DoD awards L3Harris $11.75M for aircraft parts sustainment, raising questions on competition and value

Contract Overview

Contract Amount: $11,753,087 ($11.8M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2025-02-12

End Date: 2029-05-31

Contract Duration: 1,569 days

Daily Burn Rate: $7.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FOLLOW ON CONTRACT FOR SUSTAINMENT

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $11.8 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: FOLLOW ON CONTRACT FOR SUSTAINMENT Key points: 1. Contract is a follow-on, indicating potential for sole-sourcing and limited price negotiation. 2. High contract value for sustainment services warrants scrutiny of cost-effectiveness. 3. Lack of competition suggests potential for inflated pricing and reduced innovation. 4. Fixed-price contract type shifts risk to the contractor, but oversight is still crucial. 5. Geographic concentration in Texas may have implications for regional economic impact. 6. The 'Other Aircraft Parts' NAICS code is broad, requiring deeper analysis of specific services.

Value Assessment

Rating: questionable

The contract value of $11.75 million for sustainment services over approximately four years appears substantial. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively assess value for money. The fixed-price nature of the contract suggests that the contractor bears cost overruns, which can be a positive indicator. However, the lack of competition raises concerns that the pricing may not reflect market rates or the most cost-effective solutions available.

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. This approach is often used for follow-on work where a specific contractor has unique knowledge or capabilities, or to maintain continuity of essential services. However, the absence of a competitive bidding process limits the government's ability to explore alternative solutions and potentially secure lower prices. The lack of bidders means that price discovery through market forces was not utilized.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from the cost savings that competition typically drives. This limits the government's leverage in negotiating favorable terms and prices.

Public Impact

The Department of the Air Force benefits from continued sustainment of critical aircraft parts, ensuring operational readiness. This contract supports the maintenance and longevity of existing military aircraft fleets. The primary geographic impact is in Texas, where L3Harris Technologies Integrated Systems L.P. is located. Workforce implications include continued employment for personnel involved in aircraft parts sustainment at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices and reduced value for taxpayer dollars.
Sole-source awards can stifle innovation by limiting exposure to new technologies or approaches.
Follow-on nature of the contract could indicate a lack of strategic planning for competitive sourcing.
The broad NAICS code 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' requires further detail to understand the specific services and associated risks.
Limited transparency due to sole-source award makes independent value assessment challenging.

Positive Signals

Fixed-price contract type shifts cost overrun risk to the contractor.
Follow-on contract suggests continuity of essential services, potentially avoiding operational disruptions.
L3Harris Technologies is an established defense contractor, implying a degree of reliability and experience.
The contract duration provides a predictable period for sustainment operations.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and long product lifecycles. Sustainment contracts, like this one, are crucial for maintaining the operational readiness of complex military assets. The market for aircraft parts and auxiliary equipment manufacturing is substantial, with significant government spending allocated to these areas. This contract fits within the broader category of defense logistics and maintenance, a critical component of national security spending.

Small Business Impact

This contract does not appear to have a small business set-aside component (sb: false). Given the sole-source nature and the likely specialized requirements for aircraft parts sustainment, it is improbable that significant subcontracting opportunities for small businesses would be mandated or readily available. The focus is likely on the prime contractor's capabilities, potentially limiting the direct impact on the broader small business ecosystem within this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, transparency might be limited compared to competed contracts. Accountability measures would be defined by the contract terms and conditions, including performance metrics and reporting requirements. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Aircraft Maintenance and Repair
Defense Logistics Services
Aerospace Parts Manufacturing
Military Aircraft Sustainment Programs
Follow-on Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Follow-on contract without re-competition
Potential for cost overruns despite fixed-price
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.8 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. FOLLOW ON CONTRACT FOR 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 $11.8 million.

What is the period of performance?

Start: 2025-02-12. End: 2029-05-31.

What is L3Harris Technologies Integrated Systems L.P.'s track record with similar sole-source sustainment contracts for the Department of Defense?

L3Harris Technologies Integrated Systems L.P. has a significant history of performing various defense contracts, including sustainment and support services. As a large, established defense contractor, they possess extensive experience in managing complex programs. However, specific details on their track record with sole-source sustainment contracts for aircraft parts, particularly concerning cost performance and value delivery compared to potential competitive alternatives, would require a deeper dive into historical contract data and performance reviews. Analyzing past sole-source awards to L3Harris in similar categories could reveal patterns in pricing and efficiency. Without access to proprietary performance metrics or comparative analyses, assessing their specific track record on value for money in sole-source situations remains challenging.

How does the awarded price of $11.75 million compare to market rates for similar aircraft parts sustainment services?

Benchmarking the awarded price of $11.75 million against market rates for similar aircraft parts sustainment services is difficult without specific details on the parts, quantities, and service levels involved. As a sole-source award, there is no direct competitive benchmark. To assess value, one would typically compare this contract's unit costs or total price against historical data for similar government contracts, industry benchmarks, or commercial pricing for equivalent services. Given the lack of competition and the specialized nature of military aircraft parts, market rates can be highly variable. A thorough analysis would involve examining the contractor's cost proposal (if available) and comparing it against independent government cost estimates or pricing data from other, potentially competed, contracts for comparable sustainment activities.

What are the primary risks associated with this sole-source follow-on contract for the Department of the Air Force?

The primary risks associated with this sole-source follow-on contract include potential overpricing due to the lack of competition, reduced incentive for innovation from the contractor, and a lack of transparency in the procurement process. Taxpayers may bear a higher cost than if the contract had been competed. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, making future transitions difficult or costly. Furthermore, without competitive pressure, the contractor might have less incentive to proactively identify cost-saving efficiencies or introduce technological advancements. Ensuring robust contract management and performance monitoring becomes critical to mitigate these risks.

What is the historical spending pattern for aircraft parts sustainment by the Department of the Air Force, and how does this contract fit in?

The Department of the Air Force historically spends billions of dollars annually on aircraft sustainment, which encompasses a wide range of activities including parts procurement, maintenance, repair, and overhaul. This $11.75 million contract represents a specific component of that larger sustainment effort, likely focused on particular aircraft systems or parts. Analyzing historical spending patterns would involve looking at aggregate data for the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code or similar categories over several fiscal years. This contract's value appears moderate within the context of overall Air Force sustainment budgets, but its significance lies in its follow-on, sole-source nature, which warrants scrutiny regardless of its absolute dollar amount relative to the total sustainment spend.

Are there any specific performance metrics or key performance indicators (KPIs) defined in the contract that will be used to measure success?

The provided data does not include specific performance metrics or Key Performance Indicators (KPIs) defined within the contract. For a fixed-price contract of this nature, especially a follow-on sustainment effort, performance is typically measured against delivery schedules, quality standards (e.g., defect rates), and potentially response times for critical part requests. Robust contracts usually outline specific, measurable, achievable, relevant, and time-bound (SMART) KPIs. Without access to the full contract document, it's impossible to detail these. However, the effectiveness of the contract's value for money hinges on the rigor and enforcement of these (unspecified) performance standards by the Air Force.

Industry Classification

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

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

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: $37,267,121

Exercised Options: $17,015,911

Current Obligation: $11,753,087

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline