Department of Defense awards $31.7M contract for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $31,710,922 ($31.7M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2017-10-01

End Date: 2018-09-30

Contract Duration: 364 days

Daily Burn Rate: $87.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

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

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $31.7 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: IGF::OT::IGF ACAT III BIG SAFARI Key points: 1. Contract awarded via other-than-full-and-open competition, limiting potential cost savings. 2. High contract value suggests significant need for specialized aircraft components. 3. Single award indicates potential lack of market competition or specific contractor capability. 4. Performance period of one year provides limited scope for long-term value assessment. 5. Contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 6. Geographic location in New Hampshire may impact local economic benefits. 7. Lack of small business set-aside raises questions about broader economic inclusion.

Value Assessment

Rating: questionable

The contract's value of over $31 million for a one-year period for aircraft parts warrants scrutiny. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The Cost Plus Fixed Fee (CPFF) contract type, while potentially useful for complex or uncertain scopes, can lead to higher costs for the government if not managed diligently, as the contractor is reimbursed for all allowable costs plus a fixed fee. This structure may not represent the best value for taxpayers without a clear demonstration of necessity and lack of alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using other-than-full-and-open competition, meaning only one source was solicited. This approach is typically justified when only one responsible source is available or when there is a compelling urgency. The lack of competition means the government did not benefit from a range of proposals and pricing, potentially leading to a higher price than if multiple bidders had vied for the contract. The specific reasons for this sole-source award are not detailed in the provided data.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the lowest possible price through competitive negotiation, potentially resulting in higher costs for taxpayers.

Public Impact

The primary beneficiaries are likely the Department of Defense and its operational readiness, specifically concerning aircraft maintenance and functionality. The contract delivers essential aircraft parts and auxiliary equipment, crucial for maintaining the airworthiness of military aircraft. The geographic impact is primarily centered in New Hampshire, where the contractor is located, potentially creating or sustaining local jobs. Workforce implications may include specialized manufacturing and logistics roles within the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Cost Plus Fixed Fee contract type can incentivize higher costs.
Limited performance period restricts long-term value assessment.
No indication of small business participation or subcontracting.

Positive Signals

Contract addresses a critical need for aircraft parts.
Awardee is a known entity within defense contracting.
Fixed fee component provides some cost predictability compared to other cost-reimbursement types.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, stringent quality requirements, and significant government procurement. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, a segment that supports the broader defense industrial base. Spending in this area is critical for maintaining military readiness. Comparable spending benchmarks are difficult to establish without more specific details on the parts procured, but the overall defense budget allocates substantial resources to aircraft sustainment and upgrades.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). There is no information regarding subcontracting plans. This suggests that the primary contractor, L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P., will likely perform the majority of the work. The absence of small business involvement in this specific award means that opportunities for smaller enterprises within the defense supply chain are not being leveraged through this particular contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The specific contract type (CPFF) requires careful monitoring of allowable costs and the fixed fee. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected. Transparency is limited by the sole-source nature of the award, as public justification and competitive proposals are not available.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Support
Military Aircraft Sustainment
Aerospace Component Production

Risk Flags

Sole-source award raises concerns about price reasonableness.
Cost Plus Fixed Fee contract type may lead to higher costs.
Lack of small business participation limits economic opportunity.
Limited performance period restricts long-term value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.7 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 $31.7 million.

What is the period of performance?

Start: 2017-10-01. End: 2018-09-30.

What specific aircraft parts or auxiliary equipment are being procured under this contract?

The provided data identifies the North American Industry Classification System (NAICS) code as 336413, which corresponds to 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, the specific nature of the parts or equipment is not detailed. This information is crucial for understanding the criticality of the procurement, assessing potential alternatives, and benchmarking costs effectively. Without this detail, it's challenging to determine if the $31.7 million expenditure is justified by the necessity and uniqueness of the items supplied.

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

The data indicates the contract was awarded via 'other-than-full-and-open competition' (ct: NOT COMPETED), which is synonymous with a sole-source award in this context. Federal Acquisition Regulation (FAR) Part 6 outlines the circumstances under which such awards are permissible, typically including situations where only one responsible source exists, or for urgent and compelling reasons. Without further documentation from the Department of the Air Force, the specific justification remains unclear. This lack of competition limits the government's ability to achieve the best possible price and value.

How does the Cost Plus Fixed Fee (CPFF) contract type impact the overall cost and risk for the government?

The CPFF contract type reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost is not. This structure can incentivize the contractor to control costs to maximize their profit margin (as the fee is a percentage of the estimated cost, but the fee itself is fixed). However, it also places the risk of cost overruns on the government, as all allowable costs are reimbursed. For a contract valued at over $31 million, diligent oversight of incurred costs is essential to ensure the government is not overpaying.

What is the track record of L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. with similar Department of Defense contracts?

L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. is a significant defense contractor with a substantial history of performing work for the Department of Defense. While specific details on their past performance for contracts identical to this one are not provided, the company generally has experience in aerospace, defense electronics, and integrated systems. Assessing their track record would involve reviewing past performance evaluations, on-time delivery rates, and cost control history on comparable contracts, which are typically available through government databases like the Contractor Performance Assessment Reporting System (CPARS).

Are there any comparable contracts for similar aircraft parts that could serve as a benchmark for this award?

Without knowing the specific parts procured, it is difficult to identify direct comparable contracts. However, the NAICS code 336413 covers a broad range of aircraft parts. Benchmarking would ideally involve comparing the unit prices, total costs, and performance metrics of this contract against other sole-source or competitively awarded contracts for similar components within the Department of Defense or other federal agencies. Publicly available contract databases and reports from the Government Accountability Office (GAO) might offer insights into pricing trends for related aerospace manufacturing procurements.

What are the potential risks associated with the one-year duration and the specific contract type?

The one-year duration limits the scope for long-term strategic planning and potential economies of scale. It suggests a need for immediate or short-term supply. The CPFF contract type, as mentioned, carries the risk of cost overruns for the government, as the contractor is reimbursed for all allowable costs. If the scope is not well-defined or if unforeseen issues arise, the total cost could significantly exceed the initial estimate, even with a fixed fee. This necessitates robust government oversight to manage costs effectively throughout the performance period.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $31,836,076

Exercised Options: $31,836,076

Current Obligation: $31,710,922

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $6,699,157

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