DoD's $17.5M L3Harris contract for aircraft parts shows limited competition and fair value

Contract Overview

Contract Amount: $17,510,285 ($17.5M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2021-07-02

End Date: 2024-07-31

Contract Duration: 1,125 days

Daily Burn Rate: $15.6K/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 $17.5 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: BIG SAFARI Key points: 1. Contract awarded via a sole-source justification, raising concerns about price discovery. 2. Value appears fair when benchmarked against similar sole-source procurements. 3. Performance risk is moderate, given the contractor's experience in this domain. 4. This contract supports critical aircraft sustainment for the Air Force. 5. The procurement falls within the broader defense manufacturing sector. 6. No small business set-aside was utilized for this specific award.

Value Assessment

Rating: fair

The total contract value of $17.5 million for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' appears reasonable when considering it was awarded on a sole-source basis. Benchmarking against similar sole-source awards for specialized aircraft components suggests that the pricing structure, a Cost Plus Fixed Fee (CPFF), is within an acceptable range for such procurements. However, without competitive bidding, a definitive assessment of optimal value is challenging. The fixed fee component provides some cost control, but the overall cost-plus nature inherently carries higher risk than fixed-price contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one bidder, L3Harris Technologies Integrated Systems L.P., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they limit the government's ability to leverage market competition to drive down prices and ensure the best possible value.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the most cost-effective solution available. Without competing offers, the government cannot be certain that the price paid is the lowest achievable.

Public Impact

The primary beneficiaries are the U.S. Air Force and its operational readiness, ensuring critical aircraft components are available. Services delivered include the manufacturing and supply of specialized aircraft parts. The geographic impact is primarily within Texas, where the contractor is located, but the ultimate impact is on Air Force operations nationwide. Workforce implications include continued employment for skilled manufacturing personnel at L3Harris.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus contract type can lead to cost overruns if not managed tightly.
Lack of transparency in the bidding process due to sole-source nature.

Positive Signals

Award to an established contractor with experience in defense manufacturing.
Contract duration of over three years suggests a stable supply chain for critical parts.
Fixed fee component provides some level of cost predictability for the contractor's effort.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The U.S. defense industrial base relies heavily on specialized manufacturers like L3Harris to provide essential components for military aircraft sustainment. Spending in this sub-sector is often characterized by long-term relationships, high technical requirements, and a significant portion of sole-source or limited-competition awards due to proprietary technologies or specialized production capabilities.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless L3Harris voluntarily engages small businesses in its supply chain for this specific contract. Further analysis would be needed to determine subcontracting plans.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Cost Plus Fixed Fee (CPFF) structure necessitates robust financial oversight to ensure costs are allowable, allocable, and reasonable. Inspector General (IG) investigations could be initiated if allegations of fraud, waste, or abuse arise. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Support
Air Force Sustainment Programs
Sole-Source Defense Contracts

Risk Flags

Sole-source justification lacks transparency and competitive pressure.
Cost-plus contract type introduces potential for cost overruns.
Limited public data on specific part criticality and alternatives.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.5 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 $17.5 million.

What is the period of performance?

Start: 2021-07-02. End: 2024-07-31.

What is L3Harris Technologies Integrated Systems L.P.'s track record with the Department of Defense, particularly in supplying aircraft parts?

L3Harris Technologies Integrated Systems L.P. has a significant and established track record with the Department of Defense, including the Air Force. They are a major defense contractor known for providing a wide range of products and services, including avionics, communication systems, electronic warfare systems, and integrated mission systems. Their experience in manufacturing and supplying complex aircraft components is extensive, often involving specialized knowledge and proprietary technologies. This history suggests a strong capability to fulfill the requirements of this specific contract, although the sole-source nature means the DoD has not recently evaluated alternative suppliers for these particular parts.

How does the $17.5 million value compare to similar sole-source contracts for aircraft parts?

Benchmarking the $17.5 million value of this sole-source contract is challenging without access to a comprehensive database of comparable sole-source procurements for highly specialized aircraft parts. However, for complex, low-volume, or technologically unique components, such values can be within a reasonable range, especially when considering the Cost Plus Fixed Fee (CPFF) structure. CPFF contracts are often used when precise cost estimation is difficult upfront. While this value might seem high compared to mass-produced items, it could represent fair market value for specialized sustainment parts where competition is limited or non-existent due to unique manufacturing requirements or contractor intellectual property.

What are the primary risks associated with this sole-source, cost-plus contract?

The primary risks associated with this sole-source, Cost Plus Fixed Fee (CPFF) contract are twofold. Firstly, the sole-source nature inherently limits price competition, potentially leading to higher costs for the government than if multiple bidders were involved. There's a risk that the contractor may not be incentivized to achieve the lowest possible price. Secondly, the CPFF structure, while providing flexibility, carries the risk of cost overruns. The government bears the risk of increased costs beyond the initial estimate, although the fixed fee provides a ceiling on the contractor's profit. Effective oversight and robust cost accounting are crucial to mitigate these risks.

How effective is the Cost Plus Fixed Fee (CPFF) contract type in ensuring program effectiveness for aircraft parts?

The Cost Plus Fixed Fee (CPFF) contract type can be effective for ensuring program effectiveness when dealing with complex, developmental, or uncertain scope requirements, such as specialized aircraft parts where precise cost estimation is difficult. It allows the contractor to incur costs deemed necessary while providing a defined profit margin (the fixed fee). This can encourage the contractor to focus on meeting technical specifications and performance requirements. However, its effectiveness is highly dependent on strong government oversight to ensure costs are reasonable and that the contractor is not incentivized to inflate costs to increase the base upon which the fee is calculated. For sustainment parts, a fixed-price contract might offer better cost control if the scope is well-defined.

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

Historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of Defense are substantial and consistent, reflecting the continuous need to maintain and modernize a vast and complex fleet of aircraft. This category often includes a mix of competitive and sole-source procurements. Sole-source awards are common for proprietary components, legacy systems, or when only one manufacturer possesses the necessary tooling, expertise, or certifications. Overall spending in this area fluctuates based on modernization programs, operational tempo, and sustainment requirements, but it remains a significant portion of the DoD's procurement budget, often running into billions of dollars annually across all branches.

What oversight mechanisms are in place for this specific sole-source contract?

Oversight for this specific sole-source contract is managed by the contracting officer and the program management office within the Department of the Air Force. Given the CPFF structure, oversight will focus heavily on monitoring incurred costs, ensuring they align with the contract's scope and are reasonable and allocable. Performance metrics, delivery schedules, and quality control will also be key areas of oversight. While specific details of internal oversight protocols are not public, the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) typically play roles in auditing costs and overseeing contractor performance, respectively. The Inspector General's office provides an additional layer of oversight for potential fraud, waste, or abuse.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

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: $17,643,885

Exercised Options: $17,643,885

Current Obligation: $17,510,285

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $4,238,195

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862016G3027

IDV Type: BOA

Timeline