DoD awards $30M for navigation systems, raising questions about competition and value

Contract Overview

Contract Amount: $29,938,079 ($29.9M)

Contractor: L3harris Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-09-30

End Date: 2026-03-02

Contract Duration: 2,345 days

Daily Burn Rate: $12.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION CONTRACT AWARD FOR DMC/DVMC LOT 19

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32901

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to L3HARRIS TECHNOLOGIES, INC. for work described as: PRODUCTION CONTRACT AWARD FOR DMC/DVMC LOT 19 Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure on pricing. 2. The duration of the contract, over two years, suggests a need for sustained support. 3. The fixed-price nature of the contract shifts performance risk to the contractor. 4. The award is for navigation systems, a critical component for military operations. 5. The contractor, L3Harris Technologies, is a significant player in the defense sector.

Value Assessment

Rating: questionable

Benchmarking the value of this $30 million contract is challenging due to the lack of competitive bidding. Without comparison to other offers, it's difficult to ascertain if the pricing reflects fair market value. The fixed-price structure provides some cost certainty, but the absence of competition means potential savings for the government may have been forgone. Further analysis would require access to cost breakdowns or comparable contract data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, L3Harris Technologies, Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price discovery and potentially higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not have received the most cost-effective solution. Without a bidding process, there's less incentive for the contractor to offer the lowest possible price.

Public Impact

The Department of the Navy benefits from the acquisition of critical navigation systems. The contract supports the operational readiness of naval assets. The primary impact is on military operations and national defense capabilities. The contract is expected to support jobs within L3Harris Technologies, primarily in Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the justification for a sole-source award.
Long contract duration without competitive re-evaluation could lead to price creep.

Positive Signals

Fixed-price contract shifts performance risk to the contractor.
Contract awarded to an established defense contractor with relevant experience.
Contract supports critical national defense functions.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized area within the broader defense industry. The market for such systems is often dominated by a few key players due to high barriers to entry, including technological expertise and security clearances. Spending in this niche is driven by defense modernization efforts and the need for advanced navigational capabilities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This suggests that the primary awardee, L3Harris Technologies, Inc., will likely perform the majority of the work. Consequently, the direct impact on the small business ecosystem may be limited unless L3Harris actively engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Inspector General's office may conduct audits or investigations into contract performance and pricing, especially given the sole-source nature. Transparency is limited due to the lack of competitive bidding documentation being publicly available.

Related Government Programs

Defense Logistics Agency (DLA) procurement of navigation systems
Naval Air Systems Command (NAVAIR) contracts for avionics
Air Force Life Cycle Management Center (AFLCMC) awards for guidance systems

Risk Flags

Sole-source award lacks competitive justification.
Potential for uncompetitive pricing.
Risk of technology obsolescence over contract duration.
Limited public information on specific system requirements and performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 million to L3HARRIS TECHNOLOGIES, INC.. PRODUCTION CONTRACT AWARD FOR DMC/DVMC LOT 19

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 $29.9 million.

What is the period of performance?

Start: 2019-09-30. End: 2026-03-02.

What is the specific justification provided by the Department of the Navy for awarding this contract on a sole-source basis to L3Harris Technologies, Inc.?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source can provide the required supplies or services, such as when there is a unique capability, a critical need that cannot be met by competition, or when follow-on work is required for compatibility with existing systems. Without the official justification document, it is impossible to determine the exact rationale. This lack of transparency is a common concern with sole-source procurements, as it limits public understanding of why competitive processes were bypassed.

How does the $30 million contract value compare to historical spending on similar navigation systems by the Department of the Navy or other defense agencies?

Comparing this $30 million contract value to historical spending requires access to broader contract databases and specific product information. The North American Industry Classification System (NAICS) code 334511 covers a wide range of 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' Without knowing the precise type of navigation system (e.g., GPS receivers, inertial navigation units, radar systems), a direct comparison is difficult. However, $30 million for a multi-year definitive contract for specialized defense systems is within a typical range for major components, but the lack of competition makes it hard to assess if it represents good value compared to what could have been achieved through bidding.

What are the key performance indicators (KPIs) or deliverables expected under this contract, and how will their successful completion be measured?

The provided data does not specify the key performance indicators (KPIs) or detailed deliverables for this contract. As a 'PRODUCTION CONTRACT AWARD FOR DMC/DVMC LOT 19,' it likely involves the manufacturing and delivery of specific navigation system components or units. The contract type is 'FIRM FIXED PRICE,' which generally means the contractor is obligated to deliver the specified goods or services at a predetermined price. Performance measurement would typically be outlined in the contract's statement of work (SOW) and could include metrics related to quality, delivery schedules, and technical specifications. The government's quality assurance representatives (QARs) would monitor adherence to these requirements.

What is L3Harris Technologies, Inc.'s track record with the Department of Defense, particularly in supplying navigation systems?

L3Harris Technologies, Inc. is a well-established defense contractor with a significant history of supplying various systems, including navigation and guidance equipment, to the Department of Defense (DoD). The company has a broad portfolio encompassing aerospace, communications, and electronic systems. Their track record with the DoD includes numerous contracts across different branches and agencies. While specific details on past performance for this exact type of navigation system are not provided, L3Harris is generally considered a capable and experienced supplier in this domain. However, the sole-source nature of this award means that the government did not leverage competitive processes to explicitly validate their performance against alternatives for this specific requirement.

Given the contract's end date in March 2026, what are the potential risks associated with the long-term sustainment and obsolescence of the navigation systems being procured?

The contract's duration, extending to March 2026 (approximately 2.5 years from the award date of September 30, 2019), presents potential risks related to sustainment and obsolescence. Navigation systems often rely on rapidly evolving technologies, including microelectronics and software. If the systems procured are based on older technology, they could become obsolete or difficult to maintain as newer, more advanced systems emerge. The fixed-price nature might disincentivize the contractor from proactively addressing obsolescence unless contractually obligated. The Department of the Navy will need robust lifecycle management strategies to ensure these systems remain supportable and effective throughout their intended operational life, potentially requiring future contracts for upgrades or replacements.

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: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0042118R0074

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 1395 TROUTMAN BLVD 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: $29,938,079

Exercised Options: $29,938,079

Current Obligation: $29,938,079

Actual Outlays: $505,658

Subaward Activity

Number of Subawards: 58

Total Subaward Amount: $7,022,556

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline