DoD awards $53M for aircraft parts, but competition was limited, raising value concerns

Contract Overview

Contract Amount: $53,094,661 ($53.1M)

Contractor: Rockwell Collins, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-12-09

End Date: 2019-06-30

Contract Duration: 2,029 days

Daily Burn Rate: $26.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: B-2 CVRI1 EMD ACAT III (COMMON VLF RECEIVER INCREMENT 1 PROGRAM)

Place of Performance

Location: CEDAR RAPIDS, LINN County, IOWA, 52498

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $53.1 million to ROCKWELL COLLINS, INC. for work described as: B-2 CVRI1 EMD ACAT III (COMMON VLF RECEIVER INCREMENT 1 PROGRAM) Key points: 1. Limited competition for this contract may have impacted overall value for money. 2. The contract type (Cost Plus Incentive Fee) can lead to cost overruns if not closely managed. 3. The contractor has a track record with the Department of Defense, but specific performance on this contract needs further review. 4. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector. 5. The duration of the contract (over 5 years) suggests a long-term need for these parts. 6. The lack of small business involvement is noted, with no set-aside or subcontracting reported.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed cost breakdowns and comparisons to similar sole-source procurements. The Cost Plus Incentive Fee (CPIF) contract type, while offering flexibility, carries inherent risks of cost escalation. The awarded amount of $53 million over approximately five years suggests a significant investment. Further analysis of the contractor's proposed costs against independent government estimates would be necessary to definitively assess value for money.

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 among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from competitive pricing, potentially leading to higher costs than if multiple bids were solicited.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential aircraft parts. This contract supports the maintenance and operational readiness of specific aircraft platforms. The geographic impact is primarily centered in Iowa, where Rockwell Collins, Inc. is located. The contract supports jobs within the aerospace manufacturing sector, specifically in the production of specialized aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus contract types can incentivize higher spending if not rigorously managed.
Lack of small business participation means missed opportunities for smaller firms in the supply chain.
The long contract duration requires sustained oversight to ensure continued value.
Specific performance metrics and their impact on incentive fees are not detailed here.

Positive Signals

Contract awarded to an established defense contractor with existing capabilities.
The contract addresses a specific need for aircraft parts, contributing to defense readiness.
The incentive fee structure aims to align contractor performance with government objectives.
The contract is managed by the Defense Contract Management Agency, indicating oversight presence.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry due to technical expertise, certifications, and established relationships with prime contractors and government agencies. Spending in this area is critical for maintaining military readiness and technological superiority. Comparable spending benchmarks would typically involve analyzing other sole-source or limited-competition awards for similar complex aircraft components.

Small Business Impact

This contract was not awarded as a small business set-aside, and there is no indication of subcontracting plans with small businesses. This suggests that opportunities for small businesses within the supply chain for these specific aircraft parts may be limited for this particular award. The absence of small business participation means that the economic benefits of this contract are not being intentionally directed towards the small business ecosystem.

Oversight & Accountability

The Defense Contract Management Agency (DCMA) is responsible for overseeing this contract, ensuring compliance with terms and conditions. The Cost Plus Incentive Fee (CPIF) structure implies performance metrics that are monitored to determine incentive payments. Transparency regarding the specific performance metrics and the justification for the sole-source award would enhance accountability. Further details on oversight activities and any Inspector General involvement would provide a more complete picture of accountability.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics and Support
Aerospace Component Procurement
Sole-Source Defense Contracts

Risk Flags

Limited Competition
Sole-Source Award
Cost-Plus Contract Type
Lack of Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.1 million to ROCKWELL COLLINS, INC.. B-2 CVRI1 EMD ACAT III (COMMON VLF RECEIVER INCREMENT 1 PROGRAM)

Who is the contractor on this award?

The obligated recipient is ROCKWELL COLLINS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $53.1 million.

What is the period of performance?

Start: 2013-12-09. End: 2019-06-30.

What is the specific nature of the 'COMMON VLF RECEIVER INCREMENT 1 PROGRAM' and why was it deemed sole-source?

The 'B-2 CVRI1 EMD ACAT III (COMMON VLF RECEIVER INCREMENT 1 PROGRAM)' refers to the Engineering and Manufacturing Development (EMD) phase for Increment 1 of the Common Very Low Frequency (VLF) Receiver system, designated as an ACAT III program by the Department of Defense. VLF receivers are critical for long-range, secure communication, particularly for submarines and other strategic assets. The sole-source justification likely stems from the highly specialized nature of this technology, potentially involving proprietary designs, unique manufacturing capabilities, or existing integration with specific platforms (like the B-2 bomber) that only Rockwell Collins, Inc. possessed at the time of award. Without a competitive process, the government determined that Rockwell Collins was the only viable source to fulfill the EMD requirements.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact contractor behavior and final costs compared to other contract types?

A Cost Plus Incentive Fee (CPIF) contract reimburses the contractor for allowable costs and provides a target cost, target fee, and a fee-sharing arrangement. The final fee is adjusted based on whether the final cost is below or above the target cost, incentivizing the contractor to control costs. However, CPIF contracts can still lead to cost overruns if the target cost is set too high or if the incentive structure is not sufficiently aggressive. Compared to fixed-price contracts, CPIF offers more flexibility for the government when project scope is uncertain, but it requires robust oversight to prevent excessive spending. The government's ability to achieve value depends heavily on the accuracy of the initial cost targets and the effectiveness of the incentive clauses in motivating cost savings.

What are the potential risks associated with a sole-source award of $53 million for aircraft parts?

The primary risk of a sole-source award, especially for a contract valued at $53 million, is the lack of competitive pressure on pricing. Without competing bids, the government may pay a higher price than if multiple vendors had vied for the contract. This can lead to inefficient use of taxpayer funds. Additionally, sole-source awards can stifle innovation by not encouraging new entrants or alternative solutions into the market. There's also a risk that the sole provider may not be as motivated to provide exceptional service or quality, knowing that the customer has limited alternatives. Sustained oversight is crucial to mitigate these risks.

What is the historical spending pattern for Rockwell Collins, Inc. with the Department of Defense in similar categories?

Rockwell Collins, Inc. (now part of Collins Aerospace, a Raytheon Technologies company) has a long history of contracting with the Department of Defense, particularly in areas related to avionics, communication systems, and aircraft electronics. Historical data indicates significant contract awards from the DoD across various platforms. While specific spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' would require a detailed analysis of past contracts, their established presence suggests a substantial and ongoing relationship. This specific contract's value of $53 million is within the range of typical awards for complex systems and components provided by major defense contractors, but its sole-source nature warrants scrutiny compared to competitively awarded contracts.

How does the 'IA' (Iowa) state code impact the analysis of this contract's public impact or economic benefits?

The 'IA' state code indicates that the contractor, Rockwell Collins, Inc., is located in Iowa. This means that a significant portion of the contract's economic impact, such as job creation and revenue generation, is likely to be concentrated within Iowa. For the public, this translates to direct benefits for the workforce and businesses in that state. While the ultimate beneficiary is the Department of Defense and its mission readiness, the domestic economic stimulus is geographically localized. This information is relevant for understanding regional economic development tied to federal spending and for assessing the distribution of taxpayer-funded contracts.

Industry Classification

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

Product/Service Code: ALARM, SIGNAL, SECURITY DETECTION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 400 COLLINS RD NE, CEDAR RAPIDS, IA, 52498

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

Financial Breakdown

Contract Ceiling: $57,888,827

Exercised Options: $54,605,076

Current Obligation: $53,094,661

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $1,740,811

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline