DoD awards $95.4M for aircraft component repair, with limited competition and significant cost concerns

Contract Overview

Contract Amount: $95,358,370 ($95.4M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2004-05-14

End Date: 2010-09-30

Contract Duration: 2,330 days

Daily Burn Rate: $40.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: 200412!000020!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001904C0097 !A!N! !N! ! !20040514!20060630!007365984!008898884!008898843!N!L-3 COMMUNICATIONS INTEGRATED !10001 JACK FINNEY BLVD !GREENVILLE !TX!75403!30920!231!48!GREENVILLE !HUNT !TEXAS !+000048000000!N!N!000048000000!J016!MAINT & REPAIR OF EQ/AIRCRAFT COMPS & ACCYS !S1 !SERVICES !000 !* !336413!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!Y!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $95.4 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: 200412!000020!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001904C0097 !A!N! !N! ! !20040514!20060630!007365984!008898884!008898843!N!L-3 COMMUNICATIONS INTEGRATED !10001 JACK FINNEY BLVD !GREENVILLE !TX!75403!30920!231!48!GREENVILLE !HUNT… Key points: 1. Contract awarded on a sole-source basis, raising questions about price competitiveness. 2. Significant cost growth observed over the contract's life, indicating potential value-for-money issues. 3. The contract's duration and cost escalation warrant scrutiny of performance and oversight. 4. Focus on aircraft component repair places this within a critical Defense sector. 5. Limited competition suggests potential for higher prices and reduced innovation. 6. The contractor's track record and the nature of the services provided are key risk indicators.

Value Assessment

Rating: questionable

The initial award was for $48 million, but the final cost reached $95.4 million, representing a 99% increase. This substantial cost growth over the contract's life suggests potential issues with initial pricing, scope creep, or unforeseen cost drivers. Without comparable sole-source contracts for similar services, it is difficult to definitively benchmark the value, but the significant escalation raises concerns about whether taxpayers received the best possible price.

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 when urgency dictates. However, the lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and best value.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This contract's significant cost growth further exacerbates this concern.

Public Impact

The primary beneficiaries are entities within the Department of Defense requiring maintenance and repair for aircraft components. Services delivered include the repair of aircraft components and accessories, ensuring operational readiness. The geographic impact is primarily within Texas, where the contractor is located, but the ultimate impact is on military aviation readiness nationwide. Workforce implications include employment at the contractor's facility in Greenville, Texas, supporting specialized repair services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from initial award to final cost.
Sole-source award limits competitive pricing and potential for better value.
Contract duration extended significantly, potentially increasing overall costs.
Lack of detailed performance metrics makes assessing efficiency difficult.

Positive Signals

Contract addresses a critical need for aircraft component repair within the military.
Contractor is established and likely possesses specialized knowledge for these repairs.
Services provided contribute directly to national defense readiness.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the maintenance and repair of aircraft components. The aerospace and defense MRO (Maintenance, Repair, and Overhaul) market is a significant segment, characterized by specialized technical expertise and stringent quality requirements. Spending in this area is crucial for maintaining fleet readiness. Comparable spending benchmarks would typically involve analyzing other contracts for similar repair services across different military branches or defense contractors.

Small Business Impact

This contract does not appear to have a small business set-aside. The prime contractor, L3Harris Technologies Integrated Systems L.P., is a large business. There is no explicit information provided regarding subcontracting plans or performance related to small businesses within this specific contract data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would involve monitoring contractor performance against contract terms, including delivery schedules and quality standards. Transparency is often limited in sole-source contracts, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Component Repair Services
Defense Aviation Maintenance
Naval Air Systems Command Contracts
Aerospace Manufacturing and Repair

Risk Flags

Significant Cost Growth
Sole-Source Award
Potential Lack of Competition
Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $95.4 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. 200412!000020!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001904C0097 !A!N! !N! ! !20040514!20060630!007365984!008898884!008898843!N!L-3 COMMUNICATIONS INTEGRATED !10001 JACK FINNEY BLVD !GREENVILLE !TX!75403!30920!231!48!GREENVILLE !HUNT !TEXAS !+000048000000!N!N!000048000000!J016!MAINT & REPAIR OF EQ/AIRCRAFT COMPS & ACCYS !S1 !SERVICES !000 !* !336413!E! !3! ! ! ! ! !999

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $95.4 million.

What is the period of performance?

Start: 2004-05-14. End: 2010-09-30.

What specific types of aircraft components were repaired under this contract, and what was the nature of the repairs?

The contract specifies 'MAINT & REPAIR OF EQ/AIRCRAFT COMPS & ACCYS' (Maintenance & Repair of Equipment/Aircraft Components & Accessories). While the data does not detail the exact components, the Public Service Code (PSC) '336413' points to 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This suggests a broad range of components beyond engines or airframes, potentially including avionics, landing gear, or specialized electronic systems. The nature of the repairs would likely involve diagnostics, component-level repair, testing, and recertification to meet military specifications.

Can the significant cost growth from $48 million to $95.4 million be attributed to specific factors like inflation, scope changes, or contractor inefficiencies?

The provided data indicates a substantial cost increase of approximately 99% from the initial award amount to the final cost. Without more detailed financial and performance reports, it's difficult to pinpoint the exact causes. Potential factors include unforeseen technical challenges requiring more extensive repairs, changes in the scope of work requested by the government, escalation of material costs, or potentially less efficient execution than initially projected. The 'TIME AND MATERIALS' contract type (PT) can also contribute to cost growth if not tightly managed. Further investigation into contract modifications and performance reviews would be necessary to determine the precise drivers of this cost escalation.

What is the track record of L3Harris Technologies Integrated Systems L.P. in performing similar aircraft component repair services for the DoD?

L3Harris Technologies Integrated Systems L.P. (and its predecessors) has a significant history of providing complex systems and services to the Department of Defense, including in areas related to aerospace and defense. While this specific contract highlights a large increase in cost, the company generally possesses extensive experience and technical capabilities in manufacturing, integration, and support for military platforms. Assessing their overall track record would involve reviewing performance on other contracts, including any past issues with cost overruns, schedule delays, or quality deficiencies, as well as their successes in delivering critical capabilities to the military.

How does the final cost of $95.4 million compare to industry benchmarks for similar aircraft component repair services?

Benchmarking this contract's final cost is challenging due to its sole-source nature and the specific, potentially niche, components and repair services involved. Standard industry benchmarks often rely on competitive bids for comparable services. However, the near doubling of the contract's value from its initial estimate suggests that the final price may be on the higher side compared to what might have been achieved through a competitive process. Further analysis would require identifying comparable sole-source or competitively awarded contracts for similar repair scopes and assessing their cost structures.

What oversight mechanisms were in place to manage the cost growth and ensure value for money on this sole-source contract?

Oversight for this contract would have been managed by the contracting officer and potentially the Defense Contract Management Agency (DCMA). Given the 'TIME AND MATERIALS' contract type, robust oversight would be critical to monitor labor hours, material costs, and ensure that the work performed was necessary and efficient. This would typically involve regular reviews of contractor invoices, audits of cost records, and performance assessments. The significant cost growth suggests that either the oversight mechanisms were insufficient to control costs, or the factors driving the cost increases were exceptionally difficult to manage within the existing framework.

What is the historical spending pattern for aircraft component repair services by the Naval Air Systems Command (NAVAIR)?

The Naval Air Systems Command (NAVAIR) historically spends billions of dollars annually on aviation readiness, which includes a substantial portion dedicated to the maintenance, repair, and overhaul (MRO) of aircraft components and systems. This spending supports the operational readiness of the Navy's diverse fleet of aircraft. Spending patterns can fluctuate based on fleet age, modernization programs, operational tempo, and specific platform requirements. Contracts like the one awarded to L3Harris are part of this broader ecosystem of sustaining naval aviation capabilities, often involving both competitive procurements for standardized parts and sole-source or limited-competition awards for specialized repairs or proprietary systems.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3 Technologies, Inc. (UEI: 008898884)

Address: 10001 JACK FINNEY BLVD, GREENVILLE, TX, 75403

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline