DoD awards $25.8M for ducted rockets, a sole-source contract for target vehicles

Contract Overview

Contract Amount: $25,779,427 ($25.8M)

Contractor: Orbital Sciences LLC

Awarding Agency: Department of Defense

Start Date: 2012-08-29

End Date: 2015-06-30

Contract Duration: 1,035 days

Daily Burn Rate: $24.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: GQM-163A FULL RATE PRODUCTION 6 - FIXED-PRICE INCENTIVE CLIN 0015 - DUCTED ROCKETS FOR TARGET VEHICLES.

Place of Performance

Location: CHANDLER, MARICOPA County, ARIZONA, 85286

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $25.8 million to ORBITAL SCIENCES LLC for work described as: GQM-163A FULL RATE PRODUCTION 6 - FIXED-PRICE INCENTIVE CLIN 0015 - DUCTED ROCKETS FOR TARGET VEHICLES. Key points: 1. Contract awarded to Orbital Sciences LLC for GQM-163A full rate production. 2. Focus on ducted rockets for target vehicles, a niche but critical defense component. 3. Fixed-price incentive contract type suggests shared risk and reward between government and contractor. 4. Contract duration of 1035 days indicates a medium-term production run. 5. Awarded by the Defense Contract Management Agency, overseeing defense procurement. 6. The contract is for guided missile and space vehicle manufacturing, a specialized sector.

Value Assessment

Rating: fair

The contract's value of $25.8 million for ducted rockets appears reasonable given the specialized nature of the product and the fixed-price incentive structure. However, without direct comparisons to similar target vehicle contracts or detailed cost breakdowns, a precise value-for-money assessment is challenging. The pricing is likely influenced by the limited production volume and the advanced technology involved in guided missile components.

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 is available or when there is a compelling justification for not seeking competition. The lack of competition means the government did not benefit from potential price reductions or innovative solutions that might arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is less pressure on the contractor to offer the most competitive price. It also limits opportunities for other capable companies to secure government contracts.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical target vehicles for training and testing. These ducted rockets are essential for simulating adversary threats in military exercises. The contract supports advanced manufacturing capabilities within the guided missile and space vehicle sector. Work is likely concentrated in Arizona, where Orbital Sciences LLC has operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of competition may reduce opportunities for other qualified small or large businesses.
Fixed-price incentive contracts can still lead to cost overruns if not managed carefully.

Positive Signals

Contract awarded to a known entity, Orbital Sciences LLC, suggesting a potentially reliable supplier.
Fixed-price incentive structure aligns contractor and government interests in achieving production goals.
Production of specialized target vehicles supports critical defense training and readiness.

Sector Analysis

The guided missile and space vehicle manufacturing sector is highly specialized, characterized by high barriers to entry due to technological complexity and stringent regulatory requirements. Spending in this area is driven by national security needs and technological advancement. Comparable spending benchmarks are difficult to establish due to the unique nature of target vehicles, but this contract represents a significant investment in a niche but vital defense capability.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit mention of subcontracting goals for small businesses. The award to Orbital Sciences LLC, a large defense contractor, suggests that the primary focus is on fulfilling a specific technological requirement rather than promoting small business participation through this particular award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. As a definitive contract, it is subject to standard government oversight procedures. Transparency is generally maintained through contract databases, though specific performance metrics and cost details may be sensitive.

Related Government Programs

GQM-163A Missile Program
Target Drone Systems
Naval Air Warfare
Missile Manufacturing
Defense Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns in FPI contracts

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.8 million to ORBITAL SCIENCES LLC. GQM-163A FULL RATE PRODUCTION 6 - FIXED-PRICE INCENTIVE CLIN 0015 - DUCTED ROCKETS FOR TARGET VEHICLES.

Who is the contractor on this award?

The obligated recipient is ORBITAL SCIENCES LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.8 million.

What is the period of performance?

Start: 2012-08-29. End: 2015-06-30.

What is the historical spending trend for GQM-163A target vehicles?

Historical spending data for the GQM-163A program prior to this $25.8 million award would provide crucial context. Analyzing previous contract awards, including their value, type (e.g., fixed-price, cost-plus), and duration, would reveal trends in production volume and cost escalation. Understanding if this $25.8 million represents an increase or decrease in annual spending, or if it aligns with previous production rates, is key to assessing value and program stability. Without access to prior contract details, it's difficult to determine if costs have been managed effectively over time or if there have been significant fluctuations in program funding.

How does the unit cost of the GQM-163A compare to similar target vehicles?

Benchmarking the per-unit cost of the GQM-163A against similar target vehicles is essential for a value assessment. However, direct comparisons are challenging due to the specialized nature of ducted rockets and their specific performance characteristics. If comparable target vehicles exist with similar speed, altitude, and maneuverability capabilities, their procurement costs would serve as a useful benchmark. Factors such as technology maturity, production volume, and contractor efficiency influence unit costs. A higher unit cost might be justifiable if the GQM-163A offers superior capabilities critical for advanced threat simulation, but this needs to be substantiated against available alternatives and market rates.

What are the specific risks associated with a sole-source award for this type of defense system?

Sole-source awards for critical defense systems like the GQM-163A carry inherent risks. The primary risk is the potential for inflated pricing due to the absence of competitive pressure, which can lead to suboptimal value for taxpayer dollars. Another risk is reduced innovation, as the sole contractor may have less incentive to invest in process improvements or cost-saving measures. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; any disruption affecting the sole source could significantly impact program continuity and national security readiness. The government's negotiation leverage is also diminished, potentially leading to less favorable contract terms.

What is Orbital Sciences LLC's track record with similar defense contracts?

Orbital Sciences LLC (now part of Northrop Grumman) has a significant track record in developing and producing aerospace and defense systems, including missiles and target vehicles. Their experience with programs like the GQM-163A suggests a deep understanding of the technical requirements and production processes involved. Assessing their past performance on similar fixed-price incentive contracts would be crucial. This includes evaluating their history of meeting cost, schedule, and performance targets, as well as their ability to manage risks and control expenditures. A review of past performance evaluations and any contract disputes or awards would provide insight into their reliability as a contractor for this specific program.

How does the fixed-price incentive (FPI) contract type mitigate risks for the government?

A Fixed-Price Incentive (FPI) contract aims to balance cost control with performance incentives. For the government, the FPI structure establishes a target cost and a target profit, with a price ceiling. If the contractor completes the work below the target cost, both parties share in the savings according to a pre-negotiated formula. Conversely, if costs exceed the target, the contractor assumes a larger portion of the overrun up to the price ceiling. This structure incentivizes the contractor to manage costs effectively while ensuring the government is protected from unlimited cost increases by the price ceiling. It encourages efficiency and cost-consciousness compared to simpler fixed-price contracts.

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: N0001912R0024

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 1575 SOUTH PRICE RD, CHANDLER, AZ, 85286

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

Financial Breakdown

Contract Ceiling: $25,779,427

Exercised Options: $25,779,427

Current Obligation: $25,779,427

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $16,282,828

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline