Navy awards $7.3M contract for shipset heat shields, with limited competition

Contract Overview

Contract Amount: $7,335,006 ($7.3M)

Contractor: Tex-Tech Engineered Composites, LLC

Awarding Agency: Department of Defense

Start Date: 2025-10-20

End Date: 2026-10-19

Contract Duration: 364 days

Daily Burn Rate: $20.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MK7 SHIPSETS TWCP HEATSHIELD

Place of Performance

Location: WINSTON SALEM, FORSYTH County, NORTH CAROLINA, 27107

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $7.3 million to TEX-TECH ENGINEERED COMPOSITES, LLC for work described as: MK7 SHIPSETS TWCP HEATSHIELD Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, allowing for flexibility but requiring close oversight. 2. The sole-source nature of this award raises questions about potential price overruns and lack of competitive pressure. 3. Performance period of one year suggests a focused scope, but long-term needs are unclear. 4. The specific part number (MK7) indicates a specialized component within a larger defense system. 5. Manufacturing NAICS code 336415 points to a niche industry with potentially few qualified suppliers.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids and the specialized nature of the product. The cost-plus-fixed-fee structure means the final cost is not predetermined, making direct comparison to fixed-price contracts difficult. Without more data on the specific heat shield requirements and market rates for similar components, it's hard to definitively assess if the $7.3 million represents a fair price. However, the absence of competition inherently limits the government's ability to secure the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, TEX-TECH ENGINEERED COMPOSITES, LLC, was solicited. This approach is typically used when only one responsible source is available or when there is a compelling justification for other than full and open competition. The lack of multiple bidders suggests that either the market for this specific component is extremely limited, or the justification for sole-sourcing was not thoroughly explored to ensure maximum competition.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to leverage market forces for cost savings.

Public Impact

The primary beneficiaries are the Department of the Navy and its shipbuilding programs, ensuring critical components are available. This contract delivers specialized heat shield components essential for the operational readiness of naval vessels. The geographic impact is primarily centered in North Carolina, where the contractor is located, potentially supporting local jobs. Workforce implications include specialized manufacturing roles within TEX-TECH ENGINEERED COMPOSITES, LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract requires robust oversight to manage costs effectively.
Lack of competition may indicate a concentrated market, posing future supply chain risks.
Specialized nature of the product could lead to long lead times if demand increases.

Positive Signals

Contract awarded to a specific company with likely expertise in this niche manufacturing area.
Clear performance period and delivery end date provide a defined scope for the contract.
The specific part number and NAICS code suggest a well-defined requirement.

Sector Analysis

The manufacturing of guided missile and space vehicle propulsion unit parts falls under a specialized segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, stringent quality requirements, and significant R&D investment. Companies operating in this space often possess unique technical capabilities and proprietary processes. Spending in this area is driven by defense procurement needs, with contracts often being long-term and high-value due to the critical nature of the components.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The sole-source nature further limits opportunities for small businesses to participate in this specific award. The overall impact on the small business ecosystem for this particular component is likely minimal unless the prime contractor has existing relationships with small business suppliers.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Navy's contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous financial oversight and auditing will be crucial to ensure costs are reasonable and allocable. Transparency may be limited due to the sole-source nature, but contract performance metrics and financial reporting should be subject to review. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing
Naval Shipbuilding and Repair
Defense Manufacturing Contracts
Aerospace Component Manufacturing

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.3 million to TEX-TECH ENGINEERED COMPOSITES, LLC. MK7 SHIPSETS TWCP HEATSHIELD

Who is the contractor on this award?

The obligated recipient is TEX-TECH ENGINEERED COMPOSITES, 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 $7.3 million.

What is the period of performance?

Start: 2025-10-20. End: 2026-10-19.

What is the track record of TEX-TECH ENGINEERED COMPOSITES, LLC with the Department of Defense, particularly on similar sole-source contracts?

Assessing the track record of TEX-TECH ENGINEERED COMPOSITES, LLC requires a deeper dive into federal procurement databases like FPDS-NG or SAM.gov. Specifically, one would look for past awards to this contractor, focusing on contracts with the Department of Defense and other agencies. Key metrics to examine include contract values, performance history (on-time delivery, quality ratings), and whether previous awards were also sole-sourced. A history of successful, on-time, and within-budget sole-source contracts might mitigate some concerns, while a pattern of cost overruns or performance issues would heighten them. Without this specific historical data, the assessment of the contractor's reliability for this $7.3 million award remains speculative.

How does the $7.3 million award compare to historical spending on MK7 shipset heat shields or similar components?

Comparing the $7.3 million award to historical spending on MK7 shipset heat shields or analogous components is crucial for value assessment. This would involve searching historical contract data for previous awards of the same or similar heat shields, noting their value, contract type (fixed-price vs. cost-plus), and duration. If previous awards for the same item were significantly lower in price or awarded competitively, it would suggest this current award might be less favorable. Conversely, if historical data shows similar price points for comparable components, it could indicate market stability. The sole-source nature of this award, however, inherently complicates direct historical comparisons, as competitive pressures are absent.

What are the specific risks associated with a sole-source award for critical defense components like heat shields?

Sole-source awards for critical defense components like heat shields carry several inherent risks. Firstly, the lack of competition can lead to inflated prices, as the government cannot leverage market forces to secure the best value. Secondly, it reduces the incentive for the sole provider to innovate or improve efficiency, potentially leading to stagnation. Thirdly, it creates a single point of failure in the supply chain; if the sole contractor experiences production issues, financial instability, or ceases operations, the government may face significant delays or be unable to procure the necessary components. This dependence also gives the contractor considerable leverage in negotiations. Finally, it raises concerns about whether a thorough market analysis was conducted to ensure no other viable sources exist.

What is the estimated cost per heat shield, and how does it benchmark against industry standards?

To estimate the cost per heat shield, we would need to know the quantity of heat shields included in the $7.3 million contract. Assuming, for example, that the contract covers 100 shipsets, the cost per shipset would be $73,000. However, without knowing the exact quantity or the breakdown of costs (materials, labor, fee) within the cost-plus-fixed-fee structure, a precise per-unit cost is impossible to determine. Benchmarking this against industry standards is also difficult without knowing the specific technical specifications, materials, and complexity of the MK7 heat shield. Specialized, high-performance components for defense applications typically command higher prices than commercial equivalents due to stringent requirements and lower production volumes.

What are the potential long-term implications for the Navy's supply chain if this component is only available from one source?

The long-term implications for the Navy's supply chain are significant if the MK7 shipset heat shield remains a sole-source item. This creates a critical dependency, making the Navy vulnerable to supply disruptions if the sole contractor faces issues. It also limits the Navy's ability to leverage competition for future procurements, potentially leading to sustained higher costs. Over time, this could stifle innovation in heat shield technology if the sole provider faces no competitive pressure to develop better or more cost-effective solutions. The Navy might need to invest in developing alternative sources or exploring different technologies to mitigate this long-term risk, which could involve substantial upfront costs and effort.

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: N0017825R4400

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 572 CASSELL ST, WINSTON SALEM, NC, 27107

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $14,670,013

Exercised Options: $14,670,013

Current Obligation: $7,335,006

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0017826D4400

IDV Type: IDC

Timeline