DoD's $39.3M contract for MUOS ESD protection awarded to L3Harris Technologies, Inc

Contract Overview

Contract Amount: $39,290,480 ($39.3M)

Contractor: L3harris Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-06-28

End Date: 2023-01-24

Contract Duration: 210 days

Daily Burn Rate: $187.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: VAA ASSY, MUOS, ESD PROT, GREEN 383

Place of Performance

Location: ROCHESTER, MONROE County, NEW YORK, 14610

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $39.3 million to L3HARRIS TECHNOLOGIES, INC. for work described as: VAA ASSY, MUOS, ESD PROT, GREEN 383 Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Limited competition may have resulted in a higher price than if the contract had been fully competed. 3. The contract duration of 210 days is relatively short, suggesting a focused scope of work. 4. Awarded by the Department of the Navy, indicating a focus on naval communication and defense systems. 5. The North American Industry Classification System (NAICS) code 334220 points to the manufacturing of wireless communications equipment. 6. The contract type is Firm Fixed Price, which shifts some risk to the contractor but requires careful initial pricing. 7. The base value of $18.7M is significantly lower than the award amount, indicating potential for modifications or exercised options.

Value Assessment

Rating: questionable

The contract's value of $39.3M for MUOS ESD protection is difficult to benchmark without comparable sole-source awards for similar specialized equipment. The firm fixed-price structure suggests that the contractor bears the risk of cost overruns, but the lack of competition makes it challenging to assess if the price reflects fair market value. The significant difference between the base value ($18.7M) and the award amount ($39.3M) warrants further investigation into how the final price was determined and if it represents a good value for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that L3Harris Technologies, Inc. was the only bidder considered. This approach is typically used when only one source is capable of meeting the government's needs, often due to proprietary technology or unique capabilities. The lack of competition means there was no opportunity for price negotiation or comparison against other potential suppliers, which can lead to higher costs for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competitive market forces to secure the best possible pricing. Taxpayers may be paying a premium for this specialized equipment due to the absence of competing bids.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Department of the Navy, who will receive enhanced protection for their Mobile User Objective System (MUOS) communications. The services delivered include the provision of Electronic Support Defense (ESD) protection, crucial for maintaining secure and reliable satellite communications. The geographic impact is likely global, as MUOS is a satellite system designed for worldwide coverage, supporting naval operations across various theaters. Workforce implications may include specialized manufacturing and technical support roles within L3Harris Technologies, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Lack of transparency in price determination due to no competitive bidding.
Potential for cost overruns if initial pricing was not adequately scrutinized.
Dependence on a single contractor for critical defense technology.

Positive Signals

Award to a known defense contractor (L3Harris Technologies, Inc.) suggests established capabilities.
Firm Fixed Price contract shifts cost risk to the contractor.
Contract supports a critical defense communication system (MUOS).

Sector Analysis

This contract falls within the wireless communications equipment manufacturing sector, a key component of the broader defense industrial base. The market for specialized defense communication systems is often characterized by high barriers to entry due to technological complexity and stringent security requirements. Spending in this sector is driven by national security needs, technological advancements, and the modernization of military communication networks. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for advanced electronic warfare or satellite communication components.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The prime contractor, L3Harris Technologies, Inc., is a large corporation. There is no explicit information provided regarding subcontracting plans to small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem from this particular award is unclear, though large prime contractors often engage small businesses in their supply chains.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the Firm Fixed Price contract type, requiring the contractor to deliver specified goods and services within the agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Mobile User Objective System (MUOS)
Department of Defense Communications Systems
Naval Warfare Systems
Electronic Warfare Systems
Satellite Communications Equipment

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for price premium
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.3 million to L3HARRIS TECHNOLOGIES, INC.. VAA ASSY, MUOS, ESD PROT, GREEN 383

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 $39.3 million.

What is the period of performance?

Start: 2022-06-28. End: 2023-01-24.

What is L3Harris Technologies, Inc.'s track record with sole-source defense contracts, particularly for specialized communication equipment?

L3Harris Technologies, Inc. has a significant history of receiving defense contracts, including sole-source awards, given its position as a major defense contractor. Analyzing their past performance on similar sole-source contracts for specialized communication or electronic warfare systems would be crucial. This would involve reviewing contract histories for on-time delivery, adherence to specifications, and any documented performance issues or disputes. A review of publicly available contract data and defense news archives can provide insights into their reliability and pricing practices in non-competitive environments. Understanding their historical success rates and any penalties or corrective actions taken on prior sole-source awards would help assess the risk associated with this current contract.

How does the $39.3M award value compare to similar sole-source contracts for ESD protection or related communication equipment?

Benchmarking the $39.3M award value for MUOS ESD protection is challenging without direct comparisons of identical sole-source procurements. However, analysis can be made by looking at the average contract values for similar electronic warfare or advanced communication systems awarded to large defense contractors. Factors such as technological sophistication, required quantities, and the specific threat environment addressed by the ESD protection would influence pricing. If comparable sole-source awards for systems with similar complexity and scope are significantly lower, it would suggest this contract may be priced at a premium. Conversely, if other sole-source awards for highly specialized, low-volume defense electronics are in a similar range, the price might be considered more in line with market realities for non-competitive, high-tech procurements.

What are the primary risks associated with a sole-source award for critical defense communication technology like MUOS ESD protection?

The primary risks associated with a sole-source award for critical defense communication technology are related to cost and performance. Without competition, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to overpayment by the government. Price justification becomes more critical and relies heavily on contractor-provided data or government cost analysis. Furthermore, sole-source awards can create a dependency on a single supplier, which poses a risk if the contractor experiences financial difficulties, production issues, or fails to meet performance standards. The government has limited leverage to switch providers, making contract management and oversight paramount to ensure successful delivery and value.

What is the historical spending pattern for MUOS-related procurements by the Department of the Navy, and how does this award fit in?

Historical spending on the Mobile User Objective System (MUOS) by the Department of the Navy has been substantial, reflecting the program's complexity and strategic importance. This typically includes funding for satellite development, ground infrastructure, user terminals, and ongoing sustainment and upgrades. This $39.3M award for ESD protection represents a specific component procurement within the broader MUOS ecosystem. Analyzing past Navy spending on similar sustainment or upgrade contracts for critical communication systems can provide context. If historical spending on ESD protection or related upgrades has been in a similar magnitude, it suggests this award is consistent with the program's lifecycle needs. Conversely, a significant deviation could indicate a new requirement, a change in scope, or potentially inflated pricing.

What are the implications of the Firm Fixed Price (FFP) contract type for this sole-source award, particularly regarding cost control?

The Firm Fixed Price (FFP) contract type is generally preferred by the government as it places the risk of cost overruns on the contractor. For this sole-source award, the FFP structure means L3Harris Technologies, Inc. is obligated to deliver the specified MUOS ESD protection at the agreed-upon price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently. However, the effectiveness of FFP in controlling costs for a sole-source contract hinges on the accuracy of the initial price negotiation and the government's ability to define the scope of work precisely. Without competitive pressure, the initial price negotiation is critical, and robust government cost analysis is essential to ensure the FFP represents fair value.

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

Solicitation ID: N0003920R0090

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 1680 UNIVERSITY AVE, ROCHESTER, NY, 14610

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: $39,290,480

Exercised Options: $39,290,480

Current Obligation: $39,290,480

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0003922D0070

IDV Type: IDC

Timeline