DoD awards $172.7M Wideband Satcom contract to L3Harris Technologies, raising value-for-money questions due to sole-source nature

Contract Overview

Contract Amount: $17,268,144 ($17.3M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2024-07-01

End Date: 2027-05-30

Contract Duration: 1,063 days

Daily Burn Rate: $16.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DATALINKS/AWP/WIDEBAND SATCOM

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $17.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: DATALINKS/AWP/WIDEBAND SATCOM Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract is for Wideband Satcom services, crucial for military communications and intelligence. 3. L3Harris Technologies is a significant defense contractor with a substantial presence in the aerospace and defense sector. 4. The contract duration extends over two years, indicating a need for sustained support. 5. Performance is based in Texas, suggesting a concentration of work within that state. 6. The contract type is Cost Plus Fixed Fee, which can incentivize cost overruns if not closely monitored.

Value Assessment

Rating: questionable

The contract's value is difficult to benchmark due to its sole-source nature and the specialized services provided. Without competitive bids, it's challenging to ascertain if the pricing reflects fair market value. The Cost Plus Fixed Fee structure requires rigorous oversight to ensure costs remain reasonable and that the fixed fee is appropriate for the effort involved. Comparisons to similar sole-source awards for satellite communication services would be necessary for a more definitive value assessment.

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, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they inherently reduce price discovery and can lead to higher costs for the government compared to fully competed contracts.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the most cost-effective solution. Without competing offers, the government has less leverage to negotiate favorable pricing, potentially leading to overspending on essential Wideband Satcom services.

Public Impact

The Department of Defense benefits from sustained Wideband Satcom capabilities, essential for global operations and command and control. Military personnel and intelligence agencies will receive critical communication services, enabling secure and reliable data transmission. The contract's performance in Texas may lead to job creation and economic activity within the state's aerospace and defense industry. The services provided are vital for national security, supporting various military branches and their mission requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type requires diligent oversight to control costs.
Lack of transparency in the procurement process due to sole-source justification.
Potential for cost creep if contractor's expenses are not rigorously scrutinized.
Limited opportunities for small businesses to participate as prime contractors.

Positive Signals

Award to an established contractor with proven capabilities in satcom.
Contract ensures continued critical Wideband Satcom services for DoD.
Clear performance period and defined scope of work.
Potential for innovation and efficiency improvements by a specialized provider.

Sector Analysis

The Wideband Satellite Communications (SATCOM) sector is a critical component of the global defense and telecommunications infrastructure. This contract falls within the broader aerospace and defense industry, specifically focusing on satellite services and related equipment manufacturing. The market is characterized by high barriers to entry due to technological complexity and significant capital investment. Major players include large defense contractors and specialized satellite service providers. Spending in this area is consistently high due to the strategic importance of secure and reliable global communication for military and government operations.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The prime contractor, L3Harris Technologies, is a large corporation. This means that small businesses are unlikely to be directly involved as prime contractors on this specific award. However, L3Harris may engage small businesses as subcontractors, though the extent of this subcontracting is not detailed in the provided data. The absence of a set-aside suggests that opportunities for small businesses to directly benefit from this particular contract are limited.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract will likely be managed by the Department of the Air Force contracting and program management offices. The Cost Plus Fixed Fee structure necessitates close monitoring of the contractor's incurred costs and the justification for the fixed fee. Transparency is limited due to the sole-source nature of the award. Accountability will be driven by performance metrics and adherence to the contract's terms and conditions. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

DoD Wideband SATCOM Programs
Military Satellite Communications Systems
Aerospace and Defense Manufacturing
Government Communications Services
Satellite Technology Procurement

Risk Flags

Sole-source award may limit cost savings.
CPFF contract type requires robust oversight to manage costs.
Lack of competition reduces price discovery.
Potential for contractor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. DATALINKS/AWP/WIDEBAND SATCOM

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 $17.3 million.

What is the period of performance?

Start: 2024-07-01. End: 2027-05-30.

What is L3Harris Technologies' track record with similar sole-source DoD contracts for Wideband SATCOM services?

L3Harris Technologies has a significant history of contracting with the Department of Defense, including for satellite communications systems. While specific data on their sole-source Wideband SATCOM awards is not provided here, the company is a major defense contractor with extensive experience in this domain. Their track record generally indicates a capacity to deliver complex systems and services. However, the absence of competition in sole-source awards means that performance and pricing cannot be directly compared against other bidders for this specific contract. A deeper dive into historical contract performance reviews and past performance evaluations for L3Harris on similar sole-source procurements would be necessary to fully assess their reliability and value proposition in such scenarios.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types in terms of cost efficiency for the government?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not precisely defined or when there is significant uncertainty in the cost of performance. The government agrees to pay the contractor's actual costs plus a predetermined fixed fee. While this structure allows for flexibility, it carries a higher risk of cost overruns compared to fixed-price contracts, as the contractor is incentivized to incur costs to achieve the fixed fee. For the government, cost efficiency is heavily dependent on robust oversight to scrutinize incurred costs and ensure the fixed fee is appropriate. In contrast, Firm-Fixed-Price (FFP) contracts offer greater cost certainty for the government, as the price is set upfront, incentivizing the contractor to control costs to maximize profit. However, FFP contracts may be less suitable for research and development or services with high uncertainty. Therefore, CPFF can be less cost-efficient if not managed diligently.

What are the primary risks associated with sole-source procurement for critical defense systems like Wideband SATCOM?

The primary risks associated with sole-source procurement for critical defense systems like Wideband SATCOM include reduced price competition, potentially leading to higher costs for taxpayers. Without multiple bidders, there is less incentive for the awarded contractor to offer the most competitive pricing. Furthermore, sole-source awards can limit innovation by excluding potentially superior solutions from other vendors. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, diminishing its negotiating power in future procurements. Transparency in the procurement process is also reduced, making it harder to justify the award and pricing to the public. Finally, the lack of competitive pressure might, in some cases, lead to complacency in performance or quality if not mitigated by strong contract management and oversight.

What is the historical spending trend for Wideband SATCOM services within the Department of Defense?

Historical spending on Wideband Satellite Communications (SATCOM) services within the Department of Defense has been substantial and consistently high, reflecting the critical nature of these capabilities for global military operations. While specific aggregate figures for Wideband SATCOM alone are not readily available without extensive database queries, the broader category of military communications and satellite systems represents billions of dollars annually. Spending in this area is driven by the need for secure, reliable, and high-bandwidth communication links across vast distances, supporting intelligence, surveillance, reconnaissance (ISR), command and control (C2), and tactical operations. Factors influencing spending include technological advancements, the evolving threat landscape, and the lifecycle of existing satellite constellations and ground infrastructure. The trend generally shows sustained investment, with periodic surges related to new system acquisitions or major upgrades.

How does the geographic location of contract performance (Texas) potentially impact the overall cost and execution of the contract?

The geographic location of contract performance in Texas (st: TX) can have several impacts on the overall cost and execution of the Wideband SATCOM contract. Firstly, it may influence labor costs, as wages and the availability of skilled personnel can vary significantly by region. Texas has a robust aerospace and defense industry, which could mean a competitive labor market but also a readily available pool of experienced workers. Secondly, proximity to L3Harris's existing facilities or relevant infrastructure in Texas could streamline operations and reduce logistical costs associated with personnel travel and equipment deployment. Conversely, if specialized resources or testing facilities are located elsewhere, performance in Texas might incur additional transportation or coordination expenses. The state's business environment, tax incentives, and regulatory landscape could also indirectly affect the contractor's overhead and, consequently, the contract's total cost.

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: $18,989,488

Exercised Options: $17,268,144

Current Obligation: $17,268,144

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $1,575,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862021G4027

IDV Type: BOA

Timeline