DoD's $68.5M L3Harris contract for engineering support lacked competition, raising value concerns

Contract Overview

Contract Amount: $68,510,513 ($68.5M)

Contractor: L3harris Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-03-05

End Date: 2017-02-13

Contract Duration: 1,441 days

Daily Burn Rate: $47.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ENGINEERING SUPPORT SERVICES FOR THE CBSP FLV FOLLOW-ON

Place of Performance

Location: PALM BAY, BREVARD County, FLORIDA, 32905

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $68.5 million to L3HARRIS TECHNOLOGIES, INC. for work described as: ENGINEERING SUPPORT SERVICES FOR THE CBSP FLV FOLLOW-ON Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. A firm-fixed-price structure was used, which can shift risk to the contractor but may also lead to higher initial bids without competition. 3. The duration of the contract (over 3 years) suggests a long-term need for these services. 4. The specific nature of 'engineering support' for CBSP FLV suggests specialized technical expertise was required. 5. The lack of competition is a significant risk indicator for potential overspending. 6. The contract was awarded to L3Harris Technologies, Inc., a major defense contractor.

Value Assessment

Rating: questionable

Benchmarking the value of this $68.5 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The firm-fixed-price contract type suggests a defined scope, but the absence of competition means there's no direct comparison to other offers to assess cost-effectiveness. This lack of competitive pressure is a primary concern regarding 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 unique capabilities or when urgency precludes a competitive process. The absence of bidders means there was no opportunity for price discovery through market forces, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the lack of competitive bidding. Without multiple offers, the government had limited leverage to negotiate the best possible price.

Public Impact

The primary beneficiaries are the Department of Defense (DoD) and potentially specific military branches relying on the CBSP FLV system. The services delivered are specialized engineering support, crucial for the operational readiness and maintenance of the CBSP FLV. The contract's performance was based in Florida (FL), indicating a geographic focus for the service delivery. The contract likely supported a workforce with specialized engineering and technical skills within L3Harris Technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition increases the risk of paying above-market rates.
Sole-source awards can indicate potential barriers to entry for other capable firms.
Long contract duration without competition may mask inefficiencies.
The specific nature of 'engineering support' might be difficult to benchmark without comparable contracts.

Positive Signals

Firm-fixed-price contract shifts some cost overrun risk to the contractor.
L3Harris is an established defense contractor with a track record, suggesting some level of reliability.
The contract was for a specific system (CBSP FLV), implying a focused and potentially necessary requirement.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically related to communications and electronic equipment manufacturing. The market for specialized engineering support services for defense systems is often characterized by high barriers to entry due to security clearances, proprietary technology, and long-standing relationships. Comparable spending benchmarks are difficult to establish without knowing the precise nature of the CBSP FLV system and its unique engineering needs.

Small Business Impact

This contract does not appear to have involved small business set-asides, as indicated by 'sb': false. There is no explicit information on subcontracting plans for small businesses. The sole-source nature of the award further reduces the likelihood of significant subcontracting opportunities being mandated or actively pursued for small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm-fixed-price nature provides some level of cost control, but the lack of competition limits the government's ability to scrutinize pricing. Transparency is moderate, as contract awards are generally public, but the specifics of sole-source justifications and detailed performance metrics may not be readily available.

Related Government Programs

Defense Communications Systems
Aerospace Engineering Services
Command, Control, and Communications Systems
Wireless Communications Equipment

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency on Justification for Sole Source

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.5 million to L3HARRIS TECHNOLOGIES, INC.. ENGINEERING SUPPORT SERVICES FOR THE CBSP FLV FOLLOW-ON

Who is the contractor on this award?

The obligated recipient is L3HARRIS TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $68.5 million.

What is the period of performance?

Start: 2013-03-05. End: 2017-02-13.

What is the specific nature of the CBSP FLV system and the engineering support required?

The CBSP FLV (Command, Control, Battle Management, and Mission Planning - Forward Logistics Vehicle) system is likely a component of a larger defense communication or battle management network. Engineering support would typically involve activities such as system design, integration, testing, maintenance, troubleshooting, software updates, and potentially hardware upgrades. The 'Forward Logistics Vehicle' designation suggests it might be a mobile or deployable element of the system. Without access to classified or proprietary details, the exact technical specifications and support functions remain generalized.

Why was this contract awarded on a sole-source basis?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations. Common reasons include the existence of only one responsible source capable of providing the required service, urgent and compelling needs that preclude full and open competition, or when the services are a follow-on to a previous contract where the original source is the only one with the necessary knowledge and experience. For this contract, it's probable that L3Harris possessed unique technical expertise, proprietary data, or existing infrastructure related to the CBSP FLV system that made them the only viable option.

What is the typical profit margin for similar sole-source defense engineering contracts?

Determining a 'typical' profit margin for sole-source defense engineering contracts is complex and highly variable. Profit margins are influenced by factors such as contract type (firm-fixed-price vs. cost-plus), the level of risk assumed by the contractor, the specialized nature of the technology or service, the contractor's overhead structure, and negotiation leverage. While industry averages for defense contracts might range from 7-15% profit, sole-source awards, lacking competitive pressure, could potentially allow for higher margins if not rigorously negotiated or scrutinized by oversight bodies. Specific data for this contract's profit margin is not publicly available.

How does the firm-fixed-price (FFP) structure impact risk and cost in this sole-source contract?

The firm-fixed-price (FFP) structure places the primary risk of cost overruns on the contractor (L3Harris). This means the government agrees to pay a set price regardless of the contractor's actual costs. For the government, this provides cost certainty, assuming the initial price was fair. However, in a sole-source scenario, the contractor may build in a higher contingency or profit margin to account for potential risks they perceive, knowing there's no competition to drive the price down. Thus, while FFP shifts cost risk, the lack of competition in this sole-source award could mean the 'fixed price' itself was higher than it might have been in a competitive environment.

What is L3Harris Technologies' track record with the Department of Defense?

L3Harris Technologies is a major defense contractor with an extensive history of providing a wide range of products and services to the Department of Defense and other government agencies. Their portfolio includes communications systems, electronic warfare capabilities, avionics, sensors, and information technology solutions. They have been involved in numerous large-scale defense programs. While their overall track record is substantial, the performance and value derived from specific contracts, especially sole-source ones, should be evaluated on a case-by-case basis.

Are there any publicly available performance metrics for this specific contract?

Publicly available performance metrics for individual federal contracts, particularly those awarded on a sole-source basis for specialized defense systems, are often limited. While contract award data is generally accessible, detailed performance reports, quality assessments, or on-time delivery statistics are typically considered internal government or contractor information, or may be classified. Without specific Freedom of Information Act (FOIA) requests or declassified reports, it is difficult to ascertain specific performance outcomes beyond the contract's completion.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 2400 PALM BAY RD NE, PALM BAY, FL, 32905

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: $87,979,006

Exercised Options: $69,520,038

Current Obligation: $68,510,513

Actual Outlays: $660,225

Subaward Activity

Number of Subawards: 109

Total Subaward Amount: $19,060,177

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline