Air Force awards $50.3M for RC-135 sustainment to L3Harris Technologies, a sole-source contract

Contract Overview

Contract Amount: $50,319,568 ($50.3M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2024-10-23

End Date: 2027-09-30

Contract Duration: 1,072 days

Daily Burn Rate: $46.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: RC-135 SUSTAINMENT

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $50.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: RC-135 SUSTAINMENT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award limits competitive pressure, potentially impacting price efficiency. 3. Long duration of over 3 years suggests a critical, ongoing need for sustainment services. 4. The contract is for sustainment, implying a focus on maintaining existing capabilities rather than developing new ones. 5. The awardee, L3Harris Technologies, is a significant defense contractor with extensive experience in aerospace and defense. 6. The contract value of $50.3 million is substantial, reflecting the complexity and importance of RC-135 aircraft sustainment.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The cost-plus-fixed-fee (CPFF) pricing structure means the government pays the actual costs incurred by the contractor plus a fixed fee, which can sometimes lead to higher overall costs compared to fixed-price contracts if not managed closely. Without comparable contract data or a competitive bidding process, it's difficult to definitively assess if the pricing is optimal or if it represents good value for money. The fixed fee component provides some cost control, but the variable cost component requires diligent oversight.

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 typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. This approach is often justified for specialized sustainment or unique system support where alternatives are not feasible.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the most competitive price, potentially leading to less efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Air Force and its RC-135 fleet, ensuring operational readiness and capability. Services delivered include sustainment, maintenance, repair, and potentially logistics support for the RC-135 aircraft. The geographic impact is primarily within the United States, where the RC-135 fleet is based and maintained, and potentially at deployed locations. Workforce implications include the employment of skilled technicians, engineers, and support staff at L3Harris Technologies and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure requires robust government oversight to manage costs.
Long contract duration increases exposure to potential cost escalations over time.

Positive Signals

Award to an established defense contractor (L3Harris) suggests a high likelihood of technical capability.
Sustainment contracts are crucial for maintaining the operational readiness of critical assets like the RC-135.
The fixed fee component in CPFF contracts provides some level of cost predictability for the contractor's profit.

Sector Analysis

The RC-135 is a critical intelligence, surveillance, and reconnaissance (ISR) aircraft for the U.S. Air Force. Sustainment contracts for such specialized platforms are essential for maintaining their operational effectiveness and longevity. The aerospace and defense sector, particularly companies specializing in aircraft modification, maintenance, and sustainment, plays a vital role in supporting these complex military assets. Spending in this area is often characterized by long-term contracts, high technical requirements, and a limited number of qualified providers, leading to a significant portion of contracts being sole-source or limited competition.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the sole-source nature and the specialized requirements for RC-135 sustainment, it is unlikely that small businesses would be the primary awardees for the prime contract. However, L3Harris Technologies may engage small businesses as subcontractors for specific components or services, contributing to the small business ecosystem indirectly. The extent of small business subcontracting would depend on the specific needs of the sustainment program and L3Harris's subcontracting strategy.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Given the CPFF structure, rigorous financial oversight and performance monitoring will be critical to ensure costs are reasonable and allocable, and that the fixed fee is earned appropriately. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) or the Inspector General could be in place to ensure accountability.

Related Government Programs

RC-135 Aircraft
Air Force Sustainment Programs
ISR Aircraft Maintenance
Defense Logistics Support
Aerospace Component Manufacturing

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Critical defense asset sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. RC-135 SUSTAINMENT

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 $50.3 million.

What is the period of performance?

Start: 2024-10-23. End: 2027-09-30.

What is the track record of L3Harris Technologies in performing similar aircraft sustainment contracts for the Department of Defense?

L3Harris Technologies has a substantial track record in supporting complex defense platforms, including aircraft sustainment and modernization programs. The company has been involved in various aspects of aerospace and defense, providing integrated systems and services. For the RC-135 specifically, L3Harris has a history of providing modifications and support. Their experience often includes avionics, electronic warfare systems, and structural upgrades, which are all critical for maintaining the operational capabilities of ISR aircraft. While specific performance metrics for past contracts are not detailed here, their position as a major defense contractor suggests a generally reliable performance history, though like any large contractor, they may have faced challenges on specific programs that required close government management.

How does the awarded value of $50.3 million compare to historical spending on RC-135 sustainment?

Without access to historical spending data specifically for RC-135 sustainment broken down by contract and year, a direct comparison is difficult. However, $50.3 million over approximately three years (from Oct 2024 to Sep 2027) suggests an average annual spend of roughly $16.7 million. This figure needs to be contextualized against the total fleet size, the complexity of the sustainment activities (e.g., depot-level maintenance, component repair, upgrades), and inflation. Given the specialized nature of the RC-135 and the ongoing need for its ISR capabilities, this level of annual spending is likely within the expected range for maintaining such a critical asset, especially considering the sole-source award which may not reflect the most cost-effective market price.

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

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved in a competitive environment. The government has less leverage to negotiate favorable terms. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing some cost control through the fixed fee, still allows the contractor to recoup all allowable costs. This can incentivize less cost-consciousness if oversight is not rigorous, as the contractor is guaranteed their costs plus a profit. Risks include potential cost overruns, scope creep, and a lack of incentive for the contractor to innovate or find efficiencies if not explicitly built into the contract's performance metrics and fee structure.

How effective is the RC-135 platform in fulfilling its intelligence, surveillance, and reconnaissance mission, and how does this contract contribute to that effectiveness?

The RC-135 platform is highly effective and remains a cornerstone of the U.S. Air Force's intelligence, surveillance, and reconnaissance (ISR) capabilities. It provides critical real-time data and analysis for strategic and tactical decision-making across various operational theaters. This sustainment contract is directly contributing to its effectiveness by ensuring the aircraft are airworthy, operational, and equipped with functioning systems. Without consistent and high-quality sustainment, the platform's availability, reliability, and mission capability would degrade, significantly impacting the Air Force's ability to conduct ISR operations. Therefore, this contract is essential for maintaining the readiness and operational tempo of a vital national security asset.

What are the historical spending patterns for RC-135 sustainment over the past five years, and how does this award fit into that trend?

Detailed historical spending patterns for RC-135 sustainment are not publicly available in a consolidated format. However, it is understood that sustainment costs for complex, aging platforms like the RC-135 are significant and tend to increase over time due to factors like component obsolescence, wear and tear, and the need for upgrades. Contracts for such specialized aircraft are often long-term and awarded to a limited number of prime contractors. This $50.3 million award, spanning over three years, represents a portion of the overall sustainment budget for the RC-135 fleet. It aligns with the general trend of substantial, ongoing investment required to maintain the operational readiness of high-value military assets, particularly those with unique ISR capabilities.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

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: $78,903,813

Exercised Options: $78,903,813

Current Obligation: $50,319,568

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $1,633,656

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862021G4027

IDV Type: BOA

Timeline