Navy awards $118.6M for radio production to L3 Technologies, Inc., with no competition

Contract Overview

Contract Amount: $118,639,320 ($118.6M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-06-11

End Date: 2031-02-28

Contract Duration: 3,549 days

Daily Burn Rate: $33.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RADIO FULL RATE PRODUCTION (FRP)

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92123

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $118.6 million to L3 TECHNOLOGIES, INC. for work described as: RADIO FULL RATE PRODUCTION (FRP) Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract spans over 8 years, indicating a long-term commitment to a single provider. 3. The fixed-price nature of the contract shifts some risk to the contractor, but the lack of competition limits upside for the government. 4. The product falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code. 5. This award represents a significant, long-term investment in a specific technology area for the Navy. 6. The absence of small business set-asides or subcontracting requirements is noted.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The $118.6 million award over nearly 9 years suggests a substantial per-year investment. The fixed-price contract type is generally favorable for the government in managing cost overruns, but the lack of competition means the government cannot be assured it is receiving the best possible price compared to what multiple bidders might offer. Further analysis would require understanding the specific components and market rates for similar systems.

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 typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process. This raises concerns about whether the government secured the most advantageous terms possible.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government's ability to negotiate favorable pricing is diminished when there is only one option.

Public Impact

The primary beneficiaries are the Department of the Navy, which will receive essential radio production capabilities. The contract ensures the continued supply of critical radio systems for naval operations. The contract is primarily focused on the manufacturing and delivery of goods, with a specific geographic impact tied to the contractor's facilities in California. The award supports jobs within L3 Technologies, Inc. and its supply chain, likely concentrated in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Long contract duration (over 8 years) may reduce flexibility to adapt to technological advancements or market changes.
Lack of transparency regarding the justification for sole-source award.
No explicit small business subcontracting goals mentioned, potentially limiting opportunities for smaller firms.

Positive Signals

Fixed-price contract shifts some performance risk to the contractor.
Ensures a consistent supply of critical radio systems for the Navy.
Long-term award provides stability for the contractor and ensures program continuity.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. This industry is characterized by high technological sophistication and significant government procurement, particularly from defense agencies. The market size for such specialized systems is substantial, driven by national security needs. Comparable spending benchmarks are difficult to establish without detailed technical specifications, but defense electronics manufacturing represents a multi-billion dollar segment of the industrial base.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor are there explicit mentions of subcontracting requirements for small businesses. The award to a large prime contractor like L3 Technologies, Inc. suggests that the primary focus is on large-scale production capabilities. This could limit opportunities for small businesses to participate directly in this specific contract, although they may be part of the contractor's broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the fixed-price contract terms, which obligate the contractor to deliver specified goods. Transparency regarding the sole-source justification and performance metrics would be crucial for assessing oversight effectiveness. The Inspector General's office for the Department of Defense may have jurisdiction for audits and investigations.

Related Government Programs

Naval Communication Systems
Defense Electronics Manufacturing
Navigation and Guidance Systems
Search and Detection Equipment

Risk Flags

Sole-source award lacks competitive justification.
Long contract duration may not align with rapid technological evolution.
No clear indication of small business participation or subcontracting.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $118.6 million to L3 TECHNOLOGIES, INC.. RADIO FULL RATE PRODUCTION (FRP)

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $118.6 million.

What is the period of performance?

Start: 2021-06-11. End: 2031-02-28.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as unique capabilities, urgent needs, or when only one responsible source can fulfill the requirement. For this contract, the Navy would need to document why other qualified sources could not provide the radio production services or why competition was not feasible or in the government's best interest. Without this documentation, it is impossible to fully assess the necessity of the sole-source approach and its potential impact on cost and value.

How does the total contract value of $118.6 million compare to historical spending on similar radio production systems by the Navy or other defense branches?

Direct comparison to historical spending on 'similar' radio production systems is challenging without detailed technical specifications and understanding the specific operational requirements this contract fulfills. However, $118.6 million over approximately 8.5 years (from June 2021 to February 2031) averages to roughly $13.95 million per year. This figure needs to be contextualized against the complexity, quantity, and technological sophistication of the radios being produced. For large-scale, advanced defense communication systems, this annual expenditure might be within a typical range, but without comparative data on specific system types and quantities, it's difficult to definitively assess if it represents high or low spending.

What are the key performance indicators (KPIs) and delivery milestones associated with this contract, and how is contractor performance being monitored?

The provided data does not specify the key performance indicators (KPIs) or delivery milestones for this contract. However, as a Firm Fixed Price (FFP) contract, the primary performance expectation is the timely delivery of the specified radio systems according to the contract's technical requirements and schedule. The Department of the Navy's contracting officer and program management team are responsible for monitoring L3 Technologies, Inc.'s performance against these terms. This typically involves tracking production progress, quality control, and adherence to delivery dates. Formal performance reviews and acceptance testing of delivered units would also be part of the monitoring process.

What is the track record of L3 Technologies, Inc. in fulfilling large, sole-source defense contracts, particularly for radio systems?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a significant history of performing large defense contracts across various sectors, including communications, electronics, and aerospace. While specific details on their track record for sole-source radio production contracts are not provided here, the company is a major defense contractor known for its capabilities in these areas. Their performance on other contracts, including competitive ones, would offer insights into their reliability, quality, and ability to manage complex production schedules. A thorough assessment would involve reviewing past performance evaluations and any reported issues on previous government contracts.

Given the long duration of the contract, what provisions are in place to address potential technological obsolescence or changes in Navy requirements?

The contract data does not specify provisions for addressing technological obsolescence or changes in Navy requirements over its 8.5-year duration. However, long-term defense contracts often include clauses that allow for modifications, such as equitable adjustments for changes in scope or specifications, or potentially termination for convenience clauses. The Navy's program office would typically engage in ongoing dialogue with the contractor to manage evolving requirements. If significant technological shifts occur, the Navy might pursue contract modifications or initiate new procurement actions for updated systems, depending on the contract's flexibility and the nature of the changes.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001920R0044

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 9020 BALBOA AVE, SAN DIEGO, CA, 92123

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: $120,725,596

Exercised Options: $120,725,596

Current Obligation: $118,639,320

Actual Outlays: $-223,155

Subaward Activity

Number of Subawards: 24

Total Subaward Amount: $6,487,210

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline