DoD awards $173M to L3Harris for AN/ALQ-172 countermeasures, a sole-source, cost-plus contract

Contract Overview

Contract Amount: $17,296,342 ($17.3M)

Contractor: L3harris Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-06-05

End Date: 2027-10-04

Contract Duration: 1,216 days

Daily Burn Rate: $14.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: AN/ALQ-172 COUNTERMEASURES PROGRAM & ENHANCEMENT MODERNIZATIONS

Place of Performance

Location: CLIFTON, PASSAIC County, NEW JERSEY, 07014

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $17.3 million to L3HARRIS TECHNOLOGIES, INC. for work described as: AN/ALQ-172 COUNTERMEASURES PROGRAM & ENHANCEMENT MODERNIZATIONS Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Cost-plus contract type allows for reimbursement of costs plus a fixed fee, which can incentivize higher spending. 3. The contract duration of over three years suggests a significant, ongoing need for these specialized countermeasures. 4. The specific North American Industry Classification System (NAICS) code 334513 points to a niche manufacturing sector. 5. Performance is in New Jersey, indicating a concentration of defense manufacturing in that region. 6. The absence of small business set-aside suggests larger prime contractors are expected to handle this work.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source, cost-plus contract is challenging without competitive bids. The cost-plus structure, while offering flexibility for evolving requirements, inherently carries a higher risk of cost overruns compared to fixed-price contracts. The total award amount of $173 million over approximately four years needs careful scrutiny to ensure it aligns with the scope of work and market rates for similar advanced electronic warfare systems. Without competitive data, it's difficult to definitively assess if this represents excellent value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically justified when only one vendor possesses the necessary unique capabilities, technology, or intellectual property. However, the lack of competition means there was no opportunity for price discovery through bidding, potentially leading to higher costs for the government and taxpayers. The government must have a strong justification for not seeking competitive proposals.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing. This can result in taxpayers potentially paying a premium for goods and services that could have been acquired at a lower cost through a competitive process.

Public Impact

The primary beneficiaries are the U.S. Air Force, receiving critical electronic warfare capabilities to enhance aircraft survivability. The contract delivers modernized AN/ALQ-172 countermeasures, vital for protecting aircrews and platforms from advanced threats. Geographic impact is concentrated in New Jersey, supporting specialized manufacturing jobs and the defense industrial base in that state. Workforce implications include employment for highly skilled engineers, technicians, and manufacturing personnel at L3Harris Technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus contract type can lead to higher overall costs if not managed tightly.
Lack of transparency in the justification for sole-sourcing requires further review.
Long contract duration increases exposure to potential cost escalations over time.

Positive Signals

Addresses a critical defense need for advanced electronic warfare capabilities.
L3Harris Technologies is an established provider of defense electronics.
Modernization efforts aim to keep U.S. airpower capabilities current with evolving threats.

Sector Analysis

The defense electronics sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for electronic warfare systems like the AN/ALQ-172 are crucial for maintaining air superiority and protecting personnel. The market is dominated by a few large prime contractors capable of developing and integrating such complex systems. Spending in this sub-sector is driven by evolving threat landscapes and the need for technological superiority, often resulting in sole-source or limited-competition awards due to specialized requirements.

Small Business Impact

The contract's sole-source nature and the nature of advanced electronic warfare systems suggest that small business participation is likely to be through subcontracting opportunities rather than direct prime contracting. There is no indication of a small business set-aside for this award. The prime contractor, L3Harris Technologies, will likely determine the extent of small business involvement in its supply chain, which could be significant depending on the specific components and services required.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General of the Department of Defense may conduct audits or investigations into the contract's performance and cost management, particularly given the cost-plus structure. Transparency regarding the justification for the sole-source award and ongoing cost reporting will be key accountability measures.

Related Government Programs

AN/ALQ-99 Tactical Jamming System
Advanced Threat Warning Systems
Electronic Warfare Pods
Aircraft Survivability Equipment
DoD Electronic Warfare Modernization Programs

Risk Flags

Sole-source award
Cost-plus contract type
Potential for cost overruns
Limited price competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.3 million to L3HARRIS TECHNOLOGIES, INC.. AN/ALQ-172 COUNTERMEASURES PROGRAM & ENHANCEMENT MODERNIZATIONS

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 $17.3 million.

What is the period of performance?

Start: 2024-06-05. End: 2027-10-04.

What is the historical spending trend for the AN/ALQ-172 program prior to this award?

Historical spending data for the AN/ALQ-172 program prior to this specific award is not directly provided in the given data. However, the nature of such advanced electronic warfare systems suggests a history of significant investment, often spanning multiple years and contract vehicles for development, production, and sustainment. Programs like the AN/ALQ-172 typically evolve through various modernization phases to counter emerging threats. Without access to historical contract databases or specific program budget documents, a precise trend analysis is not possible. Generally, such systems see consistent funding to maintain technological relevance, with peaks during major upgrade cycles or new threat introductions. The current award of $173 million indicates a substantial ongoing commitment to this capability.

How does the cost-plus fixed fee (CPFF) contract type compare to other contract types for similar defense electronics programs?

The Cost-Plus Fixed Fee (CPFF) contract type is common in defense acquisition, particularly for research, development, and complex system integration where the final costs are difficult to estimate precisely upfront. Unlike fixed-price contracts, CPFF reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This offers flexibility for evolving requirements but shifts cost risk to the government. Compared to Firm-Fixed-Price (FFP) contracts, CPFF generally results in higher government risk and potentially higher final costs if not rigorously managed. However, for programs involving novel technology or uncertain development paths, CPFF can be more appropriate than FFP, which might lead to contractors inflating initial bids to cover unforeseen risks.

What are the specific risks associated with a sole-source award for advanced electronic warfare systems?

Sole-source awards for advanced electronic warfare (EW) systems present several risks. Primarily, the lack of competition eliminates the government's ability to leverage market forces to achieve the best possible price, potentially leading to higher costs for taxpayers. Without competing bids, there is less incentive for the contractor to innovate on cost-efficiency. Furthermore, it can create a dependency on a single supplier, making future procurement and sustainment vulnerable to that contractor's pricing strategies or business stability. Ensuring fair and reasonable pricing requires extensive government negotiation and cost analysis, which can be more resource-intensive than evaluating competitive proposals. There's also a risk that alternative, potentially more innovative or cost-effective solutions from other vendors are not considered.

What is L3Harris Technologies' track record with similar defense electronics contracts?

L3Harris Technologies, formed through the merger of L3 Technologies and Harris Corporation, has a substantial and extensive track record in delivering defense electronics, including electronic warfare systems, communications, and sensor technologies. The company is a recognized prime contractor for numerous U.S. Department of Defense programs across various branches. Their portfolio includes a wide range of capabilities relevant to the AN/ALQ-172 program, such as signal intelligence, electronic attack, and self-protection suites. While specific performance metrics for all past contracts are not detailed here, L3Harris is generally considered a capable and experienced supplier within the defense industrial base, frequently winning large, complex sole-source and competitive contracts.

How does the $173 million award compare to the overall DoD budget for electronic warfare modernization?

The $173 million award for the AN/ALQ-172 countermeasures program represents a significant but specific investment within the broader Department of Defense (DoD) budget for electronic warfare (EW) modernization. The DoD allocates billions of dollars annually towards EW capabilities, encompassing a wide array of systems including jamming, threat detection, electronic attack, and cyber EW. This single contract, while substantial, is one component of a much larger strategic effort to maintain technological superiority in the electromagnetic spectrum. Comparing this award to the total DoD EW budget would place it as a notable allocation for a specific, critical platform enhancement, underscoring the importance placed on protecting air assets.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Instruments and Related Products Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $34,059,723

Exercised Options: $34,059,723

Current Obligation: $17,296,342

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852321D0004

IDV Type: IDC

Timeline