DoD's $230M L3Harris contract for aircraft parts faces scrutiny over lack of competition and cost structure

Contract Overview

Contract Amount: $23,022,795 ($23.0M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2021-05-24

End Date: 2025-09-30

Contract Duration: 1,590 days

Daily Burn Rate: $14.5K/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 $23.0 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: BIG SAFARI Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending. 2. Limited competition raises concerns about price discovery and potential overpayment. 3. The contract duration of 1590 days suggests a long-term need for these aircraft parts. 4. Performance risks are moderate given the nature of aircraft parts manufacturing. 5. This contract falls within the 'Other Aircraft Parts' manufacturing sector. 6. The absence of small business set-asides is noted.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available comparable data for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' under similar cost-plus-fixed-fee structures. The cost-plus-fixed-fee pricing arrangement, while common for complex or uncertain projects, can lead to higher overall costs compared to fixed-price contracts if not managed diligently. Without detailed cost breakdowns or comparisons to similar sole-source procurements, it's difficult to definitively assess if the pricing represents good value for the taxpayer.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or is the sole provider of the required goods or services. The lack of competition means that the Department of Defense did not benefit from the price reductions and innovation that typically arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible prices, potentially leading to higher costs for taxpayers. It also bypasses opportunities to foster a broader base of capable suppliers.

Public Impact

The primary beneficiaries are the Department of Defense and its operational readiness, ensuring the availability of critical aircraft parts. Services delivered include the manufacturing and supply of specialized aircraft parts. The geographic impact is primarily within Texas, where L3Harris Technologies Integrated Systems L.P. is located. Workforce implications include employment at the contractor's facility in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Cost-plus-fixed-fee structure offers less incentive for cost control compared to fixed-price contracts.
Sole-source award limits transparency in pricing.
Long contract duration could mask inefficiencies over time.

Positive Signals

L3Harris Technologies is an established defense contractor with significant experience.
The contract addresses a specific, likely critical, need for aircraft parts.
The fixed fee component provides some level of cost predictability for the contractor.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is a specialized segment within the broader aerospace and defense industry. This contract, valued at over $230 million, represents a significant award within this niche. The market for such parts is often characterized by high technical requirements, stringent quality control, and long product lifecycles, frequently involving sole-source or limited competition due to proprietary technology or specialized manufacturing capabilities. Comparable spending benchmarks are difficult to establish without more specific part identification, but large-scale DoD contracts for aircraft components typically run into the tens or hundreds of millions.

Small Business Impact

This contract does not appear to include a small business set-aside. The award to a large prime contractor like L3Harris Technologies suggests that subcontracting opportunities may exist for small businesses within their supply chain. However, the absence of a direct set-aside means that small businesses did not have a primary opportunity to bid on the entirety of this contract, potentially limiting their direct revenue generation from this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring performance and costs. Transparency is limited due to the sole-source nature and the cost-plus-fixed-fee structure, which requires detailed auditing to ensure reasonableness. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Component Manufacturing
Defense Logistics Agency Contracts
Air Force Sustainment Programs
Aerospace Parts Procurement

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of transparency in pricing
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.0 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 $23.0 million.

What is the period of performance?

Start: 2021-05-24. End: 2025-09-30.

What is L3Harris Technologies' track record with similar sole-source DoD contracts for aircraft parts?

L3Harris Technologies, and its predecessor companies, have a long history of contracting with the Department of Defense for various aerospace and defense systems, including aircraft components. While specific data on their track record with sole-source contracts for 'Other Aircraft Parts' is not readily available in the public domain, the company is a major defense contractor known for its capabilities in areas such as electronic warfare, communications, and avionics. Their extensive experience suggests a capacity to fulfill complex requirements. However, the nature of sole-source awards means that direct comparisons of performance and pricing against competitive bids are inherently limited, making a comprehensive assessment of their 'track record' in this specific context challenging without deeper access to contract performance metrics and historical pricing data.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types in terms of value for taxpayer money in this sector?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not precisely defined or involves significant uncertainty, such as research and development or complex manufacturing with evolving requirements. In this structure, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. While CPFF provides flexibility, it generally offers less incentive for cost control compared to fixed-price contracts (like Firm-Fixed-Price or Fixed-Price Incentive). In the aircraft parts sector, where requirements can be highly technical and subject to change, CPFF might be deemed necessary. However, for taxpayers, it carries a higher risk of cost overruns if not rigorously overseen, as the contractor's profit is fixed regardless of the final cost. Value for taxpayer money is maximized when competitive bidding drives down prices, which is absent in sole-source CPFF awards.

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

The primary risks associated with a sole-source award for aircraft parts include potential overpricing due to the lack of competition, reduced incentive for innovation, and a lack of transparency in cost justification. Taxpayers may end up paying more than necessary. Mitigation strategies employed by the government typically involve robust negotiation of the contract terms, detailed cost analysis by contracting officers, and stringent oversight of contractor performance and expenditures. The government may also conduct market research to ensure that a sole-source award is truly justified and that no viable alternatives exist. For long-term contracts, periodic reviews and potential renegotiations can also help manage risks.

What is the historical spending pattern for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of the Air Force?

Historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of the Air Force are substantial, reflecting the continuous need to maintain and upgrade its vast aircraft fleet. While specific aggregate figures for this precise NAICS code (336413) are not always easily isolated from broader aerospace and defense spending categories in public databases, the Air Force consistently allocates significant portions of its budget to aircraft sustainment, modification, and component procurement. This includes a wide array of parts, from basic structural elements to highly specialized electronic and mechanical systems. The total annual spending in this category can range from hundreds of millions to billions of dollars, depending on fleet readiness requirements, modernization programs, and the number of active aircraft. Contracts like the one awarded to L3Harris are indicative of this ongoing investment.

How does the geographic location of the contractor (Texas) impact the contract's execution and oversight?

The geographic location of the contractor, L3Harris Technologies Integrated Systems L.P. in Texas, has several implications for contract execution and oversight. Proximity can facilitate easier communication and site visits for government personnel, potentially streamlining oversight activities. However, it also means that the economic benefits, such as job creation and tax revenue, are concentrated in Texas. For oversight, the Defense Contract Management Agency (DCMA) has numerous offices across the United States, including in Texas, which would likely be responsible for on-site surveillance, quality assurance, and cost monitoring. While location can offer logistical advantages for oversight, the fundamental challenges of monitoring a sole-source, cost-plus contract remain regardless of geography.

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: $23,022,795

Exercised Options: $23,022,795

Current Obligation: $23,022,795

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $7,616,108

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