DoD awards $54.17M contract to L3 Technologies for aircraft parts, with limited competition

Contract Overview

Contract Amount: $54,166,044 ($54.2M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-06-01

End Date: 2026-02-28

Contract Duration: 1,368 days

Daily Burn Rate: $39.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THIS MOD IS TO ADD ADDITIONAL USG AND FMS QUANTITIES.

Place of Performance

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

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $54.2 million to L3 TECHNOLOGIES, INC. for work described as: THE PURPOSE OF THIS MOD IS TO ADD ADDITIONAL USG AND FMS QUANTITIES. Key points: 1. Contract value of $54.17M over 4 years suggests significant investment in aircraft sustainment. 2. Sole-source award raises concerns about potential overpricing and lack of competitive pressure. 3. The contract's duration of 1368 days indicates a long-term need for these aircraft parts. 4. Awarded by the Department of the Army, this contract supports critical aviation readiness. 5. The North American Industry Classification System (NAICS) code 336413 points to specialized aircraft parts manufacturing.

Value Assessment

Rating: questionable

Without a competitive bidding process, it is difficult to benchmark the value for money. The 'COST PLUS FIXED FEE' contract type can sometimes lead to higher costs if not carefully managed. Comparing this to similar sole-source awards for specialized aircraft parts would be necessary to assess if the pricing is reasonable, but such data is not readily available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning L3 Technologies, Inc. was the only vendor considered. This typically occurs when a specific capability or product is only available from one source, or in cases of urgent need. The lack of competition means taxpayers did not benefit from potential cost savings that could arise from multiple bidders vying for the contract.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price, potentially leading to higher costs for taxpayers compared to a competitively bid contract.

Public Impact

The Department of the Army benefits from the continued availability of essential aircraft parts. This contract ensures the operational readiness of specific aircraft platforms used by the U.S. military. The geographic impact is primarily within Utah, where L3 Technologies, Inc. is located, potentially supporting local jobs. The contract supports the defense industrial base, specifically the manufacturing sector for aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus contract type may incentivize higher spending if not managed rigorously.
Lack of transparency in the justification for sole-source award.

Positive Signals

Supports critical military aviation needs.
Long-term contract provides stability for the supplier.
Awarded to an established defense contractor.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The NAICS code 336413 covers establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment. The market for such specialized components is often characterized by high barriers to entry due to technical expertise, regulatory requirements, and established relationships with government agencies. Comparable spending benchmarks would likely be found within other Department of Defense contracts for aircraft sustainment and component manufacturing.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor are there explicit subcontracting requirements mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless L3 Technologies, Inc. voluntarily includes them in its supply chain. Further analysis of L3's subcontracting plans would be needed to assess any indirect benefits to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The 'COST PLUS FIXED FEE' structure necessitates close monitoring of costs and performance to ensure adherence to the agreed-upon fee and to prevent cost overruns. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Aircraft Parts Procurement
L3 Technologies, Inc. Defense Contracts
Sole-Source Defense Contracts
Army Aviation Sustainment Programs

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.2 million to L3 TECHNOLOGIES, INC.. THE PURPOSE OF THIS MOD IS TO ADD ADDITIONAL USG AND FMS QUANTITIES.

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 $54.2 million.

What is the period of performance?

Start: 2022-06-01. End: 2026-02-28.

What is the track record of L3 Technologies, Inc. in fulfilling similar Department of Defense contracts?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a substantial history of performing defense contracts for the U.S. military, including the Department of the Army. They are known for providing a wide range of products and services, including avionics, electronic systems, and components for various aircraft platforms. While specific performance metrics for this particular contract are not detailed, the company's long-standing presence in the defense sector suggests a capacity to meet contractual obligations. However, a thorough review would involve examining past performance evaluations, any documented issues or disputes, and the overall success rate of their previous awards to ensure a consistent record of reliability and quality.

How does the pricing structure of this 'COST PLUS FIXED FEE' contract compare to industry standards for similar aircraft parts?

The 'COST PLUS FIXED FEE' (CPFF) contract type is common in defense procurement when the scope of work is not precisely defined or involves significant uncertainty, making it difficult to establish a firm fixed price. Under CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While this structure allows for flexibility, it can lead to higher overall costs if not managed diligently, as the contractor has less incentive to control costs compared to fixed-price contracts. Benchmarking the 'fixed fee' component against similar CPFF contracts for specialized aircraft parts is crucial. Without access to the specific fee percentage and detailed cost breakdowns, a precise comparison is challenging, but the government aims to negotiate a reasonable fee that reflects the risk and effort involved.

What are the primary risks associated with a sole-source award for critical aircraft parts?

The primary risks associated with a sole-source award for critical aircraft parts include a lack of competitive pricing, potentially leading to higher costs for the government and taxpayers. Without competition, there's reduced incentive for the contractor to innovate or improve efficiency to lower prices. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially facing supply chain disruptions if that supplier encounters issues. Furthermore, the absence of multiple bids can obscure whether the chosen contractor offers the best available technology or quality for the price. Robust oversight and negotiation are essential to mitigate these risks.

What is the expected impact of this contract on the operational readiness of Army aviation?

This contract is expected to significantly contribute to the operational readiness of Army aviation by ensuring a consistent and reliable supply of essential aircraft parts. These parts are critical for the maintenance, repair, and overall sustainment of various Army aircraft platforms. By securing these components through a dedicated contract, the Army can mitigate the risk of shortages or delays that could ground aircraft, thereby maintaining the availability of air assets for training, deployment, and mission execution. The duration of the contract (ending February 2026) suggests a commitment to sustained support, reinforcing long-term readiness goals.

How does this contract's value and duration compare to historical spending on similar aircraft parts by the Department of Defense?

The $54.17 million award over approximately 3.5 years (June 2022 - February 2026) represents a substantial investment in aircraft parts. To provide a comparative analysis, one would need to examine historical spending data for similar parts or platforms within the Department of Defense. For instance, comparing this contract's annual value (roughly $15.5 million/year) to previous contracts for the same or comparable parts, or to the overall sustainment budget for the affected aircraft, would offer context. If historical data shows similar annual expenditures for these types of parts, it might indicate consistent demand. However, if this contract's value is significantly higher or lower than historical averages, it warrants further investigation into the reasons, such as changes in aircraft fleet size, operational tempo, or part obsolescence.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $54,166,044

Exercised Options: $54,166,044

Current Obligation: $54,166,044

Subaward Activity

Number of Subawards: 53

Total Subaward Amount: $5,864,113

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J17D0070

IDV Type: IDC

Timeline