DoD's $27.8M missile defense operation and sustainment contract awarded to L3Harris Technologies without competition

Contract Overview

Contract Amount: $27,810,255 ($27.8M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2022-09-15

End Date: 2023-09-14

Contract Duration: 364 days

Daily Burn Rate: $76.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: OPERATION AND SUSTAINMENT

Place of Performance

Location: TULSA, TULSA County, OKLAHOMA, 74115

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $27.8 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: OPERATION AND SUSTAINMENT Key points: 1. Contract awarded on a cost-plus-award-fee basis, allowing for performance incentives. 2. Duration of one year with potential for follow-on work. 3. Focus on operation and sustainment suggests a critical, ongoing need. 4. Lack of competition raises questions about price discovery and potential cost efficiencies. 5. Contractor, L3Harris Technologies, is a significant player in the defense sector. 6. Missile Defense Agency's reliance on a single source for these services warrants scrutiny.

Value Assessment

Rating: questionable

The contract's cost-plus-award-fee structure can lead to cost overruns if not managed tightly. Without competitive benchmarking, it is difficult to assess if the $27.8 million represents fair value for the operation and sustainment services provided. Comparing this to similar contracts for missile defense system support, especially those that were competed, would be necessary to determine if the pricing is aligned with market rates and performance expectations. The lack of competition inherently limits the ability to validate value for money.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, or in urgent situations. The absence of a competitive bidding process means that potential cost savings that could arise from market competition were not realized. It also limits the agency's ability to explore innovative solutions from a broader range of contractors.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without competing the award, there is less assurance that the government secured the best possible price and terms for these essential missile defense services.

Public Impact

The primary beneficiaries are the U.S. military and national security apparatus, ensuring the operational readiness of missile defense systems. Services delivered include the ongoing operation and maintenance of critical missile defense infrastructure. Geographic impact is national, supporting strategic defense capabilities across the United States. Workforce implications include the employment of specialized engineers and technicians by L3Harris Technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Cost-plus-award-fee contracts can incentivize spending if not rigorously overseen.
Lack of transparency in the justification for sole-source award.
Potential for contractor lock-in, making future competition more challenging.
Performance metrics and award fee criteria are not publicly detailed, hindering assessment of value.
Dependence on a single contractor for critical defense operations.

Positive Signals

Contract awarded to an established defense contractor with existing expertise.
Focus on operation and sustainment indicates a commitment to maintaining critical defense capabilities.
Award fee structure provides an incentive for contractor performance.
Contract duration suggests a stable, ongoing requirement for these services.
Missile Defense Agency is responsible for critical national security functions.

Sector Analysis

The defense sector, particularly within the realm of missile defense, is characterized by high technological complexity and significant government investment. Contracts in this area often involve specialized engineering, research, and development services. The market is dominated by a few large prime contractors capable of handling such intricate systems. This $27.8 million contract for operation and sustainment fits within the broader landscape of defense procurement, where long-term support and maintenance are crucial for ensuring the effectiveness of advanced weapon systems. Comparable spending benchmarks are difficult to establish without more specific details on the systems supported, but large-scale sustainment contracts in defense can range from tens to hundreds of millions of dollars annually.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the prime contractor being L3Harris Technologies, a large defense firm. There is no explicit information provided regarding subcontracting plans for small businesses. Without a competitive process or specific set-aside requirements, the direct impact on the small business ecosystem is likely minimal, and opportunities for small business participation would depend on L3Harris's internal subcontracting decisions.

Oversight & Accountability

Oversight for this contract would primarily fall under the Missile Defense Agency and the Department of Defense. Given the sole-source nature and cost-plus-award-fee structure, rigorous oversight of expenditures and performance is crucial. Accountability measures would be tied to the achievement of performance objectives outlined in the contract and the justification for the award fee. Transparency is limited due to the non-competitive award and the proprietary nature of detailed performance metrics, though contract awards are generally reported in federal databases.

Related Government Programs

Missile Defense Systems
Ballistic Missile Defense
Aerospace Engineering Services
Defense Operations and Maintenance
Cost-Plus-Award Fee Contracts

Risk Flags

Sole-source award
Lack of competition
Cost-plus contract type
Limited public performance data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.8 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. OPERATION AND 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 (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $27.8 million.

What is the period of performance?

Start: 2022-09-15. End: 2023-09-14.

What is the track record of L3Harris Technologies in performing operation and sustainment services for missile defense systems?

L3Harris Technologies, formed through the merger of Harris Corporation and L3 Technologies, has a substantial track record in defense contracting, including areas related to aerospace, electronic systems, and communications. While specific details on their performance for missile defense operation and sustainment under this particular contract are not publicly detailed beyond the 'OK' status, the company is a recognized prime contractor and subcontractor on numerous defense programs. Their broader experience in complex systems integration, cybersecurity, and advanced manufacturing suggests a capability to handle the technical demands of missile defense sustainment. However, the effectiveness and efficiency of their performance on this specific contract, especially given the sole-source award, would require deeper analysis of performance metrics and award fee payouts, which are not readily available in the public domain.

How does the $27.8 million cost compare to similar operation and sustainment contracts for missile defense systems?

Directly comparing the $27.8 million cost of this one-year contract to similar operation and sustainment contracts for missile defense systems is challenging without more specific information about the scope of services, the specific missile defense systems supported, and the level of complexity involved. Missile defense sustainment can encompass a wide range of activities, from software updates and hardware maintenance to full system readiness support. Contracts for such services can vary significantly in price, often ranging from tens to hundreds of millions of dollars annually, depending on the scale and criticality of the systems. Given this contract was awarded on a sole-source basis, a direct value-for-money comparison against competitively bid contracts is inherently difficult, as competitive pressures are absent. A comprehensive benchmark would require access to detailed contract line item details and performance data from comparable, competed contracts.

What are the primary risks associated with awarding a sole-source contract for critical defense operations and sustainment?

The primary risks associated with awarding a sole-source contract for critical defense operations and sustainment include a lack of price competition, which can lead to higher costs for the government and taxpayers. There is also a reduced incentive for the contractor to innovate or improve efficiency, as they face no threat from competitors. Furthermore, sole-source awards can create contractor dependency or 'lock-in,' making it difficult and potentially more expensive to transition to a different provider in the future. Oversight becomes even more critical to ensure that the contractor is performing effectively and that costs are reasonable, as the usual market checks and balances are absent. Finally, the justification for a sole-source award must be robust to ensure it is truly necessary and not a result of poor planning or an unwillingness to engage in competitive procurement.

What does the 'Cost Plus Award Fee' (CPAF) contract type imply for program effectiveness and contractor performance?

The Cost Plus Award Fee (CPAF) contract type implies that the contractor is reimbursed for all allowable costs incurred, plus a fee that is composed of a base amount and an award amount. The award amount is determined based on the contractor's performance against pre-defined criteria. This structure aims to incentivize contractor performance by rewarding them for meeting or exceeding specific objectives, thereby potentially enhancing program effectiveness. However, it also requires robust government oversight to ensure that costs are controlled and that the award fee criteria are objective, measurable, and aligned with desired program outcomes. If not managed properly, CPAF contracts can still lead to cost overruns, and the effectiveness of the award fee in driving desired performance depends heavily on the clarity and fairness of the evaluation process.

What is the historical spending pattern for operation and sustainment services related to missile defense by the Missile Defense Agency?

Analyzing the historical spending patterns for operation and sustainment services related to missile defense by the Missile Defense Agency (MDA) requires access to comprehensive budget and contract data over multiple fiscal years. The MDA's overall budget is substantial, reflecting the critical nature of its mission. A significant portion of this budget is allocated to research, development, testing, and evaluation (RDT&E), but operation and sustainment (O&S) also represent a considerable and ongoing expenditure. Historically, O&S costs for complex defense systems tend to grow over time as systems age and require more maintenance. Without specific MDA budget breakdowns or aggregated contract databases focused solely on O&S for missile defense, it is difficult to provide precise historical spending figures. However, it is reasonable to assume that O&S spending is a consistent and significant component of the MDA's total outlays, supporting the readiness and longevity of deployed missile defense capabilities.

What are the implications of this contract being awarded in Oklahoma?

The contract being awarded to L3Harris Technologies Integrated Systems L.P. and having a performance location noted as 'OKLAHOMA' (SN: OKLAHOMA) suggests that a significant portion of the operation and sustainment services for the missile defense systems will be performed within the state of Oklahoma. This implies a direct economic impact on the region through job creation for engineers, technicians, and support staff employed by L3Harris or its subcontractors. It also indicates that Oklahoma is a key location for missile defense operations or sustainment activities, potentially housing critical infrastructure, testing facilities, or command and control elements. This geographic focus can foster specialized workforce development and create a localized ecosystem of defense-related expertise within the state.

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

Solicitation ID: HQ085521R0001

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 6501 E APACHE ST, TULSA, OK, 74115

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $29,260,902

Exercised Options: $29,260,902

Current Obligation: $27,810,255

Actual Outlays: $22,372,458

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ085521D0001

IDV Type: IDC

Timeline