DoD awards $33.3M for long-lead missile materials, with no competition and a firm fixed price

Contract Overview

Contract Amount: $33,273,000 ($33.3M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2024-09-23

End Date: 2026-03-31

Contract Duration: 554 days

Daily Burn Rate: $60.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY25 LRIP AUR AND CATM LONG LEAD MATERIALS

Place of Performance

Location: NORTHRIDGE, LOS ANGELES County, CALIFORNIA, 91324

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $33.3 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: FY25 LRIP AUR AND CATM LONG LEAD MATERIALS Key points: 1. Contract awarded to a single vendor suggests potential for higher costs due to lack of competition. 2. Firm Fixed Price contract type shifts cost risk to the government. 3. Long lead time materials indicate a critical component for future production runs. 4. The contract duration of 554 days aligns with the need for timely material acquisition. 5. Awarded by the Department of the Navy, this supports strategic defense capabilities. 6. The specific NAICS code points to manufacturing of guided missiles and space vehicles.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar long-lead missile components. The firm fixed price structure, while providing cost certainty, can be disadvantageous to the government when competition is absent, potentially leading to prices above fair market value. The total award amount of $33.3 million for materials alone warrants scrutiny to ensure it aligns with industry standards for such specialized components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Alliant Techsystems Operations LLC, was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and fosters innovation. The lack of competition raises concerns about whether the government secured the best possible pricing and terms.

Taxpayer Impact: Taxpayers may be paying a premium for these essential materials due to the absence of competitive pressure. Without a competitive process, there is less assurance that the awarded price reflects true market value.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader defense industrial base, ensuring the continued production of critical missile systems. Services delivered include the procurement of long-lead time materials essential for manufacturing guided missiles and space vehicles. The geographic impact is primarily within California, where the contractor is located, and potentially extends to defense installations receiving the final products. Workforce implications include the support of specialized manufacturing jobs within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Firm Fixed Price contract places all cost overrun risk on the government.
Lack of competition may stifle innovation and reduce vendor options for future procurements.

Positive Signals

Award to a known entity, Alliant Techsystems, may indicate a reliance on established expertise for critical components.
Firm Fixed Price contract provides budget certainty for this specific material acquisition.
Long-lead time materials ensure the continuity of critical defense manufacturing programs.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical segment of the aerospace and defense industry. The market is characterized by high barriers to entry, significant R&D investment, and a limited number of qualified suppliers. Spending in this sector is driven by national security priorities and technological advancements. Comparable spending benchmarks are difficult to establish due to the unique nature of long-lead materials for advanced weapon systems.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or consideration (ss: false, sb: false). This sole-source award to a large prime contractor suggests limited direct opportunities for small businesses within this specific procurement. Subcontracting opportunities for small businesses would depend on Alliant Techsystems' internal sourcing strategies, which are not detailed in this award notice.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed price structure, requiring the contractor to deliver specified materials within the agreed-upon cost. Transparency is limited due to the sole-source nature of the award; however, contract award data is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Guided Missile Manufacturing
Long Lead Time Materials Procurement
Department of Defense Prime Contracting
Aerospace and Defense Manufacturing
Sole Source Defense Contracts

Risk Flags

Sole Source Award
Lack of Competition
Potential for Overpricing
Firm Fixed Price Risk to Government

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.3 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. FY25 LRIP AUR AND CATM LONG LEAD MATERIALS

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 $33.3 million.

What is the period of performance?

Start: 2024-09-23. End: 2026-03-31.

What is the historical spending pattern for long-lead materials for this specific missile program or similar systems by the Department of the Navy?

Analyzing historical spending for long-lead materials for this specific missile program or similar systems by the Department of the Navy is crucial for assessing value. Without access to specific program historical data, we can look at broader trends. The defense sector often sees significant investment in long-lead items to ensure production continuity for major weapon systems. However, sole-source awards, like this one, can obscure year-over-year price fluctuations and the impact of inflation or market changes. A review of past contracts for comparable components, even if competed, would provide a benchmark. If previous awards for similar materials were competed and resulted in lower prices, it would strengthen the argument that this sole-source award may not be the most cost-effective. Conversely, if the contractor has a long-standing relationship and demonstrated efficiency in producing these critical components, the price might be justified, though still subject to scrutiny without competition.

How does the awarded price of $33.3 million compare to industry benchmarks for similar long-lead missile components?

Directly comparing the $33.3 million award to industry benchmarks for similar long-lead missile components is challenging without specific cost breakdowns and detailed specifications of the materials. The 'Guided Missile and Space Vehicle Manufacturing' sector (NAICS 336414) is highly specialized, with costs heavily influenced by material science, manufacturing complexity, and required certifications. However, for context, large-scale defense procurements often involve substantial sums for critical components. To assess value, one would ideally compare this award to previous contracts for the same or analogous materials, ideally those awarded through competition. If comparable competed contracts show significantly lower per-unit costs or total values for similar quantities and specifications, it would indicate potential overpricing. Alternatively, if the market for these specific materials is known to be limited to a few suppliers, and Alliant Techsystems is a primary source, the price might be closer to market reality, though still subject to negotiation and justification in a competitive environment.

What are the specific risks associated with a sole-source award for critical long-lead defense materials?

The primary risk associated with a sole-source award for critical long-lead defense materials is the lack of price competition, which can lead to inflated costs for the government and, by extension, taxpayers. Without multiple bids, there is less incentive for the contractor to offer the most competitive pricing. Furthermore, sole-source awards can create vendor lock-in, making it difficult and potentially more expensive to switch suppliers in the future if issues arise or better alternatives become available. This can also reduce the government's leverage in future negotiations. Another risk is the potential for reduced innovation, as the contractor may not feel the same pressure to invest in process improvements or material advancements that might be driven by a competitive market. Finally, there's a risk of complacency, where the absence of competitive pressure could lead to less rigorous quality control or responsiveness, although this is mitigated by contract oversight.

What is Alliant Techsystems Operations LLC's track record with the Department of the Navy and in producing similar defense components?

Alliant Techsystems Operations LLC (now part of Northrop Grumman) has a significant and established track record within the Department of Defense, including the Department of the Navy, particularly in areas related to aerospace and defense manufacturing. They are known for producing a wide range of defense systems, including propulsion, electronics, and integrated systems for various platforms. Their experience in guided missile and space vehicle manufacturing is extensive. When evaluating this specific contract, their history suggests they possess the technical capabilities and manufacturing infrastructure required for producing long-lead materials. However, a comprehensive assessment would involve reviewing their performance on past contracts, including any past performance issues, cost overruns, or schedule delays, as well as their success in delivering quality products on time and within budget for similar complex defense components.

What are the potential implications of the firm fixed price (FFP) contract type on cost control for these long-lead materials?

The Firm Fixed Price (FFP) contract type shifts the majority of cost risk from the government to the contractor, Alliant Techsystems Operations LLC. This means the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. For long-lead materials, this provides the Department of the Navy with budget certainty, as the total cost is known upfront. However, because this is a sole-source award, the government does not benefit from the price reductions that competition typically drives. The contractor, knowing they are the sole provider, may have built a larger contingency into their fixed price to cover unforeseen costs or to maximize profit. While FFP is generally preferred for its cost certainty, in a sole-source scenario, it can potentially lead to the government paying a higher price than if the contract had been competed.

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: N0001924R0032

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $33,273,000

Exercised Options: $33,273,000

Current Obligation: $33,273,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline