DoD's $25.9M contract for chemical preparations awarded to ATK Launch Systems LLC shows limited competition

Contract Overview

Contract Amount: $25,915,969 ($25.9M)

Contractor: ATK Launch Systems LLC

Awarding Agency: Department of Defense

Start Date: 2009-08-27

End Date: 2012-06-30

Contract Duration: 1,038 days

Daily Burn Rate: $25.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TEST REPORT IAW DD 1423-1 ATTACHED HERETO

Place of Performance

Location: CORINNE, BOX ELDER County, UTAH, 84307

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $25.9 million to ATK LAUNCH SYSTEMS LLC for work described as: TEST REPORT IAW DD 1423-1 ATTACHED HERETO Key points: 1. The contract's value of $25.9 million represents a significant investment in specialized chemical products. 2. Awarded on a non-competitive basis, this contract raises questions about potential cost efficiencies and market alternatives. 3. The duration of nearly three years suggests a sustained need for these specific chemical preparations. 4. The firm fixed-price structure aims to transfer cost risk to the contractor, ATK Launch Systems LLC. 5. The contract falls under the 'All Other Miscellaneous Chemical Product and Preparation Manufacturing' NAICS code, indicating a niche market.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the limited competition and the specialized nature of the products. Without comparable contracts or market data, it's difficult to definitively assess if the $25.9 million represents excellent value. The firm fixed-price contract type suggests an attempt to control costs, but the lack of competitive bidding means there's less external pressure to ensure the lowest possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning ATK Launch Systems LLC was the only vendor considered. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and may result in higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may have paid a premium for these chemical preparations due to the absence of competitive pressure to drive down prices. The government did not benefit from the potential cost savings that a competitive bidding process could have yielded.

Public Impact

The primary beneficiaries are likely entities within the Department of Defense that require these specific chemical preparations for their operations. The services delivered are the manufacturing and supply of specialized chemical products. The geographic impact is primarily linked to the operations of ATK Launch Systems LLC, located in Utah. Workforce implications would be within ATK Launch Systems LLC, supporting the production of these materials.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Limited transparency into the cost structure due to sole-source award.
Potential for vendor lock-in if alternatives are not explored.

Positive Signals

Firm fixed-price contract helps manage cost overruns.
Contract duration indicates a stable, ongoing requirement.
Award to an established entity (ATK Launch Systems LLC) suggests a level of reliability.

Sector Analysis

The chemical manufacturing sector is diverse, encompassing a wide range of products from basic industrial chemicals to highly specialized compounds. This contract falls into a niche within 'All Other Miscellaneous Chemical Product and Preparation Manufacturing.' The defense industry often requires specialized chemicals for various applications, including propellants, coatings, and maintenance. Benchmarking this specific contract is difficult without more granular data on comparable specialized chemical procurements within the defense sector.

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 of the award further limits opportunities for small businesses to participate in this specific procurement, potentially impacting the small business ecosystem for this particular product category.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Accountability measures are inherent in the firm fixed-price contract, which holds the contractor responsible for delivering the specified goods within the agreed-upon price. Transparency is limited due to the sole-source nature of the award; however, contract details and performance reports (like the attached DD 1423-1) are usually available through official channels.

Related Government Programs

Defense Chemical Procurement
Specialty Chemical Manufacturing
Aerospace and Defense Supply Chain

Risk Flags

Sole-source award limits price competition.
Lack of detailed product specification in summary data.
Potential for higher costs due to non-competitive nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.9 million to ATK LAUNCH SYSTEMS LLC. TEST REPORT IAW DD 1423-1 ATTACHED HERETO

Who is the contractor on this award?

The obligated recipient is ATK LAUNCH SYSTEMS LLC.

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 $25.9 million.

What is the period of performance?

Start: 2009-08-27. End: 2012-06-30.

What is the specific nature of the 'All Other Miscellaneous Chemical Product and Preparation Manufacturing' being procured?

The provided data does not specify the exact nature of the chemical products. The NAICS code '325998 - All Other Miscellaneous Chemical Product and Preparation Manufacturing' is broad and covers establishments primarily engaged in manufacturing chemical products not elsewhere classified. This could include adhesives, sealants, inks, paints, coatings, or other specialized chemical formulations. Further details would be required from the contract's statement of work or technical specifications to understand the precise application and composition of these chemicals.

Why was this contract awarded on a sole-source basis instead of being competed?

The provided data indicates the contract was 'NOT COMPETED' and awarded as 'sole-source'. Specific justifications for sole-source awards typically include situations where only one responsible source can provide the required supply or service, or when there is a compelling urgency. Without additional documentation or agency justification, the precise reason for this sole-source award remains unknown. However, common reasons include proprietary technology, unique manufacturing capabilities, or a lack of market research identifying multiple capable vendors.

How does the $25.9 million contract value compare to historical spending on similar chemical products by the Department of Defense?

Direct comparison of this $25.9 million contract value to historical spending on similar chemical products is difficult with the provided data alone. The NAICS code is broad, and 'similar' products can vary significantly in price based on their specific properties, intended use, and production volume. To conduct a thorough comparison, one would need to access historical procurement databases, filter for contracts within the same or closely related NAICS codes, and analyze the quantities and specifications of the chemicals procured. The sole-source nature of this award also complicates direct value-for-money comparisons.

What are the potential risks associated with a sole-source contract for specialized chemical products?

Sole-source contracts for specialized chemical products carry several potential risks. Firstly, the absence of competition can lead to higher prices than might be achieved through a competitive bidding process, as the government lacks leverage to negotiate the best possible deal. Secondly, there's a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future flexibility and innovation. Thirdly, without competitive pressure, there might be less incentive for the contractor to optimize production processes or offer cost-saving improvements. Finally, transparency into the contractor's cost structure and profit margins is often reduced, making it harder to ensure fair pricing.

What is the track record of ATK Launch Systems LLC in fulfilling government contracts, particularly for chemical products?

ATK Launch Systems LLC (now part of Northrop Grumman) has a significant history of supplying the Department of Defense and other government agencies, particularly with solid rocket motors and related energetic materials. Their track record generally indicates experience in handling complex, high-stakes manufacturing for defense applications. While this specific contract is for 'miscellaneous chemical products,' their broader experience in aerospace and defense manufacturing suggests a capability to produce specialized materials. A deeper dive into their contract performance history, including any past issues or commendations related to chemical supply, would provide a more complete picture.

What oversight mechanisms are in place to ensure the quality and timely delivery of these chemical products?

Oversight for this contract would involve standard Department of Defense procurement regulations and quality assurance procedures. The contract is a Firm Fixed Price (FFP) type, which places the responsibility for meeting specifications and delivery schedules on the contractor, ATK Launch Systems LLC. The mention of 'TEST REPORT IAW DD 1423-1 ATTACHED HERETO' indicates that formal testing and acceptance procedures are in place, likely involving government quality assurance representatives (QARs) who inspect and verify that the delivered products meet all contractual requirements before acceptance and payment.

Industry Classification

NAICS: Manufacturing › Other Chemical Product and Preparation Manufacturing › All Other Miscellaneous Chemical Product and Preparation Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

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: Northrop Grumman Innovation Systems LLC (UEI: 618705925)

Address: 9160 N HWY 83, CORINNE, UT, 01

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $25,915,969

Exercised Options: $25,915,969

Current Obligation: $25,915,969

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA821309D0002

IDV Type: IDC

Timeline