DoD's $224M L3Harris contract for aircraft parts shows limited competition and potential value concerns

Contract Overview

Contract Amount: $22,436,661 ($22.4M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2018-09-26

End Date: 2023-11-30

Contract Duration: 1,891 days

Daily Burn Rate: $11.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BIG SAFARI

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $22.4 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: BIG SAFARI Key points: 1. Contract awarded through a sole-source, not-competed process, raising questions about price discovery. 2. Significant contract duration of 1891 days suggests a long-term need for these aircraft parts. 3. The prime contractor, L3Harris Technologies, is a major defense industry player. 4. The contract falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' a critical defense sub-sector. 5. No small business set-aside was indicated, potentially limiting opportunities for smaller firms. 6. The contract's value is substantial, warranting close scrutiny of its cost-effectiveness.

Value Assessment

Rating: questionable

Benchmarking the value of this $224 million contract is challenging due to its sole-source nature and lack of publicly available comparable data. The firm fixed-price contract type suggests that the contractor bears the risk of cost overruns, which is positive. However, without competitive bidding, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers received the best possible deal. Further analysis would require access to detailed cost breakdowns and comparisons with similar sole-source procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'not competed' procedure, indicating a sole-source procurement. This means that only one bidder, L3Harris Technologies Integrated Systems L.P., was solicited or considered for this award. Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, or in cases of urgent need. The lack of competition means that the government did not benefit from the price reductions and innovation that typically arise from a competitive bidding process.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium for these aircraft parts, as there was no pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the Department of Defense and its operational readiness, ensuring the availability of necessary aircraft parts. The contract delivers essential components for aircraft maintenance and operation, supporting the Air Force's fleet. The geographic impact is primarily within Texas, where the contractor is located, but the ultimate impact is on Air Force operations nationwide. The contract supports jobs within L3Harris Technologies and its supply chain, contributing to the aerospace manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency and accountability in government spending.
Long contract duration could mask inefficiencies or changing needs over time.
Reliance on a single contractor for critical parts could pose supply chain risks.

Positive Signals

Firm fixed-price contract type shifts cost risk to the contractor.
L3Harris Technologies is an established defense contractor with a track record.
The contract supports critical defense capabilities and national security objectives.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a vital component of the aerospace and defense industry. This sector is characterized by high technological demands, stringent quality control, and significant government procurement. The total market for aircraft parts manufacturing is substantial, with defense contracts forming a significant portion. Benchmarking this specific contract's value against industry standards is difficult without more granular data, but its scale suggests it represents a notable portion of L3Harris's business in this category.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This means that opportunities for small businesses to participate as prime contractors were not prioritized. While L3Harris Technologies may engage small businesses as subcontractors, the absence of a specific set-aside suggests that the primary award was not directed towards fostering small business growth. This could limit the direct impact on the small business ecosystem for this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management oversight mechanisms. The firm fixed-price nature provides some cost control, but the sole-source award necessitates robust performance monitoring to ensure delivery and quality. Transparency is limited due to the lack of competition. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Procurement
Defense Logistics Agency Contracts
Aerospace Manufacturing Contracts
Sole-Source Defense Procurements
Air Force Sustainment Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.4 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. 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 $22.4 million.

What is the period of performance?

Start: 2018-09-26. End: 2023-11-30.

What is L3Harris Technologies' track record with similar sole-source defense contracts?

L3Harris Technologies Integrated Systems L.P. has a significant history of securing defense contracts, including those awarded through non-competitive procedures. As a major defense contractor, they frequently engage with the Department of Defense across various platforms and systems. Analyzing their past sole-source awards for aircraft parts or similar components would reveal patterns in pricing, performance, and adherence to delivery schedules. Publicly available data suggests a consistent volume of work with the DoD, indicating a strong existing relationship. However, the specific details of their performance on prior sole-source contracts, particularly regarding cost efficiency and value delivered, would require deeper investigation into contract performance reports and any associated audits or reviews.

How does the $224 million value compare to other sole-source aircraft parts contracts?

Comparing the $224 million value of this L3Harris contract to other sole-source aircraft parts contracts is challenging without access to a comprehensive database of all such procurements, including their specific justifications and pricing structures. However, as a sole-source award, this figure is inherently less transparent regarding value for money than a competitively bid contract. Generally, sole-source contracts can sometimes be priced higher due to the lack of competitive pressure. To assess value, one would ideally compare the per-unit cost of the parts procured under this contract to similar parts procured competitively or through other sole-source agreements where detailed cost data is available. The substantial duration (1891 days) also suggests a significant volume or long-term supply agreement, making direct comparisons difficult without understanding the specific items and quantities involved.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($224 million) include potential overpayment due to the absence of competitive bidding, reduced incentive for the contractor to innovate or optimize costs, and a lack of transparency in the procurement process. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single supplier, potentially limiting future flexibility. Furthermore, without competition, it can be harder to identify and mitigate risks related to the contractor's performance, financial stability, or supply chain vulnerabilities. The long duration of the contract (1891 days) exacerbates these risks, as market conditions and technological needs can change significantly over such a period.

How effective is the firm fixed-price contract type in mitigating cost overruns for sole-source procurements?

The firm fixed-price (FFP) contract type is generally effective in mitigating cost overruns for the government, as it places the responsibility for managing costs and absorbing any overruns on the contractor. This is a significant advantage, especially in sole-source situations where the government has less leverage on pricing. However, the effectiveness of FFP in a sole-source context is contingent on the initial price being fair and reasonable. If the baseline price established in the sole-source negotiation is inflated, the FFP structure will simply lock in that higher cost for the government. Therefore, while FFP shifts cost risk, robust pre-award negotiation and cost analysis are crucial to ensure the initial price is justified, even without competition.

What are the historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of Defense?

The Department of Defense (DoD) consistently allocates substantial funding towards the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, reflecting the ongoing need to maintain and modernize its vast aircraft fleet. Historical spending data reveals a multi-billion dollar annual expenditure in this sector, driven by the operational tempo, aging aircraft, and development of new platforms. This spending is often characterized by a mix of competitive and sole-source awards, with sole-source procurements frequently justified for proprietary parts, specialized components, or when only one qualified manufacturer exists. Analyzing trends over the past decade would show fluctuations tied to defense budgets, major operational deployments, and specific aircraft program sustainment requirements. The $224 million awarded to L3Harris represents a significant, but not unprecedented, single contract within this broader spending landscape.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

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: 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: $22,487,110

Exercised Options: $22,487,110

Current Obligation: $22,436,661

Actual Outlays: $563,547

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $1,070,900

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