DoD awards $85.9M contract for aircraft parts, with limited competition and a cost-plus-fixed-fee structure

Contract Overview

Contract Amount: $85,862,928 ($85.9M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2023-10-24

End Date: 2026-10-31

Contract Duration: 1,103 days

Daily Burn Rate: $77.8K/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 $85.9 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: BIG SAFARI Key points: 1. The contract's cost-plus-fixed-fee (CPFF) structure may incentivize higher costs without strict oversight. 2. Limited competition raises concerns about potential overpayment and reduced value for taxpayer dollars. 3. The contractor, L3Harris Technologies, has a significant presence in the defense sector. 4. This award represents a small portion of the overall defense budget for aircraft components. 5. The contract duration of over 1000 days suggests a long-term need for these parts. 6. The lack of small business set-aside indicates potential missed opportunities for smaller enterprises.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee (CPFF) pricing structure, while common for complex or uncertain projects, can lead to higher costs compared to fixed-price contracts if not managed diligently. Benchmarking the specific unit costs against similar aircraft parts is difficult without more granular data, but the overall award value of $85.9 million for over 1000 days suggests a substantial investment. The absence of competitive bidding further complicates a direct value-for-money assessment, as the government did not leverage market forces to secure the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This approach is typically used when only one responsible source is available, or in cases of urgent need. The lack of competition means the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors. This raises questions about whether alternative solutions or more cost-effective options were fully explored.

Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the best price, potentially leading to higher costs for taxpayers. Without competitive pressure, there is less incentive for the contractor to offer the most economical solution.

Public Impact

The Department of the Air Force benefits from the acquisition of critical aircraft parts, ensuring operational readiness. This contract supports the maintenance and sustainment of existing Air Force aircraft fleets. The primary beneficiaries are the military personnel who rely on these aircraft for national security missions. The contract's impact is concentrated within the aerospace manufacturing sector, specifically in Texas where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may lead to cost overruns without stringent oversight.
Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may stifle innovation and reduce the availability of alternative solutions.
No small business set-aside means fewer opportunities for smaller, specialized firms in this sector.

Positive Signals

Contract awarded to a known entity (L3Harris Technologies) with established defense sector experience.
The contract addresses a clear need for aircraft parts, supporting military operations.
The duration of the contract suggests a stable, long-term requirement, allowing for potential efficiency gains over time.

Sector Analysis

The aerospace manufacturing sector is a critical component of the defense industrial base, characterized by high technological complexity and significant government investment. This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, indicating a focus on specialized components rather than complete aircraft. The total federal spending in this sector is substantial, with numerous contracts awarded annually for research, development, production, and sustainment. This specific award, while significant in its own right, represents a small fraction of the overall defense procurement landscape.

Small Business Impact

This contract did not include a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This suggests that the primary contractor, L3Harris Technologies, will likely fulfill the contract using its own resources or through larger supply chains. The absence of a set-aside means that opportunities for small businesses to directly compete for or participate in this specific contract are limited, potentially impacting the broader small business ecosystem within the aerospace supply chain.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Fixed Fee (CPFF) contract, rigorous financial oversight is crucial to monitor costs and ensure the fixed fee remains appropriate. Transparency regarding the specific components and services procured is limited in the provided data. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse, but day-to-day oversight rests with the agency's program managers.

Related Government Programs

Aircraft Component Procurement
Defense Logistics Agency Contracts
Air Force Sustainment Programs
Aerospace Manufacturing Services
Cost-Plus Contracts
Sole-Source Defense Awards

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee structure requires robust oversight to control costs.
Limited transparency on specific parts and services procured.
Potential for higher costs due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.9 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 $85.9 million.

What is the period of performance?

Start: 2023-10-24. End: 2026-10-31.

What is L3Harris Technologies' track record with similar sole-source, cost-plus-fixed-fee contracts within the Department of Defense?

L3Harris Technologies, a major defense contractor, has a history of performing various contract types, including sole-source and cost-plus-fixed-fee (CPFF) agreements, with the Department of Defense. Analyzing their past performance on similar contracts is crucial for assessing risk and value. CPFF contracts, while offering flexibility for complex projects, require diligent oversight to manage costs effectively. L3Harris's extensive experience suggests they possess the technical capability to meet the requirements. However, a review of past performance metrics, cost variances, and any audit findings on comparable sole-source CPFF contracts would provide a clearer picture of their reliability and cost control effectiveness in such arrangements. Without specific data on past performance for this exact type of award, it's difficult to definitively assess their historical success in delivering value under similar constraints.

How does the estimated value of this contract compare to similar aircraft parts procurements by the Air Force?

The estimated value of $85.9 million for this contract, spanning over 1000 days, needs to be benchmarked against comparable aircraft parts procurements by the Air Force. Without specific details on the exact nature of the 'aircraft parts and auxiliary equipment,' a direct comparison is challenging. However, the average value of sole-source, CPFF contracts for specialized aerospace components can vary widely based on complexity, quantity, and technological sophistication. If this contract is for high-value, low-volume components or specialized systems, the price might be within a reasonable range for a sole-source award. Conversely, if it's for more common parts, the lack of competition and CPFF structure could indicate a higher-than-market price. A thorough analysis would involve comparing the estimated cost per unit or per year against similar items procured through competitive bidding or with different contract types.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for aircraft parts?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for aircraft parts are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, which can lead to inflated pricing as the government lacks leverage to negotiate the best possible deal. Secondly, the CPFF structure, while providing flexibility, inherently shifts some financial risk to the government. The contractor is reimbursed for allowable costs plus a fixed fee, creating a potential incentive to incur higher costs to increase the absolute dollar amount of the fee, even if the percentage remains fixed. This necessitates robust government oversight to scrutinize costs and prevent inefficiencies. For aircraft parts, risks also include potential delays in delivery, quality control issues if oversight is lax, and the possibility that the chosen contractor may not be the most innovative or cost-effective solution available in the market.

What is the expected program effectiveness or outcome of this contract for the Department of the Air Force?

The expected program effectiveness of this contract hinges on the reliable and timely delivery of the specified aircraft parts and auxiliary equipment. The Department of the Air Force requires these components to maintain the operational readiness and sustainment of its aircraft fleets. Successful execution of this contract should ensure that aircraft are equipped with necessary parts, minimizing downtime and supporting mission requirements. The CPFF structure, if managed well, should allow the contractor to procure necessary materials and labor to meet the Air Force's needs, even if unforeseen challenges arise during the contract period. Ultimately, the effectiveness will be measured by the availability of serviceable aircraft, the efficiency of maintenance operations, and the overall contribution to national security objectives.

How does historical spending on 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Air Force compare to this award?

Historical spending by the Department of the Air Force on 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' is substantial, reflecting the complexity and ongoing needs of maintaining a large and diverse aircraft inventory. This $85.9 million award represents a single contract within that broader category. To assess its significance, one would need to examine annual spending trends for this specific NAICS code (336413) by the Air Force. Typically, such spending fluctuates based on fleet modernization programs, sustainment requirements, and specific technological upgrades. This award, being a sole-source CPFF contract, might be indicative of a specialized or urgent need where competition was not feasible or deemed necessary. Comparing it to the average value and number of contracts awarded in this category over the past several years would provide context on whether this award is typical, unusually large, or represents a shift in procurement strategy.

What are the implications of the 'DELIVERY ORDER' contract type for this award?

The designation of 'DELIVERY ORDER' indicates that this contract is likely a task order issued under a larger indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar type of basic ordering agreement. This means that the $85.9 million represents the value of this specific delivery order, not necessarily the total potential value of the underlying IDIQ contract. Delivery orders allow agencies to procure specific quantities of goods or services as needed over a defined period. For this contract, it suggests a phased approach to acquiring the aircraft parts. The 'NOT COMPETED' status applies to this specific delivery order, reinforcing the sole-source nature of this particular acquisition. The implications are that the government has a flexible mechanism to order parts, but the pricing and terms for this specific order were not competitively determined.

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

Financial Breakdown

Contract Ceiling: $85,862,928

Exercised Options: $85,862,928

Current Obligation: $85,862,928

Subaward Activity

Number of Subawards: 42

Total Subaward Amount: $27,162,881

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862021G4027

IDV Type: BOA

Timeline