DoD awards $45.1M to L3Harris for M-CODE capability, citing sole-source justification

Contract Overview

Contract Amount: $45,163,430 ($45.2M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2024-06-06

End Date: 2028-02-29

Contract Duration: 1,363 days

Daily Burn Rate: $33.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: M-CODE CAPABILITY (3010)

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $45.2 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: M-CODE CAPABILITY (3010) Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Cost-plus-fixed-fee structure may incentivize higher costs compared to fixed-price contracts. 3. Long performance period (over 3 years) suggests a need for sustained support. 4. Contractor, L3Harris Technologies, is a significant defense contractor with extensive experience. 5. Focus on M-CODE capability indicates a critical, specialized defense need. 6. Awarded as a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a follow-on effort.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without knowing the specific M-CODE capability delivered and its market value. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D or uncertain scope work, can lead to higher costs than fixed-price contracts if not carefully managed. The lack of competition further complicates value assessment, as there's no market pressure to drive down prices. The total value of $45.1 million over 1363 days averages approximately $33,000 per day, which requires context regarding the complexity and criticality of the M-CODE capability.

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 solicited. This typically occurs when a unique capability is required, or the item is only available from a single source. The lack of competition means that taxpayers did not benefit from potential price reductions that could arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the best possible price, potentially leading to higher costs for taxpayers compared to a competitively awarded contract.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, receiving critical M-CODE capabilities. The services delivered are related to the manufacturing of specialized aircraft parts and auxiliary equipment, likely supporting advanced navigation or communication systems. The geographic impact is primarily within Texas, where L3Harris is located, but the ultimate impact is on national defense capabilities. Workforce implications include continued employment for skilled manufacturing and engineering personnel at L3Harris facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Cost-plus-fixed-fee contract type can lead to cost overruns if not managed stringently.
Lack of transparency due to sole-source justification may obscure true value for money.
Long contract duration increases exposure to potential scope creep or evolving requirements.

Positive Signals

Award to an established defense contractor (L3Harris) suggests a high likelihood of successful delivery.
Focus on M-CODE capability indicates support for advanced, potentially critical, defense technology.
Delivery order structure implies integration into existing or planned Air Force programs.

Sector Analysis

The aerospace manufacturing sector, particularly for defense applications, is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry code (NAICS 336413). Spending in this sector is heavily influenced by defense budgets and technological advancements. Comparable spending benchmarks would typically involve other sole-source or competitively awarded contracts for specialized avionics, navigation systems, or communication equipment for military aircraft.

Small Business Impact

This contract does not appear to involve a small business set-aside, as the awardee is L3Harris Technologies Integrated Systems L.P., a large defense contractor. There is no explicit mention of subcontracting plans for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though L3Harris may engage small businesses as part of its broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of cost, schedule, and performance will be crucial. The Defense Contract Audit Agency (DCAA) and potentially the Department of Defense Inspector General (DoDIG) may conduct audits to ensure compliance and prevent fraud, waste, and abuse. Transparency is limited by the sole-source justification, but contract performance reports and milestone reviews would be key accountability measures.

Related Government Programs

DoD M-CODE Program
Air Force Avionics Modernization Programs
Defense Navigation and Timing Systems
Aircraft Parts Manufacturing Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source justification requires careful scrutiny.
Cost-plus-fixed-fee contracts need robust cost monitoring.
Long-term contract duration increases risk exposure.
Lack of competition may impact price fairness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.2 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. M-CODE CAPABILITY (3010)

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 $45.2 million.

What is the period of performance?

Start: 2024-06-06. End: 2028-02-29.

What specific M-CODE capability is being procured, and why is it considered sole-source?

The specific M-CODE capability being procured is not detailed in the provided data, but M-CODE typically refers to a military code for GPS signals, enhancing accuracy and security. The sole-source justification likely stems from L3Harris possessing unique intellectual property, proprietary technology, or specific manufacturing expertise essential for this particular M-CODE component or system that cannot be replicated by other vendors. This could involve specialized hardware, software integration, or unique testing procedures developed by L3Harris. Without further details on the specific requirement and L3Harris's proprietary position, it is difficult to definitively validate the sole-source claim beyond the stated justification.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types in terms of value for money for this type of specialized equipment?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or involves significant research and development, making it difficult to estimate costs accurately beforehand. While it allows for flexibility and encourages contractor innovation, it carries a higher risk of cost overruns compared to fixed-price contracts. For specialized equipment like M-CODE capabilities, where technical challenges may be significant, CPFF can ensure the government obtains the necessary technology. However, it places a greater burden on the government to meticulously monitor costs and contractor performance to ensure value for money. A fixed-price incentive fee (FPIF) or firm-fixed-price (FFP) contract might offer better value if the scope were more defined and risks better understood, as they incentivize the contractor to control costs.

What is L3Harris Technologies' track record with similar defense contracts, particularly those involving M-CODE or advanced avionics?

L3Harris Technologies is a major defense contractor with a substantial history of delivering complex systems for military applications, including avionics, communications, and navigation technologies. While specific details on their M-CODE contracts are not provided here, their extensive experience in related fields suggests a strong capability to execute this award. The company has been involved in numerous programs for the Air Force and other branches, often securing large, sole-source, or competitively won contracts. Their track record generally indicates a capacity for high-quality production and integration of advanced defense technologies, though like any large contractor, specific program performance can vary.

What are the potential risks associated with a sole-source award for critical defense capabilities like M-CODE?

The primary risk associated with a sole-source award for critical defense capabilities like M-CODE is the lack of competitive pressure, which can lead to inflated prices and reduced innovation. Without competing bids, the government may pay more than necessary, and the contractor has less incentive to find cost efficiencies or develop superior solutions. Furthermore, sole-source awards can create dependency on a single supplier, posing risks if that supplier faces financial difficulties, production issues, or geopolitical challenges. It also limits opportunities for smaller, innovative companies to enter the market and contribute to national defense.

How does this $45.1 million award compare to historical spending on M-CODE or similar navigation/communication systems within the DoD?

Without specific historical spending data for M-CODE or comparable systems, it's challenging to provide a direct comparison. However, $45.1 million for a specialized capability over approximately 3.75 years suggests a significant investment. Defense spending on advanced navigation and communication systems can range widely, from tens of millions for component upgrades to billions for entire platform modernizations. This award appears to be a substantial, but not exceptionally large, investment for a specific, critical technology component. It would be beneficial to compare this to other sole-source awards for similar technologies or to the total budget allocated for M-CODE development and sustainment across the DoD to gauge its relative scale.

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

Financial Breakdown

Contract Ceiling: $45,163,430

Exercised Options: $45,163,430

Current Obligation: $45,163,430

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $8,933,350

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862021G4027

IDV Type: BOA

Timeline