DoD's $12.7M contract for flares awarded to Kilgore Flares Company LLC shows potential value concerns

Contract Overview

Contract Amount: $12,737,259 ($12.7M)

Contractor: Kilgore Flares Company LLC

Awarding Agency: Department of Defense

Start Date: 2009-03-30

End Date: 2013-05-31

Contract Duration: 1,523 days

Daily Burn Rate: $8.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: M212 FLARES

Place of Performance

Location: TOONE, HARDEMAN County, TENNESSEE, 38381

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $12.7 million to KILGORE FLARES COMPANY LLC for work described as: M212 FLARES Key points: 1. The contract's value appears high relative to the quantity of items procured, suggesting a need for deeper price analysis. 2. Competition was limited after exclusion of sources, which may have impacted price discovery and potentially led to higher costs. 3. The fixed-firm price contract type offers limited flexibility, but the overall value warrants scrutiny. 4. The duration of the contract (over 4 years) suggests a sustained need for these specific flare products. 5. The procurement falls under 'All Other Miscellaneous Chemical Product and Preparation Manufacturing,' a broad category. 6. The award was made to a single contractor, Kilgore Flares Company LLC, indicating a lack of broader market engagement for this specific order.

Value Assessment

Rating: questionable

Benchmarking the per-unit cost of these flares against similar defense procurements is crucial. Given the $12.7 million award for an unspecified quantity of flares (though the NAICS code suggests a specific product), the unit price could be significantly higher than market rates or comparable government contracts. Without more granular data on the number of flares, a definitive value assessment is difficult, but the total expenditure warrants a closer look at the pricing structure and justification.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while an initial attempt at broad competition may have occurred, specific circumstances led to excluding certain sources. The exact reasons for exclusion are not detailed, but this process typically results in fewer than the maximum possible bidders. The limited competition could mean that the government did not receive the most competitive pricing possible.

Taxpayer Impact: The limited competition suggests that taxpayers may have paid a premium compared to what might have been achieved in a truly open and unrestricted bidding environment.

Public Impact

Military personnel in the Department of Defense are the primary beneficiaries, receiving essential signaling and illumination devices. The contract supports the production and delivery of specialized flares, critical for tactical operations and safety. The geographic impact is primarily linked to the contractor's location in Tennessee, contributing to local employment and economic activity. The contract supports a niche manufacturing sector within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for overpayment due to limited competition.
Lack of transparency regarding the exclusion of sources.
Uncertainty about the unit cost and overall value for money.
Reliance on a single contractor for this specific order.

Positive Signals

Contract awarded to a known entity in the flares market.
Fixed-firm pricing provides cost certainty once the price is set.
The contract addresses a clear defense need for signaling devices.

Sector Analysis

The defense sector, particularly the sub-sector of pyrotechnics and signaling devices, is characterized by specialized manufacturing and stringent quality requirements. This contract for flares fits within this niche, where a limited number of companies possess the necessary expertise and certifications. Comparable spending benchmarks would involve analyzing other contracts for similar pyrotechnic devices within the Department of Defense and other federal agencies, considering factors like quantity, specifications, and contract type.

Small Business Impact

There is no indication that this contract involved small business set-asides. The award was made to Kilgore Flares Company LLC, and the 'sb' field is false. This suggests that small businesses were not specifically targeted for this procurement, and subcontracting opportunities for small businesses are not explicitly detailed within this award information.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver goods at the agreed-upon price. Transparency is limited by the 'exclusion of sources' clause, which obscures the full competitive landscape. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Ammunition Procurement
Military Signaling and Illumination Devices
Chemical Product Manufacturing Contracts
Defense Industrial Base Support

Risk Flags

Limited competition may inflate costs.
Lack of detailed justification for source exclusion.
Potential for unfavorable unit pricing without quantity data.
Single-source award increases supply chain risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.7 million to KILGORE FLARES COMPANY LLC. M212 FLARES

Who is the contractor on this award?

The obligated recipient is KILGORE FLARES COMPANY LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $12.7 million.

What is the period of performance?

Start: 2009-03-30. End: 2013-05-31.

What is the specific unit cost of the flares procured under this contract, and how does it compare to industry benchmarks?

The provided data does not specify the exact quantity of flares procured, making a precise unit cost calculation impossible. The total award is $12,737,259.46. To determine the unit cost, the number of flares (represented by NAICS code 325998, which is broad) would need to be known. Without this, comparison to industry benchmarks is speculative. However, the significant total value suggests that even a moderate unit cost, when multiplied by a large quantity, could result in a substantial expenditure. Further analysis would require obtaining the delivery order details specifying the quantity.

What were the specific reasons for excluding other sources in the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' process?

The provided data summary does not detail the specific reasons for excluding other sources. This type of contract action typically occurs when, after initial broad solicitation, only one or a limited number of responsible sources are found to be capable of meeting the government's needs. Reasons could include unique technical requirements, proprietary technology, urgent needs that only certain contractors can meet, or prior performance issues with other potential bidders. A full understanding would require reviewing the Justification for Other Than Full and Open Competition (JOFOC) documentation associated with this specific award.

How does the $12.7 million contract value compare to historical spending on similar flare procurements by the Department of the Army?

Comparing this $12.7 million contract to historical spending requires access to historical procurement data for similar flare types by the Department of the Army. Without specific historical data points for comparable items (e.g., type of flare, specifications, quantity), a direct comparison is difficult. However, the duration of the contract (over 4 years) indicates a significant and sustained requirement. If historical data shows similar quantities procured at substantially lower total costs or unit prices, it would raise concerns about the value of this particular award. Conversely, if market prices for such items have increased, this award might be within expected ranges.

What is the track record of Kilgore Flares Company LLC in fulfilling government contracts, particularly for the Department of Defense?

Kilgore Flares Company LLC has a history of supplying flares and related pyrotechnic products to the U.S. military. While this specific contract award of $12.7 million is a significant sum, the company's track record would need to be assessed based on its overall performance history across all its government contracts. This includes evaluating factors such as on-time delivery, product quality, compliance with contract terms, and any past performance issues or disputes. A review of contract databases and performance assessment reports (like Contractor Performance Assessment Reporting System - CPARS) would provide a more comprehensive view of their reliability and capability.

What are the potential risks associated with relying on a single contractor for this type of specialized defense product?

Relying on a single contractor, as indicated by the award details, presents several risks. Firstly, it reduces leverage for price negotiation, potentially leading to higher costs for the government over the contract's life. Secondly, it creates a dependency; any disruption in the contractor's operations (e.g., production issues, financial instability, supply chain problems) could directly impact the military's supply of critical flares. Thirdly, it limits opportunities for innovation and competition that could drive improvements in product performance or cost-effectiveness. Finally, it concentrates risk, making the supply chain more vulnerable to unforeseen events.

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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN07R0117

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Chemring Group PLC (UEI: 216244954)

Address: 155 KILGORE DR, TOONE, TN, 38381

Business Categories: Category Business, Labor Surplus Area Firm, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $12,737,259

Exercised Options: $12,737,259

Current Obligation: $12,737,259

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15QKN08D0428

IDV Type: IDC

Timeline