DoD awards $660M contract for aircraft parts to L3Harris Technologies, raising questions about competition and value

Contract Overview

Contract Amount: $660,102,935 ($660.1M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2023-02-17

End Date: 2029-03-31

Contract Duration: 2,234 days

Daily Burn Rate: $295.5K/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: WACO, MCLENNAN County, TEXAS, 76705

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $660.1 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: BIG SAFARI Key points: 1. The contract's value of $660 million over five years suggests a significant investment in aircraft parts. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 3. The fixed-price contract type aims to control costs, but the lack of competition may undermine this. 4. Performance context is limited without specific details on the aircraft parts or their intended use. 5. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, indicating a specialized need. 6. The duration of the contract (over 5 years) suggests a long-term requirement for these components.

Value Assessment

Rating: questionable

Benchmarking the value of this $660 million contract is challenging without specific details on the aircraft parts procured. However, the absence of competition for such a substantial award raises concerns about whether the government secured the best possible price. A sole-source award often leads to higher costs compared to a competitively bid contract, as the contractor faces less pressure to offer competitive pricing. Further analysis would require comparing the unit costs and overall value to similar procurements for comparable aircraft components, which are not readily available in the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, L3Harris Technologies Integrated Systems L.P., was considered. The data indicates the contract type was 'NOT COMPETED.' This approach bypasses the standard competitive bidding process, which typically involves soliciting offers from multiple vendors. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they limit price discovery and can potentially lead to higher costs for the government. The lack of multiple bidders means there was no direct comparison of pricing or technical solutions from competing firms.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft parts due to the lack of competitive bidding. Without a competitive process, there is less assurance that the government obtained the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries of this contract are likely the Department of Defense, specifically the Air Force, which will receive the aircraft parts. The services delivered involve the manufacturing and supply of 'Other Aircraft Parts and Auxiliary Equipment'. The geographic impact is centered in Texas, where L3Harris Technologies Integrated Systems L.P. is located. Workforce implications may include job creation or maintenance within L3Harris and its supply chain, particularly in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a large-value contract may result in suboptimal pricing.
Sole-source awards can reduce transparency and accountability in the procurement process.
The extended contract duration (over 5 years) could lock the government into a potentially non-competitive arrangement.
Limited public information on the specific parts and their necessity makes independent value assessment difficult.

Positive Signals

The contract is awarded to a known entity, L3Harris Technologies, suggesting a potentially established relationship and understanding of requirements.
The firm fixed-price contract type provides cost certainty for the government, assuming the initial pricing is fair.
The contract is managed by the Department of the Air Force, a major component of the DoD with significant procurement expertise.
The specified North American Industry Classification System (NAICS) code (336413) indicates a focus on specialized manufacturing.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a specialized segment of the aerospace and defense industry. This sector is characterized by high technical requirements, stringent quality control, and often long production lead times. The market size for aircraft parts is substantial, driven by military and commercial aviation needs. Comparable spending benchmarks are difficult to establish without knowing the specific components, but large, long-term contracts are common for critical defense systems. L3Harris Technologies is a significant player in this industry, known for its defense and aerospace solutions.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false) and did not involve small business subcontracting (sb: false). This suggests that the prime contractor, L3Harris Technologies, will be fulfilling the contract requirements directly or through its large business partners. Consequently, there is no direct positive impact on the small business ecosystem from this specific award in terms of set-asides or mandated subcontracting goals. The absence of small business involvement may limit opportunities for smaller firms to participate in the defense supply chain for these specific aircraft parts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Department of the Air Force. Accountability measures are typically embedded within the contract terms, including delivery schedules, quality standards, and payment milestones. Transparency is limited due to the sole-source nature of the award and the lack of publicly available detailed specifications. Inspector General jurisdiction would apply to investigate any potential fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Aircraft Component Procurement
Defense Logistics and Sustainment
Aerospace Manufacturing Contracts
Sole-Source Defense Acquisitions
Air Force Supply Chain Management

Risk Flags

Sole-source award for a large-value contract
Lack of competitive bidding raises value-for-money concerns
Extended contract duration limits flexibility
Absence of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $660.1 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 $660.1 million.

What is the period of performance?

Start: 2023-02-17. End: 2029-03-31.

What is L3Harris Technologies' track record with the Department of Defense, particularly in supplying aircraft parts?

L3Harris Technologies Integrated Systems L.P. is a well-established defense contractor with a significant history of working with the Department of Defense. The company provides a wide range of products and services, including advanced electronic systems, communication systems, and integrated mission systems for military platforms. While specific details on their past performance in supplying 'Other Aircraft Parts and Auxiliary Equipment' under similar sole-source contracts are not provided here, their overall profile suggests substantial experience in the defense sector. DoD contract databases would likely contain more granular performance information, including past performance evaluations and any disputes or claims filed against the company on previous contracts. Given their size and scope, it is probable they have fulfilled numerous contracts for various aircraft components and related services over the years.

How does the $660 million value compare to typical contracts for similar aircraft parts?

Direct comparison of the $660 million contract value for 'Other Aircraft Parts and Auxiliary Equipment' is difficult without knowing the specific nature of these parts. Aircraft components can range from small, standardized fasteners to complex, highly specialized systems like engines or avionics. The five-year duration of this contract ($132 million per year on average) suggests a substantial and ongoing requirement. If these parts are critical, high-value components, the total contract value might be within the expected range for a sole-source award to a major supplier. However, without competitive bidding, it's impossible to definitively state if this represents a fair market value. Benchmarking against competitively awarded contracts for similar types of parts, if available, would be necessary for a more accurate assessment of value for money.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($660 million) include: 1. **Price Inflation:** Without competition, the contractor has less incentive to offer the lowest possible price, potentially leading to overpayment. 2. **Reduced Innovation:** The absence of competing solutions may limit the government's exposure to innovative technologies or more efficient designs. 3. **Contractor Lock-in:** The government becomes dependent on a single supplier, which can be problematic if the supplier faces production issues, quality problems, or decides to significantly increase prices in future negotiations. 4. **Limited Oversight Effectiveness:** While oversight mechanisms exist, the lack of alternative options can reduce the leverage the government has in enforcing contract terms or demanding better value. 5. **Potential for Complacency:** The awarded contractor might become complacent due to the guaranteed business, potentially impacting responsiveness or proactive problem-solving.

What does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' classification imply about the contract's scope?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates that the contract is for the production of components that are not specifically covered by other aerospace manufacturing codes. This typically includes parts like airframe structures, landing gear, aircraft lighting, aircraft seats, and various auxiliary equipment not directly related to engines or propulsion systems. It suggests a broad scope within the aircraft manufacturing ecosystem, focusing on essential but perhaps less complex or more standardized components compared to, for example, jet engines (NAICS 333611). The 'auxiliary equipment' aspect could also encompass a wide range of items, from electrical systems to cabin furnishings, depending on the specific requirements defined in the contract.

What are the implications of the contract duration (2234 days) for the Air Force's long-term planning?

The contract duration of 2234 days, approximately 6.1 years (including the extended period to March 31, 2029), signifies a long-term commitment by the Air Force to procure these specific aircraft parts from L3Harris Technologies. This extended timeframe provides stability and predictability for both the government and the contractor regarding supply. For the Air Force, it ensures a consistent supply of necessary components, potentially simplifying logistics and maintenance planning. However, it also means that for the duration of the contract, the Air Force is largely locked into this supplier, limiting its flexibility to adapt to new technologies or seek potentially better deals from competitors should they emerge. This long-term commitment underscores the perceived criticality and sustained need for these parts.

Are there any indications of potential cost savings or efficiencies achieved through this contract structure?

The provided data offers limited information to assess potential cost savings or efficiencies. The contract is 'FIRM FIXED PRICE' (pt: FIRM FIXED PRICE), which is designed to shift cost risk to the contractor and provide price certainty for the government. This structure aims to prevent cost overruns from impacting the government's budget. However, the 'NOT COMPETED' (ct: NOT COMPETED) nature of the award raises significant doubts about whether the initial fixed price itself represents the most economical option available. Without a competitive bidding process, it is difficult to ascertain if the price was negotiated down to the lowest feasible level. Therefore, while the fixed-price format offers budget predictability, the lack of competition undermines the likelihood of achieving optimal cost savings compared to a competitively procured contract.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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: 7500 MAEHR RD, WACO, TX, 76705

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: $660,102,935

Exercised Options: $660,102,935

Current Obligation: $660,102,935

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862020G4050

IDV Type: BOA

Timeline