DoD's $4.57M purchase of thruster inert parts lacked competition, raising value concerns

Contract Overview

Contract Amount: $4,570,704 ($4.6M)

Contractor: Pacific Scientific Energetic Materials Company (california LLC)

Awarding Agency: Department of Defense

Start Date: 2022-09-30

End Date: 2026-12-31

Contract Duration: 1,553 days

Daily Burn Rate: $2.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NEW PURCHASE OF NSN: 1377-01-285-3109 ES SEAT RETRACTION THRUSTER INERT PARTS BASE QUANTITY 72 EACH OPTION QUANTITY 72 EACH

Place of Performance

Location: HOLLISTER, SAN BENITO County, CALIFORNIA, 95023

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $4.6 million to PACIFIC SCIENTIFIC ENERGETIC MATERIALS COMPANY (CALIFORNIA LLC) for work described as: NEW PURCHASE OF NSN: 1377-01-285-3109 ES SEAT RETRACTION THRUSTER INERT PARTS BASE QUANTITY 72 EACH OPTION QUANTITY 72 EACH Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract type shifts performance risk to the contractor, but the lack of competition hinders benchmarking. 3. The purchase of specialized aerospace components suggests a critical need within a niche defense sector. 4. The contract duration extends over four years, indicating a long-term requirement for these parts. 5. The absence of small business participation raises questions about broader economic impact. 6. The geographic location of the contractor in California may influence logistics and regional economic benefits.

Value Assessment

Rating: questionable

The contract's value is difficult to assess due to the sole-source award. Without competitive bids, it's challenging to determine if the $4.57 million price represents a fair market value for 144 units of specialized thruster parts. Benchmarking against similar sole-source procurements for aerospace components is necessary, but such data is often proprietary or not publicly available. The firm fixed-price structure provides cost certainty but does not inherently guarantee value for money in a non-competitive environment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor was solicited. This approach is typically employed when a unique capability or proprietary technology is required, or in cases of urgent and compelling need where competition is not feasible. The lack of competition means there were no other bidders to compare against, limiting the government's ability to negotiate the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium for these parts due to the absence of competitive pressure. The government missed an opportunity to leverage market forces to drive down costs.

Public Impact

The Department of the Air Force benefits from the acquisition of critical components for its aerospace systems. The services delivered involve the supply of specialized inert parts for thruster systems, essential for aircraft or missile operations. The geographic impact is primarily concentrated in California, where the contractor is located, potentially creating local economic benefits. Workforce implications are likely within the specialized manufacturing sector, requiring skilled labor for the production of energetic materials and aerospace components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can limit innovation by not engaging a broader market.
Dependence on a single supplier creates supply chain risk.
No small business set-aside indicates limited opportunities for smaller enterprises in this procurement.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Contractor is located in the US, supporting domestic manufacturing.
The purchase addresses a specific, likely critical, component need for the Air Force.

Sector Analysis

This contract falls within the Explosives Manufacturing sector (NAICS 325920), a specialized area of the broader aerospace and defense industry. The market for such components is typically characterized by high barriers to entry due to stringent quality control, safety regulations, and specialized technical expertise. Spending in this sector is often driven by defense procurement needs for propulsion systems, ordnance, and other energetic materials. Comparable spending benchmarks are difficult to establish due to the niche nature and proprietary aspects of these components.

Small Business Impact

This contract was not set aside for small businesses, and the contractor is not identified as a small business. The sole-source nature of the award further limits opportunities for small businesses to participate, either as prime contractors or potentially as subcontractors, unless specifically included by the prime. This suggests a missed opportunity to foster small business growth within the defense supply chain for this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature and the proprietary aspects of the components. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aerospace Component Procurement
Defense Propulsion Systems
Energetic Materials Manufacturing
Air Force Supply Chain Management
Sole-Source Defense Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Limited transparency in contract value assessment.
No small business participation noted.
Long contract duration increases long-term dependency risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $4.6 million to PACIFIC SCIENTIFIC ENERGETIC MATERIALS COMPANY (CALIFORNIA LLC). NEW PURCHASE OF NSN: 1377-01-285-3109 ES SEAT RETRACTION THRUSTER INERT PARTS BASE QUANTITY 72 EACH OPTION QUANTITY 72 EACH

Who is the contractor on this award?

The obligated recipient is PACIFIC SCIENTIFIC ENERGETIC MATERIALS COMPANY (CALIFORNIA LLC).

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $4.6 million.

What is the period of performance?

Start: 2022-09-30. End: 2026-12-31.

What is the track record of Pacific Scientific Energetic Materials Company with the Department of Defense?

Pacific Scientific Energetic Materials Company (PSEMC) has a history of contracting with the Department of Defense, particularly for specialized energetic materials and components. While specific contract details and performance reviews are often not publicly disclosed in full, their presence in this niche market suggests they possess the required certifications and expertise. Analyzing past performance on similar sole-source or competitively awarded contracts, if available through government databases like SAM.gov or FPDS, would provide further insight into their reliability, quality, and pricing consistency. However, the limited public data necessitates a cautious approach when assessing their overall track record solely based on this single award.

How does the price of these thruster parts compare to similar market offerings, given the sole-source nature?

Directly comparing the price of these thruster parts is challenging due to the sole-source award and the specialized nature of the components. Without competitive bids, the $4.57 million for 144 units (approximately $31,741 per unit) cannot be definitively benchmarked against market rates. Typically, sole-source procurements may result in higher prices than competitive ones. To assess value, one would need to compare this unit price against historical sole-source contracts for similar aerospace components, analyze the contractor's cost breakdown if available, or consult industry experts familiar with the pricing of such specialized parts. The lack of transparency in sole-source deals makes objective value-for-money assessments difficult.

What are the primary risks associated with this sole-source contract for the government?

The primary risks associated with this sole-source contract for the government include potential overpayment due to the lack of price competition, limited leverage in negotiating terms and conditions, and increased supply chain vulnerability. Without alternative suppliers, the government is dependent on Pacific Scientific Energetic Materials Company for delivery, quality, and future availability. This dependence could be exacerbated if the contractor faces production issues, financial instability, or decides to discontinue the product line. Furthermore, the absence of competition may disincentivize the contractor from investing in process improvements or cost reductions, potentially leading to higher long-term costs for the taxpayer.

How effective is the firm fixed-price contract type in ensuring performance for these specialized parts?

The firm fixed-price (FFP) contract type is generally effective in ensuring performance for specialized parts by placing the responsibility for cost overruns on the contractor, thereby incentivizing efficient performance and quality control. For this specific contract, the FFP structure means Pacific Scientific Energetic Materials Company is obligated to deliver the 144 thruster inert parts at the agreed-upon $4.57 million price, regardless of their actual costs. This provides the government with cost certainty. However, the effectiveness in ensuring *optimal* performance or the *best possible value* is somewhat diminished by the sole-source nature, as the contractor may face less pressure to innovate or exceed basic requirements compared to a competitive scenario.

What is the historical spending pattern for NSN 1377-01-285-3109 or similar thruster components by the Department of Defense?

Historical spending data for the specific National Stock Number (NSN) 1377-01-285-3109, 'ES SEAT RETRACTION THRUSTER INERT PARTS,' is not readily available in public databases to establish a clear spending pattern. This suggests it might be a relatively niche or infrequently procured item, or that previous procurements were handled under different NSNs or contract vehicles. To understand historical spending, one would need access to more comprehensive government procurement databases (like FPDS or agency-specific systems) that allow for detailed searches by NSN, contractor, and time period. Without such data, it's difficult to determine if the current $4.57 million award represents an increase, decrease, or is consistent with past investments in similar components.

Industry Classification

NAICS: Manufacturing › Other Chemical Product and Preparation Manufacturing › Explosives Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA821322R3006

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Danaher Corporation

Address: 3601 UNION RD, HOLLISTER, CA, 95023

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $4,570,704

Exercised Options: $4,570,704

Current Obligation: $4,570,704

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $468,039

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline