scope creep, requirement changes, and potential cost increases over time due to inflation or evolving market conditions. For budget predictability, while the fixed fee provides some certainty on profit, the variable cost component in a CPFF contract means the total expenditure is not fully fixed. Agencies must carefully plan and allocate budgets over the multi-year period, and robust oversight is needed to manage costs effectively throughout the contract's life.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852219R0004

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 77 RIVER RD, CLIFTON, NJ, 07014

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

Financial Breakdown

Contract Ceiling: $45,077,249

Exercised Options: $45,077,249

Current Obligation: $45,077,249

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $3,351,430

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline