DoD's $13.1M F-35 Parts Purchase: Sole-Source Contract Raises Oversight Concerns

Contract Overview

Contract Amount: $13,090,936 ($13.1M)

Contractor: Pacific Scientific Energetic Materials Company (california LLC)

Awarding Agency: Department of Defense

Start Date: 2024-06-17

End Date: 2026-07-02

Contract Duration: 745 days

Daily Burn Rate: $17.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: F35 AIRCRAFT PARTS, FY 24 1377-01-659-3166 FLEXIBLE LIEAR SHAPE CHARGE ASSEMBLY 1377-01-660-2677 TRANSFER LINE ASSEMBLY 1377-01-660-4905 DONOR ASSEMBLY 1377-01-660-7535 INITIATOR ARM FIRE 1377-01-661-0138 ACCEPTOR 1377-01-661-0143 INITIATOR

Place of Performance

Location: HOLLISTER, SAN BENITO County, CALIFORNIA, 95023

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $13.1 million to PACIFIC SCIENTIFIC ENERGETIC MATERIALS COMPANY (CALIFORNIA LLC) for work described as: F35 AIRCRAFT PARTS, FY 24 1377-01-659-3166 FLEXIBLE LIEAR SHAPE CHARGE ASSEMBLY 1377-01-660-2677 TRANSFER LINE ASSEMBLY 1377-01-660-4905 DONOR ASSEMBLY 1377-01-660-7535 INITIATOR ARM FIRE 1377-01-661-0138 ACCEPTOR 1377-01-661-0143 INITIATOR Key points: 1. The Department of Defense is acquiring F-35 aircraft parts valued at $13.1 million. 2. Pacific Scientific Energetic Materials Company is the sole contractor for these specialized components. 3. The contract's sole-source nature warrants scrutiny regarding price discovery and potential cost overruns. 4. This procurement falls within the Explosives Manufacturing sector, critical for defense readiness.

Value Assessment

Rating: questionable

Benchmarking per-unit costs for highly specialized F-35 components is challenging due to proprietary designs and limited market data. The firm fixed-price contract offers some cost certainty, but the lack of competition prevents robust price validation against alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other vendors were considered. This significantly limits price discovery and competition, potentially leading to higher costs for taxpayers as the government lacks leverage to negotiate better terms.

Taxpayer Impact: The absence of competitive bidding in this sole-source contract may result in taxpayers paying a premium for these critical F-35 components, impacting overall defense budget efficiency.

Public Impact

Ensures continued operational readiness of the F-35 fighter jet fleet. Supports the specialized manufacturing capabilities within the U.S. defense industrial base. Highlights reliance on a single supplier for critical aircraft components, posing a potential supply chain risk. Funds advanced energetic materials essential for aircraft safety and performance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Lack of transparency in pricing due to limited market comparison.
Potential for cost overruns without competitive pressure.
Dependence on a single supplier for critical parts.

Positive Signals

Ensures availability of specialized, critical components.
Firm fixed-price contract provides some cost predictability.
Supports a key defense contractor.

Sector Analysis

This procurement is within the Explosives Manufacturing sector (NAICS 325920), which supplies specialized materials for defense applications. Spending benchmarks are difficult to establish due to the unique nature of F-35 components, but significant investment in aircraft sustainment is typical for major defense platforms.

Small Business Impact

The contract was awarded to Pacific Scientific Energetic Materials Company, a California LLC. There is no indication that small businesses were involved as subcontractors or partners in this specific award, suggesting a lack of small business participation.

Oversight & Accountability

The sole-source nature of this award necessitates robust oversight from the Department of Defense to ensure fair pricing and prevent potential waste. Regular audits and performance reviews are crucial to maintain accountability and taxpayer value.

Related Government Programs

Explosives Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award.
Lack of competitive bidding.
Potential for price inflation.
Supply chain dependency.
Limited transparency in cost justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.1 million to PACIFIC SCIENTIFIC ENERGETIC MATERIALS COMPANY (CALIFORNIA LLC). F35 AIRCRAFT PARTS, FY 24 1377-01-659-3166 FLEXIBLE LIEAR SHAPE CHARGE ASSEMBLY 1377-01-660-2677 TRANSFER LINE ASSEMBLY 1377-01-660-4905 DONOR ASSEMBLY 1377-01-660-7535 INITIATOR ARM FIRE 1377-01-661-0138 ACCEPTOR 1377-01-661-0143 INITIATOR

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 $13.1 million.

What is the period of performance?

Start: 2024-06-17. End: 2026-07-02.

What is the justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure fair pricing?

The justification for a sole-source award typically involves unique capabilities or proprietary technology held by a single supplier. The Department of Defense should provide detailed documentation supporting this determination. To ensure fair pricing, they should conduct thorough cost analyses, benchmark against any available historical data for similar components, and potentially engage independent cost estimators.

What are the long-term risks associated with relying on a single supplier for critical F-35 aircraft parts?

Long-term reliance on a single supplier creates significant supply chain vulnerability. Risks include potential production disruptions due to the supplier's operational issues, price increases driven by lack of competition, and difficulties in sourcing parts if the supplier faces financial distress or decides to exit the market. This could impact F-35 fleet readiness.

How does the firm fixed-price contract structure mitigate risks for the government in this sole-source scenario?

A firm fixed-price contract shifts most of the risk to the contractor, meaning the price is set and generally not subject to adjustment based on the contractor's cost experience. While this provides cost certainty for the government, it doesn't eliminate the risk of inflated pricing due to the lack of competition. The contractor bears the risk of cost overruns, but the initial price may be higher.

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: FA821320R3038

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: $13,090,936

Exercised Options: $13,090,936

Current Obligation: $13,090,936

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA821321D0006

IDV Type: IDC

Timeline