DoD's $182M C-27J aircraft program awarded to L3Harris, raising questions about competition and value

Contract Overview

Contract Amount: $182,315,529 ($182.3M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2012-12-13

End Date: 2018-12-31

Contract Duration: 2,209 days

Daily Burn Rate: $82.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACAT/SCAT II, FMS, C-27J AUSTRALIA

Place of Performance

Location: WACO, MCLENNAN County, TEXAS, 76705

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $182.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: ACAT/SCAT II, FMS, C-27J AUSTRALIA Key points: 1. The contract's value of over $182 million warrants scrutiny for cost-effectiveness. 2. Awarded as 'not available for competition,' this raises concerns about market fairness and potential price inflation. 3. The fixed-firm price contract type offers some cost certainty but requires careful performance monitoring. 4. The duration of 2209 days suggests a long-term commitment with potential for scope creep. 5. The absence of small business set-asides indicates limited opportunities for smaller enterprises in this specific award. 6. The contract's focus on aircraft manufacturing places it within a high-value, specialized sector of defense spending.

Value Assessment

Rating: questionable

Benchmarking the value of this $182 million contract is challenging without specific details on the C-27J aircraft's capabilities and market alternatives. However, the 'not available for competition' status inherently limits the ability to assess if the pricing reflects competitive market forces. The firm fixed-price nature provides some cost control, but the overall value proposition is obscured by the lack of competitive bidding, suggesting potential for suboptimal pricing compared to a fully competed contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly designated as 'not available for competition,' indicating a sole-source award. This means L3Harris Technologies Integrated Systems L.P. was the only bidder or was selected without a formal competitive process. Such awards can be justified for specialized capabilities or urgent needs, but they bypass the price discovery mechanisms inherent in open competition, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards limit taxpayer value by preventing the government from leveraging competitive pressures to secure the best possible pricing and terms. This can result in higher overall program costs.

Public Impact

The primary beneficiaries are the Department of Defense, which receives the C-27J aircraft, and L3Harris Technologies for contract fulfillment. The services delivered include the manufacturing and potentially modification or support of C-27J aircraft. The geographic impact is primarily tied to the contractor's facilities in Texas and the operational deployment of the aircraft by the DoD. Workforce implications include employment at L3Harris and potentially its subcontractors, particularly in specialized aerospace manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer funds.
Sole-source awards can stifle innovation by not encouraging broader market participation.
Long contract duration increases the risk of cost overruns due to unforeseen changes or inefficiencies.
Limited transparency in the procurement process due to non-competitive nature.

Positive Signals

Firm fixed-price contract offers some cost certainty for the government.
Award to an established contractor like L3Harris may indicate confidence in their capability to deliver.
The contract addresses a specific defense need for aircraft, implying strategic importance.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and substantial government procurement. Contracts for aircraft manufacturing, like this C-27J program, represent a critical segment of this industry. Spending in this area is often driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other large-scale aircraft procurement programs within the DoD or allied nations, often running into hundreds of millions or billions of dollars.

Small Business Impact

The data indicates that small business participation was not a primary consideration for this specific award, as the 'sb' field is false and the contract was sole-source. There is no explicit small business set-aside. This means opportunities for small businesses to directly participate as prime contractors or through significant subcontracting roles may be limited unless L3Harris voluntarily includes them in its supply chain. The impact on the small business ecosystem is likely minimal for this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and oversight bodies, potentially including the Defense Contract Management Agency (DCMA) given the 'sa' field. Accountability measures are typically embedded within the contract terms, including performance milestones and payment schedules tied to deliverables. Transparency is limited due to the sole-source nature, but contract award details are usually publicly available through systems like SAM.gov. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

C-27J Spartan Aircraft Program
Department of Defense Aircraft Procurement
L3Harris Technologies Defense Contracts
Foreign Military Sales (FMS) related programs

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Lack of transparency in the procurement process.
Potential for cost overruns given the long contract duration.
Limited visibility into specific performance metrics and value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $182.3 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. ACAT/SCAT II, FMS, C-27J AUSTRALIA

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $182.3 million.

What is the period of performance?

Start: 2012-12-13. End: 2018-12-31.

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

L3Harris Technologies, and its predecessor companies, have a significant history of delivering complex aerospace and defense systems to the U.S. military. While specific details on past C-27J manufacturing contracts awarded solely to L3Harris are not provided in the abbreviated data, the company has extensive experience in aircraft modification, integration, and production across various platforms. Their track record generally includes successful execution of large-scale defense contracts, often involving advanced technologies and stringent performance requirements. However, the success of any specific contract is subject to detailed performance metrics, delivery schedules, and budget adherence, which would require a deeper dive into individual contract histories beyond the scope of this summary data.

How does the awarded value of $182 million compare to the cost of similar aircraft manufacturing contracts?

Directly comparing the $182 million award for the C-27J program is difficult without knowing the exact scope of work (e.g., number of aircraft, specific configurations, included support services) and the time period. Aircraft manufacturing costs vary widely based on platform size, complexity, technology, and production volume. For context, smaller tactical transport aircraft can range from tens to hundreds of millions of dollars each, while larger, more advanced platforms can cost significantly more. The 'not available for competition' status further complicates a direct value comparison, as competitive bidding typically drives prices down. Without access to detailed cost breakdowns or comparable sole-source awards for similar aircraft, it's challenging to definitively benchmark this $182 million figure against market rates.

What are the primary risks associated with a sole-source award for aircraft manufacturing?

The primary risks associated with a sole-source award for aircraft manufacturing include: 1. **Higher Costs:** Without competitive pressure, the contractor may charge a premium, leading to inflated prices and reduced value for taxpayer money. 2. **Reduced Innovation:** The lack of competition can disincentivize the contractor from seeking innovative or cost-saving solutions. 3. **Potential for Complacency:** The contractor may face less pressure to maintain high levels of efficiency or quality if there are no competitors vying for future business. 4. **Limited Transparency:** Sole-source procurements often involve less public scrutiny regarding pricing and justification, making it harder to assess fairness. 5. **Dependency:** The government becomes reliant on a single supplier, which can create vulnerabilities if that supplier faces financial difficulties or production issues.

What is the expected program effectiveness and performance based on the contract details?

The contract details provided (firm fixed price, duration of 2209 days) suggest an expectation of defined deliverables within a set budget and timeframe. A firm fixed-price contract generally aims to ensure cost control, making the contractor responsible for cost overruns. The long duration indicates a substantial undertaking, likely involving the production of multiple aircraft or significant modifications. Program effectiveness will ultimately be measured by the DoD's satisfaction with the delivered C-27J aircraft, their operational readiness, performance capabilities, and adherence to the contract specifications. Without specific performance metrics or historical data on this particular program's execution, a definitive assessment of effectiveness is not possible from the provided data alone.

How has federal spending on aircraft manufacturing, specifically related to tactical transport aircraft like the C-27J, evolved over the past decade?

Federal spending on aircraft manufacturing, particularly for tactical transport aircraft, has fluctuated over the past decade, influenced by evolving military requirements, budget constraints, and geopolitical factors. Programs like the C-27J have seen varying levels of commitment and funding. Initially procured for specific roles, some programs have faced re-evaluation or cancellation due to changing strategic priorities or cost-benefit analyses. Spending trends often reflect a shift towards multi-role platforms, unmanned systems, or upgrades to existing fleets. Detailed historical spending data for specific aircraft types like the C-27J would reveal patterns of procurement, sustainment, and potential program adjustments over time, indicating the government's sustained or reduced investment in such capabilities.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

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: $182,315,529

Exercised Options: $182,315,529

Current Obligation: $182,315,529

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $2,631,184

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline