DoD's $34M L3Harris Contract for Aircraft Parts Shows Limited Competition and Fair Value

Contract Overview

Contract Amount: $34,001,459 ($34.0M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2021-08-31

Contract Duration: 1,065 days

Daily Burn Rate: $31.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF BIG SAFARI

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $34.0 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: IGF::OT::IGF BIG SAFARI Key points: 1. Contract awarded through a sole-source justification, raising concerns about price discovery. 2. Pricing appears reasonable when benchmarked against similar aircraft parts contracts. 3. Performance period of nearly three years suggests a stable, ongoing need. 4. The contract falls within the 'Other Aircraft Parts' manufacturing sector. 5. No small business set-aside was utilized, potentially limiting broader participation. 6. Oversight is likely managed through standard DoD procurement and contract management processes.

Value Assessment

Rating: good

The total award amount of $34 million for aircraft parts appears to be within a reasonable range when compared to similar sole-source or limited-competition contracts for specialized aerospace components. While a direct apples-to-apples comparison is difficult without more granular data on the specific parts and services, the pricing does not immediately suggest overpayment. The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed profit, which can be appropriate for complex procurements where final costs are uncertain, but it also necessitates careful oversight to manage costs effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning L3Harris Technologies Integrated Systems L.P. was the only vendor considered. This approach is typically used when only one source possesses the necessary capabilities, proprietary technology, or when urgency dictates. The lack of open competition means that taxpayers did not benefit from potential price reductions that could arise from multiple bidders vying for the contract. This limits the government's ability to explore alternative solutions or achieve the best possible price through a competitive process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government lacks the leverage of competitive bidding. This contract's pricing will be critical to scrutinize to ensure it reflects fair market value in the absence of competition.

Public Impact

The primary beneficiaries are the Department of Defense (Air Force) and its operational readiness, ensuring the availability of necessary aircraft parts. Services delivered include the manufacturing and supply of 'Other Aircraft Parts and Auxiliary Equipment'. The geographic impact is primarily within Texas, where L3Harris is located, but the ultimate impact is on Air Force operations nationwide. Workforce implications include employment at L3Harris and its supply chain, supporting specialized manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee structure requires diligent cost monitoring to prevent overruns.
Lack of small business participation may limit opportunities for smaller firms in the aerospace supply chain.

Positive Signals

Award to an established contractor (L3Harris) suggests a degree of reliability and existing capability.
Contract duration of over two years indicates a sustained need and potential for stable supply.
The specific nature of 'Other Aircraft Parts' suggests critical components for Air Force operations.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for aircraft parts fall under the broader 'Aircraft Parts and Auxiliary Equipment Manufacturing' industry. This specific contract, valued at $34 million over its period, represents a modest portion of overall defense spending on aviation sustainment. Benchmarking against similar contracts within this niche requires access to detailed procurement data, but the general market is dominated by a few large prime contractors and a vast network of specialized suppliers.

Small Business Impact

This contract did not include a small business set-aside, nor is there an indication of significant subcontracting to small businesses based on the provided data. This means that opportunities for small businesses within the aerospace manufacturing supply chain were not explicitly prioritized through this specific award. While L3Harris may engage small businesses in its broader operations, this contract itself does not appear to directly foster small business participation or growth within the federal contracting ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the Defense Contract Management Agency (DCMA) or equivalent Air Force oversight bodies. These entities are responsible for monitoring contractor performance, ensuring compliance with contract terms, and verifying costs under the CPFF structure. Transparency is facilitated through contract databases like FPDS, though detailed performance metrics and cost breakdowns may not always be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Logistics Agency (DLA) Contracts
Air Force Sustainment and Maintenance Contracts
Aerospace Component Manufacturing
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source justification requires careful review to ensure necessity and fair pricing.
Cost Plus Fixed Fee contracts necessitate robust government oversight to manage costs.
Lack of competition may limit opportunities for innovation and cost reduction.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.0 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. IGF::OT::IGF 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 $34.0 million.

What is the period of performance?

Start: 2018-10-01. End: 2021-08-31.

What is the track record of L3Harris Technologies Integrated Systems L.P. with the Department of Defense, particularly for similar aircraft parts contracts?

L3Harris Technologies Integrated Systems L.P. is a significant defense contractor with a substantial history of awards from the Department of Defense across various platforms and services. For aircraft parts specifically, the company frequently secures contracts related to avionics, structural components, and auxiliary systems. Analyzing their past performance on similar Cost Plus Fixed Fee (CPFF) contracts would reveal their ability to manage costs and deliver within agreed-upon parameters. A review of their award history would likely show numerous contracts, some competitive and some sole-source, indicating a deep integration into the DoD supply chain. Their track record generally suggests a capacity to meet complex technical requirements, though specific performance metrics on individual contracts would be needed for a comprehensive assessment.

How does the $34 million award compare to historical spending on 'Other Aircraft Parts' by the Air Force?

The $34 million award represents a specific procurement action for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' over a period of approximately 34 months (1065 days). To benchmark this against historical spending, one would need to analyze aggregate spending data for the NAICS code 336413 by the Department of the Air Force over several fiscal years. This would involve identifying trends in contract values, the number of awards, and the types of contracts (e.g., competitive vs. sole-source). Without access to that granular historical data, it's challenging to definitively state if this $34 million is high, low, or average. However, considering the specialized nature of aircraft parts and the typical costs associated with defense manufacturing, this figure appears to be within a plausible range for a multi-year supply of critical components.

What are the primary risks associated with a sole-source award for aircraft parts, and how are they mitigated?

The primary risk of a sole-source award for aircraft parts is the potential for inflated pricing due to the lack of competitive pressure. This can lead to reduced value for taxpayer money. Another risk is the potential for complacency from the contractor, assuming continued awards without aggressive innovation or cost-saving measures. Mitigation strategies typically involve robust government oversight, including detailed cost analysis and negotiation by contracting officers to ensure the price is fair and reasonable. The government may also conduct market research to identify potential future competitors or alternative solutions. Furthermore, the contract terms themselves can include incentives or penalties related to cost control and performance, and the government reserves the right to re-evaluate the sole-source justification periodically.

What does the Cost Plus Fixed Fee (CPFF) contract type imply about the nature of the services and the associated risks?

The Cost Plus Fixed Fee (CPFF) contract type indicates that the government agrees to pay the contractor's actual costs incurred, plus a predetermined fixed fee representing profit. This type of contract is often used when the scope of work is not precisely defined at the outset, or when there is significant uncertainty about the costs involved, such as in research and development or complex manufacturing. For aircraft parts, it suggests that the exact quantity, specifications, or manufacturing challenges might have been difficult to predict fully. The risk is shared: the contractor bears the risk of cost overruns impacting their fixed fee, while the government bears the risk of paying higher-than-expected costs, making effective cost monitoring crucial for the government.

Are there any indications of potential performance issues or successes based on the contract's duration and award type?

The contract's duration of 1065 days (approximately 2 years and 10 months) suggests a sustained need for the specified aircraft parts, implying that the contractor has likely met baseline performance expectations to warrant such a long-term award. The sole-source nature, however, means that performance wasn't validated against competing offers. Success in a CPFF contract is often measured by the contractor delivering the required parts within the estimated cost parameters (which influence the fixed fee) and meeting quality and delivery schedules. Without specific performance reports or data, we infer that the initial award decision was based on perceived capability and necessity, and the duration suggests no major performance failures occurred that would have led to early termination or significant modifications.

What is the significance of the contract being awarded to L3Harris Technologies Integrated Systems L.P. in Texas?

Awarding the contract to L3Harris Technologies Integrated Systems L.P., located in Texas, signifies the utilization of a major aerospace and defense manufacturing hub within the United States. Texas has a significant presence of defense contractors and a skilled workforce, making it a strategic location for such operations. This award contributes to the regional economy through job creation and business activity within the state. For the Department of Defense, sourcing from established facilities like L3Harris in Texas can offer advantages in terms of logistical proximity to other bases or depots, and access to a mature industrial base capable of producing specialized components critical for military aviation sustainment.

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: $34,470,363

Exercised Options: $34,470,363

Current Obligation: $34,001,459

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $5,443,052

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