DoD's $51M sole-source L3Harris contract for Czech Republic radios raises value and competition questions

Contract Overview

Contract Amount: $50,953,343 ($51.0M)

Contractor: L3harris Global Communications, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-05-07

End Date: 2022-09-28

Contract Duration: 1,240 days

Daily Burn Rate: $41.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COUNTRY DIRECTED, SOLE SOURCE PROCUREMENT FOR HARRIS RADIOS AND SERVICES FOR THE COUNTRY OF CZECH REPUBLIC; FMS: EZ-B-UEJ, ARP: AE19020.

Place of Performance

Location: ROCHESTER, MONROE County, NEW YORK, 14623

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $51.0 million to L3HARRIS GLOBAL COMMUNICATIONS, INC. for work described as: COUNTRY DIRECTED, SOLE SOURCE PROCUREMENT FOR HARRIS RADIOS AND SERVICES FOR THE COUNTRY OF CZECH REPUBLIC; FMS: EZ-B-UEJ, ARP: AE19020. Key points: 1. Sole-source procurement limits price discovery and potentially inflates costs. 2. Lack of competition raises concerns about achieving best value for taxpayer funds. 3. Contract duration of over three years suggests a long-term need for these communication systems. 4. The specific nature of radios and services for a foreign country highlights FMS complexities. 5. Performance risk is moderate given the established nature of the contractor and product line.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The $50.9 million price tag for radios and services for the Czech Republic under Foreign Military Sales (FMS) requires careful scrutiny. Without comparable contracts or market data for similar international sales, it's difficult to definitively assess if the pricing reflects fair market value. The firm-fixed-price structure offers some cost certainty, but the absence of competition means potential savings were likely forgone.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other vendors. This approach is typically justified when only one vendor can provide the required goods or services, often due to proprietary technology or specific national security requirements. The lack of competition means that the government did not benefit from the price reductions and innovation that typically arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no market pressure to drive down prices. This limits the government's ability to secure the most economical solution.

Public Impact

The primary beneficiaries are the armed forces of the Czech Republic, receiving advanced communication equipment. The contract delivers specialized radio equipment and associated services essential for military operations. Geographic impact is focused on the Czech Republic, supporting a NATO ally's defense capabilities. Workforce implications are primarily within L3Harris, supporting their manufacturing and service delivery operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in a higher price than a competitively awarded contract.
Sole-source awards can set a precedent for future procurements, potentially reducing overall market competition.
Transparency in pricing and justification for sole-source award could be enhanced.

Positive Signals

L3Harris is an established defense contractor with a track record in communication systems.
The firm-fixed-price contract provides cost certainty for the duration of the award.
The contract supports a key NATO ally, aligning with U.S. foreign policy and defense cooperation objectives.

Sector Analysis

This contract falls within the 'Other Communications Equipment Manufacturing' sector, a segment of the broader defense industrial base. The market for military communication systems is characterized by high barriers to entry, specialized technology, and significant government procurement. Spending in this sector is driven by modernization efforts, interoperability requirements, and geopolitical considerations. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of FMS sole-source awards.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit mention of subcontracting goals for small businesses within the provided data. This suggests that the primary contract is with a large business, and opportunities for small businesses would likely depend on L3Harris's internal subcontracting practices, which are not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and FMS oversight mechanisms. The firm-fixed-price nature provides some cost control, but the sole-source award limits the government's leverage in price negotiation. Transparency is a concern due to the lack of competitive bidding. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Foreign Military Sales (FMS)
Department of Defense Communications Equipment Procurements
NATO Cooperative Programs
L3Harris Defense Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency in value assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.0 million to L3HARRIS GLOBAL COMMUNICATIONS, INC.. COUNTRY DIRECTED, SOLE SOURCE PROCUREMENT FOR HARRIS RADIOS AND SERVICES FOR THE COUNTRY OF CZECH REPUBLIC; FMS: EZ-B-UEJ, ARP: AE19020.

Who is the contractor on this award?

The obligated recipient is L3HARRIS GLOBAL COMMUNICATIONS, 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 $51.0 million.

What is the period of performance?

Start: 2019-05-07. End: 2022-09-28.

What is the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis to L3Harris?

The provided data indicates a 'COUNTRY DIRECTED, SOLE SOURCE PROCUREMENT FOR HARRIS RADIOS AND SERVICES FOR THE COUNTRY OF CZECH REPUBLIC'. This suggests that the Czech Republic, as the end-user nation, directed the procurement of specific Harris (now L3Harris) radios and services. Such country-directed FMS cases often stem from existing interoperability, training, or sustainment agreements, where the foreign government specifies a particular system they are already familiar with or that meets unique operational requirements. The Department of Defense acts as the contracting agent, facilitating the sale but not necessarily initiating the sole-source decision independently of the foreign partner's request.

How does the $50.9 million contract value compare to typical spending on similar communication equipment for allied nations?

Directly comparing this $50.9 million contract value is challenging without specific details on the quantity and type of radios, associated services, and the timeframe of delivery. Foreign Military Sales (FMS) procurements are often tailored to the unique requirements of the partner nation. However, the value suggests a significant quantity of advanced communication systems or a comprehensive support package. For context, major defense equipment sales to allied nations can range from tens of millions to billions of dollars, depending on the scope. The sole-source nature here means a direct competitive benchmark is absent, making value assessment reliant on internal cost analysis by the DoD and L3Harris.

What are the potential risks associated with a sole-source procurement of this magnitude for critical communication equipment?

The primary risk of a sole-source procurement is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, there is less incentive for the contractor to offer the lowest possible price. Additionally, sole-source awards can limit the government's access to innovative solutions or alternative technologies that might be offered by other vendors. There's also a risk of vendor lock-in, where the acquiring nation becomes dependent on a single supplier for sustainment, upgrades, and future requirements, potentially leading to higher long-term costs.

What is L3Harris's track record with the Department of Defense and in providing international military communication systems?

L3Harris Technologies is a major defense contractor with a substantial history of providing a wide range of products and services to the U.S. Department of Defense and allied nations. They are known for their expertise in areas such as communication systems, electronic warfare, and avionics. The company has a significant portfolio of contracts with the DoD across various branches. Their experience in delivering complex communication solutions, including radios and integrated systems, to both domestic and international military customers is extensive, suggesting a strong capability to fulfill this contract's requirements.

How does this contract fit into the broader context of U.S. foreign military sales and defense cooperation with NATO allies like the Czech Republic?

This contract aligns with the U.S. strategy of enhancing the defense capabilities of key allies, particularly within the NATO framework. Providing advanced communication equipment to the Czech Republic strengthens their ability to interoperate with U.S. and other NATO forces, improving collective security. Foreign Military Sales are a critical tool for U.S. foreign policy, enabling partners to acquire U.S. defense articles and services, thereby fostering security cooperation, promoting U.S. defense industry, and maintaining technological interoperability among allies. This specific procurement supports the modernization and operational readiness of a crucial European partner.

What are the implications of the 'Other Communications Equipment Manufacturing' NAICS code for understanding this contract's scope?

The North American Industry Classification System (NAICS) code 334290, 'Other Communications Equipment Manufacturing,' indicates that the primary business activity related to this contract involves the production of communication equipment not elsewhere classified. This broad category can encompass a wide array of devices, from specialized radio transceivers to network infrastructure components. For this contract, it signifies that the radios procured are likely specialized military-grade systems, potentially incorporating advanced encryption, secure communication protocols, or specific frequency bands tailored for defense applications, distinguishing them from commercial off-the-shelf communication devices.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 1350 JEFFERSON RD, ROCHESTER, NY, 14623

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: $50,953,343

Exercised Options: $50,953,343

Current Obligation: $50,953,343

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91CRB16D5006

IDV Type: IDC

Timeline