DoD's $6.1M Engineering Services Contract Awarded to L3 Technologies Inc. with No Competition

Contract Overview

Contract Amount: $6,085,663 ($6.1M)

Contractor: L3 Technologies Inc

Awarding Agency: Department of Defense

Start Date: 2024-03-13

End Date: 2026-03-12

Contract Duration: 729 days

Daily Burn Rate: $8.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES

Place of Performance

Location: MILLERSVILLE, ANNE ARUNDEL County, MARYLAND, 21108

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $6.1 million to L3 TECHNOLOGIES INC for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential value for money. 2. The 'NOT AVAILABLE FOR COMPETITION' status suggests potential barriers to entry or unique capabilities required. 3. A definitive contract type indicates a clear agreement on scope and terms, but the cost-plus-fixed-fee structure warrants scrutiny. 4. The contract duration of 729 days (2 years) suggests a significant, ongoing need for these engineering services. 5. Performance is located in Maryland, a hub for defense contracting and engineering expertise. 6. The award to L3 Technologies Inc. represents a single-source commitment, highlighting the contractor's established relationship or specialized role.

Value Assessment

Rating: questionable

Benchmarking the value of this $6.1 million contract is challenging without comparable sole-source awards for similar engineering services. The cost-plus-fixed-fee (CPFF) pricing structure can sometimes lead to higher costs if not managed diligently, as the contractor is reimbursed for allowable costs plus a fixed fee. Without competitive pressure, it's difficult to ascertain if the fixed fee accurately reflects the effort or if the overall cost base is optimized. Further analysis would require understanding the specific engineering services provided and comparing them to industry standards and historical pricing for similar sole-source procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not competed. The 'NOT AVAILABLE FOR COMPETITION' status indicates that the Department of the Navy determined that only one responsible source could satisfy the agency's needs. This could be due to proprietary technology, unique capabilities, or urgent requirements where competition is not feasible. The lack of multiple bidders means there was no direct price comparison or negotiation driven by market forces, potentially impacting the final price.

Taxpayer Impact: For taxpayers, sole-source awards mean there is less assurance of obtaining the best possible price. Without competition, the government relies heavily on the contractor's proposed pricing and the agency's negotiation skills to ensure fair value.

Public Impact

The Department of Defense, specifically the Department of the Navy, is the primary beneficiary, receiving critical engineering services. These services are essential for supporting naval operations, research, development, or maintenance activities. The geographic impact is concentrated in Maryland, supporting the local economy and defense industry ecosystem. The contract likely supports a specialized engineering workforce within L3 Technologies Inc. and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee structure requires robust oversight to manage costs and prevent overruns.
Lack of transparency in the competition process due to sole-source nature.
Potential for contractor lock-in if unique capabilities are involved.

Positive Signals

Award to an established contractor (L3 Technologies Inc.) suggests a level of trust and proven capability.
Definitive contract provides clear terms and scope, reducing ambiguity.
Fixed fee component provides some cost predictability compared to pure cost-reimbursement contracts.
Performance in Maryland aligns with a strong regional defense industrial base.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for specialized engineering services, particularly those supporting defense applications, is often characterized by high barriers to entry due to technical expertise, security clearances, and established relationships with government agencies. Spending in this sector is driven by the need for advanced technological solutions, system integration, and lifecycle support for complex defense platforms. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded engineering service contracts within the Department of Defense for similar scope and duration.

Small Business Impact

The data indicates that small business participation is not a primary focus for this specific award, as 'sb' is false. There is no indication of a small business set-aside. Subcontracting opportunities for small businesses would depend on L3 Technologies Inc.'s internal policies and the specific nature of the engineering services required. Without explicit subcontracting goals or set-asides, the direct impact on the small business ecosystem from this particular contract is likely limited, though larger prime contractors often engage small businesses for specialized support.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy's contracting officers and program managers. As a cost-plus-fixed-fee contract, rigorous financial and performance monitoring is crucial to ensure costs are allowable, reasonable, and allocable, and that the fixed fee is earned appropriately. Transparency may be limited due to the sole-source nature, but contract performance reports and audits would be key accountability measures. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Department of Defense Engineering Services
Naval Engineering Support Contracts
Sole-Source Defense Procurements
Cost-Plus-Fixed-Fee Contracts
L3 Technologies Inc. Defense Contracts

Risk Flags

Sole-source award lacks competitive transparency.
Cost-plus-fixed-fee structure requires diligent cost oversight.
Specific services undefined in award notice.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.1 million to L3 TECHNOLOGIES INC. ENGINEERING SERVICES

Who is the contractor on this award?

The obligated recipient is L3 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 $6.1 million.

What is the period of performance?

Start: 2024-03-13. End: 2026-03-12.

What specific engineering services are being provided under this contract?

The provided data indicates the contract is for 'ENGINEERING SERVICES' (NAICS code 541330). However, the specific nature of these services is not detailed. Typically, engineering services in the defense sector can encompass a wide range of activities, including systems engineering, design, analysis, testing, integration, and technical support for complex military platforms, weapons systems, or infrastructure. Without further documentation, such as the contract's statement of work (SOW), it is impossible to determine the precise technical disciplines or project objectives. This lack of specificity is common in high-level contract award notices but requires deeper investigation for a full understanding of the contract's purpose and value.

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

The contract was designated as 'NOT AVAILABLE FOR COMPETITION,' signifying a sole-source award. The Department of the Navy would have issued a justification and approval (J&A) document outlining the rationale. Common reasons for sole-source awards include the existence of unique capabilities or proprietary technology held by only one contractor, urgent and compelling needs where competition cannot be timely, or when the services are a continuation of previous work where only one contractor can provide the necessary continuity. Without access to the specific J&A for this contract, the exact reason remains undisclosed, but it implies that the Navy determined L3 Technologies Inc. was the only viable source.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types in terms of risk and value?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or involves research and development, making it difficult to estimate costs accurately upfront. The government agrees to pay the contractor's actual allowable costs plus a predetermined fixed fee, which represents the contractor's profit. This structure shares cost risk: the government bears the risk of cost overruns (as it pays actual costs), while the contractor's profit (the fixed fee) remains constant regardless of the final cost. Compared to fixed-price contracts, CPFF can lead to higher overall costs for the government if not managed tightly, as there's less incentive for the contractor to control costs beyond what's necessary to earn the fee. However, it can be advantageous when innovation or flexibility is paramount and precise cost estimation is impossible.

What is the historical spending pattern for engineering services by the Department of the Navy?

Historical spending data for engineering services by the Department of the Navy is extensive, reflecting the continuous need for technical expertise across its vast operations. While specific figures for this contract's predecessors are not provided, the Navy consistently awards billions of dollars annually for various engineering support, research, development, and sustainment activities. This spending is distributed across numerous contracts, both competitive and sole-source, supporting shipbuilding, aircraft, weapons systems, IT infrastructure, and shore facilities. Trends often show an increasing reliance on specialized contractors for advanced technologies and complex system integration, with significant portions allocated to major platforms like aircraft carriers, submarines, and fighter jets. Analyzing broader spending trends reveals a consistent demand for engineering services, underscoring their critical role in naval readiness.

What is L3 Technologies Inc.'s track record with the Department of Defense?

L3 Technologies Inc. (now part of L3Harris Technologies following a merger) has a substantial and long-standing track record as a major defense contractor serving the Department of Defense (DoD) and its various branches, including the Department of the Navy. The company has historically been involved in a wide array of programs, providing products and services related to aerospace systems, electronic warfare, communications, intelligence, surveillance, reconnaissance (ISR), and training. Their involvement spans numerous complex defense platforms and technologies. Given their size and scope, they are a frequent recipient of significant DoD contracts, both competitively and, at times, through sole-source awards when specific capabilities align with agency needs. Their extensive history suggests a deep understanding of DoD requirements and processes.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003923R9001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 1121 BENFIELD BLVD STE H, MILLERSVILLE, MD, 21108

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: $30,174,006

Exercised Options: $9,444,360

Current Obligation: $6,085,663

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline