DoD's $8.8M NRE contract for cable assemblies awarded to Alliant Techsystems Operations LLC

Contract Overview

Contract Amount: $8,796,659 ($8.8M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2020-09-28

End Date: 2024-12-20

Contract Duration: 1,544 days

Daily Burn Rate: $5.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MX-12348/USM CABLE ASSEMBLY (BOX 5) NRE

Place of Performance

Location: NORTHRIDGE, LOS ANGELES County, CALIFORNIA, 91324

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $8.8 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: MX-12348/USM CABLE ASSEMBLY (BOX 5) NRE Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. The contract was not competed, raising questions about price discovery and value for money. 3. A significant duration of 1544 days suggests a long-term need for these specialized services. 4. The contract is for Non-Recurring Engineering (NRE), which can be complex and difficult to benchmark. 5. The award is a Delivery Order under a larger contract, suggesting it's part of a broader acquisition strategy. 6. The contract is managed by the Department of the Navy, a major defense acquisition entity.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its NRE nature and lack of competition. The cost-plus-fixed-fee structure, while common for complex engineering, can lead to costs exceeding initial estimates if not managed tightly. Without competitive bids, it's difficult to ascertain if the fixed fee accurately reflects the effort required or if it includes a premium. The total award amount of $8.8 million over its duration needs careful scrutiny against industry standards for similar NRE projects.

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 possesses the necessary capabilities, technology, or when urgency dictates a rapid award. The lack of competition means taxpayers did not benefit from potential price reductions that could arise from a bidding process. It also limits the government's ability to explore alternative solutions or innovative approaches from a wider market.

Taxpayer Impact: Sole-source awards can result in higher prices for taxpayers as there is no competitive pressure to drive down costs. It also reduces transparency in the procurement process.

Public Impact

The primary beneficiaries are likely defense contractors and their supply chains involved in producing specialized cable assemblies. The services delivered are critical for the operational readiness and technological advancement of naval systems. The geographic impact is primarily within California, where the contractor is located, potentially supporting local jobs. Workforce implications include specialized engineering and manufacturing roles within Alliant Techsystems Operations LLC and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Cost-plus-fixed-fee contracts carry inherent risks of cost overruns.
NRE contracts can be difficult to scope and manage effectively.
Long contract duration may not reflect current market efficiencies.

Positive Signals

Award to an established defense contractor with existing capabilities.
Contract supports critical naval systems, indicating strategic importance.
Delivery Order structure suggests integration into a larger, potentially well-managed program.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense-related manufacturing and development. The market for specialized defense components like NRE cable assemblies is often characterized by high barriers to entry, proprietary technology, and long-standing relationships between government agencies and prime contractors. Comparable spending benchmarks are difficult to establish due to the unique nature of NRE and the sole-source award, but the overall defense electronics and components market is substantial, with significant government investment.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the 'sb' field is false. There is no explicit small business set-aside mentioned. This suggests that the prime contractor, Alliant Techsystems Operations LLC, is likely responsible for subcontracting, and the extent to which small businesses will be involved is not detailed in this award notice. Further analysis would be needed to determine if subcontracting goals for small businesses are included in the master contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the cost-plus-fixed-fee structure, requiring the contractor to justify costs and adhere to the fixed fee. Transparency is limited due to the sole-source nature and the proprietary aspects of NRE. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Naval Systems Engineering
Defense Electronics Manufacturing
Specialized Component Procurement
Cost-Plus-Fixed-Fee Contracts
Non-Recurring Engineering Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Non-recurring engineering (NRE) designation
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.8 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. MX-12348/USM CABLE ASSEMBLY (BOX 5) NRE

Who is the contractor on this award?

The obligated recipient is ALLIANT TECHSYSTEMS OPERATIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $8.8 million.

What is the period of performance?

Start: 2020-09-28. End: 2024-12-20.

What is the historical spending pattern for similar NRE cable assembly contracts by the Department of the Navy?

Analyzing historical spending for similar NRE cable assembly contracts by the Department of the Navy is crucial for benchmarking. Without specific data on past awards for comparable items, it's challenging to provide precise figures. However, NRE projects, by definition, involve unique development efforts and are often costly due to the specialized engineering, testing, and prototyping required. The Department of the Navy, like other defense branches, frequently engages in NRE for system upgrades and new platform development. Historically, such contracts can range from hundreds of thousands to tens of millions of dollars, depending on complexity, technological innovation, and the scale of integration. The sole-source nature of this particular award ($8.8M) suggests it might be for a highly specialized or proprietary component where competition was deemed impractical or impossible, potentially leading to a higher price than a competed contract.

How does the cost-plus-fixed-fee (CPFF) structure impact the value proposition for this contract?

The Cost-Plus-Fixed-Fee (CPFF) contract structure for this $8.8 million NRE cable assembly award presents a mixed value proposition. On one hand, it allows the government to procure complex, non-standard engineering services where precise costs are difficult to estimate upfront. The 'cost-plus' element means the contractor is reimbursed for allowable costs incurred, while the 'fixed-fee' provides a predetermined profit margin. This can incentivize the contractor to complete the work efficiently to maximize their fee relative to the effort. However, CPFF contracts also carry inherent risks for the government. If the contractor's costs escalate beyond projections, the total expenditure can increase significantly, potentially exceeding the initial budget. The government bears the risk of cost overruns, and the fixed fee does not directly incentivize cost reduction beyond what's needed to achieve the fee. Effective government oversight is paramount to ensure costs are reasonable and allocable.

What are the potential risks associated with a sole-source award for specialized engineering services?

Sole-source awards for specialized engineering services, like this $8.8 million NRE cable assembly contract, carry several potential risks. The most significant is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved in a competitive bidding environment. Without competing offers, there's less pressure on the contractor to offer the most cost-effective solution. Another risk is the potential for reduced innovation; a sole-source award might not encourage the contractor to explore novel or more efficient approaches if they are not explicitly required or incentivized. Furthermore, it can create a dependency on a single supplier, potentially limiting future options or leverage for the government. Ensuring robust justification for the sole-source determination and implementing stringent oversight are critical to mitigate these risks.

What is the track record of Alliant Techsystems Operations LLC in delivering similar engineering services to the DoD?

Alliant Techsystems Operations LLC (now part of Northrop Grumman) has a substantial track record of delivering complex engineering and manufacturing services to the Department of Defense across various platforms and programs. They are known for their work in areas such as aerospace systems, defense electronics, and munitions. For specialized engineering services, particularly those involving NRE for components like cable assemblies, their experience likely includes numerous projects requiring advanced technical expertise, rigorous quality control, and adherence to strict defense specifications. While specific performance metrics for this exact contract are not detailed here, the company's long-standing presence and significant contract awards suggest a generally capable performance history. However, as with any large defense contractor, individual contract performance can vary, and a deeper dive into past performance reviews and past performance information (PPI) databases would be necessary for a comprehensive assessment.

How does the 'Engineering Services' NAICS code (541330) typically relate to defense spending and contract types?

The North American Industry Classification System (NAICS) code 541330, 'Engineering Services,' broadly encompasses firms that provide engineering consulting and design services. Within the defense sector, this code is highly relevant and frequently associated with contracts for research and development, system design, integration, testing, and technical support for military platforms and equipment. Contracts under this NAICS code can take various forms, including cost-plus (like the CPFF here), fixed-price, and time-and-materials. Defense spending heavily utilizes engineering services for everything from conceptual design of new weapon systems to the modification and sustainment of existing ones. The 'NRE' (Non-Recurring Engineering) designation in this specific contract indicates a focus on the initial, unique design and development phase, which is a core function often captured under this engineering services classification.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 9401 CORBIN AVE, NORTHRIDGE, CA, 91324

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: $8,796,659

Exercised Options: $8,796,659

Current Obligation: $8,796,659

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001917G0011

IDV Type: BOA

Timeline