L3Harris awarded $325M for C-27J FMS Australia, highlighting aircraft manufacturing and foreign military sales

Contract Overview

Contract Amount: $324,914,922 ($324.9M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2012-05-31

End Date: 2018-03-27

Contract Duration: 2,126 days

Daily Burn Rate: $152.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C-27J FMS AUSTRALIA

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $324.9 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: C-27J FMS AUSTRALIA Key points: 1. Contract value represents a significant investment in specialized aircraft for international partners. 2. The fixed-price nature of the contract aims to control costs for both the government and the contractor. 3. Foreign Military Sales (FMS) indicate strong international demand for U.S. defense capabilities. 4. The duration of the contract suggests a long-term commitment to supporting the aircraft's lifecycle. 5. Competition dynamics for such specialized systems can be limited due to technical requirements. 6. Performance context is crucial for ensuring the aircraft meets stringent operational demands.

Value Assessment

Rating: good

The contract value of $324.9 million for the C-27J FMS to Australia appears reasonable given the specialized nature of military aircraft and foreign military sales. Benchmarking against similar FMS contracts for transport or specialized aircraft would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an effort to establish cost certainty, which is generally favorable for the government if the scope is well-defined. However, without detailed breakdowns of the aircraft's configuration and support services, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but full and open competition generally fosters a competitive environment, potentially leading to better pricing and terms for the government. The nature of specialized military aircraft manufacturing often means that the pool of qualified bidders is limited, even under full and open competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for cost savings through a competitive bidding process, ensuring that the government receives the best value.

Public Impact

The primary beneficiary is the Australian government, which will receive specialized C-27J aircraft to enhance its military capabilities. The contract delivers advanced aircraft manufacturing and associated support services. The geographic impact is primarily in Australia, with potential ripple effects on regional security. Workforce implications include employment opportunities within L3Harris Technologies and its supply chain, particularly in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if scope creep occurs despite fixed-price contract.
Dependence on a single contractor for specialized aircraft manufacturing can create supply chain risks.
Ensuring long-term sustainment and spare parts availability for the C-27J in Australia.

Positive Signals

Firm fixed-price contract provides cost certainty.
Full and open competition suggests a robust bidding process.
Award to a known defense contractor with experience in aircraft manufacturing.
Foreign Military Sales indicate strong international partnership and trust in U.S. defense products.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls within the aircraft manufacturing sub-sector, specifically catering to military applications and foreign military sales. The global market for military aircraft is substantial, driven by geopolitical factors and the need for advanced defense capabilities. Comparable spending benchmarks would involve looking at other FMS contracts for similar aircraft types or major defense equipment procurements by allied nations.

Small Business Impact

While this contract was awarded to L3Harris Technologies, a large prime contractor, the implications for small businesses are indirect. Large defense contracts often involve extensive subcontracting opportunities. It is likely that L3Harris will engage various small and medium-sized businesses for components, specialized services, and support. The extent of small business subcontracting would depend on the specific terms of the contract and L3Harris's internal policies, but it represents a potential avenue for small business participation in the defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Department of the Air Force, which is responsible for executing Foreign Military Sales. Mechanisms likely include contract performance reviews, milestone tracking, and financial audits. Accountability is ensured through the firm fixed-price structure and the contractual obligations of L3Harris. Transparency is generally maintained through reporting requirements and the FMS process, although specific details of the sale may be subject to national security considerations.

Related Government Programs

Foreign Military Sales Program
Aircraft Manufacturing
Defense Logistics Agency
Air Force Materiel Command
C-27J Spartan Program

Risk Flags

Potential for long-term sustainment costs exceeding initial estimates.
Dependence on a single prime contractor for specialized aircraft.
Geopolitical shifts could impact future FMS demand or support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $324.9 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. C-27J FMS AUSTRALIA

Who is the contractor on this award?

The obligated recipient is L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $324.9 million.

What is the period of performance?

Start: 2012-05-31. End: 2018-03-27.

What is the historical spending pattern for the C-27J aircraft program, particularly for Foreign Military Sales?

Historical spending on the C-27J program, especially for Foreign Military Sales, provides crucial context for evaluating the current contract. While specific FMS spending figures for the C-27J can be fragmented across various sales and fiscal years, the program itself has seen fluctuating levels of investment. Initially developed for the U.S. military, its procurement was eventually canceled, but international interest persisted. Australia's acquisition represents a significant, albeit specific, instance of FMS. Analyzing past FMS awards for similar tactical airlift aircraft can help benchmark the $324.9 million award to L3Harris. This includes examining the total value of previous C-27J FMS deals, the number of aircraft involved, and the duration of those contracts. Understanding the historical demand and pricing trends for the C-27J in the international market is key to assessing whether the current contract represents a fair market value and reflects sustained international commitment to the platform.

How does the pricing of this C-27J FMS contract compare to other similar international sales or domestic procurements of the aircraft?

Comparing the pricing of this $324.9 million contract for the C-27J FMS to Australia against other similar sales or domestic procurements is essential for a value-for-money assessment. However, direct comparisons can be challenging due to variations in aircraft configuration, included support packages (such as training, spare parts, and maintenance), and the specific terms negotiated in each sale. Domestic procurements, if any, might have different cost structures due to different funding mechanisms and oversight. International sales, especially FMS, often include additional costs related to program management, security assistance, and specific customer requirements. To conduct a robust comparison, one would need access to detailed pricing breakdowns for each aircraft and its associated services across multiple contracts. Benchmarking against publicly available data for similar tactical airlift aircraft sales to allied nations, considering factors like payload capacity, range, and technological sophistication, would offer a broader perspective on market rates and the relative cost-effectiveness of this specific C-27J award.

What are the key performance indicators (KPIs) used to measure the success of this contract and the C-27J aircraft's operational effectiveness for Australia?

The key performance indicators (KPIs) for this contract and the C-27J aircraft's operational effectiveness for Australia would likely encompass a range of technical, logistical, and operational metrics. For the contract itself, KPIs might include on-time delivery of aircraft and support elements, adherence to budget (especially critical under a firm fixed-price agreement), and quality of manufactured components. Operationally, for Australia, KPIs would focus on the aircraft's performance in its intended roles, such as cargo and troop transport, humanitarian aid delivery, or special operations support. This could involve metrics like mission availability rates, sortie completion rates, fuel efficiency, reliability (mean time between failures), and adherence to flight safety standards. Furthermore, KPIs related to training effectiveness for Australian crews and maintainers, as well as the efficiency of the logistics and sustainment support provided post-delivery, would be crucial. The success of the FMS program itself would also be measured by Australia's satisfaction with the capability delivered and its contribution to their defense objectives.

What is L3Harris Technologies' track record with Foreign Military Sales and complex aircraft manufacturing contracts?

L3Harris Technologies, formed through the merger of L3 Technologies and Harris Corporation, possesses a substantial track record in complex defense manufacturing and has been a significant participant in Foreign Military Sales (FMS). The company has a history of producing and integrating sophisticated avionics, communication systems, and electronic warfare suites for various military platforms, including aircraft. Their experience spans numerous international customers, delivering capabilities tailored to specific national requirements. L3Harris has been involved in upgrades, modifications, and new production of aircraft components and systems for FMS programs across different branches of the U.S. military. Their portfolio includes work on transport aircraft, surveillance platforms, and fighter jet systems. Evaluating their specific performance on past FMS contracts, particularly those involving aircraft delivery and long-term support, would reveal their ability to manage program complexities, meet delivery schedules, and maintain quality standards. A review of their contract history, including any past performance issues or commendations, provides insight into their reliability as a partner for international defense sales.

What are the potential risks associated with the long-term sustainment and maintenance of the C-27J aircraft for Australia, and how are they being mitigated?

The long-term sustainment and maintenance of the C-27J aircraft present several potential risks for Australia. One primary risk is the availability and cost of spare parts, especially if production lines for certain components are winding down or if there are limited suppliers. Another risk involves the need for ongoing technical support and upgrades to keep the aircraft technologically relevant and operationally effective against evolving threats. Furthermore, the availability of trained maintenance personnel within Australia's defense force is crucial. Mitigation strategies typically involve comprehensive sustainment packages negotiated as part of the FMS agreement. This can include long-term spare parts provisioning, technical data packages, contractor logistics support (CLS), and training programs for Australian technicians. The firm fixed-price nature of the initial acquisition may not cover all future sustainment costs, necessitating separate agreements or budget allocations. Proactive planning by both the U.S. government (through the FMS program) and the Australian government is essential to identify and address these sustainment challenges, potentially through establishing regional maintenance hubs or ensuring robust industrial cooperation.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3 Technologies, Inc. (UEI: 008898884)

Address: 10001 JACK FINNEY BLVD, GREENVILLE, TX, 75402

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $324,914,922

Exercised Options: $324,914,922

Current Obligation: $324,914,922

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ07D0099

IDV Type: IDC

Timeline