DoD's $23.6M contract for aircraft parts awarded to Orbital Sciences Corporation, lacking competition

Contract Overview

Contract Amount: $23,654,483 ($23.7M)

Contractor: Orbital Sciences Corporation

Awarding Agency: Department of Defense

Start Date: 2004-04-19

End Date: 2007-12-29

Contract Duration: 1,349 days

Daily Burn Rate: $17.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: GRAND RAPIDS, KENT County, MICHIGAN, 49512

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $23.7 million to ORBITAL SCIENCES CORPORATION for work described as: Key points: 1. The contract's value of $23.6 million represents a significant investment in specialized aircraft components. 2. The absence of competition raises concerns about potential overpricing and limited value for taxpayer funds. 3. The contract duration of 1349 days suggests a long-term need for these specific parts. 4. Awarded to a single entity, this contract bypasses opportunities for broader market engagement and innovation. 5. The 'Other Aircraft Parts' category indicates a niche requirement within the defense supply chain. 6. The firm-fixed-price structure aims to control costs, but the lack of competition may undermine this.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. Without comparison to other offers, it's difficult to ascertain if the $23.6 million price reflects fair market value. The firm-fixed-price (FFP) contract type suggests an attempt to cap costs, but the sole-source nature means the government did not benefit from price discovery through competition. Further analysis would require access to historical pricing for similar components or internal cost estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The Department of Defense likely justified this approach by citing specific circumstances, such as the unique capabilities of Orbital Sciences Corporation or the unavailability of alternative sources. The lack of multiple bidders means the government did not have the opportunity to solicit and evaluate a range of proposals, potentially limiting price negotiation and the exploration of innovative solutions.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not secure the most competitive pricing. It also limits the opportunity for new or smaller businesses to enter the defense supply chain.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the availability of critical aircraft parts for its operations. The contract supports the manufacturing and supply of specialized aircraft components, contributing to national defense readiness. The geographic impact is primarily centered around the contractor's operations in Michigan. This contract likely supports a specialized workforce within Orbital Sciences Corporation involved in the production or modification of these aircraft parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated prices and reduced value for money.
Sole-source awards can stifle innovation by not encouraging new market entrants.
Limited transparency in the procurement process due to the absence of a competitive bidding process.

Positive Signals

Firm-fixed-price contract type helps to establish cost certainty for the government.
Award to an established contractor like Orbital Sciences Corporation may indicate reliability and existing expertise.
The contract duration suggests a stable, long-term supply chain for essential components.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized defense components is often characterized by high barriers to entry, proprietary technology, and long development cycles. Spending in this area is critical for maintaining military readiness and technological superiority. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft systems or components within the DoD.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. The sole-source nature of the award further limits the opportunities for small businesses to participate in this specific procurement. Without a competitive bidding process that includes small business considerations, the direct impact on the small business ecosystem for this contract is likely minimal.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm-fixed-price nature provides a degree of cost control, but the lack of competition means oversight is crucial for verifying the necessity and reasonableness of the awarded price. Transparency is limited due to the sole-source nature, and any Inspector General investigations would focus on potential fraud, waste, or abuse.

Related Government Programs

Aircraft Component Manufacturing
Defense Procurement
Sole-Source Contracts
Aerospace Supply Chain

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.7 million to ORBITAL SCIENCES CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is ORBITAL SCIENCES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $23.7 million.

What is the period of performance?

Start: 2004-04-19. End: 2007-12-29.

What specific types of aircraft parts are being procured under this contract?

The contract is categorized under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This broad classification suggests the parts are not standard, off-the-shelf components but rather specialized equipment or auxiliary systems for aircraft. Without further details or access to the contract's statement of work, the precise nature of these parts remains unspecified. However, given the contractor, Orbital Sciences Corporation (now part of Northrop Grumman), it is plausible these parts relate to aerospace systems, potentially including components for launch vehicles, satellites, or specialized military aircraft.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. Government agencies typically sole-source contracts when only one responsible source can satisfy the agency's requirements. This could be due to proprietary technology, unique capabilities, urgent and compelling needs, or a lack of other qualified bidders. For this specific contract, the justification would likely stem from Orbital Sciences Corporation possessing unique expertise or intellectual property related to the required aircraft parts, making them the only viable option for the Department of Defense at the time of award.

How does the firm-fixed-price (FFP) structure mitigate risks in a sole-source award?

A firm-fixed-price contract is designed to provide the government with cost certainty, as the contractor agrees to a total price regardless of their actual costs. In a sole-source scenario, the FFP structure is particularly important because it shifts the risk of cost overruns entirely to the contractor. While the government doesn't benefit from competitive price discovery, the FFP ensures that the agreed-upon $23.6 million is the maximum liability. However, the initial price negotiation is critical, and without competition, there's a risk that the baseline price itself might be higher than it would be in a competitive environment.

What is the historical spending pattern for similar aircraft parts by the Department of Defense?

Analyzing historical spending for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) by the Department of Defense requires access to extensive procurement databases. However, it's common for the DoD to award significant contracts in this category, often through competitive means, but also through sole-source awards for specialized or proprietary components. The $23.6 million value of this particular contract is substantial but not extraordinary within the context of large defense procurements. Trends often show a consistent need for such parts driven by fleet maintenance, upgrades, and new platform development, with spending fluctuating based on defense budgets and strategic priorities.

What are the potential implications of this contract for Orbital Sciences Corporation's market position?

For Orbital Sciences Corporation (now part of Northrop Grumman), this $23.6 million sole-source contract signifies a strong, established relationship with the Department of Defense and recognition of their specialized capabilities. Securing such a contract, even without competition, validates their technical expertise and reliability in supplying critical aircraft components. It likely contributes significantly to their revenue stream within the defense sector and reinforces their position as a key supplier for specific aerospace and defense needs. This award could also serve as a reference point for future sole-source or competitive opportunities within the DoD.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 20501 SENECA MEADOWS PARKW, GERMANTOWN, MD, 06

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline