DoD's $194M missile manufacturing contract awarded to Aerojet Rocketdyne shows fair value with strong competition

Contract Overview

Contract Amount: $194,442,985 ($194.4M)

Contractor: Aerojet Rocketdyne Coleman Aerospace Inc

Awarding Agency: Department of Defense

Start Date: 2008-06-12

End Date: 2018-01-08

Contract Duration: 3,497 days

Daily Burn Rate: $55.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SRP-3

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $194.4 million to AEROJET ROCKETDYNE COLEMAN AEROSPACE INC for work described as: SRP-3 Key points: 1. Contract value of $194.4 million over a decade suggests significant investment in critical defense capabilities. 2. Full and open competition indicates a healthy market for missile manufacturing services. 3. Potential for cost overruns exists given the Cost Plus Incentive Fee (CPIF) contract type. 4. The contract supports the Missile Defense Agency's strategic goals for national security. 5. Long duration of the contract (nearly 10 years) implies a stable, long-term need for these services. 6. The award to a single contractor, Aerojet Rocketdyne, warrants scrutiny for potential future competition.

Value Assessment

Rating: good

The contract's total value of $194.4 million over approximately 10 years averages to about $19.4 million annually. Benchmarking this against similar large-scale missile manufacturing contracts is challenging without more specific details on the exact components and services. However, the CPIF structure allows for shared savings if costs are below target, which can lead to good value if managed effectively. The absence of specific cost breakdowns makes a precise value-for-money assessment difficult, but the competitive award suggests a reasonable starting point.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple capable vendors were likely solicited. The data does not specify the number of bids received, but the 'full and open' designation suggests a robust bidding process. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: A competitive award process helps ensure taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

The primary beneficiaries are the Department of Defense and national security, ensuring the availability of advanced missile systems. Services delivered include the manufacturing of guided missiles and space vehicles, crucial for defense operations. The contract is geographically focused on Florida (st. FL), suggesting a concentration of manufacturing or assembly activities in that state. Workforce implications include job creation and retention within the aerospace and defense manufacturing sector in Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

CPIF contract type can incentivize contractor spending if not closely monitored, potentially leading to costs exceeding initial targets.
Long contract duration may reduce opportunities for re-competition and potentially lock in higher prices if market conditions change.
Sole awardee for this specific order (though competed openly) could indicate limited future competition if capabilities are concentrated.

Positive Signals

Awarded under full and open competition, suggesting a competitive marketplace for these services.
The contract supports critical national defense capabilities, aligning with strategic government objectives.
The CPIF structure includes incentive fees, which can reward efficiency and cost savings if performance targets are met.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized segment of the broader aerospace and defense industry. This sector is characterized by high technological barriers to entry, significant R&D investment, and stringent quality control requirements. Spending in this area is often driven by national security priorities and geopolitical factors. Comparable spending benchmarks would typically involve analyzing other major missile system development and production contracts within the DoD.

Small Business Impact

The data indicates that small business participation was not a primary set-aside consideration for this specific award (ss: false, sb: false). While the prime contractor, Aerojet Rocketdyne, is a large entity, there may be subcontracting opportunities for small businesses within the supply chain. The impact on the small business ecosystem would depend on the extent to which Aerojet Rocketdyne utilizes small business subcontractors for components or specialized services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically the Missile Defense Agency. The Cost Plus Incentive Fee (CPIF) structure necessitates robust financial oversight to ensure costs are reasonable and that incentive targets are appropriately managed. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract. Transparency is generally maintained through contract award databases and reporting requirements.

Related Government Programs

Missile Defense Systems
Strategic Weapons Programs
Aerospace Manufacturing Contracts
Department of Defense Procurement

Risk Flags

Cost Plus Incentive Fee (CPIF) contract type requires diligent oversight to manage potential cost overruns.
Long contract duration may limit future competitive opportunities.
Concentration of award to a single entity warrants monitoring for future competition.
Dependence on specialized manufacturing may create supply chain risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $194.4 million to AEROJET ROCKETDYNE COLEMAN AEROSPACE INC. SRP-3

Who is the contractor on this award?

The obligated recipient is AEROJET ROCKETDYNE COLEMAN AEROSPACE INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $194.4 million.

What is the period of performance?

Start: 2008-06-12. End: 2018-01-08.

What is the historical spending trend for guided missile and space vehicle manufacturing by the Missile Defense Agency?

Analyzing historical spending trends for guided missile and space vehicle manufacturing by the Missile Defense Agency requires access to detailed historical procurement data. Generally, spending in this sector fluctuates based on geopolitical tensions, technological advancements, and specific program requirements. The Missile Defense Agency's budget is often substantial, reflecting the high cost and complexity of developing and producing advanced missile defense systems. Over the past decade, there has been a consistent focus on modernizing missile defense capabilities, suggesting sustained or increasing investment in this area. Specific figures would require querying databases like FPDS-NG or USAspending.gov for relevant contract actions over multiple fiscal years, looking at the Product Service Code (PSC) or NAICS code associated with this type of manufacturing.

How does the awarded price compare to similar missile manufacturing contracts?

Directly comparing the awarded price of $194.4 million to similar missile manufacturing contracts is challenging without detailed specifications of the missiles, quantities, and technological complexity. However, the contract's duration of nearly 10 years suggests a long-term production run or sustainment effort. The average annual value of approximately $19.4 million falls within a range typical for significant defense manufacturing programs. To perform a robust comparison, one would need to identify contracts with comparable scope, such as the production of specific missile types (e.g., air defense, ballistic missiles) or space launch vehicle components, and analyze their total value, duration, and contract type (e.g., fixed-price, cost-plus).

What are the key performance indicators (KPIs) for this Cost Plus Incentive Fee (CPIF) contract?

For a Cost Plus Incentive Fee (CPIF) contract like this one, Key Performance Indicators (KPIs) are crucial for managing cost, schedule, and performance. While specific KPIs are not detailed in the provided data, they typically revolve around meeting or exceeding targets for technical performance (e.g., missile reliability, accuracy, range), delivery schedules, and cost control. The 'incentive' aspect means the contractor is rewarded for achieving or surpassing these targets and may face penalties or reduced profit if they fall short. The government's oversight team would closely monitor progress against these defined metrics, with regular reviews and reporting to ensure the contractor is motivated to perform efficiently and effectively within the agreed-upon framework.

What is Aerojet Rocketdyne's track record with the Missile Defense Agency and similar contracts?

Aerojet Rocketdyne has a significant history as a major defense contractor, particularly in propulsion systems and missile manufacturing. Their track record with the Missile Defense Agency (MDA) likely includes numerous contracts for various missile defense components and systems. Historically, large defense contractors like Aerojet Rocketdyne are awarded substantial contracts due to their established capabilities, infrastructure, and expertise. Assessing their specific track record on similar CPIF contracts would involve reviewing past performance evaluations, any documented issues or successes, and their history of meeting cost and schedule targets on previous MDA or DoD programs. Generally, companies of this size and specialization are expected to have a robust, albeit complex, performance history.

What are the potential risks associated with the 'Guided Missile and Space Vehicle Manufacturing' (NAICS 336414) sector?

The 'Guided Missile and Space Vehicle Manufacturing' sector (NAICS 336414) carries several inherent risks. These include high research and development costs, long and complex production cycles, stringent regulatory and quality control requirements, and susceptibility to technological obsolescence. Geopolitical shifts can rapidly alter demand and program priorities. Furthermore, reliance on specialized materials and components, often with long lead times, can create supply chain vulnerabilities. For government contracts, risks also include potential cost overruns, schedule delays, and the challenge of maintaining a competitive industrial base due to the specialized nature of the work and consolidation within the industry.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Aerojet Rocketdyne Holdings, Inc. (UEI: 001316330)

Address: 7675 MUNICIPAL DRIVE, ORLANDO, FL, 32819

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: $196,579,429

Exercised Options: $196,579,429

Current Obligation: $194,442,985

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA881808D0038

IDV Type: IDC

Timeline