DoD's $80M Aircraft Upgrade Program Lacks Competition, Risks Overpaying for Obsolete Parts

Contract Overview

Contract Amount: $80,274,605 ($80.3M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2014-10-10

End Date: 2020-03-31

Contract Duration: 1,999 days

Daily Burn Rate: $40.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF SUPPORT THE STANDARDIZATION, REMOVAL OF OBSOLESCENCE AND UPGRADE PROGRAM FOR THE ARGENTINE AIR FORCE

Place of Performance

Location: WACO, MCLENNAN County, TEXAS, 76705

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $80.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: IGF::OT::IGF SUPPORT THE STANDARDIZATION, REMOVAL OF OBSOLESCENCE AND UPGRADE PROGRAM FOR THE ARGENTINE AIR FORCE Key points: 1. Significant spending on aircraft modernization with a focus on obsolescence. 2. Sole-source award to L3Harris Technologies raises concerns about price discovery. 3. Long contract duration (2014-2020) may have locked in suboptimal pricing. 4. No small business participation noted, potentially limiting broader economic benefit.

Value Assessment

Rating: questionable

The contract's firm fixed price structure and lack of competition make it difficult to assess value. Without competitive bids, it's hard to determine if the $80M price reflects fair market value for the services and parts provided, especially given the focus on obsolescence.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was awarded on a sole-source basis, indicating a lack of competition. This significantly limits price discovery and may lead to inflated costs for the Argentine Air Force's modernization program.

Taxpayer Impact: Taxpayers may be bearing higher costs due to the absence of competitive bidding, potentially diverting funds from other critical defense needs.

Public Impact

Modernization of aging military aircraft is crucial for national security. Reliance on sole-source contracts can stifle innovation and increase costs. Ensuring value for taxpayer money in defense contracts is a public concern. Lack of small business involvement means missed opportunities for economic growth.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Potential for overpayment due to lack of competition
Focus on obsolescence may indicate outdated technology being procured
No small business participation

Positive Signals

Addresses critical need for aircraft modernization
Long-term contract provides stability for the vendor

Sector Analysis

This contract falls within the Defense sector, specifically Aircraft Manufacturing. Spending benchmarks in this area are highly variable, depending on the complexity and age of the aircraft being upgraded. The $80M figure is substantial for a single contract.

Small Business Impact

The contract data indicates no small business participation (ss: false, sb: false). This suggests that the prime contractor, L3Harris Technologies, did not subcontract with small businesses for this significant award, potentially missing opportunities to leverage specialized capabilities and foster economic inclusion.

Oversight & Accountability

The sole-source nature of this contract warrants scrutiny. Oversight should focus on ensuring that the pricing is justified and that the services rendered are essential and effectively delivered, despite the lack of competitive pressure to drive efficiency.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition
Potential for inflated pricing
Limited transparency in price justification
No small business participation
Long contract duration may not reflect current market value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. IGF::OT::IGF SUPPORT THE STANDARDIZATION, REMOVAL OF OBSOLESCENCE AND UPGRADE PROGRAM FOR THE ARGENTINE AIR FORCE

Who is the contractor on this award?

The obligated recipient is L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $80.3 million.

What is the period of performance?

Start: 2014-10-10. End: 2020-03-31.

What specific obsolescence issues were addressed, and were alternative, more cost-effective solutions explored before opting for a sole-source upgrade?

The data does not specify the exact obsolescence issues. However, a sole-source award for an upgrade program focused on obsolescence raises questions. It's crucial to understand if a thorough market analysis was conducted to identify if newer, more cost-effective technologies or alternative upgrade paths existed. Without this, the $80M could be funding a solution that is not the most efficient or technologically advanced available.

How was the 'fair and reasonable' price determined for this sole-source contract, and what mechanisms were in place to prevent potential cost overruns?

Determining a 'fair and reasonable' price for a sole-source contract is inherently challenging. The Department of Defense typically relies on cost analysis, historical pricing data, and negotiation. However, without competitive benchmarking, the risk of overpayment is elevated. Robust oversight and detailed justification of the price components, including labor, materials, and profit, are essential to mitigate this risk.

Given the contract's duration and sole-source nature, what is the long-term strategic value of this specific upgrade program for the Argentine Air Force's operational readiness?

The long-term strategic value hinges on whether the upgrades genuinely enhance the aircraft's operational readiness and extend their useful life effectively. A sole-source award for a program spanning several years (2014-2020) necessitates careful evaluation to ensure the chosen solutions are sustainable and align with future defense needs, rather than merely addressing immediate obsolescence with potentially outdated approaches.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: INSTALLATION OF EQUIPMENT › INSTALLATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 7500 MAEHR RD, WACO, TX, 76705

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $80,274,605

Exercised Options: $80,274,605

Current Obligation: $80,274,605

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $23,921,114

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline