Air Force awards $43.8M contract for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $43,780,170 ($43.8M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2017-11-22

End Date: 2019-11-30

Contract Duration: 738 days

Daily Burn Rate: $59.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: IGF::OT::IGF ACAT III BIG SAFARI

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $43.8 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: IGF::OT::IGF ACAT III BIG SAFARI Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value for aircraft parts suggests a critical need for specialized components. 3. The duration of the contract (738 days) indicates a long-term requirement for these parts. 4. Awarded to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P., a major defense contractor. 5. Geographic location of the contractor in Texas may have implications for local economies. 6. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code points to a niche market.

Value Assessment

Rating: questionable

Benchmarking the value of this $43.8 million contract is challenging due to its sole-source nature and the specific nature of aircraft parts. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The contract type 'COST NO FEE' suggests the government bears the cost of performance, and the contractor receives no fee, which is unusual and warrants further investigation into the cost structure and justification.

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 used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means there were no other bidders, and therefore no direct price comparison or negotiation leverage was available to the government.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. It also limits opportunities for other businesses to secure government contracts.

Public Impact

The primary beneficiaries are likely the Department of the Air Force, ensuring the operational readiness of its aircraft fleet. Services delivered include the provision of critical aircraft parts and auxiliary equipment. The geographic impact is primarily within Texas, where the contractor is located, potentially supporting local jobs and businesses. Workforce implications may include specialized manufacturing and logistics roles at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer money.
The sole-source nature limits transparency in the procurement process.
The 'COST NO FEE' contract type requires careful scrutiny of cost justification and oversight.

Positive Signals

Ensures the availability of critical aircraft parts, supporting Air Force operational readiness.
Award to an established contractor like L3HARRIS TECHNOLOGIES suggests a level of reliability and expertise.
The contract supports a specific manufacturing sector, contributing to the defense industrial base.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. This contract for aircraft parts falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, a specialized segment of the broader defense industrial base. Spending in this area is crucial for maintaining aging fleets and developing new aviation technologies. Comparable spending benchmarks are difficult to establish without more specific part details, but the overall defense procurement budget runs into hundreds of billions annually.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. The sole-source award to a large prime contractor suggests that small businesses were likely not directly involved in this specific procurement, potentially missing out on subcontracting roles.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and financial management offices. Given the sole-source nature and 'COST NO FEE' structure, enhanced oversight may be warranted to ensure costs are reasonable and the contractor is performing effectively. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Maintenance and Repair
Defense Procurement
Aerospace Manufacturing
Air Force Logistics

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Contract type ('COST NO FEE') requires heightened cost oversight.
Lack of transparency in the procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.8 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. IGF::OT::IGF ACAT III BIG SAFARI

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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $43.8 million.

What is the period of performance?

Start: 2017-11-22. End: 2019-11-30.

What specific aircraft components or parts were procured under this contract?

The provided data indicates the contract falls under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, the specific components or parts are not detailed in the available information. This category encompasses a wide range of items, from engine components and airframes to electronic systems and auxiliary equipment. Understanding the exact nature of these parts is crucial for a more accurate assessment of their necessity, cost, and the justification for a sole-source award. Without this specificity, it's difficult to determine if alternative suppliers or parts could have been sourced competitively.

What is the justification for awarding this contract on a sole-source basis?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For aircraft parts, this could stem from proprietary technology, unique manufacturing capabilities, or the need for parts specifically designed for a particular aircraft model where only the original equipment manufacturer or an authorized supplier can provide them. The Department of the Air Force would have a formal justification document outlining the specific reasons why competition was not feasible or practicable for this particular procurement. This justification is critical for ensuring the award was made appropriately and in the best interest of the government.

How does the 'COST NO FEE' contract type impact the government's financial risk and oversight?

A 'COST NO FEE' contract means the government reimburses the contractor for all allowable costs incurred in performing the contract but does not pay any additional fee or profit. This structure shifts the financial risk primarily to the government, as it bears the full cost of performance. While it can be used in situations where profit might be inappropriate or difficult to determine, it necessitates robust government oversight to ensure that costs are reasonable, allocable, and allowable. The absence of a fee means the contractor has less direct financial incentive to control costs, making diligent monitoring by the contracting agency paramount to prevent cost overruns and ensure value.

What is the historical spending pattern for similar aircraft parts by the Department of the Air Force?

Analyzing historical spending patterns for similar aircraft parts by the Department of the Air Force would provide context for the $43.8 million award. Without specific part details, a broad comparison to 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' spending is possible. The Air Force, as a major aviation force, consistently procures a vast array of parts for its diverse fleet. Trends in this spending can be influenced by aircraft modernization programs, aging fleet sustainment needs, and geopolitical factors. A review of past sole-source awards in this category could reveal patterns of limited competition and potentially higher unit costs compared to competitively procured items, highlighting the importance of scrutinizing such awards.

What is L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.'s track record with sole-source defense contracts?

L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. is a significant defense contractor with a substantial history of performing various contracts for the U.S. military. Their track record with sole-source contracts would need to be examined individually. Large contractors often receive sole-source awards due to their specialized capabilities, existing system knowledge, or sole manufacturing rights for certain components. Assessing their performance on past sole-source awards, including adherence to cost, schedule, and quality requirements, would be essential to gauge their reliability and the appropriateness of this specific award. Publicly available contract databases and watchdog reports can offer insights into their performance history.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 10001 JACK FINNEY BLVD, GREENVILLE, TX, 75402

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: $43,851,470

Exercised Options: $43,851,470

Current Obligation: $43,780,170

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $71,700

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862016G3027

IDV Type: BOA

Timeline