Army's $63M Hellfire Missile System Contract Awarded to Single Source with Cost-Plus Fixed Fee Structure

Contract Overview

Contract Amount: $22,292,163 ($22.3M)

Contractor: Hellfire Systems, LLC

Awarding Agency: Department of Defense

Start Date: 2001-12-18

End Date: 2011-08-19

Contract Duration: 3,531 days

Daily Burn Rate: $6.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200210!000572!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0102C0017 !A!N! !N! !20011218!20051230!941092306!941092306!941092306!N!HELLFIRE SYSTEMS LIMITED LIABI!5798 S SEMORAN BLVD !ORLANDO !FL!32822!53000!095!12!ORLANDO !ORANGE !FLORIDA !+000001999714!N!N!000000000000!AD21!RDTE/SERVICES-BASIC RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !1CPA!HELLFIRE MODULAR MSL SYS !336414!E! !3! ! ! ! ! !20051219!B! ! !A! !D!N!U!1!001!N!1G!C!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!Y! ! ! ! ! ! !0001!

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819, UNITED STATES OF AMERICA

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $22.3 million to HELLFIRE SYSTEMS, LLC for work described as: 200210!000572!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0102C0017 !A!N! !N! !20011218!20051230!941092306!941092306!941092306!N!HELLFIRE SYSTEMS LIMITED LIABI!5798 S SEMORAN BLVD !ORLANDO !FL!32822!53000!095!12!ORLANDO !ORANGE !FLORIDA !+000001999714!N!N!000000000000!AD21!RD… Key points: 1. Contract awarded to a single entity, raising questions about competitive pricing. 2. Cost-plus fixed fee structure may incentivize higher costs without strict oversight. 3. Long contract duration (over 9 years) suggests a sustained need for these systems. 4. Focus on research, development, testing, and evaluation (RDTE) indicates innovation and future capabilities. 5. The contract falls under the Guided Missile and Space Vehicle Manufacturing sector, a critical defense industry.

Value Assessment

Rating: questionable

The contract's total value of approximately $63.1 million over its life is difficult to benchmark without comparable sole-source awards for similar missile systems. The cost-plus fixed fee (CPFF) pricing structure, while common in R&D, can lead to higher overall costs compared to fixed-price contracts if not managed diligently. The lack of competition inherently limits the government's ability to negotiate the best possible price, potentially resulting in a less favorable value for the taxpayer.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Hellfire Systems, LLC, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and can reduce the incentive for contractors to offer their most competitive pricing.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that often arise from a competitive bidding environment. This can lead to higher overall program expenditures.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense requiring advanced missile systems. The contract supports the development, production, and sustainment of Hellfire missile systems, crucial for air-to-ground combat. Geographic impact is primarily within Florida, where the contractor is located, potentially supporting local jobs and the regional economy. Workforce implications include specialized engineering, manufacturing, and technical support roles within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus fixed fee structure may not provide sufficient incentive for cost control.
Long contract duration could mask inefficiencies if not actively managed.
Lack of transparency inherent in sole-source procurements hinders public scrutiny.

Positive Signals

Supports critical defense capabilities for the U.S. Army.
Contractor is established in a specialized defense manufacturing niche.
Long-term award suggests a stable and ongoing requirement for the system.

Sector Analysis

This contract operates within the defense sector, specifically focusing on missile and space systems manufacturing. The market for such specialized defense components is typically characterized by high barriers to entry, significant R&D investment, and a limited number of qualified suppliers. Government contracts are the primary revenue source for companies in this niche. Comparable spending benchmarks would involve analyzing other large-scale missile system development and production contracts within the Department of Defense.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the specialized nature of Hellfire missile systems and the sole-source award, it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively pursued through a competitive process. The focus appears to be on a prime contractor with specific, established capabilities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined by the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award. The Inspector General's office for the Department of Defense may conduct audits or investigations if specific concerns arise regarding contract performance or financial management.

Related Government Programs

Advanced Missile Systems
Air-to-Ground Munitions
Defense Research and Development
Guided Missile Manufacturing
U.S. Army Aviation and Missile Command Contracts

Risk Flags

Sole-source award
Cost-plus fixed fee pricing
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.3 million to HELLFIRE SYSTEMS, LLC. 200210!000572!2100!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0102C0017 !A!N! !N! !20011218!20051230!941092306!941092306!941092306!N!HELLFIRE SYSTEMS LIMITED LIABI!5798 S SEMORAN BLVD !ORLANDO !FL!32822!53000!095!12!ORLANDO !ORANGE !FLORIDA !+000001999714!N!N!000000000000!AD21!RDTE/SERVICES-BASIC RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !1CPA!HELLFIRE MODULAR MSL SYS !336414!E! !3! ! ! ! ! !20051219!B! ! !A! !D!N!U!1!001!N!1G!C!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!Y! ! ! ! ! ! !0001!

Who is the contractor on this award?

The obligated recipient is HELLFIRE 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 $22.3 million.

What is the period of performance?

Start: 2001-12-18. End: 2011-08-19.

What is the track record of Hellfire Systems, LLC in delivering similar defense contracts?

Information regarding the specific track record of Hellfire Systems, LLC in delivering defense contracts is limited in the provided data. However, the award of this sole-source contract suggests they possess unique or critical capabilities required by the Department of the Army for the Hellfire missile systems. Further investigation into past performance reviews, contract modifications, and any disputes or terminations associated with previous contracts would be necessary for a comprehensive assessment. The duration and value of this contract imply a level of trust or necessity from the Army's perspective, but without comparative data, it's difficult to definitively gauge their historical performance against industry standards or competitors.

How does the cost-plus fixed fee (CPFF) structure compare to other contract types for similar defense R&D projects?

Cost-plus fixed fee (CPFF) contracts are common in research and development (R&D) where the scope of work is not precisely defined, and costs are difficult to estimate upfront. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set regardless of actual costs, incentivizing efficiency. For R&D, CPFF can encourage innovation and exploration but may lead to higher costs for the government if not closely monitored. Other contract types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) offer more performance-based incentives. Compared to fixed-price R&D, CPFF generally offers less cost certainty for the government.

What are the potential risks associated with a sole-source award for a critical defense system like the Hellfire missile?

Sole-source awards for critical defense systems like the Hellfire missile present several risks. Primarily, the lack of competition can lead to inflated prices, as the contractor faces no market pressure to reduce costs. This can result in a less efficient use of taxpayer funds. Furthermore, it can stifle innovation by reducing the incentive for the sole provider to invest in new technologies or process improvements. Dependence on a single supplier also creates a vulnerability; any disruption in the contractor's operations (e.g., financial instability, production issues, geopolitical factors) could severely impact the defense supply chain and national security. Finally, it limits the government's ability to leverage alternative solutions or technologies that might emerge from a competitive market.

What is the historical spending pattern for Hellfire missile systems by the Department of Defense?

The provided data represents a single contract award for Hellfire missile systems totaling approximately $63.1 million over its duration. To understand historical spending patterns, one would need to analyze multiple contracts awarded over several fiscal years, potentially across different branches of the DoD. This would involve aggregating spending on the Hellfire system, including R&D, procurement, and sustainment. Analyzing trends in contract values, award types (competitive vs. sole-source), and pricing structures over time would reveal whether spending has increased or decreased, if competition has been utilized, and if costs have been managed effectively. Without a broader dataset, this single contract provides only a snapshot.

How does the geographic concentration of the contractor (Orlando, FL) impact the contract's execution and oversight?

The geographic concentration of Hellfire Systems, LLC in Orlando, Florida, means that oversight activities, such as site visits, inspections, and progress meetings, may require travel for government personnel. While Orlando is a known hub for defense contractors, this concentration doesn't inherently pose a significant risk unless it leads to a lack of local government oversight presence or creates logistical challenges for monitoring. The primary impact is economic, potentially benefiting the local Florida economy through job creation and related business activity. For contract execution, the location itself is less critical than the contractor's operational capabilities and adherence to contract terms. Oversight effectiveness depends more on the resources and diligence of the contracting agency than the contractor's specific location.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Address: 5798 S SEMORAN BLVD, ORLANDO, FL, 32822

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline