DoD awards $39.3M contract to L3Harris for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $39,317,001 ($39.3M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2021-11-24

End Date: 2026-10-31

Contract Duration: 1,802 days

Daily Burn Rate: $21.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

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 $39.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: BIG SAFARI Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over 5 years suggests a long-term need for these aircraft parts. 3. The contract's value, while substantial, needs benchmarking against similar sole-source awards. 4. Lack of competition is a key risk indicator for potential overpricing and reduced innovation. 5. The award falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' a critical defense sector. 6. Performance is tied to a firm fixed-price structure, offering some cost certainty. 7. The contract is a delivery order under a larger unspecified contract.

Value Assessment

Rating: questionable

The contract's value of $39.3 million over approximately five years requires careful benchmarking. As a sole-source award, direct comparison to competitively bid contracts is difficult. However, the lack of competition inherently raises concerns about whether the government secured the best possible price. Without a competitive process, it's challenging to assess if L3Harris's pricing is aligned with market rates or if there's an opportunity for cost savings through a more open bidding process. The firm fixed-price nature provides some cost control, but the overall value proposition is weakened by the absence of competition.

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. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means there were no other bidders, and therefore no direct price comparison or negotiation leverage that would typically arise from a competitive bidding process. This significantly limits the government's ability to ensure it is receiving the most advantageous pricing.

Taxpayer Impact: For taxpayers, a sole-source award means there is a higher risk of paying a premium for goods or services. Without the pressure of competition, contractors may not be incentivized to offer their lowest possible prices, potentially leading to less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, which will receive critical aircraft parts. The services delivered are essential for maintaining the operational readiness and longevity of specific aircraft platforms. The geographic impact is primarily within Texas, where L3Harris Technologies is located, but the ultimate impact is on Air Force operations nationwide. Workforce implications include continued employment and potential expansion at L3Harris facilities supporting this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for money.
Long contract duration (over 5 years) increases exposure to potential price escalations without competitive review.
Lack of transparency in the justification for sole-source procurement.
Potential for contractor to leverage sole-source status for less favorable terms.
Absence of small business subcontracting opportunities due to sole-source nature.

Positive Signals

L3Harris is an established defense contractor with a track record in aerospace and defense.
Firm fixed-price contract provides cost certainty for the government.
The contract addresses a specific, likely critical, need for aircraft parts.
Delivery order structure may indicate flexibility in managing phased requirements.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is a vital component of the aerospace and defense industry. This sector encompasses a wide range of components, from engine parts to avionics and structural elements, crucial for maintaining the airworthiness and performance of military aircraft. The total market for defense aircraft parts is substantial, driven by ongoing modernization efforts, sustainment requirements, and the operational tempo of military forces. This contract fits within the sustainment and readiness segment of the defense industrial base, ensuring that existing fleets remain operational.

Small Business Impact

This contract was not competed and there is no indication of a small business set-aside. As a sole-source award to a large prime contractor, it is unlikely to generate significant subcontracting opportunities for small businesses unless L3Harris voluntarily includes them in its supply chain. The absence of a set-aside or specific subcontracting goals means that small businesses may not directly benefit from this particular award, potentially missing out on revenue streams within this segment of the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are embedded in the contract terms, particularly the firm fixed-price structure, which aims to hold the contractor responsible for delivering within the agreed-upon price. Transparency is limited due to the sole-source nature; the justification for this procurement method would typically be documented but may not be publicly accessible. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Agency (DLA) Contracts
Air Force Sustainment Programs
L3Harris Technologies Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source procurement
Lack of competition
Potential for cost overruns
Limited transparency
Long-term contract duration without competitive review

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.3 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 $39.3 million.

What is the period of performance?

Start: 2021-11-24. End: 2026-10-31.

What is L3Harris Technologies' track record with the Department of Defense, particularly for similar aircraft parts contracts?

L3Harris Technologies, formed through the merger of Harris Corporation and L3 Technologies, is a significant defense contractor with a substantial history of serving the Department of Defense. The company has a broad portfolio encompassing aerospace systems, communication systems, electronic systems, and power and energy systems. For aircraft parts and related services, L3Harris has a proven track record, often securing contracts for complex systems integration, avionics upgrades, and component manufacturing. Their past performance with the DoD includes numerous awards, both competitive and sole-source, across various branches. Analyzing their specific performance on similar firm fixed-price delivery orders for aircraft parts would provide context on their reliability, delivery timeliness, and adherence to quality standards. However, without access to detailed performance reports or specific contract histories for this exact type of part, a comprehensive assessment remains challenging.

How does the $39.3 million contract value compare to similar sole-source awards for aircraft parts within the DoD?

Benchmarking the $39.3 million value of this sole-source contract against similar awards is inherently difficult due to the lack of competitive pricing. Sole-source contracts are often justified by unique capabilities, proprietary technology, or urgent needs where competition is impractical. Consequently, prices can vary significantly based on these factors. To provide a meaningful comparison, one would need to identify other sole-source contracts for comparable aircraft parts (e.g., similar complexity, quantity, and criticality) awarded by the DoD or other federal agencies over a similar timeframe. Analyzing the price per unit, total contract value, and duration of these comparable sole-source awards would help determine if L3Harris's pricing is within an expected range for non-competed procurements. However, without such a dataset, it's challenging to definitively state whether this contract represents excellent, fair, or questionable value.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with awarding a $39.3 million contract on a sole-source basis are multifaceted. Firstly, the lack of competition significantly reduces the government's ability to achieve the lowest possible price, potentially leading to overspending. This is because the contractor faces less pressure to be cost-efficient or to offer competitive margins. Secondly, sole-source awards can stifle innovation, as there is no incentive for alternative suppliers to enter the market or for the incumbent to continuously improve its offerings. Thirdly, there's a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future flexibility and negotiation power. Finally, the justification for sole-sourcing must be robust; if the justification is weak or flawed, it raises concerns about the integrity of the procurement process and the responsible use of taxpayer funds.

What is the expected effectiveness of this contract in ensuring the operational readiness of Air Force aircraft?

The effectiveness of this contract in ensuring Air Force aircraft operational readiness hinges on several factors. The firm fixed-price structure suggests a clear expectation for L3Harris to deliver specific parts within a defined budget, which contributes to cost predictability. The contract's duration of over 1800 days (approximately 5 years) indicates a commitment to sustained supply, crucial for long-term fleet maintenance. However, the sole-source nature introduces a risk: if L3Harris faces production issues, supply chain disruptions, or quality control problems, the Air Force's readiness could be jeopardized without readily available alternative suppliers. The ultimate effectiveness will depend on L3Harris's performance, the criticality of the specific parts being supplied, and the Air Force's ability to manage the relationship and monitor performance closely, despite the limited competition.

How does this contract fit into the broader historical spending patterns for aircraft parts and maintenance within the Department of Defense?

This $39.3 million contract represents a single instance within the vast and complex spending landscape of the Department of Defense for aircraft parts and maintenance. Historically, the DoD allocates billions of dollars annually towards sustaining its vast aircraft fleets, encompassing everything from routine maintenance and repairs to major overhauls and component replacements. Spending in this category is driven by factors such as the age of the fleet, operational tempo, geopolitical demands, and modernization programs. Contracts like this one, even if sole-source, are typical components of the overall sustainment strategy. Analyzing historical spending trends would reveal whether the DoD's reliance on sole-source awards for specific parts is increasing or decreasing, and how spending on parts compares to spending on services or new acquisitions. This particular contract, while significant in its own right, is a small fraction of the total DoD aircraft sustainment budget.

What are the implications of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' classification for this contract?

The classification 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS code 336413) indicates that this contract is for components that are not specifically covered under more specialized categories like engines, propellers, or navigation equipment. This broad classification suggests the parts could range widely, potentially including structural components, landing gear parts, electrical system components, or other essential auxiliary equipment. For the DoD, this classification means they are procuring items critical to the overall function and safety of aircraft, but perhaps not the most complex or technologically advanced systems. The manufacturing aspect implies that L3Harris is either producing these parts or sourcing and assembling them. The 'other' designation can sometimes correlate with less standardized parts, potentially contributing to sole-source justifications if specific tooling or designs are involved.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 10001 JACK FINNEY BLVD, GREENVILLE, TX, 75402

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $39,317,001

Exercised Options: $39,317,001

Current Obligation: $39,317,001

Subaward Activity

Number of Subawards: 30

Total Subaward Amount: $16,991,455

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862021G4027

IDV Type: BOA

Timeline