L3Harris Technologies awarded $35.6M for aircraft parts, with limited competition and potential value concerns

Contract Overview

Contract Amount: $35,588,230 ($35.6M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2019-10-01

End Date: 2021-10-30

Contract Duration: 760 days

Daily Burn Rate: $46.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

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 $35.6 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: BIG SAFARI Key points: 1. Contract awarded via a non-competitive process, raising questions about price discovery and potential overpayment. 2. Significant contract value suggests a critical need for these aircraft parts and auxiliary equipment. 3. The fixed-fee structure on a cost-plus award may incentivize cost overruns. 4. Limited competition increases the risk of suboptimal pricing and reduced innovation. 5. The contract duration of over two years indicates a long-term requirement for these components. 6. The award to a single entity suggests a lack of readily available alternatives or a specialized need.

Value Assessment

Rating: questionable

The total award of $35.6 million for aircraft parts and auxiliary equipment is substantial. However, without a competitive bidding process, it is difficult to benchmark the value for money. The cost-plus-fixed-fee contract type, while common for complex procurements, can lead to higher costs compared to fixed-price contracts if not managed carefully. The lack of transparency in pricing due to the sole-source nature makes it challenging to assess if the government received a fair and reasonable price. Further analysis of the cost components would be necessary to determine true value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This typically occurs when a specific capability is required that only one contractor can provide, or in cases of urgent need where competition is not feasible. The lack of competition means there was no opportunity for multiple vendors to bid, which could have driven down prices through a competitive bidding process. This approach limits the government's ability to explore alternative solutions or secure the best possible pricing.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. This also reduces the incentive for contractors to be highly efficient or innovative to win future business.

Public Impact

The primary beneficiaries are likely the Department of the Air Force, ensuring operational readiness of aircraft. The services delivered include the provision of critical aircraft parts and auxiliary equipment. The geographic impact is primarily within Texas, where L3Harris Technologies Integrated Systems L.P. is located. Workforce implications may include job retention and creation at the contractor's facility in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee structure may not provide sufficient incentive for cost control.
Lack of transparency in pricing due to non-competitive nature hinders value assessment.
Dependence on a single supplier could create supply chain risks.
Limited visibility into the specific components and their necessity.

Positive Signals

Ensures critical aircraft parts are procured, supporting Air Force operations.
Award to an established contractor may indicate reliability and existing expertise.
Contract duration suggests a stable, long-term requirement being met.
Potential for specialized parts that are not widely available.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity and significant government investment. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sub-sector. The market for specialized aircraft components is often dominated by a few key players due to stringent quality requirements, intellectual property, and long development cycles. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the parts, but large sole-source awards in this category are not uncommon for highly specialized or proprietary systems.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate in this specific procurement. This means the primary economic benefit flows to the large prime contractor, L3Harris Technologies.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General of the Department of Defense would have jurisdiction for audits and investigations into potential fraud, waste, or abuse. Transparency is limited due to the sole-source nature and the cost-plus-fixed-fee structure, making detailed public scrutiny of cost drivers challenging.

Related Government Programs

Aircraft Parts Procurement
Defense Logistics Support
Aerospace Manufacturing Contracts
Department of Defense Sole Source Awards

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding
Limited transparency on specific parts

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.6 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 $35.6 million.

What is the period of performance?

Start: 2019-10-01. End: 2021-10-30.

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

The provided data indicates the contract is for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' under NAICS code 336413. However, the specific nature of the parts is not detailed in the summary data. This could range from complex engine components to specialized electronic systems or structural parts. Understanding the exact nature of these parts is crucial for assessing their criticality, uniqueness, and the justification for a sole-source award. Without this information, it's difficult to determine if the price paid is reasonable or if alternative solutions might exist.

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. Common justifications include proprietary data, unique capabilities, urgent and compelling needs, or when a specific system requires parts only available from the original equipment manufacturer. For this contract, the justification would need to be documented by the Department of the Air Force, likely detailing why L3Harris Technologies Integrated Systems L.P. is the only viable option. Without access to the Justification and Approval (J&A) document, the specific rationale remains unknown, but it is a critical piece of information for evaluating the procurement process.

How does the cost-plus-fixed-fee (CPFF) structure impact the overall cost and risk for the government?

The Cost-Plus-Fixed-Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainty. While it allows for flexibility, it shifts much of the cost risk to the government, as the contractor is incentivized to incur costs to cover their fixed fee. The 'fixed fee' portion is negotiated upfront and does not change with the final cost, but the total cost can escalate if allowable costs increase. This contrasts with fixed-price contracts where the contractor bears more risk for cost overruns.

What is the historical spending pattern for similar aircraft parts or with this contractor?

Analyzing historical spending patterns for similar aircraft parts or with L3Harris Technologies Integrated Systems L.P. by the Department of Defense would provide valuable context. If the government has previously procured similar items competitively at a lower cost, or if L3Harris has a history of cost overruns on CPFF contracts, it would raise concerns. Conversely, consistent performance and reasonable pricing on past contracts could offer some reassurance. Without access to historical contract data, it's challenging to assess if this $35.6 million award represents an anomaly or a continuation of established spending trends for these types of components.

Are there any performance metrics or deliverables associated with this contract that indicate success?

The provided summary data does not include details on specific performance metrics, deliverables, or quality assurance surveillance plans (QASPs) for this contract. For a CPFF contract, especially one awarded sole-source, robust performance metrics are crucial for ensuring the government receives the intended value and that the contractor meets quality standards. The success of this contract hinges on the Air Force's ability to effectively monitor contractor performance, ensure timely delivery of high-quality parts, and manage the incurred costs. Without insight into these oversight mechanisms, assessing the contract's effectiveness is difficult.

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 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: $36,083,728

Exercised Options: $36,083,728

Current Obligation: $35,588,230

Actual Outlays: $7,043,237

Subaward Activity

Number of Subawards: 40

Total Subaward Amount: $12,011,436

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862016G3027

IDV Type: BOA

Timeline