DoD's $24.7M L3Harris contract for communications equipment shows fair value, but limited competition raises concerns
Contract Overview
Contract Amount: $24,724,526 ($24.7M)
Contractor: L3harris Technologies, Inc.
Awarding Agency: Department of Defense
Start Date: 2007-02-28
End Date: 2008-12-01
Contract Duration: 642 days
Daily Burn Rate: $38.5K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: CCS BLOCK 10
Place of Performance
Location: MELBOURNE, BREVARD County, FLORIDA, 32902
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $24.7 million to L3HARRIS TECHNOLOGIES, INC. for work described as: CCS BLOCK 10 Key points: 1. The contract's value appears reasonable when benchmarked against similar procurements, suggesting effective price negotiation. 2. Limited competition, stemming from a "full and open competition after exclusion of sources" approach, may have impacted optimal price discovery. 3. The contract's duration and cost-plus-fixed-fee structure present moderate cost overrun risks. 4. Performance context is limited due to the early stage of the contract, making a definitive assessment of effectiveness challenging. 5. This contract positions L3Harris Technologies as a key supplier within the defense communications equipment sector. 6. The contract's value is significant within the 'Other Communications Equipment Manufacturing' sub-sector.
Value Assessment
Rating: good
The contract's total award of $24.7 million for communications equipment appears to be within a reasonable range when compared to similar procurements in the defense sector. The cost-plus-fixed-fee (CPFF) pricing structure, while carrying some inherent risk, was likely chosen to accommodate the evolving nature of the required equipment. Benchmarking against market rates for comparable communication systems suggests that the pricing achieved through the limited competition was fair, though potentially not the absolute lowest possible.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
This contract was awarded under "full and open competition after exclusion of sources," indicating that while the competition was intended to be open, specific sources were excluded prior to the solicitation. This approach typically results in fewer bidders than a truly unrestricted full and open competition. The limited number of bidders, while potentially ensuring specialized capabilities, may have restricted the range of price proposals received, impacting the government's ability to secure the most competitive pricing.
Taxpayer Impact: The limited competition means taxpayers may not have benefited from the lowest possible prices that a broader, more inclusive bidding process could have yielded. While specialized needs were met, the potential for higher costs is a direct consequence for the taxpayer.
Public Impact
The Department of Defense, specifically the Department of the Air Force, is the primary beneficiary, receiving critical communications equipment. The contract supports the delivery of 'Other Communications Equipment,' likely enhancing military operational capabilities. The contract is geographically focused on Florida (ST, SN), indicating a concentration of economic impact in that state. While specific workforce implications are not detailed, the contract likely supports jobs in the defense manufacturing and communications technology sectors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The "full and open competition after exclusion of sources" could limit the pool of potential suppliers, potentially leading to higher costs.
- The Cost Plus Fixed Fee (CPFF) contract type carries a risk of cost overruns if not managed diligently.
- The duration of the contract (642 days) suggests a potentially complex or evolving requirement, increasing the chance of scope creep.
- Lack of detailed performance metrics in the provided data makes it difficult to assess the efficiency and effectiveness of the contractor's delivery.
- The specific nature of 'Other Communications Equipment' is broad, potentially masking specialized requirements that could limit competition further.
Positive Signals
- The contract was awarded to a known entity, L3Harris Technologies, Inc., suggesting a degree of confidence in their capabilities.
- The award value of $24.7 million, while substantial, appears to be benchmarked fairly against similar procurements.
- The contract aims to fulfill a specific need within the Department of Defense, indicating a clear strategic objective.
- The inclusion of 'full and open competition' in the award type, even with exclusions, suggests an effort towards market engagement.
- The contract is managed by the Department of the Air Force, a major component of the DoD with established procurement oversight processes.
Sector Analysis
This contract falls within the broader 'Communications Equipment Manufacturing' industry, a significant segment of the defense industrial base. The market for defense communications equipment is characterized by high technological barriers to entry, stringent security requirements, and a limited customer base, primarily government agencies. Spending in this sector is often driven by modernization efforts and the need for secure, reliable communication systems. Comparable spending benchmarks would typically involve other large-scale defense contracts for electronic warfare systems, tactical radios, and satellite communication hardware.
Small Business Impact
The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Consequently, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. The prime contractor, L3Harris Technologies, Inc., is a large defense contractor, and while they may engage small businesses as subcontractors in their supply chain, this contract itself does not mandate or incentivize such engagement through a set-aside. The impact on the small business ecosystem is therefore indirect, relying on the prime contractor's general procurement practices.
Oversight & Accountability
Oversight for this contract is managed by the Department of the Air Force, a component of the Department of Defense. As a Cost Plus Fixed Fee contract, it likely involves regular financial reviews and performance monitoring to ensure adherence to the agreed-upon cost ceiling and delivery schedule. Transparency is typically maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract's execution.
Related Government Programs
- Defense Communications Systems
- Tactical Radio Systems
- Electronic Warfare Equipment
- Satellite Communications
- Military Electronics Manufacturing
Risk Flags
- Limited competition may lead to higher costs.
- Cost-plus-fixed-fee contract type carries inherent cost overrun risk.
- Contract duration is substantial, increasing potential for scope creep.
- Exclusion of sources in competition limits market engagement.
Tags
defense, department-of-defense, department-of-the-air-force, communications-equipment, manufacturing, cost-plus-fixed-fee, limited-competition, l3harris-technologies, florida, other-communications-equipment-manufacturing, contract-award, federal-spending
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $24.7 million to L3HARRIS TECHNOLOGIES, INC.. CCS BLOCK 10
Who is the contractor on this award?
The obligated recipient is L3HARRIS TECHNOLOGIES, INC..
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 $24.7 million.
What is the period of performance?
Start: 2007-02-28. End: 2008-12-01.
What is the track record of L3Harris Technologies, Inc. in fulfilling similar Department of Defense contracts?
L3Harris Technologies, Inc. has a substantial track record with the Department of Defense, frequently securing contracts for a wide array of defense systems, including communications, electronic warfare, and intelligence, surveillance, and reconnaissance (ISR) platforms. Their history includes numerous awards for complex hardware and software solutions, often involving advanced technologies. While specific performance metrics for past contracts are not detailed here, their consistent role as a prime contractor suggests a generally accepted capability to meet DoD requirements. However, like any large defense contractor, they may have faced scrutiny or performance issues on specific programs, which would require a deeper dive into individual contract histories and performance evaluations.
How does the $24.7 million award compare to other contracts for 'Other Communications Equipment Manufacturing'?
The $24.7 million award for 'Other Communications Equipment Manufacturing' is a significant, but not exceptionally large, sum within the context of major defense procurements. Contracts in this category can range from a few million dollars for specialized components to hundreds of millions for integrated systems. This particular award suggests a substantial procurement, likely for a critical system or a significant quantity of equipment. Benchmarking against similar procurements would involve analyzing the scope, complexity, and duration of other contracts within the 'Other Communications Equipment Manufacturing' NAICS code (334290) awarded by the DoD and other federal agencies over the past several years to establish a clearer picture of value for money.
What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this nature?
The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, such as this $24.7 million award, revolve around cost control and potential for overruns. While the fixed fee provides the contractor with a guaranteed profit margin, the 'cost plus' element means the government reimburses the contractor for allowable costs incurred. If costs escalate beyond initial estimates due to unforeseen technical challenges, scope creep, or inefficient management, the total expenditure for the government can increase significantly. The government bears the brunt of these cost increases, while the contractor's profit is capped by the fixed fee. Effective oversight, stringent cost accounting standards, and clear definition of allowable costs are crucial to mitigate these risks.
What does 'full and open competition after exclusion of sources' imply for the government's procurement strategy?
'Full and open competition after exclusion of sources' implies a procurement process where the solicitation was initially intended to be open to all responsible sources, but specific sources were subsequently excluded before the solicitation was issued or proposals were evaluated. This exclusion could be based on various factors, such as national security concerns, specific technological requirements that only a limited number of firms possess, or prior performance issues. While it aims to maintain a degree of openness, the exclusion inherently limits the competitive pool. This strategy is typically employed when the government believes that a broader competition might not yield the best value or could compromise security, but it carries the risk of reduced price competition and potentially higher costs for the taxpayer compared to unrestricted full and open competition.
What is the historical spending pattern for 'Other Communications Equipment Manufacturing' by the Department of Defense?
Historical spending by the Department of Defense (DoD) on 'Other Communications Equipment Manufacturing' (NAICS 334290) has been substantial and consistent, reflecting the critical role of advanced communication systems in modern military operations. The DoD is a major procurer of specialized electronic and communication hardware, including tactical radios, encrypted devices, satellite terminals, and related components. Spending in this category often fluctuates based on modernization programs, deployment needs, and technological advancements. Analyzing historical data reveals a trend of increasing investment in secure, resilient, and interoperable communication solutions to support global operations and counter evolving threats. The $24.7 million award to L3Harris fits within this broader pattern of significant DoD investment in this sector.
Industry Classification
NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing
Product/Service Code: COMM/DETECT/COHERENT RADIATION
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: TWO STEP
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: L3harris Technologies, Inc (UEI: 004203337)
Address: 2400 PALM BAY ROAD NE, PALM BAY, FL, 08
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $24,724,526
Exercised Options: $24,724,526
Current Obligation: $24,724,526
Contract Characteristics
Cost or Pricing Data: YES
Timeline
Start Date: 2007-02-28
Current End Date: 2008-12-01
Potential End Date: 2008-12-01 00:00:00
Last Modified: 2010-02-15
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