DoD's $326M contract for aircraft parts awarded without competition, raising value-for-money questions

Contract Overview

Contract Amount: $326,014,810 ($326.0M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2013-02-27

End Date: 2015-11-30

Contract Duration: 1,006 days

Daily Burn Rate: $324.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: IGF::CT::IGF ACAT III BIG SAFARI JAVAMAN GOCO UCA

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $326.0 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: IGF::CT::IGF ACAT III BIG SAFARI JAVAMAN GOCO UCA Key points: 1. Contract awarded on a cost-plus-no-fee basis, which can incentivize cost overruns. 2. Lack of competition suggests potential for higher prices and reduced innovation. 3. Contract duration of 1006 days indicates a significant, long-term commitment. 4. The contractor, L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P., is a major defense supplier. 5. Awarded by the Defense Contract Management Agency, indicating a focus on operational support. 6. The specific North American Industry Classification System (NAICS) code is 336413 (Other Aircraft Parts and Auxiliary Equipment Manufacturing).

Value Assessment

Rating: questionable

The contract's cost-plus-no-fee structure, combined with a lack of competition, raises concerns about achieving optimal value for taxpayer dollars. Without competitive bidding, it is difficult to benchmark pricing against market rates or assess if the awarded amount represents a fair and reasonable cost. The absence of a fixed-price element further limits the government's ability to control costs and incentivize efficiency from the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach limits the number of potential bidders and can lead to less favorable pricing and terms for the government. The lack of a competitive process means that the government did not benefit from the price discovery that typically occurs when multiple companies vie for a contract.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no market pressure to drive down prices. This limits the government's ability to secure the best possible deal.

Public Impact

The Department of Defense benefits from the acquisition of essential aircraft parts and auxiliary equipment. Services delivered include the manufacturing and supply of critical components for military aircraft. The geographic impact is primarily within Texas, where the contractor is located. Workforce implications include employment opportunities within L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost-plus-no-fee contract type offers limited incentive for cost control.
Long contract duration could lock in potentially unfavorable terms.
Absence of small business set-aside raises questions about broader economic impact.

Positive Signals

Contract awarded to a large, established defense contractor with existing capabilities.
Contract supports critical Department of Defense aviation needs.
Awarded by a specialized agency (DCMA) suggesting focused oversight.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for these specialized components is often characterized by high barriers to entry due to technical expertise, regulatory compliance, and established relationships with government agencies. Spending in this sector is substantial, driven by the continuous need for maintenance, upgrades, and new platforms within military aviation.

Small Business Impact

The contract does not indicate any small business set-aside provisions, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the primary award went to a large prime contractor, potentially limiting opportunities for small businesses to participate directly in this specific contract. Further analysis would be needed to determine if subcontracting plans include provisions for small business engagement.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-no-fee structure necessitates close monitoring of costs incurred by the contractor. Transparency regarding the specific oversight mechanisms and reporting requirements would be beneficial for assessing accountability.

Related Government Programs

Department of Defense Aircraft Procurement
Defense Logistics Agency Aviation Support
Military Aircraft Parts Manufacturing
Aerospace Component Supply Contracts

Risk Flags

Lack of Competition
Cost-Plus Contract Type
Potential for Cost Overruns
Limited Transparency on Value for Money

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $326.0 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. IGF::CT::IGF ACAT III BIG SAFARI JAVAMAN GOCO UCA

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $326.0 million.

What is the period of performance?

Start: 2013-02-27. End: 2015-11-30.

What is the historical spending pattern for this specific contract vehicle or similar services by the Department of Defense?

Analyzing historical spending for this contract vehicle or similar services by the Department of Defense is crucial for understanding trends and identifying potential anomalies. Without specific historical data for this exact contract ID (IGF::CT::IGF ACAT III BIG SAFARI JAVAMAN GOCO UCA), we can look at broader spending patterns for aircraft parts and auxiliary equipment manufacturing (NAICS 336413) by the DoD. Historically, the DoD spends billions annually on aircraft components, with significant portions allocated to sustainment and modernization efforts. Contracts for specialized parts can be long-term and high-value, especially when involving sole-source awards due to unique technical requirements or existing system integration. A review of past solicitations and awards for similar items could reveal if this $326 million award is consistent with previous investments, or if it represents an escalation in cost or scope. Furthermore, examining the frequency of sole-source awards within this category can indicate market dynamics and the prevalence of competitive challenges.

How does the awarded price compare to industry benchmarks for similar aircraft parts and auxiliary equipment?

Benchmarking the awarded price of $326 million against industry standards for similar aircraft parts and auxiliary equipment is challenging without detailed specifications of the items procured. However, given the contract type (Cost No Fee) and the lack of competition, there is an inherent risk that the price may not be optimized. Industry benchmarks are typically derived from competitive procurements, market research reports, and historical pricing data for comparable goods and services. For specialized aerospace components, prices can vary widely based on complexity, materials, certifications, and volume. The absence of a competitive bidding process means that the government did not benefit from the price discovery mechanism that would normally ensure a fair and reasonable cost. Therefore, a thorough audit and comparison with publicly available pricing data for similar components, if obtainable, would be necessary to assess the value-for-money aspect of this award.

What are the specific risks associated with a sole-source, cost-plus-no-fee contract for aircraft parts?

A sole-source, cost-plus-no-fee (CPNF) contract for aircraft parts presents several significant risks. Firstly, the lack of competition means the government is reliant on a single provider, potentially leading to higher prices and reduced negotiation leverage. There's less incentive for the contractor to innovate or become more efficient since profits are not directly tied to cost savings. Secondly, the CPNF structure, while covering all allowable costs, offers no fee or profit to the contractor, which can sometimes lead to a lack of motivation or a focus on minimizing costs if not properly managed. However, in defense contexts, CPNF might be used when the scope is highly uncertain or when the government needs to ensure availability of critical services without the contractor bearing financial risk. The primary risk is the potential for cost escalation without a corresponding increase in value or performance, and the difficulty in verifying the necessity and reasonableness of all incurred costs.

What is the track record of L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. in fulfilling similar Department of Defense contracts?

L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. is a well-established and significant defense contractor with a substantial history of fulfilling contracts for the Department of Defense across various domains, including aerospace and electronics. Their track record generally involves complex systems integration, manufacturing, and support services for military platforms. While specific performance metrics for this particular contract (IGF::CT::IGF ACAT III BIG SAFARI JAVAMAN GOCO UCA) are not detailed here, the company's overall profile suggests they possess the technical capabilities and infrastructure required for such procurements. However, like any large contractor, they may have faced past performance issues or disputes on other contracts. A comprehensive review would involve examining contract performance reports, past performance evaluations, and any significant disputes or litigation involving L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. related to similar types of work.

What are the potential implications of this contract on the broader aerospace parts manufacturing market and small business participation?

This contract, awarded solely to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. without competition, could have implications for the broader aerospace parts manufacturing market. If this represents a significant portion of the demand for certain specialized parts, it might reduce opportunities for other large prime contractors and potentially smaller, specialized manufacturers to compete for similar work. The lack of a small business set-aside or explicit subcontracting requirements could mean that small businesses in the aerospace supply chain may not directly benefit from this specific award, potentially limiting their growth and participation in the defense industrial base. However, L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. might engage small businesses as subcontractors, which would need to be verified. The overall effect depends on the scale of the contract relative to the market and the contractor's subcontracting strategy.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

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

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

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $664,678,790

Exercised Options: $664,678,790

Current Obligation: $326,014,810

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862011G4025

IDV Type: BOA

Timeline