DoD's $39.2M contract for aircraft parts awarded to L3Harris Technologies, raising questions about competition

Contract Overview

Contract Amount: $39,196,525 ($39.2M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2024-08-15

End Date: 2026-08-31

Contract Duration: 746 days

Daily Burn Rate: $52.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RJ12 PDM/MITD

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $39.2 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: RJ12 PDM/MITD Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of 746 days suggests a long-term need for these aircraft parts. 3. The contract's value, while substantial, needs benchmarking against similar sole-source awards. 4. Focus on 'Other Aircraft Parts' indicates a specialized niche within the defense industrial base. 5. Awarded by the Department of the Air Force, highlighting a specific branch's procurement needs. 6. The firm-fixed-price structure aims to transfer some cost risk to the contractor.

Value Assessment

Rating: questionable

The contract's value of $39.2 million for aircraft parts requires careful benchmarking. As a sole-source award, direct comparison to competitively bid contracts is difficult. However, the duration of over two years suggests a significant volume of parts. Without competitive pressure, the pricing may not reflect the best possible value for taxpayers. Further analysis would involve comparing the unit costs of specific parts, if available, to market rates or historical pricing for similar components.

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 among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means that L3Harris Technologies was the only bidder, which can limit price negotiation and potentially lead to higher costs compared to a competitive procurement.

Taxpayer Impact: Sole-source awards limit opportunities for other businesses to compete for government contracts and can result in higher prices for taxpayers due to the absence of competitive pressure to offer the lowest cost.

Public Impact

The Department of the Air Force benefits from the acquisition of critical aircraft parts, ensuring operational readiness. The contract supports the maintenance and sustainment of specific aircraft platforms used by the Air Force. The geographic impact is primarily in Texas, where L3Harris Technologies is located, potentially supporting local jobs. The contract likely sustains jobs within L3Harris Technologies' manufacturing and supply chain operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for taxpayers.
Lack of transparency in the procurement process due to no-bid nature.
Potential for cost overruns if pricing is not rigorously scrutinized.
Dependence on a single contractor for critical aircraft components.

Positive Signals

Award to an established contractor, L3Harris Technologies, suggests a degree of reliability.
Firm-fixed-price contract shifts some cost risk to the contractor.
Contract duration indicates a sustained need, potentially leading to economies of scale for the contractor.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity and significant government spending. This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, which is a crucial segment supporting the operational readiness of military fleets. The market for such specialized parts is often dominated by a few key players due to stringent quality requirements and proprietary technologies. Benchmarking spending in this area involves comparing sole-source awards to similar sole-source procurements or, where possible, to the cost of parts procured through competitive means for comparable aircraft.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless L3Harris Technologies voluntarily engages small businesses in its supply chain. Further investigation into subcontracting plans would be needed to assess any indirect benefits to small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The firm-fixed-price nature of the contract provides some level of cost control. Transparency is limited due to the sole-source award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. Accountability measures would involve performance monitoring against delivery schedules and quality standards.

Related Government Programs

Aircraft Component Procurement
Defense Logistics Agency Contracts
Air Force Sustainment Programs
Sole-Source Defense Contracts
Aerospace Manufacturing Support

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.2 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. RJ12 PDM/MITD

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 $39.2 million.

What is the period of performance?

Start: 2024-08-15. End: 2026-08-31.

What is L3Harris Technologies' track record with the Department of Defense, particularly for sole-source contracts?

L3Harris Technologies is a major defense contractor with a long history of supplying various systems and components to the Department of Defense. While specific data on their sole-source contract performance is not provided here, their status as a large, established entity suggests significant experience. However, sole-source awards, by their nature, limit the ability to assess competitive performance. DoD typically relies on past performance evaluations, which would include factors like delivery timeliness, quality, and responsiveness, when considering sole-source options. A review of L3Harris's broader contract history with the Air Force and other DoD branches would offer more insight into their reliability and pricing practices across different procurement types.

How does the $39.2 million value compare to similar sole-source awards for aircraft parts?

Direct comparison of this $39.2 million sole-source award to similar contracts is challenging without access to a comprehensive database of sole-source procurements for comparable aircraft parts. Sole-source awards are often justified by unique requirements, proprietary technology, or urgent needs, making direct apples-to-apples comparisons difficult. However, the value is substantial and suggests a significant quantity or high-value components. To assess value for money, one would ideally benchmark the unit prices of the specific parts procured against market rates, historical pricing for the same or similar parts, or against prices achieved in any prior competitive procurements for these items. The absence of competition inherently raises the risk that the price may not be the lowest achievable.

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

The primary risks associated with a sole-source award of $39.2 million include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. Taxpayers may not be receiving the best possible value for their money. Furthermore, reliance on a single supplier can create supply chain vulnerabilities if the contractor experiences production issues or goes out of business. The government also has less leverage in negotiating terms and pricing compared to a competitive scenario. Robust oversight and negotiation are critical to mitigate these risks.

What specific types of aircraft parts does 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' typically encompass?

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category (NAICS code 336413) is broad and encompasses a wide array of components not specifically classified elsewhere within aircraft manufacturing. This can include items such as aircraft engine parts (excluding complete engines), landing gear components, aircraft electrical systems parts, flight control system parts, aircraft interior components, and various auxiliary equipment like pumps, valves, and actuators. It essentially covers the vast range of specialized parts and sub-assemblies required to keep aircraft operational, excluding major structural components or complete systems that might fall under different classifications. The specific parts procured under this contract would depend on the Air Force's particular aircraft fleet needs.

What is the historical spending pattern for this specific type of aircraft part procurement by the Department of the Air Force?

Analyzing historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of the Air Force requires access to historical contract databases. Without that specific data, it's difficult to provide precise figures. However, the Air Force, as a major branch of the DoD, consistently procures a vast quantity of parts and components to maintain its extensive fleet. Spending in this category is typically driven by fleet size, aircraft age, operational tempo, and modernization programs. Sole-source awards for such parts are not uncommon, especially for specialized or legacy systems where few suppliers exist. Understanding the trend of sole-source versus competitive awards in this category over time would reveal shifts in market dynamics or procurement strategies.

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: 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: $39,196,525

Exercised Options: $39,196,525

Current Obligation: $39,196,525

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $163,715

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862021G4027

IDV Type: BOA

Timeline