DoD's $13M L3Harris contract for software/system support awarded without competition

Contract Overview

Contract Amount: $13,054,339 ($13.1M)

Contractor: L3harris Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-06-21

End Date: 2026-12-31

Contract Duration: 923 days

Daily Burn Rate: $14.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SOFTWARE/SYSTEM ENG SUPPORT AND UPGRADES

Place of Performance

Location: CLIFTON, PASSAIC County, NEW JERSEY, 07014

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $13.1 million to L3HARRIS TECHNOLOGIES, INC. for work described as: SOFTWARE/SYSTEM ENG SUPPORT AND UPGRADES Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract's duration of over two years suggests a need for sustained support, but the lack of competition limits options. 3. Performance risk is moderate, given the nature of software and system engineering support, but oversight is crucial. 4. This contract falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicating a specialized niche within defense. 5. The absence of small business set-asides or subcontracting plans suggests limited direct benefit to the small business ecosystem. 6. The contract's value, while significant, needs to be benchmarked against similar sole-source procurements for a true value assessment.

Value Assessment

Rating: questionable

Benchmarking the value of this $13 million contract is challenging due to its sole-source nature and specific technical requirements. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are receiving optimal value for money. The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to higher costs if not meticulously managed, as contractor incentives may not always align perfectly with cost efficiency. Further analysis would require access to historical pricing data for similar support services within the U.S. Special Operations Command or comparable agencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically employed when only one vendor possesses the necessary capabilities, proprietary technology, or when urgency dictates a direct award. The lack of competition means there was no opportunity for price discovery through bidding, potentially leading to higher costs for the government compared to a competed contract. The U.S. Special Operations Command would need to have documented a compelling reason for not seeking alternative sources.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive pressure. Without multiple bids, the government has less leverage to negotiate favorable pricing, and the risk of inflated costs increases.

Public Impact

The primary beneficiaries are L3Harris Technologies, Inc., for providing essential software and system engineering support. The contract delivers critical support and upgrades for specialized software and systems utilized by the U.S. Special Operations Command. The geographic impact is primarily within New Jersey, where the contractor is located, but the services support national defense operations. Workforce implications include the employment of skilled software engineers and technical personnel at L3Harris, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type requires robust oversight to manage costs effectively.
Lack of small business participation or set-aside opportunities limits broader economic impact.
Specific details on performance metrics and success criteria are not publicly available, hindering outcome assessment.

Positive Signals

Contract supports critical software and system engineering for a specialized military command.
Long-term contract duration (over two years) indicates a recognized need for sustained support.
L3Harris Technologies is an established defense contractor with existing knowledge of DoD systems.
Delivery order under an existing contract vehicle (implied) could streamline administrative processes.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on software and systems engineering support. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code suggests a specialized area, possibly related to avionics, mission systems, or integrated platforms. The market for such specialized engineering services is often characterized by a limited number of highly capable contractors, making sole-source awards more common, though still subject to scrutiny. Comparable spending benchmarks would likely be found within other DoD contracts for similar system sustainment and upgrade services.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there explicit mention of subcontracting goals for small businesses. Given the sole-source nature and the specialized technical requirements, it is unlikely that small businesses were directly involved in the bidding process. This limits the direct economic benefit to the small business ecosystem for this particular award, although L3Harris may engage small businesses as subcontractors through their own supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command's contracting and program management offices. As a Cost Plus Fixed Fee (CPFF) contract, rigorous financial oversight is essential to ensure that costs are reasonable and allocable, and that the fixed fee is earned appropriately. Transparency is limited due to the sole-source nature and the proprietary aspects of software and system engineering. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Special Operations Forces Support Contracts
Defense Software Development and Maintenance
Aircraft Systems Engineering
U.S. Special Operations Command Procurement

Risk Flags

Sole-source award lacks competitive justification.
CPFF contract type requires enhanced oversight for cost control.
Limited transparency on specific performance metrics and deliverables.
Potential for cost escalation without competitive pressure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.1 million to L3HARRIS TECHNOLOGIES, INC.. SOFTWARE/SYSTEM ENG SUPPORT AND UPGRADES

Who is the contractor on this award?

The obligated recipient is L3HARRIS TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $13.1 million.

What is the period of performance?

Start: 2024-06-21. End: 2026-12-31.

What is the specific nature of the software and system engineering support being provided under this contract?

The contract data indicates 'SOFTWARE/SYSTEM ENG SUPPORT AND UPGRADES' provided to the U.S. Special Operations Command (SOCOM). While the specific systems or software are not detailed in the provided data, this type of support typically involves maintaining, enhancing, and troubleshooting complex software applications and integrated systems. This could range from operational software for intelligence, surveillance, and reconnaissance (ISR) platforms to command and control systems, or specialized mission planning tools. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code suggests a potential link to aviation-related systems, implying the software and systems may be integral to SOCOM's aircraft or airborne operations.

Why was this contract awarded on a sole-source basis instead of being competed?

The provided data explicitly states the contract type as 'NOT COMPETED,' indicating a sole-source award. Government agencies typically award contracts on a sole-source basis when only one responsible source is available or capable of meeting the requirement. For specialized software and system engineering, this could be due to proprietary technology, unique expertise held by a single contractor, or urgent needs where only one vendor can respond in the required timeframe. The U.S. Special Operations Command would have a documented justification (e.g., under FAR Part 6) explaining why full and open competition was not feasible or not in the government's best interest for this specific procurement.

How does the Cost Plus Fixed Fee (CPFF) contract structure impact cost control and value for money?

The Cost Plus Fixed Fee (CPFF) contract structure involves the government reimbursing the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves research and development. While it allows flexibility, it can incentivize cost overruns, as the contractor is guaranteed their fee regardless of the final cost. Effective cost control relies heavily on robust government oversight, detailed cost accounting standards, and clear performance metrics to ensure the contractor is motivated to manage expenses efficiently. Without strong oversight, CPFF contracts can be more expensive than fixed-price alternatives.

What is the historical spending pattern for similar software/system engineering support by SOCOM?

Analyzing historical spending patterns for similar support by SOCOM is crucial for benchmarking. Without access to SOCOM's detailed procurement history, it's difficult to provide specific figures. However, contracts for specialized software and system engineering support within defense agencies often represent significant, recurring investments. Agencies like SOCOM frequently engage in sole-source or limited-competition contracts for sustainment and upgrades of complex, mission-critical systems due to the unique nature of the technology and the need for specialized expertise. Trends often show increasing costs over time due to system complexity, obsolescence, and evolving threats, underscoring the importance of competitive sourcing where feasible.

What are the potential risks associated with L3Harris Technologies' performance on this contract?

Potential risks associated with L3Harris's performance include technical challenges in delivering software upgrades or system support, potential schedule delays, and cost overruns, particularly given the CPFF structure. As a sole-source award, there's less external pressure to perform at peak efficiency. Risks also extend to cybersecurity vulnerabilities if the software or systems are not adequately secured during upgrades. Furthermore, the long-term sustainment of specialized systems can be challenging if technology evolves rapidly or if key personnel with unique knowledge leave the contractor's employ. SOCOM's program management and technical teams will need to actively monitor performance and mitigate these risks.

Does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code accurately reflect the services provided?

The classification under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' might seem indirect for 'SOFTWARE/SYSTEM ENG SUPPORT AND UPGRADES.' However, this code can encompass a broader range of activities related to aircraft systems. Software and system engineering support is often integral to the development, integration, and maintenance of complex aircraft components, avionics, and mission systems. It's plausible that the software and systems being supported are critical components of SOCOM's aircraft or related auxiliary equipment, making this classification relevant, albeit specialized. The government uses NAICS codes to categorize businesses based on their primary activities, and sometimes contracts may span multiple categories.

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

Solicitation ID: H9224117R0013

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 77 RIVER RD, CLIFTON, NJ, 07014

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $13,054,339

Exercised Options: $13,054,339

Current Obligation: $13,054,339

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: H9224120D0001

IDV Type: IDC

Timeline