DoD's $28.4M L3 Technologies contract for sustainment services lacks competition, raising value concerns

Contract Overview

Contract Amount: $28,381,553 ($28.4M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-09-23

End Date: 2024-06-28

Contract Duration: 644 days

Daily Burn Rate: $44.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUSTAINMENT SERVICES, CONTRACTOR FIELD SERVICE REPRESENTATIVES, ENGINEERING TECHNICAL SERVICES, INTEGRATED LOGISTICS, SPECIALIZED REPAIR ACTIVITIES, SPARES PROCUREMENT, DATA LINK & SATCOM SYSTEMS & PROGRAM MANAGEMENT SUPPORT

Place of Performance

Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84116

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $28.4 million to L3 TECHNOLOGIES, INC. for work described as: SUSTAINMENT SERVICES, CONTRACTOR FIELD SERVICE REPRESENTATIVES, ENGINEERING TECHNICAL SERVICES, INTEGRATED LOGISTICS, SPECIALIZED REPAIR ACTIVITIES, SPARES PROCUREMENT, DATA LINK & SATCOM SYSTEMS & PROGRAM MANAGEMENT SUPPORT Key points: 1. The contract's sole-source nature limits price discovery and potentially inflates costs for essential sustainment services. 2. A lack of competitive bidding prevents benchmarking against market rates, making value-for-money assessment difficult. 3. The cost-plus-fixed-fee structure may incentivize cost escalation rather than efficiency. 4. Performance context is limited due to the absence of comparative contract data. 5. This contract falls within the broader defense electronics and communications sector. 6. The duration of 644 days suggests a significant, ongoing need for these specialized services.

Value Assessment

Rating: questionable

Without competitive bidding, it is challenging to definitively assess the value for money. The contract's cost-plus-fixed-fee (CPFF) pricing structure, while common for complex services, can lead to higher costs if not closely managed. Benchmarking against similar sole-source contracts is difficult, but the absence of competition inherently reduces the government's leverage to negotiate favorable pricing. The reported award amount of $28.4 million over 644 days suggests a substantial investment, underscoring the need for rigorous oversight to ensure costs remain reasonable.

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. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means that multiple bidders were not evaluated, and the government did not benefit from the price reductions and service improvements that can arise from a competitive procurement process. This limits the government's ability to ensure it is receiving the best possible price and terms.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, there is less incentive for the contractor to offer the lowest possible price, potentially leading to higher overall spending.

Public Impact

The Department of the Army benefits from critical sustainment services for its radio and television broadcasting and wireless communications equipment. Services include field representative support, engineering technical services, integrated logistics, and specialized repair activities. The contract supports the operational readiness of defense communication systems. Geographic impact is likely concentrated where these specific communication systems are deployed, with a potential focus on Utah (ST='UT', SN='UTAH'). Specialized technical expertise is being provided, potentially supporting a skilled workforce within L3 Technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer dollars.
The CPFF contract type can incentivize cost increases if not managed with strict oversight.
Limited transparency into the contractor's cost structure due to sole-source award.
Absence of performance metrics or comparative data makes it difficult to gauge efficiency.
Potential for vendor lock-in given the specialized nature of sustainment services.

Positive Signals

Contract addresses critical sustainment needs for defense communication systems, ensuring operational readiness.
L3 Technologies is a known entity in the defense sector, suggesting established capabilities.
The contract specifies engineering technical services, indicating a focus on specialized expertise.
The award is for delivery orders against an existing contract, implying some level of prior vetting or framework agreement.

Sector Analysis

This contract falls within the defense electronics and communications equipment manufacturing sector, specifically related to radio and television broadcasting and wireless communications. This sector is characterized by high technological complexity, significant R&D investment, and a concentrated market of specialized providers. Comparable spending in this area often involves long-term sustainment and upgrade contracts for critical military hardware, where specialized knowledge and proprietary systems are common. The market size for defense communications equipment and services is substantial, driven by ongoing modernization efforts and the need for secure, reliable communication networks.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (SS=false, SB=false). There is no information available regarding subcontracting plans or performance. Therefore, the direct impact on the small business ecosystem is likely minimal, as the prime contract is awarded to a large business. However, the potential for small businesses to participate as subcontractors cannot be ruled out without further information on subcontracting requirements.

Oversight & Accountability

Oversight mechanisms for this contract would typically be managed by the Department of the Army contracting and program management offices. Accountability measures would be tied to the terms and conditions of the Cost Plus Fixed Fee contract, including cost reporting and performance milestones. Transparency is limited due to the sole-source nature and the absence of publicly available detailed performance data. Inspector General jurisdiction may apply if specific allegations of fraud, waste, or abuse arise.

Related Government Programs

Department of Defense Sustainment Contracts
Defense Communications Equipment Procurement
L3 Technologies Inc. Contracts
Radio and Television Broadcasting Equipment Services
Wireless Communications Systems Support
Logistics and Maintenance Contracts

Risk Flags

Lack of Competition
Cost Plus Fixed Fee Structure
Potential for Cost Overruns
Limited Value for Money Assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.4 million to L3 TECHNOLOGIES, INC.. SUSTAINMENT SERVICES, CONTRACTOR FIELD SERVICE REPRESENTATIVES, ENGINEERING TECHNICAL SERVICES, INTEGRATED LOGISTICS, SPECIALIZED REPAIR ACTIVITIES, SPARES PROCUREMENT, DATA LINK & SATCOM SYSTEMS & PROGRAM MANAGEMENT SUPPORT

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 Army).

What is the total obligated amount?

The obligated amount is $28.4 million.

What is the period of performance?

Start: 2022-09-23. End: 2024-06-28.

What is the track record of L3 Technologies, Inc. with the Department of Defense, particularly in providing sustainment services?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a significant history of contracting with the Department of Defense across various sectors, including communications, electronic warfare, and aerospace systems. Their experience often involves complex engineering, manufacturing, and sustainment services for advanced military platforms and equipment. While specific details on sustainment contracts can vary, the company's established presence suggests a capacity to handle demanding defense requirements. Analyzing past performance on similar contracts, including any reported issues or successes, would provide further context on their reliability and effectiveness in delivering sustainment solutions for critical defense assets.

How does the $28.4 million award compare to similar sustainment contracts for defense communication systems?

Direct comparison of this $28.4 million award for sustainment services is challenging without knowing the specific systems supported and the scope of services. However, sustainment contracts for complex defense communication systems can range from millions to hundreds of millions of dollars, depending on the technology's age, criticality, and the required level of support (e.g., depot-level maintenance, field service, spares provisioning). The duration of 644 days (approximately 1.7 years) suggests a medium-term support requirement. Given the sole-source nature, it's difficult to benchmark against competitive pricing, but the overall value would be assessed against the criticality of the systems being sustained and the availability of alternative support providers.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for sustainment services?

The primary risks associated with a sole-source CPFF contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved in a competed procurement. The government lacks the leverage to negotiate the best possible price. Secondly, the CPFF structure, while providing flexibility for evolving requirements, can incentivize the contractor to incur higher costs, as their fixed fee is earned regardless of the actual costs incurred (within the contract ceiling). This necessitates robust government oversight to monitor costs, ensure efficiency, and prevent unnecessary expenditures. Without strong program management and auditing, there's a risk of cost overruns and reduced value for money.

What is the expected effectiveness of these sustainment services in ensuring the operational readiness of DoD communication systems?

The effectiveness of these sustainment services hinges on several factors, including the contractor's technical expertise, the responsiveness of field service representatives, the efficiency of integrated logistics and repair activities, and the timely procurement of necessary spares. Assuming L3 Technologies possesses the requisite capabilities and the Department of the Army implements strong oversight, these services are intended to maintain the operational readiness and extend the lifecycle of critical radio and television broadcasting and wireless communications equipment. The contract's focus on engineering technical services suggests an aim to proactively address technical challenges and ensure system reliability, which is crucial for mission success.

How has historical spending on sustainment services for similar defense communication equipment evolved over time?

Historical spending on sustainment services for defense communication equipment has generally trended upwards, driven by the increasing complexity and cost of maintaining aging platforms alongside investments in new technologies. Factors influencing this trend include the pace of technological obsolescence, the need for cybersecurity enhancements, and the increasing reliance on networked systems. Specific spending patterns for radio and wireless communications equipment would vary based on the types of systems in use, their operational tempo, and the strategic importance placed on maintaining their readiness. Analyzing historical data for similar contracts would reveal trends in contract values, durations, and the types of services most frequently procured.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 640 N 2200 W, SALT LAKE CITY, UT, 84116

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: $84,036,012

Exercised Options: $84,036,012

Current Obligation: $28,381,553

Actual Outlays: $2,335,665

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $321,714

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56JSR22D0001

IDV Type: IDC

Timeline