DoD's $1.11B contract for MRBM targets awarded to Aerojet Rocketdyne shows strong competition and long-term performance

Contract Overview

Contract Amount: $1,112,182,933 ($1.1B)

Contractor: Aerojet Rocketdyne Coleman Aerospace Inc

Awarding Agency: Department of Defense

Start Date: 2013-10-31

End Date: 2029-12-31

Contract Duration: 5,905 days

Daily Burn Rate: $188.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: MRBM TARGETS

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $1.11 billion to AEROJET ROCKETDYNE COLEMAN AEROSPACE INC for work described as: MRBM TARGETS Key points: 1. The contract's value of over $1.1 billion over its lifespan suggests a significant investment in strategic defense capabilities. 2. With four bidders, the competition level indicates a healthy market for this specialized defense product. 3. The fixed-price incentive contract type aims to balance cost control with contractor performance incentives. 4. The long duration of the contract (over 16 years) points to sustained demand and the critical nature of the services. 5. The Missile Defense Agency's reliance on this contract highlights its role in testing and validating missile defense systems. 6. The geographic concentration in Florida for performance warrants attention for potential economic impacts and supply chain resilience.

Value Assessment

Rating: good

Benchmarking the value of this contract is challenging due to the specialized nature of missile defense targets. However, the presence of multiple bidders suggests that the pricing is likely competitive within this niche market. The fixed-price incentive structure aims to ensure value by linking contractor profit to performance outcomes, which is a positive sign for cost-effectiveness over the long term. The sustained funding over more than a decade indicates a consistent need and potentially stable pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with four bidders participating. This level of competition is generally favorable for price discovery and ensuring that the government receives competitive pricing. The fact that four entities were capable and willing to bid suggests a robust market for these specialized targets, which benefits the taxpayer by driving down costs and encouraging innovation.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely leads to more favorable pricing and ensures that the Missile Defense Agency is getting the best value for its investment in critical defense infrastructure.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, particularly those involved in missile defense. The contract delivers essential services for the testing and validation of advanced missile defense systems. Performance is concentrated in Florida, indicating a significant economic impact and potential job creation within that state. The workforce implications include specialized engineering, manufacturing, and technical roles required for producing and supporting these advanced targets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to complacency or reduced urgency in innovation if not actively managed.
Geographic concentration in Florida could pose risks related to natural disasters or localized economic downturns affecting performance.
Reliance on a single prime contractor for such a critical capability might present supply chain vulnerabilities.

Positive Signals

Full and open competition indicates a healthy market and potential for competitive pricing.
Fixed-price incentive contract type aligns contractor incentives with government objectives, promoting performance.
The sustained nature of the contract suggests a stable and predictable demand for these vital defense assets.

Sector Analysis

The defense sector, specifically within the guided missile and space vehicle manufacturing sub-sector, is characterized by high barriers to entry, significant R&D investment, and stringent quality requirements. This contract fits within the broader missile defense ecosystem, supporting the testing and readiness of strategic assets. Comparable spending benchmarks are difficult to ascertain due to the unique nature of these targets, but the scale of this award reflects the high cost associated with advanced defense technology.

Small Business Impact

The data indicates that small business participation was not a primary set-aside consideration for this contract, as the 'sb' field is false. This suggests that the prime contractor, Aerojet Rocketdyne, is likely a large business. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within the supply chain for these specialized targets. The absence of a specific small business set-aside might limit direct opportunities for smaller firms in prime contracting roles.

Oversight & Accountability

Oversight for this contract is likely managed by the Missile Defense Agency, with potential involvement from the Department of Defense's Inspector General. Accountability measures are embedded within the fixed-price incentive contract structure, which ties profits to performance metrics. Transparency is generally maintained through contract award databases and reporting requirements, although specific performance details may be sensitive.

Related Government Programs

Missile Defense Systems
Ballistic Missile Defense
Advanced Target Systems
Aerospace Manufacturing
Defense Procurement

Risk Flags

Long-term contract duration may lead to technological obsolescence.
Geographic concentration of performance could pose localized risks.
Potential for contractor performance degradation over extended period.
Reliance on a single prime contractor for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.11 billion to AEROJET ROCKETDYNE COLEMAN AEROSPACE INC. MRBM TARGETS

Who is the contractor on this award?

The obligated recipient is AEROJET ROCKETDYNE COLEMAN AEROSPACE INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $1.11 billion.

What is the period of performance?

Start: 2013-10-31. End: 2029-12-31.

What is the historical spending trend for MRBM targets by the Missile Defense Agency?

Analyzing historical spending on MRBM targets by the Missile Defense Agency (MDA) requires access to detailed procurement data over several fiscal years. While this specific contract represents a significant award of over $1.11 billion, understanding the broader trend involves examining previous contracts for similar target systems, their values, durations, and the number of bidders. Trends might indicate increasing or decreasing investment in this area, driven by evolving threat assessments and technological advancements in missile defense. For instance, a sustained or increasing spending pattern could suggest a growing perceived threat or a long-term modernization effort. Conversely, a declining trend might point to the maturation of existing systems or a shift in strategic priorities. Without specific historical data points for comparison, it's difficult to definitively characterize the current award's place within a historical spending trajectory, but its substantial value suggests a continued commitment to this capability.

How does the performance of Aerojet Rocketdyne on similar contracts compare to industry benchmarks?

Assessing Aerojet Rocketdyne's performance on similar contracts requires a detailed review of their past performance evaluations, on-time delivery rates, cost performance, and quality metrics for previous government contracts, particularly those involving complex aerospace manufacturing or missile systems. Benchmarking against industry standards would involve comparing these metrics against averages for companies of similar size and specialization within the defense sector. Factors such as contract type (e.g., fixed-price vs. cost-plus), program complexity, and customer satisfaction ratings are crucial. A positive performance history, characterized by meeting or exceeding contract requirements, on-time delivery, and effective cost management, would indicate a lower risk for this current contract. Conversely, a history of performance issues, cost overruns, or delivery delays would raise concerns and necessitate closer scrutiny of their capabilities and management approach for the MRBM target contract.

What are the primary risks associated with the long duration (over 16 years) of this contract?

The extended duration of this contract, spanning from 2013 to 2029, presents several potential risks. Firstly, technological obsolescence is a significant concern; the threat landscape and defense technologies evolve rapidly, and targets developed early in the contract period might become less relevant or effective by its end. Secondly, contractor performance can degrade over long periods due to changes in key personnel, organizational priorities, or a potential decrease in competitive pressure if follow-on work is not actively pursued. Thirdly, economic uncertainties and shifting budget priorities within the Department of Defense could lead to funding instability or contract modifications, impacting the program's continuity. Finally, maintaining consistent quality and innovation over such an extended timeframe requires robust program management and continuous oversight to ensure the targets remain effective and meet evolving requirements.

How does the fixed-price incentive (FPI) contract type influence cost control and contractor motivation?

The Fixed-Price Incentive (FPI) contract type is designed to provide a middle ground between the cost certainty of fixed-price contracts and the flexibility of cost-reimbursement contracts, aiming to achieve better value for the government. In an FPI contract, the final price is determined by the contractor's performance against mutually agreed-upon targets for cost, delivery schedule, and performance. There is a target cost, a target profit, and a price ceiling. If the contractor achieves a final cost below the target cost, both the government and the contractor share in the savings (a lower final price). If the final cost exceeds the target cost, the contractor bears a portion of the overrun up to a certain point, after which the government assumes more risk. This structure incentivizes the contractor to control costs and perform efficiently to maximize their profit, while also providing the government with a degree of cost certainty up to the ceiling. It motivates the contractor to meet performance and schedule goals to achieve the target profit or better.

What is the strategic importance of MRBM targets for the Missile Defense Agency's mission?

Missile defense systems are designed to detect, track, and intercept threats such as ballistic missiles. The effectiveness of these systems can only be validated through rigorous testing and training exercises. Medium-Range Ballistic Missile (MRBM) targets are crucial components of this testing regimen. They simulate the characteristics of actual adversary missiles, allowing the MDA to evaluate the performance of their interceptors, radar systems, and command and control infrastructure under realistic conditions. Without accurate and representative targets, the MDA cannot reliably assess the readiness of its missile defense capabilities, identify weaknesses, or develop improvements. Therefore, a consistent and reliable supply of MRBM targets, as provided by this contract, is fundamental to ensuring the nation's security against ballistic missile threats.

Are there any known issues with Aerojet Rocketdyne's past performance on Department of Defense contracts?

To determine if there are known issues with Aerojet Rocketdyne's past performance on Department of Defense contracts, a thorough review of their contract history, including past performance evaluations (CPARS - Contractor Performance Assessment Reporting System), any contract disputes, claims, or terminations for default would be necessary. Publicly available information might include news reports on significant issues or government accountability office (GAO) bid protest decisions. Generally, large defense contractors like Aerojet Rocketdyne have extensive contract portfolios, and occasional performance challenges or disputes can occur. The key is to assess the frequency, severity, and resolution of any such issues. If significant negative performance trends or unresolved major issues exist, it would warrant closer examination of their suitability for this critical MRBM target contract. Without specific data on past performance issues, it is assumed they have met contractual obligations sufficiently to be awarded this significant contract.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ014712R0005

Offers Received: 4

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: L3harris Technologies, Inc

Address: 7675 MUNICIPAL DRIVE, ORLANDO, FL, 32819

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: $1,427,110,839

Exercised Options: $1,290,071,176

Current Obligation: $1,112,182,933

Actual Outlays: $33,005,578

Subaward Activity

Number of Subawards: 393

Total Subaward Amount: $119,903,307

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline