L3Harris Technologies awarded $45.3M for LRU 7 and LRU 9 systems, with contract duration extending over 8 years

Contract Overview

Contract Amount: $45,289,149 ($45.3M)

Contractor: L3harris Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2015-08-31

End Date: 2023-09-30

Contract Duration: 2,952 days

Daily Burn Rate: $15.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LRU 7 AND LRU 9

Place of Performance

Location: CLIFTON, PASSAIC County, NEW JERSEY, 07014

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $45.3 million to L3HARRIS TECHNOLOGIES, INC. for work described as: LRU 7 AND LRU 9 Key points: 1. Contract value of $45.3M over nearly 8 years suggests a significant investment in specialized systems. 2. The 'NOT COMPETED' award raises questions about the justification for avoiding a competitive bidding process. 3. A Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely monitored. 4. The duration of the contract (2952 days) indicates a long-term need for these LRU systems. 5. Awarded to a single contractor, L3Harris Technologies, Inc., this contract may limit market innovation. 6. The absence of small business set-asides or subcontracting requirements warrants further investigation into broader economic impact.

Value Assessment

Rating: questionable

The total award of $45.3 million over nearly eight years for LRU 7 and LRU 9 systems is substantial. Without specific benchmarks for these particular LRU systems, it is difficult to definitively assess value for money. However, the Cost Plus Fixed Fee (CPFF) contract type, while common for complex or evolving requirements, carries inherent risks of cost escalation. The lack of competition further complicates a direct value comparison, as there is no market-driven price discovery to benchmark against. The long duration suggests a sustained need, but the pricing structure requires careful oversight to ensure efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' justification, indicating that a full and open competition was not pursued. The specific reasons for this sole-source award are not detailed in the provided data. Typically, sole-source awards are made when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. The lack of competition means there were no other bidders, and therefore no direct price comparison from a competitive market.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, potentially leading to a higher overall cost for these systems compared to what might have been achieved through an open bidding process.

Public Impact

The primary beneficiaries are likely the Department of Defense units requiring the LRU 7 and LRU 9 systems for their operations. The services delivered involve the provision and potential sustainment of critical system components (LRU 7 and LRU 9). The geographic impact is likely concentrated within military installations or operational theaters where these systems are deployed. Workforce implications could include specialized technical roles at L3Harris Technologies for manufacturing, integration, and support of these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting long-term cost-effectiveness.
CPFF contract type requires robust oversight to mitigate risk of cost overruns.
Long contract duration (nearly 8 years) necessitates sustained monitoring for performance and evolving needs.
Lack of small business participation noted, potentially limiting broader economic benefits.
Specific system details (LRU 7 and LRU 9) are not publicly detailed, hindering independent value assessment.

Positive Signals

Award to an established contractor (L3Harris Technologies) suggests a degree of confidence in their capability.
The long duration indicates a stable, long-term requirement for these systems within the DoD.
The definitive contract structure provides a framework for the relationship over the specified period.
The contract is for specific, defined LRU systems, implying a focused requirement.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized area within aerospace and defense. This sector is characterized by high technological barriers to entry, significant R&D investment, and long product development cycles. Spending in this area is critical for national security and advanced technological capabilities. Comparable spending benchmarks are difficult to establish without more specific details on the LRU systems, but contracts for complex avionics and navigation systems can range from millions to billions of dollars.

Small Business Impact

The provided data indicates that this contract was not awarded with small business set-asides (ss: false, sb: false). This suggests that small businesses were not specifically targeted for this procurement. Consequently, there are no direct subcontracting requirements mandated for small businesses within this contract. The impact on the small business ecosystem is likely minimal unless L3Harris Technologies voluntarily engages small businesses as suppliers or partners in fulfilling this contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to ensure that costs are reasonable and allowable, and that the fixed fee is earned appropriately. Transparency is limited due to the sole-source nature and lack of public detail on the specific LRU systems. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Logistics Agency (DLA) Procurement
Aerospace and Defense Manufacturing
Navigation and Guidance Systems
Avionics and Electronic Systems
Department of Defense Sustainment Contracts

Risk Flags

Sole-source award justification requires scrutiny.
CPFF contract type necessitates robust cost oversight.
Long contract duration increases risk of obsolescence or changing requirements.
Lack of competition limits price discovery and potential savings.
No small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.3 million to L3HARRIS TECHNOLOGIES, INC.. LRU 7 AND LRU 9

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 Logistics Agency).

What is the total obligated amount?

The obligated amount is $45.3 million.

What is the period of performance?

Start: 2015-08-31. End: 2023-09-30.

What is the specific function and criticality of LRU 7 and LRU 9 systems within the Department of Defense's operations?

The provided data classifies the contract under NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' LRU typically stands for 'Line Replaceable Unit,' which are modular components of larger systems. LRU 7 and LRU 9 are therefore specific, interchangeable parts crucial for the functioning of larger search, detection, navigation, or guidance systems used by the Department of Defense. Their criticality stems from their role in enabling essential military functions such as target acquisition, situational awareness, and mission execution. Without more specific system names or descriptions, their exact operational impact remains generalized, but as components of navigation and guidance systems, they are fundamental to aircraft, naval vessels, or ground systems' ability to operate effectively and safely.

What are the primary justifications for awarding this contract on a sole-source basis instead of through full and open competition?

The data explicitly states the contract was 'NOT COMPETED,' indicating a sole-source award. While the specific justification is not provided, common reasons for sole-source awards in defense contracting include: 1) Unique capabilities: Only one contractor possesses the proprietary technology, specialized knowledge, or unique manufacturing capabilities required. 2) Urgent and compelling need: A critical operational requirement exists that cannot be met through the lengthy competitive process. 3) Follow-on work: The requirement is a logical follow-on to a previous contract where competition was previously conducted, and it's deemed more efficient to award to the incumbent. 4) Industrial base considerations: Maintaining a specific defense industrial capability might necessitate sole-source awards. Without further documentation from the agency, the precise rationale remains speculative, but it implies a belief that competition was either impractical or not in the government's best interest for these specific LRU systems.

How does the Cost Plus Fixed Fee (CPFF) contract structure potentially impact cost control and contractor incentives for this $45.3M award?

A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or is subject to change, as is common in complex defense systems. For cost control, the government relies on robust auditing of incurred costs to ensure they are reasonable and allocable. The 'fixed fee' component provides some incentive for the contractor to manage costs, as the fee does not increase with higher costs. However, the primary incentive for cost reduction lies with the government's oversight and negotiation of the initial fee. If not managed diligently, CPFF contracts can lead to cost overruns as the contractor is guaranteed to cover costs and receive a profit regardless of efficiency, potentially making it less cost-effective than fixed-price contracts where the contractor bears more risk.

What is the historical spending pattern for LRU 7 and LRU 9 systems or similar components by the Defense Logistics Agency or Department of Defense?

The provided data pertains to a single definitive contract awarded to L3Harris Technologies for LRU 7 and LRU 9 systems, valued at $45.3 million and spanning from August 2015 to September 2023 (duration of 2952 days). This data point alone does not provide sufficient information to establish a historical spending pattern. To analyze historical spending, one would need access to procurement databases that track all contracts awarded for these specific LRU systems, or similar components, across various agencies (like DLA and other DoD branches) over multiple fiscal years. Such an analysis would reveal trends in contract volume, average award values, contractor concentration, and the evolution of pricing over time, which is essential for benchmarking and identifying significant shifts in investment.

What are the potential risks associated with a single contractor, L3Harris Technologies, holding this long-term contract for critical LRU systems?

Awarding a long-term contract valued at $45.3 million to a single contractor, L3Harris Technologies, presents several potential risks. Firstly, it creates a dependency on one supplier, which can lead to supply chain vulnerabilities if L3Harris faces production issues, financial instability, or strategic shifts. Secondly, the lack of ongoing competition can reduce the incentive for the contractor to innovate or offer cost reductions beyond what is contractually required, potentially leading to higher long-term costs for the government. Thirdly, it limits the government's flexibility to switch to alternative suppliers or technologies if they emerge. Finally, it concentrates significant program knowledge and control within one entity, which can be a strategic risk if that entity's interests diverge from the government's.

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

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 77 RIVER RD, CLIFTON, NJ, 07014

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

Financial Breakdown

Contract Ceiling: $45,289,149

Exercised Options: $45,289,149

Current Obligation: $45,289,149

Subaward Activity

Number of Subawards: 75

Total Subaward Amount: $42,491,128

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline