Navy awards $37.1M contract for Hydroclave refurbishment to SGL Composites Inc

Contract Overview

Contract Amount: $37,098,089 ($37.1M)

Contractor: SGL Composites Inc.

Awarding Agency: Department of Defense

Start Date: 2019-12-09

End Date: 2026-05-21

Contract Duration: 2,355 days

Daily Burn Rate: $15.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HYDROCLAVE REFURBISHMENT

Place of Performance

Location: GARDENA, LOS ANGELES County, CALIFORNIA, 90249

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $37.1 million to SGL COMPOSITES INC. for work described as: HYDROCLAVE REFURBISHMENT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Long contract duration of 2355 days suggests a need for sustained support. 3. The contract is for refurbishment of propulsion unit parts, indicating a focus on maintenance and sustainment. 4. Awarded by the Department of the Navy, a major defense spender. 5. The fixed-price contract type aims to control costs for the government. 6. The specific product service code (PSC) is not provided, making direct benchmarking difficult.

Value Assessment

Rating: fair

Without a competitive bidding process, it is difficult to definitively assess the value for money. The fixed-price nature of the contract provides some cost certainty. However, the lack of competition raises concerns about whether the government secured the best possible price. Benchmarking against similar refurbishment contracts for naval propulsion systems would be necessary for a more thorough assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, SGL Composites Inc., was solicited. This significantly limits price discovery and competition. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to higher prices compared to fully competed contracts.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down costs. The government did not benefit from multiple offers to choose from.

Public Impact

The Department of the Navy benefits from the refurbishment of critical missile propulsion components. This contract ensures the operational readiness of naval assets utilizing these propulsion units. The services are likely performed in California, where the contractor is located. The contract supports specialized manufacturing and refurbishment jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Long contract duration could lead to cost overruns if not managed effectively.
Lack of transparency in the sole-source justification process.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Contract supports critical defense assets, ensuring readiness.
Specialized nature of the work may require a single, qualified provider.

Sector Analysis

The defense industrial base relies on specialized manufacturers for critical components like missile propulsion units. This contract falls within the 'Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing' sector. The market for such specialized refurbishment services is likely concentrated among a few highly qualified firms, which can sometimes lead to sole-source awards.

Small Business Impact

There is no indication that this contract includes a small business set-aside. Given the specialized nature of the work and the sole-source award, it is unlikely that significant subcontracting opportunities for small businesses will be mandated, though the prime contractor may engage them.

Oversight & Accountability

Oversight would typically be conducted by the Department of the Navy's contracting and program management offices. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply if any fraud or waste is suspected.

Related Government Programs

Defense Procurement
Naval Aviation
Missile Systems
Propulsion Systems Manufacturing

Risk Flags

Sole-source award
Long contract duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.1 million to SGL COMPOSITES INC.. HYDROCLAVE REFURBISHMENT

Who is the contractor on this award?

The obligated recipient is SGL COMPOSITES INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.1 million.

What is the period of performance?

Start: 2019-12-09. End: 2026-05-21.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source can provide the required supplies or services, such as when there is a unique capability, a critical need that cannot be met by competition, or when the cost of competition would outweigh the benefits. For this contract, the specialized nature of 'Hydroclave Refurbishment' for missile propulsion units might necessitate a single, highly qualified contractor with proprietary knowledge or specialized equipment. Further investigation into the Federal Acquisition Regulation (FAR) justifications for sole-source awards would be required to understand the precise rationale.

How does the awarded price compare to market rates for similar refurbishment services?

Direct comparison to market rates for similar 'Hydroclave Refurbishment' services is challenging without more specific details about the scope of work and the exact components being refurbished. The provided data indicates a total award of $37,098,089.22 over a period of 2355 days. Benchmarking would require identifying comparable contracts, ideally those awarded competitively, for similar naval propulsion unit refurbishment. Factors such as the complexity of the refurbishment, the specific technologies involved, and the required certifications would influence pricing. Given the sole-source nature, it is difficult to ascertain if this price represents optimal value without a competitive baseline.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

Sole-source contracts, especially those with a long duration like this 2355-day award, carry inherent risks. The primary risk is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or improve efficiency. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider. For long-term contracts, cost escalation due to unforeseen factors can be a concern, even with a fixed-price structure, if contract modifications become necessary. Ensuring robust oversight and performance management is crucial to mitigate these risks and ensure the government receives fair value throughout the contract's life.

What is the historical spending pattern for Hydroclave refurbishment by the Department of the Navy?

The provided data only pertains to this single contract award. To assess historical spending patterns for Hydroclave refurbishment by the Department of the Navy, a broader search of federal procurement databases would be necessary. This would involve looking for previous contracts with the same or similar product service codes (PSCs), keywords, and contractors. Analyzing historical spending would help determine if this $37.1 million award is an anomaly, an increase, or consistent with past investments in this area. It would also reveal if this is a recurring need or a one-time major refurbishment effort.

What is the track record of SGL Composites Inc. in performing similar defense contracts?

The provided data identifies SGL Composites Inc. as the contractor but does not offer details on their past performance or track record. To assess their suitability and reliability for this contract, a review of their contract history with the Department of Defense and other federal agencies would be essential. This would include examining past performance evaluations, any history of contract disputes or terminations, and their experience with similar complex refurbishment projects. A strong performance history would provide greater confidence in their ability to successfully execute this $37.1 million sole-source award.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0017819R4031

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: SGL Carbon SE

Address: 1551 WEST 139TH ST, GARDENA, CA, 90249

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $39,174,875

Exercised Options: $37,591,591

Current Obligation: $37,098,089

Actual Outlays: $50,252

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline