DoD's $145M L3Harris Contract for Navigation Systems Lacked Competition, Raising Cost Concerns
Contract Overview
Contract Amount: $145,087,290 ($145.1M)
Contractor: L3harris Technologies, Inc.
Awarding Agency: Department of Defense
Start Date: 2006-11-17
End Date: 2012-09-22
Contract Duration: 2,136 days
Daily Burn Rate: $67.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: TAS::17 1804::TAS LOT I - SRW 1.0(C)
Place of Performance
Location: FORT WAYNE, ALLEN County, INDIANA, 46818
State: Indiana Government Spending
Plain-Language Summary
Department of Defense obligated $145.1 million to L3HARRIS TECHNOLOGIES, INC. for work described as: TAS::17 1804::TAS LOT I - SRW 1.0(C) Key points: 1. The contract awarded to L3Harris Technologies, Inc. for navigation systems totaled $145,087,289.63. 2. This contract was not competed, indicating a lack of market research and potential for higher costs. 3. The 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector is critical for defense operations. 4. The use of a Cost Plus Incentive Fee (CPIF) contract type can incentivize cost control but requires robust oversight.
Value Assessment
Rating: questionable
The contract's value of $145M is substantial. Without competitive bidding, it's difficult to assess if this price reflects fair market value compared to similar navigation system procurements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, meaning L3Harris was the sole provider. This limits price discovery and potentially leads to inflated costs for taxpayers.
Taxpayer Impact: The absence of competition likely resulted in higher prices than could have been achieved through a competitive process, impacting taxpayer funds.
Public Impact
Taxpayers may have overpaid due to the lack of competitive bidding on this significant defense contract. The reliance on a single vendor for critical navigation systems could pose a long-term supply chain risk. The Department of Defense missed an opportunity to foster innovation and potentially secure better technology through competition.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of Competition
- Potential for Overpricing
- Sole-Source Award
Positive Signals
- CPIF contract type can incentivize performance
- Long contract duration may indicate complex needs
Sector Analysis
This contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a critical area for defense. Spending benchmarks for such specialized systems are hard to establish without competitive data.
Small Business Impact
The data does not indicate any involvement of small businesses in this contract, suggesting a missed opportunity for small business participation.
Oversight & Accountability
The use of a CPIF contract necessitates strong oversight from the Defense Contract Management Agency to ensure cost controls and contractor performance are effectively managed.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of Competition
- Potential for Cost Overruns
- Sole-Source Award
- Limited Small Business Participation
- Supply Chain Dependency
Tags
search-detection-navigation-guidance-aer, department-of-defense, in, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $145.1 million to L3HARRIS TECHNOLOGIES, INC.. TAS::17 1804::TAS LOT I - SRW 1.0(C)
Who is the contractor on this award?
The obligated recipient is L3HARRIS 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 $145.1 million.
What is the period of performance?
Start: 2006-11-17. End: 2012-09-22.
What was the justification for awarding this contract on a sole-source basis, and was a market survey conducted to confirm the lack of alternatives?
The justification for a sole-source award is crucial for understanding why competition was bypassed. A thorough market survey should have been conducted to identify potential alternative sources or technologies. Without this information, it's impossible to definitively assess if the government acted prudently or missed opportunities for better value and innovation.
How effectively did the Cost Plus Incentive Fee (CPIF) structure manage costs and incentivize L3Harris to achieve performance targets given the lack of competition?
The CPIF structure aims to align contractor incentives with government objectives, including cost control and performance. However, its effectiveness is significantly hampered in a sole-source environment. Robust oversight is required to ensure the incentive targets are appropriate and that the contractor is genuinely motivated to reduce costs rather than simply passing them on, especially without the pressure of competing bids.
What is the long-term strategic risk associated with relying on a single provider for these critical navigation systems, particularly concerning technological obsolescence or supply chain disruptions?
Sole-source reliance creates significant long-term strategic risks. Technological advancements may be slower without competitive pressure, potentially leading to obsolescence. Furthermore, the government becomes highly vulnerable to supply chain disruptions affecting L3Harris, including geopolitical issues, manufacturing problems, or the company's own financial stability. Diversification of suppliers or proactive technology insertion strategies are essential mitigations.
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: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N6523606R0810
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: L3harris Technologies, Inc (UEI: 004203337)
Address: 7310 INNOVATION BLVD, FORT WAYNE, IN, 46818
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $157,984,390
Exercised Options: $152,808,467
Current Obligation: $145,087,290
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2006-11-17
Current End Date: 2012-09-22
Potential End Date: 2012-09-22 00:00:00
Last Modified: 2021-11-01
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