DoD awards $24.4M for hydraulic drive units, raising questions about competition and value

Contract Overview

Contract Amount: $24,415,480 ($24.4M)

Contractor: Woodward HRT Inc

Awarding Agency: Department of Defense

Start Date: 2022-12-08

End Date: 2026-03-11

Contract Duration: 1,189 days

Daily Burn Rate: $20.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DRIVE UNIT,HYDRAULI

Place of Performance

Location: VALENCIA, LOS ANGELES County, CALIFORNIA, 91355

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $24.4 million to WOODWARD HRT INC for work described as: DRIVE UNIT,HYDRAULI Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Limited competition raises concerns about achieving the best possible value for taxpayer funds. 3. The contract duration of nearly four years suggests a long-term need for these critical components. 4. Performance risk appears moderate given the specialized nature of aircraft parts manufacturing. 5. This contract falls within the 'Other Aircraft Parts' manufacturing sector, a niche but vital area for defense readiness. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The awarded amount of $24.4 million for hydraulic drive units over approximately four years needs closer scrutiny. Without comparison to similar sole-source awards or open market prices, it's difficult to definitively assess if this represents a fair price. The lack of competition inherently limits the government's ability to negotiate the most favorable terms, potentially leading to a higher cost than if multiple vendors had vied for the contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, WOODWARD HRT INC, was solicited. This approach bypasses the standard competitive bidding process, which typically involves soliciting proposals from multiple qualified suppliers. While sole-source awards can be justified in specific circumstances, such as when only one vendor possesses the necessary unique capabilities or proprietary technology, the lack of competition here raises concerns about price reasonableness and potential overspending. It limits the government's ability to leverage market forces to secure the best possible pricing.

Taxpayer Impact: The absence of competition means taxpayers may not be receiving the most cost-effective solution. Without a competitive environment, there is less pressure on the contractor to offer the lowest possible price, potentially leading to higher overall expenditure for these essential aircraft parts.

Public Impact

The Department of the Navy benefits directly through the acquisition of critical hydraulic drive units for its aircraft fleet. These units are essential for the operational readiness and maintenance of naval aviation assets. The contract supports specialized manufacturing capabilities within the United States, contributing to the defense industrial base. Work is likely to be performed in California, supporting the local economy and skilled workforce in aerospace manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for vendor lock-in given the specialized nature of the components.
Absence of small business participation goals may limit broader economic impact.

Positive Signals

Award to a single, presumably qualified, vendor ensures supply continuity for critical components.
Firm Fixed Price contract type shifts some cost risk to the contractor.
Long-term contract provides predictable demand for the supplier.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector (NAICS 336413) is a specialized segment of the aerospace industry focused on producing components essential for aircraft operation and maintenance. This contract for hydraulic drive units fits squarely within this category. The market for such components is often characterized by high technical barriers to entry, stringent quality requirements, and a limited number of qualified suppliers, particularly for defense applications. Spending in this sector is critical for maintaining military readiness and supporting the broader aerospace industrial base. Comparable spending benchmarks are difficult to establish without more specific details on the units' specifications and the competitive landscape.

Small Business Impact

This contract does not appear to include any specific small business set-aside provisions, nor is there an indication of mandatory subcontracting goals for small businesses. The award to WOODWARD HRT INC, a single entity, suggests that small businesses were either not solicited or did not participate in the bidding process. This lack of direct small business involvement could limit opportunities for smaller firms within the aerospace supply chain and may not fully leverage the capabilities of the small business ecosystem in this specialized manufacturing area.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the Firm Fixed Price contract type, which obligates the contractor to deliver the specified goods at the agreed-upon price. Transparency is limited due to the sole-source nature of the award. The Inspector General for the Department of Defense may conduct audits or investigations if specific concerns regarding waste, fraud, or abuse arise.

Related Government Programs

Aircraft Component Manufacturing
Defense Procurement
Naval Aviation Support
Hydraulic Systems Components
Sole-Source Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.4 million to WOODWARD HRT INC. DRIVE UNIT,HYDRAULI

Who is the contractor on this award?

The obligated recipient is WOODWARD HRT 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 $24.4 million.

What is the period of performance?

Start: 2022-12-08. End: 2026-03-11.

What is the track record of WOODWARD HRT INC in delivering similar hydraulic drive units to the Department of Defense or other government agencies?

Information regarding WOODWARD HRT INC's specific track record with similar hydraulic drive units is not detailed in the provided data. A comprehensive review would require accessing contract performance databases and past performance evaluations. Typically, for sole-source awards, the justification often includes a statement that the existing contractor possesses unique qualifications or has a proven history of successful delivery. However, without access to that specific justification or performance data, it's difficult to assess their reliability and past success in fulfilling such requirements. Further investigation into their contract history, including any reported issues or successes, would be necessary to fully evaluate their capabilities and reliability for this specific award.

How does the awarded price of $24.4 million compare to market rates for similar hydraulic drive units, considering the sole-source nature of the award?

Directly comparing the $24.4 million award to market rates is challenging due to the sole-source nature of this contract. Without competitive bids, there is no direct market price discovery. To assess value, one would typically look for data on similar contracts awarded competitively, or analyze the contractor's cost breakdown if available. Benchmarking against industry standards for comparable components, considering factors like complexity, materials, and volume, would be necessary. However, the lack of competition inherently introduces a risk that the price may be higher than what could have been achieved through a competitive process. A thorough value analysis would require access to detailed cost data or comparable contract information.

What are the specific risks associated with awarding a nearly four-year contract for aircraft parts on a sole-source basis?

The primary risks associated with a sole-source, long-term contract for aircraft parts include potential price escalation over the contract's duration, reduced incentive for the contractor to innovate or improve efficiency, and a lack of flexibility if requirements change or better alternatives emerge. Taxpayers are exposed to the risk of paying above-market rates without the benefit of competitive pressure. Furthermore, reliance on a single supplier for critical components can create vulnerabilities in the supply chain. While a Firm Fixed Price contract shifts some cost risk to the contractor, the initial price negotiation is crucial, and without competition, this negotiation may not yield the best possible outcome. The long duration also means that any initial pricing errors or inefficiencies could have a prolonged financial impact.

What is the anticipated impact of this contract on the overall defense industrial base, particularly concerning specialized aircraft parts manufacturing?

This contract supports a critical niche within the defense industrial base: the manufacturing of specialized aircraft parts, specifically hydraulic drive units. By awarding $24.4 million to WOODWARD HRT INC, the Department of the Navy ensures the continued production and availability of these essential components, thereby sustaining the capabilities of a key supplier. This can contribute to maintaining the health and readiness of the domestic aerospace manufacturing sector, which is vital for national security. However, the sole-source nature means that the benefits are concentrated with one firm, potentially limiting broader industry growth or competition that could foster innovation and resilience across a wider range of suppliers.

Are there any historical spending patterns with WOODWARD HRT INC or for similar hydraulic drive units that indicate a trend of overpricing or underperformance?

Without access to historical spending data specifically for WOODWARD HRT INC or detailed records of past procurements for similar hydraulic drive units, it is impossible to identify historical spending patterns related to overpricing or underperformance. A thorough analysis would involve querying federal procurement databases (like FPDS or SAM.gov) for previous contracts awarded to this vendor and for the same or similar products. Examining contract modifications, delivery performance reports, and any associated audits or reviews would be crucial. The current data provides only a snapshot of a single award, lacking the historical context needed to identify trends or potential issues.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Woodward, Inc.

Address: 25200 W RYE CANYON RD, SANTA CLARITA, CA, 91355

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: $27,083,770

Exercised Options: $27,083,770

Current Obligation: $24,415,480

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0038321GYN01

IDV Type: BOA

Timeline