DoD's $265M L3Harris contract for aircraft parts saw no competition, raising value concerns

Contract Overview

Contract Amount: $265,485,261 ($265.5M)

Contractor: L3harris Technologies Integrated Systems L.P.

Awarding Agency: Department of Defense

Start Date: 2013-12-03

End Date: 2019-04-30

Contract Duration: 1,974 days

Daily Burn Rate: $134.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CT::IGF ACAT III BIG SAFARI PROJECT LIBERTY CLS VI

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $265.5 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P. for work described as: IGF::CT::IGF ACAT III BIG SAFARI PROJECT LIBERTY CLS VI Key points: 1. The contract's value-for-money is questionable due to the lack of competition. 2. Competition dynamics were absent, as the contract was sole-sourced. 3. Risk indicators include potential for overpricing and reduced innovation without competitive pressure. 4. Performance context is within aircraft parts manufacturing, a sector with potential for specialized needs. 5. Sector positioning is in 'Other Aircraft Parts and Auxiliary Equipment Manufacturing'.

Value Assessment

Rating: questionable

Benchmarking the value of this $265 million contract is challenging without competitive bids. The sole-source nature suggests potential for pricing inefficiencies compared to a competed procurement. Without comparable contract data or market analysis, it's difficult to definitively assess if the government received a fair price. The cost-plus-fixed-fee structure, while common, can also lead to higher costs if not tightly managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other vendors were solicited or considered. This significantly limits price discovery and the potential for innovative solutions that might arise from a competitive environment. The absence of bidders suggests either a highly specialized requirement or a lack of market research to identify potential competitors.

Taxpayer Impact: Taxpayers may have paid a premium for goods and services due to the lack of competitive pressure. Without competing offers, there's a reduced incentive for the contractor to offer the lowest possible price.

Public Impact

The Department of Defense benefits from the acquisition of critical aircraft parts and auxiliary equipment. Services delivered include the manufacturing and supply of specialized components for military aircraft. Geographic impact is primarily within Texas, where the contractor is located. Workforce implications include employment at 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.
Sole-source awards can reduce innovation and efficiency.
Limited transparency into pricing justifications without competitive bids.

Positive Signals

Contract supports critical defense needs for aircraft.
Established contractor with existing capabilities.
Fixed fee component provides some cost control.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is a critical component of the aerospace and defense industry. This contract falls within a niche that supports the sustainment and operation of military aviation assets. Spending in this area is often driven by specific platform requirements and long-term sustainment strategies. Comparable spending benchmarks are difficult to establish without knowing the exact nature of the parts procured, but the overall defense aerospace sector sees significant investment.

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 information regarding subcontracting plans for small businesses. The sole-source nature further reduces the likelihood of small business participation unless they are direct subcontractors to L3Harris. This contract's structure does not actively promote the small business ecosystem.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract administration by the Department of the Air Force, including performance monitoring and financial reviews. Accountability measures are tied to the terms of the Cost Plus Fixed Fee contract. Transparency is limited due to the sole-source award, with public information primarily consisting of the award notice and basic contract details. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics
Air Force Procurement
Sole-Source Contracts
Cost-Plus Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (CPFF)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $265.5 million to L3HARRIS TECHNOLOGIES INTEGRATED SYSTEMS L.P.. IGF::CT::IGF ACAT III BIG SAFARI PROJECT LIBERTY CLS VI

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 $265.5 million.

What is the period of performance?

Start: 2013-12-03. End: 2019-04-30.

What is the track record of L3Harris Technologies Integrated Systems L.P. with the Department of Defense?

L3Harris Technologies Integrated Systems L.P. has a significant history of contracting with the Department of Defense across various platforms and services. As a major defense contractor, they are involved in a wide array of programs, including aerospace systems, communications, electronic warfare, and information technology. Their track record generally indicates substantial experience in delivering complex defense solutions. However, the specific performance on individual contracts, especially sole-source awards, requires detailed review of past performance evaluations and any associated contract disputes or modifications. Without access to specific performance metrics for this particular contract (ID 336413), a comprehensive assessment of their track record on this specific award is limited to their general standing as a large, established defense supplier.

How does the pricing of this contract compare to similar sole-source awards for aircraft parts?

Directly comparing the pricing of this $265 million sole-source contract to similar awards is challenging due to the inherent lack of transparency and competition. Sole-source contracts, by definition, do not undergo a competitive bidding process, which typically drives down prices. The 'Cost Plus Fixed Fee' (CPFF) contract type means the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Without access to the detailed cost breakdowns and the fixed fee negotiated, it's impossible to benchmark against market rates or other similar sole-source procurements. Generally, sole-source awards are presumed to be less cost-effective than competed ones, and the absence of competitive pressure on this contract suggests a potential for higher-than-market pricing, though specific data is unavailable.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($265 million) are significant. Firstly, there is a heightened risk of the government overpaying for the goods or services due to the absence of competitive bidding, which normally ensures price discovery and efficiency. Secondly, a lack of competition can stifle innovation, as the contractor may have less incentive to develop more cost-effective or technologically advanced solutions. Thirdly, there's a potential for reduced contractor performance accountability, as the government has fewer alternatives if issues arise. Finally, sole-source awards can raise concerns about fairness and the equitable distribution of government contracts, potentially leading to perceptions of favoritism or inefficiency in the procurement process.

How effective is the Cost Plus Fixed Fee (CPFF) contract type in managing costs for specialized aircraft parts?

The Cost Plus Fixed Fee (CPFF) contract type aims to balance risk between the government and the contractor, particularly for complex or uncertain projects where cost estimation is difficult. For specialized aircraft parts, where R&D or unique manufacturing processes might be involved, CPFF can be effective in ensuring the contractor is willing to undertake the work without bearing excessive financial risk. The 'fixed fee' provides the contractor with a predetermined profit margin, incentivizing them to control costs to maximize their return. However, the government bears the risk of cost overruns, as all allowable costs are reimbursed. Effective management requires robust government oversight to scrutinize costs, ensure they are reasonable and allocable, and prevent scope creep that could inflate the total contract value beyond the initial expectations.

What is the historical spending pattern for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of Defense?

Historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of Defense are substantial and fluctuate based on modernization programs, sustainment needs, and specific aircraft platform lifecycles. The DoD is a major consumer of aerospace components, requiring a vast array of parts for its diverse fleet of aircraft. Spending in this category is often driven by long-term contracts for major platforms (like fighter jets, bombers, transport aircraft) and their associated maintenance, repair, and overhaul (MRO) requirements. While specific aggregate figures for this precise NAICS code (336413) can vary year-to-year, the overall defense budget allocation towards aviation systems and sustainment ensures consistent and significant investment in this sector. Trends may show increased spending during periods of heightened operational tempo or major fleet upgrades.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $269,568,038

Exercised Options: $269,568,038

Current Obligation: $265,485,261

Subaward Activity

Number of Subawards: 147

Total Subaward Amount: $94,735,236

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862011G4025

IDV Type: BOA

Timeline