DoD's $19.8M contract for electronics systems awarded to L3Harris Cincinnati Electronics Corp. without competition

Contract Overview

Contract Amount: $19,811,121 ($19.8M)

Contractor: L3harris Cincinnati Electronics Corporation

Awarding Agency: Department of Defense

Start Date: 2005-09-27

End Date: 2011-03-31

Contract Duration: 2,011 days

Daily Burn Rate: $9.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200511!000630!5700!FA8523!WR-ALC-LSK EW SYSTEMS !FA852305C0035 !A!N! !N! ! !20050927!20060926!059106484!205520823!251900734!N!L-3 CINCINNATI ELECTRONICS COR!7500 INNOVATION WAY !MASON !OH!45040!48188!165!39!MASON !WARREN !OHIO !+000006224988!N!N!000000000000!5865!ELCT CNTRMSRS, CNTR-CNTR-MSRS & QCK RCTN CPBLTY EQ!A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334413!E! !3! ! ! ! ! !20200930!B!D! !A! !D!N!J!1!001!N!1G!A!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: MASON, WARREN County, OHIO, 45040

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $19.8 million to L3HARRIS CINCINNATI ELECTRONICS CORPORATION for work described as: 200511!000630!5700!FA8523!WR-ALC-LSK EW SYSTEMS !FA852305C0035 !A!N! !N! ! !20050927!20060926!059106484!205520823!251900734!N!L-3 CINCINNATI ELECTRONICS COR!7500 INNOVATION WAY !MASON !OH!45040!48188!165!39!MASON !WARR… Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential cost savings. 2. The contract's duration spans over 5 years, indicating a long-term need for these specialized electronics. 3. The specific product code (334413) points to semiconductor manufacturing, a critical but often high-cost sector. 4. Awarded by the Defense Logistics Agency, suggesting a role in supporting broader military logistics and readiness. 5. The firm fixed-price contract type aims to transfer some cost risk to the contractor. 6. No small business set-aside was utilized, indicating the prime contractor is not a small business.

Value Assessment

Rating: questionable

The total award amount of $19.8 million for electronics systems over a period of approximately 5.5 years warrants scrutiny. Without competitive bidding, it is difficult to benchmark the value for money. The firm fixed-price contract type is appropriate for managing cost certainty, but the absence of competition means there's no direct market comparison to assess if the price is optimal. Further analysis would require understanding the specific components and services procured, and comparing them to similar sole-source awards or commercial off-the-shelf equivalents if applicable.

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 among multiple vendors. This typically occurs when only one vendor possesses the necessary capabilities, technology, or security clearances to fulfill the requirement. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially limits the range of innovative solutions considered. It suggests a reliance on a specific contractor's proprietary technology or established relationship.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, the government cannot be assured it received the best possible price for these critical electronics systems.

Public Impact

The primary beneficiaries are likely Department of Defense units requiring specialized electronic countermeasure systems. The contract delivers essential electronic systems, crucial for maintaining operational capabilities and potentially enhancing defense technologies. The geographic impact is national, supporting defense logistics across various military branches and installations. Workforce implications include supporting specialized manufacturing and engineering roles within L3Harris Cincinnati Electronics Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Long contract duration could lead to price escalation if not managed effectively.
Reliance on a single contractor may create dependency and reduce future sourcing flexibility.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established contractor like L3Harris suggests a focus on proven capabilities.
The contract addresses a specific need for advanced electronics systems critical to defense operations.

Sector Analysis

This contract falls within the broader electronics and communication equipment manufacturing sector, specifically related to defense applications. The North American Industry Classification System (NAICS) code 334413, Semiconductor and Related Device Manufacturing, indicates a focus on components that are vital for modern electronic systems. The defense sector often requires highly specialized and reliable electronic components, which can command premium pricing due to stringent performance and security requirements. Spending in this area is driven by the need for technological superiority and operational readiness.

Small Business Impact

The contract was not set aside for small businesses, and the prime contractor, L3Harris Cincinnati Electronics Corporation, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Without a small business subcontracting plan requirement or a competitive bidding process that encourages small business participation, the direct impact on the small business ecosystem for this specific award is likely minimal, though L3Harris may engage small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring contract compliance, quality, and financial integrity. The Department of Defense's Inspector General may also conduct audits or investigations into specific aspects of the contract if concerns arise. Transparency is facilitated through contract databases like FPDS, but detailed performance metrics and cost breakdowns may not always be publicly available for sole-source awards.

Related Government Programs

Defense Logistics Agency Procurement
Electronic Warfare Systems
Semiconductor Manufacturing Contracts
Department of Defense Electronics Procurement

Risk Flags

Sole-source award lacks competitive pricing validation.
Potential for cost overruns if contractor's costs exceed estimates (mitigated by FFP, but still a risk).
Dependency on a single supplier for critical EW systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.8 million to L3HARRIS CINCINNATI ELECTRONICS CORPORATION. 200511!000630!5700!FA8523!WR-ALC-LSK EW SYSTEMS !FA852305C0035 !A!N! !N! ! !20050927!20060926!059106484!205520823!251900734!N!L-3 CINCINNATI ELECTRONICS COR!7500 INNOVATION WAY !MASON !OH!45040!48188!165!39!MASON !WARREN !OHIO !+000006224988!N!N!000000000000!5865!ELCT CNTRMSRS, CNTR-CNTR-MSRS & QCK RCTN CPBLTY EQ!A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334413!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is L3HARRIS CINCINNATI ELECTRONICS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $19.8 million.

What is the period of performance?

Start: 2005-09-27. End: 2011-03-31.

What is the specific nature of the 'WR-ALC-LSK EW SYSTEMS' and why was it deemed sole-source?

The 'WR-ALC-LSK EW SYSTEMS' likely refers to specific electronic warfare (EW) systems managed by the Warner Robins Air Logistics Center (WR-ALC). Electronic warfare systems are critical for defense, encompassing capabilities like jamming, deception, and electronic attack. The sole-source designation suggests that L3Harris Cincinnati Electronics Corporation possessed unique, proprietary technology, specialized manufacturing capabilities, or specific certifications essential for these EW systems that no other vendor could readily provide. This could stem from patented designs, unique integration expertise with existing military platforms, or classified technological requirements that limit the pool of eligible contractors.

How does the firm fixed-price contract type mitigate risk for the government in this sole-source scenario?

A firm fixed-price (FFP) contract establishes a price that is not subject to adjustment based on the contractor's cost experience. In a sole-source context, FFP is a crucial tool for the government to manage cost uncertainty. It shifts the risk of cost overruns to the contractor, incentivizing them to control expenses and perform efficiently to maximize profit. While it doesn't guarantee the lowest possible price (as competition would), it provides a ceiling and predictability for the government's budget, preventing unexpected increases in the contract's total value due to the contractor's internal cost fluctuations.

What are the potential long-term implications of awarding such a significant contract without competition?

Awarding a significant contract without competition can have several long-term implications. It may stifle innovation by not exposing the government to alternative solutions from other companies. It can also lead to a dependency on the sole-source provider, potentially weakening the government's negotiating position in future procurements. Furthermore, without market validation through competition, there's a persistent risk that the government is not achieving optimal value for its investment, potentially leading to higher sustainment costs or missed opportunities for technological advancement if competitors are excluded from the outset.

Can the value of this contract be benchmarked against similar defense electronics procurements?

Benchmarking this contract's value is challenging due to its sole-source nature and specific application (EW systems). Standard commercial benchmarks are unlikely to apply. To assess value, one would need to compare it to other sole-source or limited-competition contracts for similar EW systems awarded by the DoD or other defense agencies. Analyzing the unit costs of comparable components, the complexity of integration, and the required performance specifications would be necessary. Without access to detailed cost breakdowns or comparable contract data, a precise value-for-money assessment remains difficult.

What is L3Harris Cincinnati Electronics Corporation's track record with the Department of Defense?

L3Harris Technologies, including its Cincinnati Electronics division, has a long-standing and extensive track record as a major defense contractor. They are known for providing a wide range of advanced electronic systems, including avionics, communications, electronic warfare, and sensor systems for various military platforms. Their history with the DoD involves numerous contracts, often for complex and critical technologies. While specific performance details for every contract are not always public, their continued role as a prime contractor for significant defense programs indicates a generally accepted capability and reliability within the defense industrial base.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Semiconductor and Related Device Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)

Address: 7500 INNOVATION WAY, MASON, OH, 01

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline