DoD's $16M UNFILLED MULTI-APPLICATION FUZE contract to Thales UK Limited lacked competition, raising value concerns

Contract Overview

Contract Amount: $16,023,066 ($16.0M)

Contractor: Thales UK Limited

Awarding Agency: Department of Defense

Start Date: 2008-03-31

End Date: 2018-04-16

Contract Duration: 3,668 days

Daily Burn Rate: $4.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UNFILLED MULTI-APPLICATION FUZE (FMS)

Plain-Language Summary

Department of Defense obligated $16.0 million to THALES UK LIMITED for work described as: UNFILLED MULTI-APPLICATION FUZE (FMS) Key points: 1. The contract was awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. A long performance period of nearly 10 years suggests a sustained need for the fuze system. 3. The firm fixed-price contract type shifts some risk to the contractor, but the lack of competition is a primary concern. 4. The 'Guided Missile and Space Vehicle Manufacturing' sector is highly specialized and often involves complex supply chains. 5. No small business participation was indicated, suggesting larger prime contractors are involved. 6. The absence of a competitive process warrants scrutiny regarding the reasonableness of the awarded price.

Value Assessment

Rating: questionable

Without competitive bids, it is difficult to benchmark the value for money on this $16 million contract. The lack of competition suggests that the government may not have secured the most favorable pricing. Comparing this to similar contracts for fuze systems would be necessary to assess if the price was reasonable, but such data is not readily available in this context. The extended duration of the contract further emphasizes the need for strong justification for the non-competitive award.

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. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition means that potential alternative suppliers were not considered, and the government did not benefit from a bidding process that could drive down prices and encourage innovation.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price reflects the lowest possible cost for the required fuze system.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical components for missile and space vehicle systems. The contract supports the manufacturing of guided missile and space vehicle components, essential for national defense. The geographic impact is primarily within the defense industrial base, potentially involving specialized manufacturing facilities. Workforce implications would be within the specialized manufacturing sector, requiring skilled labor in areas like aerospace engineering and production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced value for taxpayer dollars.
The sole-source award limits opportunities for other qualified manufacturers to participate and innovate.
The extended contract duration without competition could indicate a lack of market research or strategic sourcing.

Positive Signals

The firm fixed-price contract type provides cost certainty for the government once awarded.
The contract supports a critical defense capability, ensuring the availability of necessary components.
The long performance period suggests a stable, long-term requirement being met.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized segment of the aerospace and defense industry. It involves the production of complex systems requiring advanced engineering, precision manufacturing, and stringent quality control. Spending in this sector is often characterized by long development cycles, high research and development costs, and significant government investment due to national security implications. Contracts are frequently awarded on a sole-source or limited-competition basis due to the unique capabilities required.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Thales UK Limited, is a large international defense company. This suggests that opportunities for small businesses would likely be through subcontracting, if at all. The lack of a specific small business focus in the prime contract award may limit direct opportunities for smaller enterprises within this specific procurement.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense, likely managed by the Defense Contract Management Agency (DCMA). Accountability measures would include contract performance monitoring, quality assurance, and financial oversight. Transparency is generally limited for sole-source defense contracts, with details often classified or restricted. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Missile Manufacturing
Aerospace Components
Defense Systems Procurement
Guided Weapons
Space Vehicle Production

Risk Flags

Lack of Competition
Potential for Overpricing
Extended Contract Duration
Sole-Source Award

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.0 million to THALES UK LIMITED. UNFILLED MULTI-APPLICATION FUZE (FMS)

Who is the contractor on this award?

The obligated recipient is THALES UK LIMITED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $16.0 million.

What is the period of performance?

Start: 2008-03-31. End: 2018-04-16.

What is the track record of Thales UK Limited in delivering similar defense components?

Thales UK Limited is a subsidiary of the global Thales Group, a major player in aerospace, defense, security, and transportation. The company has a significant history of supplying complex systems and components to defense ministries worldwide, including the UK Ministry of Defence and other NATO allies. Their expertise spans areas such as electronic warfare systems, communication systems, and defense electronics. While specific performance data for this particular fuze contract is not detailed here, Thales's broader reputation suggests a capacity for high-quality manufacturing within the defense sector. However, a comprehensive assessment would require reviewing past performance evaluations and any documented issues related to their contracts with the DoD or other government agencies.

How does the $16 million value compare to similar fuze system procurements?

Directly comparing the $16 million value of this specific 'UNFILLED MULTI-APPLICATION FUZE (FMS)' contract is challenging without access to a broader dataset of comparable fuze system procurements. Fuze systems can vary significantly in complexity, functionality, and quantity, leading to wide price ranges. Factors such as the specific application (e.g., for missiles, artillery, or bombs), technological sophistication, and required reliability standards heavily influence cost. Given this contract was sole-sourced and had a long duration (nearly 10 years), it's plausible that the price reflects specialized requirements or a lack of competitive market alternatives. A thorough value assessment would necessitate identifying contracts for fuze systems with similar technical specifications and quantities, ideally awarded through a competitive process, to establish a robust benchmark.

What are the primary risks associated with a sole-source contract of this magnitude?

The primary risk associated with a sole-source contract of this magnitude ($16 million) is the potential for inflated pricing due to the absence of competitive pressure. Without competing bids, the government lacks a clear market benchmark to ensure it is receiving fair value for its money. This can lead to overspending and inefficient use of taxpayer funds. Another significant risk is the potential for complacency from the contractor, as there is less incentive to innovate or improve efficiency when competition is not a factor. Furthermore, reliance on a single source can create supply chain vulnerabilities; if the contractor experiences production issues or financial difficulties, it could disrupt the supply of critical defense components.

How effective is the firm fixed-price contract type in managing costs for this type of defense procurement?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs for procurements where the scope of work is well-defined and risks can be reasonably estimated. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This provides cost certainty for the buyer (the government) and incentivizes the contractor to control costs efficiently to maximize profit. For a product like a fuze system, where specifications are likely established, FFP can be advantageous. However, the effectiveness of FFP is somewhat diminished in a sole-source scenario. While the government has price certainty, the initial price might be higher than it would be in a competitive environment, thus reducing the overall cost-saving benefit.

What are the historical spending patterns for 'Guided Missile and Space Vehicle Manufacturing' by the Department of Defense?

Historical spending patterns within the Department of Defense (DoD) for 'Guided Missile and Space Vehicle Manufacturing' (NAICS 336414) are substantial and reflect the critical nature of these capabilities for national security. The DoD consistently allocates significant portions of its budget to research, development, testing, and procurement of missile and space systems. This spending is characterized by large, long-term contracts, often awarded non-competitively due to the specialized nature of the technology and the limited number of qualified contractors. Spending fluctuates based on strategic priorities, technological advancements, and geopolitical factors, but it remains a core area of investment. Analyzing historical data would reveal trends in specific sub-categories, major program investments, and the prevalence of sole-source versus competitive awards within this sector.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001907R0093

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Thales (UEI: 275250553)

Address: 350 LONGWATER AVENUE, READING

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $16,537,508

Exercised Options: $16,537,508

Current Obligation: $16,023,066

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline