DoD's $45.2M sole-source contract for Harris radios to the UK raises questions on value and competition

Contract Overview

Contract Amount: $45,203,836 ($45.2M)

Contractor: L3harris Global Communications, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-12-23

End Date: 2022-07-21

Contract Duration: 210 days

Daily Burn Rate: $215.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COUNTRY DIRECTED, SOLE SOURCE PROCUREMENT FOR HARRIS RADIOS FOR THE COUNTRY OF THE UNITED KINGDOM.

Place of Performance

Location: ROCHESTER, MONROE County, NEW YORK, 14623

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $45.2 million to L3HARRIS GLOBAL COMMUNICATIONS, INC. for work described as: COUNTRY DIRECTED, SOLE SOURCE PROCUREMENT FOR HARRIS RADIOS FOR THE COUNTRY OF THE UNITED KINGDOM. Key points: 1. Contract awarded without competition, limiting price discovery and potentially increasing costs. 2. Sole-source nature raises concerns about whether the government secured the best possible value. 3. The contract's short duration (210 days) suggests a specific, immediate need. 4. Procurement is directed for a foreign military sale, indicating a unique geopolitical context. 5. The use of a firm-fixed-price contract provides some cost certainty for the government. 6. Lack of small business participation noted, as the contract was not set aside.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and foreign military sales context. Without competitive bids, it's difficult to ascertain if the $45.2 million price reflects fair market value for the specified Harris radios. The firm-fixed-price structure offers some predictability, but the absence of competition means the government did not benefit from potential cost reductions that could arise from a bidding process. Further analysis would require comparing pricing to similar direct sales of these radios to other entities or assessing the contractor's cost structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, L3Harris Global Communications, Inc., was solicited. This approach is typically justified when a specific capability is required that only one source can provide, or in cases of urgent need or foreign military sales directives. The lack of competition means that potential alternative suppliers were not considered, and the government did not have the opportunity to leverage multiple bids to drive down costs or improve terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government's ability to negotiate the best possible price was constrained by the sole-source award.

Public Impact

The primary beneficiary is the United Kingdom's defense forces, receiving critical communication equipment. The contract delivers specialized Harris radio equipment, essential for military operations. The geographic impact is international, specifically supporting U.S. foreign military sales to the UK. Workforce implications are primarily within L3Harris, potentially involving manufacturing and logistics personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
No small business participation or subcontracting opportunities were mandated.
Foreign military sales can sometimes involve complex pricing structures not directly comparable to domestic procurements.

Positive Signals

Firm-fixed-price contract provides cost certainty for the awarded amount.
Procurement is for specialized, potentially critical, communication equipment.
Contract is managed by the Department of the Army, indicating established oversight processes.

Sector Analysis

This contract falls within the 'Other Communications Equipment Manufacturing' sector, a segment of the broader defense industrial base focused on producing specialized electronic communication devices. The market for such equipment is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. L3Harris is a significant player in this space. Comparable spending benchmarks are difficult to establish without knowing the exact specifications and quantities, but defense communications equipment represents a substantial portion of the Department of Defense's overall procurement budget.

Small Business Impact

This contract did not include any small business set-aside provisions, nor is there any indication of subcontracting goals for small businesses. As a sole-source award to a large prime contractor, the direct opportunities for small businesses are likely minimal unless L3Harris voluntarily engages them. This procurement does not appear to contribute to the government's small business utilization goals.

Oversight & Accountability

The Department of the Army, through its acquisition and contracting arms, is responsible for overseeing this contract. As a firm-fixed-price contract, the primary oversight focuses on delivery and compliance with specifications. Transparency regarding the justification for the sole-source award would be crucial for a comprehensive accountability assessment. Inspector General involvement would typically be triggered by allegations of fraud, waste, or abuse, which are not indicated here but remain a possibility in any large procurement.

Related Government Programs

Foreign Military Sales Program
Department of Defense Communications Equipment Procurement
Tactical Radio Systems
L3Harris Global Communications Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Foreign military sale context requires specific justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.2 million to L3HARRIS GLOBAL COMMUNICATIONS, INC.. COUNTRY DIRECTED, SOLE SOURCE PROCUREMENT FOR HARRIS RADIOS FOR THE COUNTRY OF THE UNITED KINGDOM.

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 $45.2 million.

What is the period of performance?

Start: 2021-12-23. End: 2022-07-21.

What is the specific justification provided for awarding this contract on a sole-source basis?

The provided data indicates the procurement was 'COUNTRY DIRECTED, SOLE SOURCE PROCUREMENT FOR HARRIS RADIOS FOR THE COUNTRY OF UNITED KINGDOM.' This suggests the direction came from a higher authority, likely involving U.S. foreign policy or international cooperation agreements, which often necessitate specific equipment from designated suppliers to ensure interoperability or fulfill treaty obligations. Such directives can override standard competitive procurement requirements. Without access to the official justification document (e.g., a Justification and Approval for Other Than Full and Open Competition - J&A), the precise technical or strategic reasons remain unspecified, but the 'country directed' nature is the primary stated driver.

How does the pricing of this contract compare to similar procurements of Harris radios?

Direct price comparison is difficult due to the sole-source nature of this contract and its context as a foreign military sale (FMS) to the United Kingdom. FMS pricing can be influenced by factors beyond standard commercial or domestic government pricing, including specific end-user agreements, support packages, and the overall diplomatic relationship. To benchmark effectively, one would need to compare the per-unit cost against other FMS contracts for the same or comparable Harris radio models, or against direct sales by L3Harris to allied nations under similar conditions. Access to L3Harris's standard price lists or data from other competitive DoD procurements of similar radios would also be necessary for a robust comparison, which is not publicly available.

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

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated prices and potentially suboptimal terms for the government. Without competing bids, the government may not secure the best value available in the market. There's also a risk of vendor lock-in, where reliance on a single supplier for critical components can create dependencies and limit future flexibility. Furthermore, a sole-source award can reduce transparency and make it harder to verify the fairness of the pricing. In this specific case, the risk is mitigated somewhat by the firm-fixed-price contract type, which caps the government's financial exposure, but it doesn't address the potential for an unnecessarily high baseline price.

What is the expected performance or capability of the Harris radios being procured?

The data identifies the North American Industry Classification System (NAICS) code as 334290, pertaining to 'Other Communications Equipment Manufacturing.' Harris radios, particularly those supplied by L3Harris, are generally known for their robust, secure, and advanced communication capabilities, often used in tactical military environments. They are designed to operate in challenging conditions and provide reliable voice and data transmission. While the specific model and its exact capabilities are not detailed in the provided data, the context of a Department of Defense procurement for a foreign ally suggests these are likely high-grade, secure communication devices critical for military operations, potentially including features like encryption, frequency hopping, and network integration.

What is the historical spending trend for similar communication equipment by the Department of the Army?

Analyzing historical spending trends for similar communication equipment by the Department of the Army requires access to comprehensive contract databases and spending reports. The Army procures a vast array of communication systems, ranging from individual soldier radios to complex network infrastructure. Spending in this category can fluctuate significantly year-over-year based on modernization programs, operational tempo, and specific technological advancements. L3Harris, as a major defense contractor, likely holds numerous contracts with the Army for various communication solutions. To establish a trend, one would need to aggregate spending data on contracts classified under relevant NAICS codes (like 334290) and Product Service Codes (PSCs) related to radio and communication equipment over several fiscal years, identifying patterns of sole-source versus competitive awards and average contract values.

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: $45,203,836

Exercised Options: $45,203,836

Current Obligation: $45,203,836

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91CRB21D5003

IDV Type: IDC

Timeline