DoD awards $47.6M for Stinger flight motors, a sole-source contract for critical missile components

Contract Overview

Contract Amount: $47,603,118 ($47.6M)

Contractor: Aerojet Rocketdyne Inc

Awarding Agency: Department of Defense

Start Date: 2018-06-29

End Date: 2023-09-30

Contract Duration: 1,919 days

Daily Burn Rate: $24.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF STINGER FLIGHT MOTORS IN SUPPORT OF THE SERVICE LIFE EXTENSION PROGRAM

Place of Performance

Location: CAMDEN, CALHOUN County, ARKANSAS, 71701

State: Arkansas Government Spending

Plain-Language Summary

Department of Defense obligated $47.6 million to AEROJET ROCKETDYNE INC for work described as: PROCUREMENT OF STINGER FLIGHT MOTORS IN SUPPORT OF THE SERVICE LIFE EXTENSION PROGRAM Key points: 1. This contract supports the Service Life Extension Program for Stinger missiles, indicating a need for sustained readiness. 2. The sole-source nature of this award warrants scrutiny regarding price reasonableness and potential for cost overruns. 3. Aerojet Rocketdyne Inc. is the sole provider, highlighting a lack of market competition for these specific components. 4. The contract duration spans over five years, suggesting a long-term requirement for these critical parts. 5. The absence of competition may limit opportunities for innovation and cost reduction through alternative suppliers. 6. Performance context is tied to ensuring the operational readiness of a key defensive asset.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The firm fixed-price structure offers some cost certainty, but the lack of competition raises concerns about whether the government is achieving the best possible price. Without comparable contracts or market data for Stinger flight motors, it's difficult to definitively assess value for money. The total award amount of $47.6 million over five years suggests a significant investment in maintaining existing missile systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Aerojet Rocketdyne Inc., was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means there was no opportunity for other potential suppliers to bid, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less incentive for the contractor to offer the lowest possible price, and the government has fewer options to negotiate favorable terms.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense relying on Stinger missiles for air defense. The services delivered include the procurement of flight motors essential for the operational capability and sustainment of Stinger missiles. The geographic impact is national, supporting defense readiness across various military installations. Workforce implications include continued employment for specialized manufacturing roles at Aerojet Rocketdyne Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of competitive bidding may stifle innovation in propulsion technology.
Long contract duration could lock the government into a single supplier relationship.
Dependence on a single supplier creates a potential supply chain risk.

Positive Signals

Ensures continued availability of critical components for a vital defense system.
Firm fixed-price contract provides cost predictability for this specific award.
Supports the Service Life Extension Program, extending the utility of existing assets.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity and significant government investment. This contract falls within the guided missile and space vehicle propulsion unit manufacturing sub-sector. The market for such specialized components is often concentrated among a few key players due to high barriers to entry, including R&D costs and stringent quality requirements. Comparable spending benchmarks are difficult to ascertain without more specific market data, but defense procurement for missile systems represents a substantial portion of the overall defense budget.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. The sole-source nature of the award to a large prime contractor like Aerojet Rocketdyne Inc. typically means that opportunities for small businesses are limited to direct supply chain roles, if any. This contract does not appear to actively contribute to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which shifts some risk to the contractor. Transparency is limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Stinger Missile System
Service Life Extension Program (SLEP)
Air Defense Systems Procurement
Missile Component Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for price escalation
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.6 million to AEROJET ROCKETDYNE INC. PROCUREMENT OF STINGER FLIGHT MOTORS IN SUPPORT OF THE SERVICE LIFE EXTENSION PROGRAM

Who is the contractor on this award?

The obligated recipient is AEROJET ROCKETDYNE INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $47.6 million.

What is the period of performance?

Start: 2018-06-29. End: 2023-09-30.

What is Aerojet Rocketdyne Inc.'s track record with sole-source defense contracts?

Aerojet Rocketdyne Inc. has a history of securing sole-source contracts, particularly for specialized propulsion systems and components where they possess unique capabilities or are the incumbent supplier. This is common in the defense industry due to the high technical barriers and long development cycles for advanced systems. While sole-source awards can ensure continuity and access to critical technologies, they also necessitate robust government oversight to ensure fair pricing and prevent potential cost escalations. Analyzing past sole-source awards to Aerojet Rocketdyne Inc. for similar components could provide insights into their pricing strategies and the government's negotiation outcomes in non-competitive environments. However, specific data on their track record with sole-source contracts requires deeper analysis of historical procurement data and contract modifications.

How does the pricing of this contract compare to market rates for similar propulsion units?

Directly comparing the pricing of this contract to market rates for similar propulsion units is challenging due to the specialized nature of Stinger flight motors and the sole-source award. Market rates are typically established through competitive bidding processes where multiple suppliers offer their prices, allowing for price discovery. In a sole-source scenario, the government relies on negotiation, cost analysis, and potentially historical pricing data. Without access to Aerojet Rocketdyne Inc.'s cost breakdowns or data on comparable, non-proprietary propulsion systems from other manufacturers, a precise market rate comparison is not feasible. The government's contracting officers would have conducted some form of price analysis, but the effectiveness of this analysis is inherently limited without competitive benchmarks.

What are the primary risks associated with a sole-source contract for critical missile components?

The primary risks associated with a sole-source contract for critical missile components like Stinger flight motors include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a heightened risk of supply chain disruption if the sole provider faces operational issues. Furthermore, the government becomes heavily reliant on a single supplier, which can limit its leverage in future negotiations and make it difficult to switch providers if performance or cost becomes unsatisfactory. There's also a risk that the contractor may prioritize other, more competitive contracts if resources become constrained. Robust contract management, including detailed cost reviews and performance monitoring, is crucial to mitigate these risks.

How effective is the Service Life Extension Program (SLEP) in maintaining the Stinger missile's operational readiness?

The Service Life Extension Program (SLEP) is generally an effective strategy for maintaining the operational readiness of aging but still critical weapon systems like the Stinger missile. SLEP aims to refurbish, repair, and upgrade components to extend the service life of existing assets, thereby delaying the need for costly replacements and ensuring that vital capabilities remain available. For the Stinger, which is a widely deployed and crucial short-range air defense weapon, SLEP is essential for ensuring its continued effectiveness against evolving threats. The procurement of new flight motors under this contract directly supports the SLEP by providing necessary components for refurbishment or replacement, thereby contributing to the overall readiness and longevity of the Stinger inventory.

What are the historical spending patterns for Stinger missile components, and how does this award compare?

Historical spending patterns for Stinger missile components, particularly flight motors, would likely show consistent investment to maintain the operational fleet, especially given its strategic importance. Awards for such components are often sole-source or limited competition due to the specialized nature of the technology and the established supply chain. This $47.6 million award over approximately five years represents a significant, but likely consistent, level of investment for sustaining a key missile system. Without access to detailed historical procurement data for Stinger flight motors specifically, it's difficult to provide precise comparative figures. However, the duration and value suggest a sustained commitment to the Stinger's lifecycle management, aligning with typical defense spending for critical munitions.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 14160 W AR 274 HWY, CAMDEN, AR, 71701

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: $47,603,118

Exercised Options: $47,603,118

Current Obligation: $47,603,118

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $235,074

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q18D0027

IDV Type: IDC

Timeline