Army awards $11M contract for pyrotechnics, highlighting limited competition and potential value concerns

Contract Overview

Contract Amount: $10,999,877 ($11.0M)

Contractor: ATK Launch Systems LLC

Awarding Agency: Department of Defense

Start Date: 2005-09-28

End Date: 2009-07-15

Contract Duration: 1,386 days

Daily Burn Rate: $7.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200512!502174!2100!W15QKN!TACOM - PICATINNY !W15QKN04D1003 !A!N! !N!0008 ! !20050928!20061130!002241164!002241164!001339472!N!ATK THIOKOL, INC !9160 NORTH HIGHWAY 83 !CORINNE !UT!84307!15830!003!49!CORINNE !BOX ELDER !UTAH !+000010999877!N!N!000000000000!1370!PYROTECHNICS !A6 !AMMUNITION !000 !* !325998!E! !5!B!S! ! ! !20200930!B! ! !N!Z!D!U!J!1!001!N!1G!Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: CORINNE, BOX ELDER County, UTAH, 84307

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $11.0 million to ATK LAUNCH SYSTEMS LLC for work described as: 200512!502174!2100!W15QKN!TACOM - PICATINNY !W15QKN04D1003 !A!N! !N!0008 ! !20050928!20061130!002241164!002241164!001339472!N!ATK THIOKOL, INC !9160 NORTH HIGHWAY 83 !CORINNE !UT!84307!15830!003!49!CORINNE !BOX … Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. The contract's duration of over three years suggests a need for ongoing supply of pyrotechnic materials. 3. The specific product code for pyrotechnics indicates a specialized and potentially high-risk material. 4. Award to ATK Thiokol, Inc. suggests a reliance on established suppliers for critical defense components. 5. The lack of competition may limit opportunities for innovation and cost reduction from alternative vendors.

Value Assessment

Rating: questionable

The contract value of $10,999,877 for pyrotechnics over approximately 3.8 years warrants scrutiny. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar government contracts. The sole-source nature suggests the government may not have achieved the best possible price. Further analysis would be needed to compare the per-unit cost of these pyrotechnics to industry standards or historical government purchases of similar items.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, ATK Thiokol, Inc., was solicited. This approach is typically used when only one responsible source is available or when there is a compelling justification for other reasons. The lack of competition means that the government did not benefit from a bidding process that could drive down prices and encourage innovation from multiple suppliers.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without alternative bids, there's a risk that the price reflects the vendor's proposed cost rather than a market-tested value.

Public Impact

The primary beneficiaries are likely Department of Defense units requiring pyrotechnic materials for training, signaling, or other operational purposes. The contract delivers essential pyrotechnic products, crucial for various military applications. The geographic impact is primarily centered around the contractor's location in Corinne, Utah, and the military installations receiving the supplies. Workforce implications may include continued employment for specialized personnel at ATK Thiokol, Inc. involved in the manufacturing of these materials.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Long contract duration without clear performance metrics could mask inefficiencies.
Reliance on a single supplier for critical pyrotechnics poses a supply chain risk.
Lack of transparency in the sole-source justification process.

Positive Signals

Contract awarded to a known entity (ATK Thiokol, Inc.) with presumed expertise in pyrotechnics.
The contract addresses a specific and necessary defense requirement.
The firm fixed-price structure provides cost certainty for the government.

Sector Analysis

The pyrotechnics sector within the broader chemical manufacturing industry is highly specialized, often involving stringent safety regulations and proprietary technologies. Contracts for such materials are frequently awarded to a limited number of experienced defense contractors. The market size for defense-related pyrotechnics is substantial, driven by ongoing military readiness and modernization efforts. This contract fits within the niche of specialized chemical manufacturing for defense applications, where unique capabilities are paramount.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded sole-source to ATK Thiokol, Inc. There is no explicit mention of subcontracting plans for small businesses. The lack of a set-aside or subcontracting requirement means that opportunities for small businesses within the pyrotechnics supply chain may be limited for this specific award.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. Accountability measures are typically embedded in the contract terms, including delivery schedules and quality specifications. Transparency is limited due to the sole-source nature of the award. The Inspector General's office could investigate if any improprieties are suspected, but the initial award process itself lacked public competitive scrutiny.

Related Government Programs

Department of Defense Ammunition Procurement
Specialty Chemical Manufacturing Contracts
Military Training and Readiness Supplies
Defense Contractor Sole-Source Awards

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Supply chain risk associated with single-source dependency.
Limited transparency in the procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.0 million to ATK LAUNCH SYSTEMS LLC. 200512!502174!2100!W15QKN!TACOM - PICATINNY !W15QKN04D1003 !A!N! !N!0008 ! !20050928!20061130!002241164!002241164!001339472!N!ATK THIOKOL, INC !9160 NORTH HIGHWAY 83 !CORINNE !UT!84307!15830!003!49!CORINNE !BOX ELDER !UTAH !+000010999877!N!N!000000000000!1370!PYROTECHNICS !A6 !AMMUNITION !000 !* !325998!E! !5!B!S! ! ! !202

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 Army).

What is the total obligated amount?

The obligated amount is $11.0 million.

What is the period of performance?

Start: 2005-09-28. End: 2009-07-15.

What is the historical spending pattern for pyrotechnics by the Department of the Army?

Analyzing historical spending patterns for pyrotechnics by the Department of the Army is crucial for understanding the context of this $11 million contract. While specific aggregate data for 'pyrotechnics' alone can be challenging to isolate due to varied product codes and classifications, the Army consistently procures a wide range of ordnance and related materials. Past spending trends often reveal whether such contracts are recurring, subject to significant price fluctuations, or concentrated among a few key suppliers. Without access to detailed historical procurement databases filtered for pyrotechnics, it's difficult to provide precise figures. However, general defense spending on munitions and related components runs into billions annually, suggesting that while this contract is significant for its specific item, it represents a small fraction of the Army's overall budget. Understanding if similar sole-source awards have been common for pyrotechnics in the past would also shed light on the justification for this approach.

How does the contractor's track record influence the justification for a sole-source award?

A contractor's track record is often a primary factor in justifying a sole-source award, particularly for specialized or critical defense items like pyrotechnics. Agencies may argue that only a specific contractor possesses the unique technical capabilities, proprietary processes, or established security clearances necessary to produce the required goods. ATK Thiokol, Inc. (now part of Northrop Grumman) has a long history in energetic materials and propulsion systems, suggesting they possess the requisite expertise. The government might cite this established performance, reliability, and understanding of military specifications as reasons why soliciting other vendors would be impractical, time-consuming, or riskier. However, a strong track record alone does not negate the principle of competition; agencies must still demonstrate why no other responsible source could meet the requirement, even if it involves a learning curve or additional upfront investment.

What are the potential risks associated with relying on a single supplier for pyrotechnics?

Relying on a single supplier for pyrotechnics introduces several significant risks. Firstly, there's a heightened supply chain vulnerability; any disruption at the sole source—whether due to production issues, labor strikes, natural disasters, or financial instability—could halt the delivery of critical materials. This could directly impact military readiness and training schedules. Secondly, the lack of competition can lead to price escalation over time, as the supplier faces no market pressure to offer competitive pricing. This can result in the government paying more than necessary. Thirdly, it can stifle innovation; without the incentive of winning new business through competitive bids, the sole-source supplier may have less motivation to invest in process improvements or develop more cost-effective or advanced pyrotechnic solutions. Finally, it can create a dependency that is difficult and costly to break, even if performance issues arise later.

Can the value of this contract be benchmarked against similar government or commercial pyrotechnic purchases?

Benchmarking the value of this $11 million sole-source contract for pyrotechnics is challenging due to its specific nature and the lack of competitive bidding. Publicly available data on specific pyrotechnic formulations and their unit costs is often limited due to proprietary information and security concerns. While the government may have internal databases comparing similar items, external benchmarking requires access to detailed specifications and pricing from comparable contracts. If other agencies have recently procured similar pyrotechnic items through competitive processes, those prices could serve as a benchmark. Similarly, if commercial market prices for comparable, non-military grade pyrotechnics are available, they could offer a rough comparison, though military-grade materials often command higher prices due to stringent quality control, testing, and security requirements. The absence of competition here makes a definitive value assessment difficult without further, non-public data.

What oversight mechanisms are in place for sole-source defense contracts of this nature?

Oversight for sole-source defense contracts like this one involves multiple layers. Program managers within the Department of the Army are responsible for ensuring the contractor meets the contract's technical requirements and delivery schedules. Contracting officers monitor compliance with contract terms and financial aspects. For sole-source awards, there's often a requirement for a robust justification process, which itself is subject to review by higher authorities within the agency and potentially by oversight bodies like the Government Accountability Office (GAO) if a protest is filed. The Department of Defense's Inspector General (IG) can also investigate allegations of fraud, waste, or abuse related to any contract, including sole-source awards. Transparency is generally lower than for competed contracts, but reporting requirements regarding contract performance and financial status still apply.

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 NORTH HIGHWAY 83, CORINNE, UT, 01

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15QKN04D1003

IDV Type: IDC

Timeline