Navy awards $1.2B contract for SPS-48 systems engineering to L3Harris Technologies, Inc

Contract Overview

Contract Amount: $12,038,000 ($12.0M)

Contractor: L3harris Technologies, Inc

Awarding Agency: Department of Defense

Start Date: 2020-06-01

End Date: 2026-09-30

Contract Duration: 2,312 days

Daily Burn Rate: $5.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SPS-48 SYSTEMS ENGINEERING

Place of Performance

Location: VAN NUYS, LOS ANGELES County, CALIFORNIA, 91406

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $12.0 million to L3HARRIS TECHNOLOGIES, INC for work described as: SPS-48 SYSTEMS ENGINEERING Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant duration of over 2300 days suggests a long-term need for these systems. 3. The contract type (Cost Plus Incentive Fee) can lead to cost overruns if not managed carefully. 4. The North American Industry Classification System (NAICS) code 334511 indicates a focus on specialized navigation and guidance systems. 5. The award value of over $1.2 billion represents a substantial investment in defense systems. 6. The contract is managed by the Department of the Navy, indicating a specific military application.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized technical requirements. The Cost Plus Incentive Fee (CPIF) structure means the final cost will depend on performance against targets, making a fixed value comparison difficult. However, the significant duration and scope suggest a critical need for these systems. Further analysis would require detailed cost breakdowns and performance metrics to assess true 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, technology, or security clearances. The lack of competition means there was no direct price comparison with other potential suppliers, which could potentially lead to higher costs for the government.

Taxpayer Impact: The absence of competition means taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive critical systems engineering support for the SPS-48 radar system. The services delivered include essential engineering, integration, and sustainment for advanced radar technology. The contract has a geographic impact primarily within California, where the contractor is located. This contract supports a specialized segment of the aerospace and defense industry workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Incentive Fee contract type carries inherent risk of cost escalation.
Long contract duration requires sustained oversight to ensure continued value.
Lack of publicly available performance metrics makes independent assessment difficult.

Positive Signals

Award to an established contractor with presumed expertise in the system.
Contract addresses a critical defense capability for the Navy.
Defined performance incentives within the CPIF structure aim to align contractor and government interests.

Sector Analysis

The contract falls within the aerospace and defense sector, specifically focusing on electronic and navigation systems manufacturing. The NAICS code 334511 covers companies involved in the production of search, detection, navigation, guidance, aeronautical, and nautical systems. This is a highly specialized and technologically advanced segment of the manufacturing industry, often characterized by long development cycles and significant R&D investment. Comparable spending in this area is substantial across the Department of Defense, reflecting the critical role of advanced sensor and navigation technology in modern warfare.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor, L3Harris Technologies, Inc., is a large defense contractor. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means that opportunities for small businesses to directly compete for this prime contract were limited.

Oversight & Accountability

Oversight for this contract is primarily managed by the Department of the Navy's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates close monitoring of costs and performance against established targets to ensure accountability and value. Transparency is limited by the sole-source nature and the proprietary details of defense systems. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Air Systems Command (NAVAIR) contracts
Defense radar systems procurement
Aerospace and defense electronics manufacturing
SPS-48 radar system sustainment programs

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.0 million to L3HARRIS TECHNOLOGIES, INC. SPS-48 SYSTEMS ENGINEERING

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 Navy).

What is the total obligated amount?

The obligated amount is $12.0 million.

What is the period of performance?

Start: 2020-06-01. End: 2026-09-30.

What is the historical spending trend for SPS-48 systems engineering and sustainment by the Department of the Navy?

Analyzing historical spending on SPS-48 systems engineering and sustainment by the Department of the Navy is crucial for understanding the long-term investment in this critical radar technology. While specific historical data for this exact contract is not provided, general trends in defense spending on radar and electronic warfare systems indicate a consistent and significant allocation of resources. The Navy, in particular, relies heavily on advanced sensor capabilities for its fleet operations. Over the past decade, there has been a continuous effort to upgrade and maintain these systems to counter evolving threats. Contracts for similar systems often span multiple years and involve substantial dollar values, reflecting the complexity and strategic importance of maintaining operational readiness. Without access to detailed historical contract databases for the SPS-48 specifically, it's difficult to provide precise figures, but the overall defense budget allocation for radar systems suggests a sustained, multi-billion dollar investment over time.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact contractor performance and final costs compared to other contract types?

The Cost Plus Incentive Fee (CPIF) contract type is designed to incentivize contractors to control costs and meet performance targets by sharing in the savings or overruns. In a CPIF contract, the final profit is adjusted based on whether the final cost is below or above a target cost, and performance against specific objectives. This structure aims to align the contractor's financial interests with those of the government, encouraging efficiency and innovation. Compared to a firm-fixed-price contract, CPIF offers more flexibility for complex projects where costs are uncertain, but it carries a higher risk of cost escalation if targets are not met or if the government's oversight is insufficient. It generally provides better cost control than a Cost Plus Fixed Fee (CPFF) contract, as the contractor has a direct financial stake in managing expenses. However, effective negotiation of the target cost and incentive structure, along with robust government oversight, is critical to realizing the intended benefits and avoiding excessive costs for taxpayers.

What are the key performance indicators (KPIs) or metrics used to evaluate L3Harris Technologies' performance under this contract?

The specific Key Performance Indicators (KPIs) or metrics used to evaluate L3Harris Technologies' performance under this Cost Plus Incentive Fee (CPIF) contract are not publicly disclosed in the provided data. However, for a contract of this nature, which involves systems engineering for a critical defense asset like the SPS-48 radar, typical KPIs would likely include factors such as system reliability, availability, maintainability, on-time delivery of engineering milestones, adherence to technical specifications, and successful integration of system upgrades or modifications. The 'incentive fee' component of the CPIF structure implies that specific, measurable performance targets are established, and the contractor's achievement against these targets directly influences their final profit. The Department of the Navy would be responsible for monitoring these KPIs and assessing the contractor's performance against them throughout the contract's duration.

What is the strategic importance of the SPS-48 radar system to the U.S. Navy's operational capabilities?

The SPS-48 radar system is a crucial component of the U.S. Navy's air defense and situational awareness capabilities. As a 3D, medium-range, surface-search and fire-control radar, it plays a vital role in detecting and tracking airborne threats, including aircraft, missiles, and drones, at significant distances. Its ability to provide accurate targeting information is essential for the effective employment of the Navy's combat systems, contributing directly to the survivability of naval vessels and the success of missions. Maintaining and upgrading the SPS-48 system through robust engineering and sustainment contracts ensures that the Navy can adapt to evolving threats and maintain its technological edge in complex operational environments. The continuous investment in systems like the SPS-48 underscores its strategic importance in safeguarding naval assets and projecting power globally.

Are there any known risks associated with the sole-source procurement of specialized defense systems like the SPS-48?

Yes, sole-source procurements of specialized defense systems like the SPS-48 carry several inherent risks. The most significant is the potential for reduced price competition, which can lead to higher costs for the government compared to a competitively bid contract. Without multiple bidders vying for the contract, the sole-source provider may have less incentive to offer the most competitive pricing. Another risk is vendor lock-in; the government becomes dependent on a single supplier for critical systems, potentially limiting future flexibility and negotiation leverage. Furthermore, sole-source awards can sometimes mask inefficiencies or a lack of innovation if the contractor faces no external pressure to improve processes or technologies. To mitigate these risks, the government typically conducts thorough market research to ensure a sole-source justification is valid and may implement stringent oversight, performance metrics, and cost-control measures to ensure fair pricing and value.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002419R5500

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 7821 ORION AVE, VAN NUYS, CA, 91406

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

Financial Breakdown

Contract Ceiling: $12,038,000

Exercised Options: $12,038,000

Current Obligation: $12,038,000

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $146,150

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002419G5500

IDV Type: BOA

Timeline