DoD's $34.4M L3Harris contract for aircraft parts saw limited competition, raising value concerns

Contract Overview

Contract Amount: $34,386,891 ($34.4M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2018-12-21

End Date: 2021-11-30

Contract Duration: 1,075 days

Daily Burn Rate: $32.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

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 $34.4 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: BIG SAFARI Key points: 1. Contract awarded through a non-competitive process, limiting price discovery. 2. Significant contract value suggests potential for substantial taxpayer investment. 3. Performance period spanned nearly three years, indicating ongoing need. 4. The contractor, L3Harris Technologies, is a major defense industry player. 5. Focus on 'Other Aircraft Parts' suggests a critical but potentially niche role. 6. Lack of competition raises questions about achieving best value for the government.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bidding. The $34.4 million awarded over its duration suggests a significant investment. Without comparative pricing from multiple vendors, it's difficult to ascertain if the government secured the most favorable terms. The 'time and materials' pricing structure can also lead to cost overruns if not closely managed, further complicating value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, L3Harris Technologies, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities), they inherently limit price negotiation and may not result in the most cost-effective outcome for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that typically arise from a competitive marketplace. The absence of competing bids prevents the government from leveraging market forces to drive down prices.

Public Impact

The primary beneficiary is the Department of the Air Force, receiving critical aircraft parts. Services delivered include the provision of 'Other Aircraft Parts and Auxiliary Equipment'. The contract's geographic impact is centered in Texas, where the contractor is located. Workforce implications are likely within L3Harris's manufacturing and supply chain operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competitive award.
Sole-source nature limits transparency in pricing and cost justification.
Time and materials contract type can pose risks of cost escalation without strict oversight.

Positive Signals

Contract awarded to a known, established defense contractor (L3Harris).
Contract supported a specific need within the Department of the Air Force.
Performance period was substantial, indicating a sustained requirement.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government procurement. Contracts for aircraft parts are crucial for maintaining military readiness. L3Harris Technologies is a major player in this sector, specializing in integrated systems and components. The market for specialized aircraft parts can be concentrated, sometimes leading to situations where only a few companies possess the necessary technical capabilities, potentially influencing competition dynamics.

Small Business Impact

This contract does not appear to have involved small business set-asides, as indicated by 'sb': false. Furthermore, there is no explicit information suggesting subcontracting opportunities were mandated for small businesses. The sole-source nature of the award further reduces the likelihood of direct small business participation through this specific procurement vehicle.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and 'time and materials' pricing, robust oversight would be critical to monitor costs, ensure fair pricing, and verify the necessity and quality of the parts delivered. Inspector General involvement would be possible if specific allegations of fraud, waste, or abuse arose.

Related Government Programs

Aircraft Parts Procurement
Defense Logistics Agency Contracts
Air Force Sustainment Contracts
L3Harris Technologies Contracts

Risk Flags

Lack of Competition
Sole-Source Award
Time and Materials Pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.4 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 $34.4 million.

What is the period of performance?

Start: 2018-12-21. End: 2021-11-30.

What is the track record of L3Harris Technologies in fulfilling similar defense contracts?

L3Harris Technologies is a well-established defense contractor with a significant history of delivering complex systems and components to various branches of the U.S. military, including the Air Force. They have a broad portfolio encompassing aerospace, communications, and electronic systems. While specific performance metrics for individual contracts are often not publicly detailed, their consistent presence as a prime contractor on large-value awards suggests a generally reliable track record. However, like any large corporation, they may have faced scrutiny or performance issues on specific projects, which would typically be managed through contract modifications, performance reviews, or, in extreme cases, contractual remedies by the procuring agency.

How does the pricing structure of this 'time and materials' contract compare to industry standards for aircraft parts?

Time and Materials (T&M) contracts are often used when the scope of work is not clearly defined or when there's uncertainty about the labor hours or materials required. For aircraft parts, T&M can be suitable for repair, modification, or custom fabrication where the exact effort is hard to predict upfront. However, T&M contracts carry a higher risk of cost escalation for the government compared to fixed-price contracts. Industry standards generally favor fixed-price contracts for well-defined procurements to ensure cost certainty. When T&M is used, robust government oversight is crucial to monitor labor rates, material costs, and the overall efficiency of the contractor's effort to ensure fair pricing and prevent overcharging.

What are the primary risks associated with a sole-source award for critical aircraft components?

The primary risk associated with a sole-source award for critical aircraft components is the potential for inflated pricing due to the lack of competition. Without competing bids, the government loses the leverage to negotiate the best possible price. This can lead to taxpayers paying more than necessary for essential parts. Another risk is reduced innovation, as there's less incentive for the sole provider to invest in cost-saving technologies or processes if they are guaranteed the contract regardless of competitive pressures. Furthermore, sole-source awards can create dependency on a single supplier, which can be problematic if that supplier faces production issues, financial instability, or decides to exit the market.

How effective are sole-source procurements in meeting urgent defense needs?

Sole-source procurements can be effective in meeting urgent defense needs when specific circumstances necessitate bypassing the standard competitive process. This often occurs when there is only one responsible source capable of providing the required goods or services, such as unique technology, proprietary systems, or when a critical, time-sensitive requirement cannot be met through competition without unacceptable delays. The Federal Acquisition Regulation (FAR) outlines specific justifications for sole-source awards. While they can expedite procurement, their effectiveness is contingent on the justification being valid and the government ensuring fair and reasonable pricing through negotiation and cost analysis, even in the absence of competition.

What is the historical spending trend for 'Other Aircraft Parts' by the Department of the Air Force?

Historical spending trends for 'Other Aircraft Parts' by the Department of the Air Force (and the DoD broadly) typically show consistent and substantial investment. This category encompasses a wide array of components essential for aircraft maintenance, repair, and overhaul (MRO). Spending in this area is influenced by factors such as the size and age of the Air Force's aircraft fleet, operational tempo, modernization programs, and depot maintenance schedules. While specific figures fluctuate annually, the overall demand for aircraft parts remains a significant and ongoing expenditure within the defense budget, reflecting the continuous need to ensure fleet readiness and operational capability.

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: TIME AND MATERIALS (Y)

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: $36,562,652

Exercised Options: $36,562,652

Current Obligation: $34,386,891

Actual Outlays: $742,290

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $1,599,901

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