DoD awards $7M firm-fixed-price contract for aircraft communication devices, with no competition

Contract Overview

Contract Amount: $7,025,277 ($7.0M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2025-09-30

End Date: 2028-08-31

Contract Duration: 1,066 days

Daily Burn Rate: $6.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DEVICES FOR TWO-WAY AUDIO, VIDEO AND DATA COMMUNICATIONS BETWEEN AIRCRAFT AND GROUND UNITS.

Place of Performance

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

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $7.0 million to L3 TECHNOLOGIES, INC. for work described as: DEVICES FOR TWO-WAY AUDIO, VIDEO AND DATA COMMUNICATIONS BETWEEN AIRCRAFT AND GROUND UNITS. Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. The contract duration of over 3 years suggests a need for stable, long-term supply of critical communication equipment. 3. Fixed-price contract type shifts risk to the contractor, potentially incentivizing cost control. 4. The absence of small business set-asides or subcontracting plans warrants further investigation into opportunities for smaller firms. 5. The specific nature of the 'devices for two-way audio, video and data communications' implies a specialized, potentially high-value technology. 6. The contract's value, while significant, needs benchmarking against similar procurements to assess value for money.

Value Assessment

Rating: questionable

The contract value of $7,025,276.89 for communication devices requires careful benchmarking. Without competitive bidding, it is difficult to ascertain if this price represents fair market value. The firm-fixed-price structure is generally favorable for the government in controlling costs, but the lack of competition means there's no direct market comparison to validate the pricing. Further analysis would involve comparing this award to similar procurements for comparable communication systems, considering factors like technological sophistication, quantity, and support services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This approach is typically used when only one responsible source is available or when a compelling justification exists for not seeking competition. The lack of multiple bidders limits the government's ability to leverage market forces to achieve the best possible price and terms. It is crucial to understand the justification for this sole-source award to ensure it was appropriate and that the government did not forgo potential cost savings.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as competition is a key driver for cost reduction. Without competitive pressure, the awarded price may not reflect the most economical option available in the market.

Public Impact

The Department of the Army benefits from the acquisition of essential communication devices for aircraft. This contract ensures the delivery of two-way audio, video, and data communication capabilities between aircraft and ground units. The services are likely to support military operations and command and control functions, enhancing operational effectiveness. The geographic impact is primarily within the operational areas of the Department of the Army, potentially worldwide. Workforce implications may include specialized technical support and maintenance personnel for the communication systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in a higher price than if multiple vendors had bid.
Sole-source awards can reduce transparency and make it harder to assess true market value.
The specific technology is not detailed, making it difficult to assess obsolescence risk or future upgradeability.
Dependence on a single supplier could create supply chain risks if the contractor faces production issues.

Positive Signals

Firm-fixed-price contract type shifts cost overrun risk to the contractor.
The contract duration of over 3 years suggests a stable, long-term need for these communication capabilities.
The award to L3 Technologies, Inc. suggests a contractor with existing expertise in defense communications.
The contract specifies definitive contract terms, implying a clear scope and delivery schedule.

Sector Analysis

This contract falls within the broader defense electronics and communication systems sector. This market is characterized by high technological sophistication, stringent security requirements, and significant government procurement. The market size for defense communication systems is substantial, driven by ongoing modernization efforts and operational demands. This specific procurement for aircraft communication devices addresses a critical niche within this sector, ensuring interoperability and enhanced situational awareness for air and ground forces. Benchmarking would involve comparing this contract's value and terms to other procurements for similar airborne communication suites or integrated command and control systems within the defense industry.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This means that opportunities for small businesses to participate as prime contractors were not explicitly prioritized. It is important to investigate whether subcontracting opportunities exist and if small businesses are being leveraged for specialized components or services. Without specific subcontracting plans detailed in the award, the direct impact on the small business ecosystem is unclear, and there may be missed opportunities for fostering small business growth within this defense procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract type, which obligates the contractor to deliver specified goods or services at an agreed-upon price. Transparency could be enhanced by making the justification for the sole-source award publicly available and by reporting on performance metrics. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected in the procurement or execution of the contract.

Related Government Programs

Department of Defense Communication Systems
Aircraft Electronic Systems
Command and Control Systems
Airborne Communication Equipment
Defense Engineering Services

Risk Flags

Sole-source award lacks competitive justification.
Potential for overpricing due to lack of competition.
Limited transparency regarding specific technology and justification.
No explicit small business set-aside or subcontracting information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.0 million to L3 TECHNOLOGIES, INC.. DEVICES FOR TWO-WAY AUDIO, VIDEO AND DATA COMMUNICATIONS BETWEEN AIRCRAFT AND GROUND UNITS.

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 $7.0 million.

What is the period of performance?

Start: 2025-09-30. End: 2028-08-31.

What is the specific justification for awarding this contract on a sole-source basis to L3 Technologies, Inc.?

The justification for a sole-source award typically stems from situations where only one responsible source can provide the required goods or services. This could be due to unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or if the original contract was awarded competitively and only one offeror was deemed responsible. For this specific contract, the Department of the Army would have documented the rationale, possibly citing L3 Technologies' exclusive rights to certain technologies, specialized expertise essential for these communication devices, or a lack of other qualified vendors capable of meeting the stringent requirements within the necessary timeframe. Without access to the official justification documentation (e.g., a Justification and Approval document), the precise reasons remain speculative, but it is a critical piece of information for assessing the propriety of the award and potential impact on cost.

How does the $7.03 million contract value compare to similar procurements for aircraft communication systems?

Benchmarking the $7.03 million contract value against similar procurements is essential for assessing value for money. This comparison would involve identifying contracts for comparable two-way audio, video, and data communication systems for aircraft, considering factors such as system complexity, technological capabilities (e.g., encryption, bandwidth, range), quantity of units, and contract duration. Without access to a comprehensive database of comparable contracts, a precise benchmark is difficult. However, if similar systems with comparable features were procured competitively for significantly less, or if this contract's per-unit cost is substantially higher than market averages for similar technology, it would indicate potential overpricing or inefficient procurement. The firm-fixed-price nature suggests the contractor bears cost risk, but the lack of competition hinders a direct price validation.

What are the potential risks associated with a sole-source award for critical communication equipment?

Sole-source awards for critical communication equipment carry several potential risks. Firstly, the absence of competition can lead to inflated prices, as the government lacks the leverage of multiple bids to drive down costs. This means taxpayers may be paying more than necessary. Secondly, there's a risk of reduced innovation and responsiveness, as the sole contractor may face less pressure to improve their offerings or expedite delivery compared to a competitive environment. Thirdly, dependence on a single supplier can create supply chain vulnerabilities; if the contractor experiences production issues, quality control problems, or financial instability, the government's access to essential equipment could be jeopardized. Finally, a lack of transparency inherent in sole-source procurements can make it harder to scrutinize the fairness of the terms and pricing.

What is the expected performance period and delivery schedule for these communication devices?

The contract has a stated start date of September 30, 2025, and an end date of August 31, 2028, giving it a duration of approximately 35 months, or just under three years. This timeframe suggests a need for a consistent supply of these communication devices over a significant period. The contract type is 'FIRM FIXED PRICE,' which implies that the contractor is obligated to deliver the specified devices within the agreed-upon schedule and at the negotiated price, regardless of their actual costs incurred. While the exact delivery schedule for individual units or batches is not detailed in the provided data, the overall contract duration indicates the expected period of performance for fulfilling the government's requirements.

Are there any provisions for small business subcontracting or participation in this contract?

Based on the provided data, the contract was not set aside for small businesses (ss: false, sb: false). This means that small businesses were not specifically targeted as prime contractors for this procurement. However, the data does not explicitly state whether there are any subcontracting requirements or goals for small businesses. Typically, larger defense contracts may include clauses requiring the prime contractor to subcontract a certain percentage of the work to small businesses. Without this information, it's unclear if L3 Technologies, Inc. is obligated to engage small businesses for any portion of this contract, such as providing components, specialized services, or support. Further review of the full contract details would be necessary to determine the extent of small business involvement.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $7,531,753

Exercised Options: $7,025,277

Current Obligation: $7,025,277

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline