L3 Technologies awarded $130.6M for navigation systems, highlighting a long-term, fixed-price incentive contract

Contract Overview

Contract Amount: $130,567,393 ($130.6M)

Contractor: L3 Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2015-04-03

End Date: 2024-10-20

Contract Duration: 3,488 days

Daily Burn Rate: $37.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: PIO ORDERS

Place of Performance

Location: NORTHAMPTON, HAMPSHIRE County, MASSACHUSETTS, 01060

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $130.6 million to L3 TECHNOLOGIES, INC. for work described as: PIO ORDERS Key points: 1. Contract value of $130.6M over nearly 10 years suggests significant, sustained demand for navigation systems. 2. Fixed-price incentive contract type indicates a shared risk between government and contractor for cost control. 3. Awarded under full and open competition, implying a competitive market for these specialized systems. 4. The contract's duration and value position it as a substantial component of defense logistics. 5. Focus on 'Search, Detection, Navigation, Guidance' systems points to critical operational capabilities. 6. The contractor, L3 Technologies, Inc., has a significant role in this specialized manufacturing sector.

Value Assessment

Rating: good

The contract's fixed-price incentive structure suggests an effort to balance cost control with performance incentives. While specific cost benchmarks are not provided, the long duration and substantial value indicate a significant investment. Comparing this to other contracts for similar navigation and guidance systems would be necessary for a more precise value-for-money assessment. The sustained award over almost a decade implies the services or products meet the agency's needs effectively.

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 compete. The presence of two bids suggests a moderately competitive environment for this specific requirement. A higher number of bidders typically leads to better price discovery and potentially lower costs for the government. However, the nature of specialized defense systems can sometimes limit the pool of qualified competitors.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages competitive pricing and potentially drives down costs through market forces.

Public Impact

The Department of Defense benefits from advanced navigation and guidance systems essential for military operations. This contract supports the manufacturing and delivery of critical components for defense platforms. The geographic impact is primarily within Massachusetts, where the contractor is located, potentially supporting local jobs. Workforce implications include skilled labor in systems manufacturing, engineering, and quality assurance within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if performance targets are not met under the incentive structure.
Long contract duration could lead to technological obsolescence if not managed proactively.
Dependence on a single contractor for a critical system requires robust oversight.

Positive Signals

Fixed-price incentive contract encourages cost efficiency from the contractor.
Full and open competition suggests a healthy market and potential for competitive pricing.
Long-term award provides stability and predictability for both the government and the contractor.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized niche within the broader aerospace and defense industry. This sector is characterized by high technological barriers to entry and significant R&D investment. Comparable spending benchmarks would involve analyzing other contracts for similar navigation systems awarded by the Department of Defense or other federal agencies, considering factors like system complexity and quantity.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, and the prime contractor is L3 Technologies, Inc., a large entity. There is no explicit information on subcontracting plans for small businesses within this data. The impact on the small business ecosystem would depend on whether L3 Technologies actively engages small businesses for components or services, which is not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are embedded within the fixed-price incentive contract terms, linking contractor profit to performance and cost targets. Transparency is facilitated through contract award databases, though detailed performance metrics may be considered sensitive.

Related Government Programs

Defense Logistics Agency
Naval Air Systems Command
Air Force Materiel Command
Tactical Navigation Systems
Guidance and Control Systems

Risk Flags

Long contract duration may lead to technological obsolescence.
Fixed-price incentive contracts require careful monitoring of cost and performance targets.
Potential for contractor viability issues over an extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $130.6 million to L3 TECHNOLOGIES, INC.. PIO ORDERS

Who is the contractor on this award?

The obligated recipient is L3 TECHNOLOGIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $130.6 million.

What is the period of performance?

Start: 2015-04-03. End: 2024-10-20.

What is the historical spending trend for navigation and guidance systems by the Department of Defense over the last five years?

Analyzing historical spending trends for navigation and guidance systems by the Department of Defense over the last five years reveals a generally consistent, albeit fluctuating, investment. While specific figures for this exact contract vehicle are not publicly detailed year-over-year, the broader category of 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' has seen significant federal outlays. Factors influencing these trends include evolving military operational requirements, geopolitical developments, and technological advancements. For instance, increased demand for precision navigation in contested environments or the integration of new sensor technologies could drive up spending. Conversely, budget reallocations or the maturation of existing systems might lead to temporary dips. Without access to granular budget data for specific sub-categories or individual contracts like this one, a precise trend line is difficult to establish, but the overall commitment to these critical systems remains substantial.

How does the fixed-price incentive (FPI) contract structure compare to other contract types for similar defense systems in terms of cost control and risk?

The Fixed-Price Incentive (FPI) contract structure employed here offers a distinct balance between cost control and risk allocation compared to other common contract types. In an FPI contract, the final price is not fixed but is adjusted based on the contractor's performance against target cost and target profit goals. If the contractor's final cost is below the target cost, both the government and contractor share in the savings according to a predetermined formula. Conversely, if the final cost exceeds the target, the contractor's profit is reduced, and in some cases, the government may absorb a portion of the overrun up to a ceiling price. This contrasts with Firm-Fixed-Price (FFP) contracts, where the contractor bears all cost overruns, incentivizing extreme cost caution but potentially leading to higher initial bids to buffer risk. Cost-Plus-Fixed-Fee (CPFF) contracts, on the other hand, allow the contractor to recover all allowable costs plus a fixed fee, offering flexibility for R&D but with higher government cost risk. For complex systems like navigation and guidance, where technical uncertainties can be significant, FPI provides a middle ground, encouraging efficiency while acknowledging potential cost variances.

What is L3 Technologies, Inc.'s track record with similar government contracts, particularly in navigation and guidance systems?

L3 Technologies, Inc. (now part of L3Harris Technologies) has a substantial and long-standing track record of performing government contracts, particularly within the defense sector and specifically in areas related to navigation, guidance, and sensor systems. The company has historically been a key supplier of advanced electronic systems, including those for communication, navigation, surveillance, and intelligence. Publicly available contract databases show numerous awards to L3 Technologies and its subsidiaries from various branches of the U.S. military and other federal agencies over many years. These contracts often involve complex systems integration, manufacturing, and sustainment services. While specific performance metrics for past contracts are not always detailed in public records, the continued awarding of significant contracts, such as the $130.6 million definitive contract for navigation systems, suggests a generally positive performance history and a demonstrated capability to meet the government's requirements in this specialized domain. Their extensive experience positions them as a capable provider for critical defense technologies.

What are the potential risks associated with the long duration (nearly 10 years) of this contract?

The long duration of this contract, spanning nearly 10 years (from April 2015 to October 2024), presents several potential risks that require careful management. One primary concern is technological obsolescence. The field of navigation and guidance systems is rapidly evolving; by the end of the contract term, the systems or components being produced might be outdated compared to emerging technologies. This necessitates proactive technology refresh strategies or robust upgrade clauses within the contract. Another risk is related to contractor viability and market shifts. Over such a long period, the financial health or strategic direction of L3 Technologies could change, potentially impacting their ability to fulfill the contract. Furthermore, long-term contracts can sometimes lead to complacency in cost management if not rigorously overseen, although the FPI structure aims to mitigate this. Finally, changes in defense priorities or budget constraints could lead to contract modifications, terminations, or reduced scope, introducing uncertainty.

How does the $130.6 million total award compare to the annual spending on navigation systems by the Department of Defense?

The total award of $130.6 million for this specific contract represents a significant, but not overwhelming, portion of the Department of Defense's (DoD) overall spending on navigation and guidance systems. The DoD's annual budget is in the hundreds of billions of dollars, with substantial allocations for research, development, procurement, and sustainment of various defense platforms and their associated systems. Spending on navigation and guidance systems, while critical, is a subset of this larger budget. This $130.6 million contract, spread over nearly a decade, averages roughly $13 million per year. This annual figure is likely a moderate component when compared to the total annual expenditure across all branches and programs for similar technologies. For context, major platform procurements (like aircraft or ships) often involve billions of dollars, and their integrated systems contribute significantly to overall spending. Therefore, while substantial for this specific requirement, this contract's value appears to be a manageable and focused investment within the broader DoD acquisition landscape.

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: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: N0002414R6204

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 50 PRINCE ST, NORTHAMPTON, MA, 01060

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: $154,560,886

Exercised Options: $154,560,886

Current Obligation: $130,567,393

Actual Outlays: $4,863,940

Subaward Activity

Number of Subawards: 26

Total Subaward Amount: $1,966,596

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline