DoD's $61.7M contract for communication equipment repair awarded to L3Harris Technologies, Inc. raises value concerns

Contract Overview

Contract Amount: $10,563,892 ($10.6M)

Contractor: L3harris Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2004-12-22

End Date: 2006-01-31

Contract Duration: 405 days

Daily Burn Rate: $26.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200506!000018!5700!FA8819!SMC/SYK !FA881905C0001 !A!N! !N! ! !20041222!20051231!617647029!617647029!004203337!N!HARRIS CORPORATION !2400 PALM BAY ROAD NE !MELBOURNE !FL!32902!43975!009!12!MELBOURNE !BREVARD !FLORIDA !+000001800000!N!N!000003650000!J058!MAINT & REPAIR OF EQ/COMMUNICATION EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !000 !* !541330!E! !1! ! ! ! ! !20200930!B!A! !A! !D!N!R!1!001!N!1G!C!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: PALM BAY, BREVARD County, FLORIDA, 32905

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $10.6 million to L3HARRIS TECHNOLOGIES, INC. for work described as: 200506!000018!5700!FA8819!SMC/SYK !FA881905C0001 !A!N! !N! ! !20041222!20051231!617647029!617647029!004203337!N!HARRIS CORPORATION !2400 PALM BAY ROAD NE !MELBOURNE !FL!32902!43975!009!12!MELBOURNE !BREV… Key points: 1. The contract's value of $61.7 million for repair services warrants scrutiny given the lack of competitive bidding. 2. The 'NOT COMPETED' award status suggests potential for higher costs and reduced innovation compared to an open market. 3. The contract duration of 405 days (approximately 13 months) is standard for this type of service. 4. The Public Service Code (PSC) for 'MAINT & REPAIR OF EQ/COMMUNICATION EQUIPMENT' indicates a focus on sustainment. 5. The contractor, L3Harris Technologies, Inc., is a significant player in the defense sector, suggesting established capabilities. 6. The contract's geographic focus is Florida, aligning with the contractor's location.

Value Assessment

Rating: questionable

The total award amount of $61.7 million for maintenance and repair of communication equipment appears high, particularly given the contract was not competed. Without a competitive process, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of transparency in the bidding process prevents a thorough assessment of whether the government received the best possible value. Further analysis would be needed to determine if the pricing reflects fair market value or if it is inflated due to the sole-source nature of the award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' procedure, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of fulfilling the requirement, or in situations where urgency or specific circumstances preclude competition. The lack of multiple bidders means there was no direct price comparison or negotiation leverage derived from a competitive environment, potentially impacting the final price and terms.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. The lack of competition limits the government's ability to secure the most cost-effective solution.

Public Impact

The primary beneficiary of this contract is the Department of Defense, ensuring the continued operational readiness of communication equipment. The services delivered include maintenance and repair of essential communication hardware, crucial for military operations. The contract's impact is primarily within the defense sector, supporting national security objectives. The contract supports the workforce of L3Harris Technologies, Inc., likely involving skilled technicians and engineers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Limited transparency in the award process hinders value assessment.
Potential for vendor lock-in due to sole-source award.

Positive Signals

Contract awarded to a known defense contractor with established capabilities.
Focus on essential maintenance and repair ensures operational readiness.
Contract duration suggests a need for sustained support.

Sector Analysis

The defense sector is characterized by complex and high-value contracts, often involving specialized equipment and services. This contract for communication equipment maintenance and repair falls within the broader category of defense sustainment services. The market for such services is dominated by a few large prime contractors capable of meeting stringent military requirements. Benchmarking this contract's value is challenging without competitive data, but the total award amount is significant for a non-competed service contract.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the 'NOT COMPETED' status and the nature of the services, it is unlikely that small businesses were directly involved as prime contractors. Subcontracting opportunities for small businesses are not explicitly detailed in the provided data, but are a possibility if L3Harris Technologies, Inc. chooses to engage them.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions. Accountability measures are inherent in the contract's performance clauses and payment structures. Transparency is limited due to the non-competitive award, but contract modifications and performance reports would be subject to internal DoD review.

Related Government Programs

Defense Communications Systems
Military Equipment Maintenance
Communication Technology Services
Department of Defense Sustainment Contracts

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.6 million to L3HARRIS TECHNOLOGIES, INC.. 200506!000018!5700!FA8819!SMC/SYK !FA881905C0001 !A!N! !N! ! !20041222!20051231!617647029!617647029!004203337!N!HARRIS CORPORATION !2400 PALM BAY ROAD NE !MELBOURNE !FL!32902!43975!009!12!MELBOURNE !BREVARD !FLORIDA !+000001800000!N!N!000003650000!J058!MAINT & REPAIR OF EQ/COMMUNICATION EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !000 !* !541330!E! !1! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is L3HARRIS TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $10.6 million.

What is the period of performance?

Start: 2004-12-22. End: 2006-01-31.

What is the track record of L3Harris Technologies, Inc. in fulfilling similar defense contracts?

L3Harris Technologies, Inc. (and its predecessor companies) has a long history of serving the Department of Defense and other government agencies with a wide range of communication, electronic, and aerospace systems. They are a major defense contractor known for their expertise in areas such as command and control, intelligence, surveillance, and reconnaissance (ISR), and resilient communications. Their track record generally includes successful delivery on complex programs, though like any large contractor, specific contract performance can vary. For this particular contract, the 'NOT COMPETED' status suggests a specific need or relationship that may have bypassed standard performance evaluations against competitors. A deeper dive into their past performance on similar maintenance and repair contracts, especially those awarded non-competitively, would be necessary for a comprehensive assessment.

How does the pricing of this contract compare to similar maintenance and repair contracts for communication equipment within the DoD?

Direct comparison of pricing for this $61.7 million contract is challenging because it was awarded on a 'NOT COMPETED' basis. Without a competitive bidding process, there is no benchmark against other offers to determine if the price is optimal. Typically, competitive solicitations result in multiple bids, allowing the government to select the best value offer based on price, technical approach, and past performance. In a sole-source or non-competed scenario, the government relies on cost realism analyses and negotiation to ensure fair pricing. However, the absence of competition inherently limits the downward pressure on prices that a robust bidding environment provides. Therefore, it is difficult to definitively state if the pricing is favorable without further detailed cost breakdowns and market analysis.

What are the primary risks associated with awarding a contract of this magnitude without competition?

The primary risks associated with awarding a contract of this magnitude without competition include potential overpayment, reduced incentive for the contractor to innovate or provide exceptional service, and a lack of transparency in the procurement process. Without competitive pressure, the contractor may not feel compelled to offer the lowest possible price, leading to increased costs for the government (and taxpayers). Furthermore, the absence of competing solutions means the government might miss out on potentially more advanced or cost-effective technologies or service delivery methods. The 'NOT COMPETED' status also raises concerns about the thoroughness of the justification for excluding other capable vendors, potentially indicating a missed opportunity for broader market engagement and support for other businesses.

What is the expected effectiveness of the services provided under this contract in maintaining communication equipment readiness?

The expected effectiveness of the services under this contract hinges on the contractor's capabilities and the specific terms outlined in the 'COST PLUS AWARD FEE' agreement. L3Harris Technologies, Inc. is a reputable defense contractor, suggesting they possess the technical expertise and resources to perform maintenance and repair effectively. The 'award fee' component incentivizes the contractor to meet or exceed performance standards, which should contribute to maintaining communication equipment readiness. However, the effectiveness is also dependent on the clarity of the performance work statement, the adequacy of the government's oversight, and the contractor's commitment to quality. Without specific performance metrics and historical data from this contract, a definitive assessment of effectiveness is speculative, but the structure aims for high readiness.

How does this contract fit into the broader historical spending patterns for communication equipment maintenance within the Department of Defense?

This $61.7 million contract represents a significant, albeit singular, expenditure for communication equipment maintenance and repair. The Department of Defense historically spends billions annually on sustainment, maintenance, and repair across all its equipment categories, including communications. Contracts for such services are common and essential for maintaining operational readiness. The 'NOT COMPETED' nature of this specific award might indicate a specialized requirement, a sole-source justification based on unique capabilities, or a contract consolidation. To understand its place in historical patterns, one would need to compare its value and duration against a portfolio of similar contracts awarded over several fiscal years, looking at trends in non-competed awards versus competitively sourced ones for communication systems.

What is the justification provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'DEFINITIVE CONTRACT' with a 'COST PLUS AWARD FEE' (CPAF) pricing structure. While the specific justification for not competing is not detailed in the abbreviated data, common reasons for sole-source awards in defense contracting include: unique technical capabilities possessed by only one contractor, urgent and compelling needs where competition is impractical, or follow-on work to a previous contract where only the original contractor can provide the necessary integration or compatibility. The CPAF structure suggests that the government is willing to pay a base cost plus an additional fee based on the contractor's performance against defined objectives, implying a desire to incentivize high performance even in a non-competitive scenario.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc (UEI: 004203337)

Address: 2400 PALM BAY RD NE, PALM BAY, FL, 32905

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline