DoD's $9.5M Actuator Contract to Beaver Aerospace & Defense Raises Value and Competition Questions

Contract Overview

Contract Amount: $9,581,810 ($9.6M)

Contractor: Beaver Aerospace & Defense, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-04-16

End Date: 2025-11-11

Contract Duration: 2,401 days

Daily Burn Rate: $4.0K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8506421415!ACTUATOR,ELECTRO-ME

Place of Performance

Location: LIVONIA, WAYNE County, MICHIGAN, 48150

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $9.6 million to BEAVER AEROSPACE & DEFENSE, INC. for work described as: 8506421415!ACTUATOR,ELECTRO-ME Key points: 1. The contract's value proposition requires scrutiny given the lack of competitive bidding. 2. Limited competition may have led to suboptimal pricing for the government. 3. The contract duration of over two years suggests a need for ongoing performance monitoring. 4. This procurement falls within the 'Other Electronic Component Manufacturing' sector. 5. The fixed-price contract type shifts some risk to the contractor. 6. The award was made to a single entity, Beaver Aerospace & Defense, Inc.

Value Assessment

Rating: questionable

The total contract value of $9.5 million for electro-mechanical actuators warrants a closer look due to the sole-source nature of the award. Without competitive benchmarking, it is difficult to ascertain if this price represents fair market value. Comparing this to similar procurements for comparable components would be essential to assess if the government received good value for its investment. The fixed-price nature of the contract provides some cost certainty, but the absence of competition is a significant red flag for potential overpricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically reserved for situations where only one source can fulfill the requirement, or under specific exceptions to full and open competition. The lack of multiple bidders means the government did not benefit from the price discovery mechanisms inherent in a competitive process, potentially leading to higher costs.

Taxpayer Impact: Taxpayers may have paid a premium for this actuator due to the absence of competitive pressure to drive down prices. The government's negotiating position is weakened without alternative sources to consider.

Public Impact

The primary beneficiaries are likely military units requiring electro-mechanical actuators for various defense systems. The contract delivers essential electronic components crucial for the operation of defense equipment. The geographic impact is primarily within Michigan, where Beaver Aerospace & Defense, Inc. is located. Workforce implications include continued employment for skilled manufacturing and engineering personnel at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
Sole-source awards can limit innovation by not engaging a broader range of potential suppliers.
The extended contract duration requires diligent oversight to ensure continued performance and quality.
The specific nature of the 'actuator, electro-me' component may indicate a specialized or proprietary technology, necessitating careful justification for sole-sourcing.

Positive Signals

The fixed-price contract type provides cost certainty for the government, assuming the price was negotiated effectively.
The award supports a specific defense requirement, contributing to national security objectives.
The contractor, Beaver Aerospace & Defense, Inc., is presumably capable of meeting the technical specifications required.

Sector Analysis

The 'Other Electronic Component Manufacturing' sector is diverse, encompassing a wide range of specialized parts. Contracts within this space often involve high technical specifications and stringent quality control. The market can be characterized by both large, established players and smaller, niche manufacturers. Benchmarking spending in this category requires careful consideration of the specific component's complexity and application, as prices can vary significantly.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and the contractor is not a small business (ss: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. The absence of a small business set-aside means larger companies were eligible to bid, and the prime contractor is responsible for its own supply chain, which may or may not involve small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Defense Logistics Agency. Accountability measures are typically embedded in the contract terms, including performance standards and delivery schedules. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the procurement process challenging. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Procurement
Aerospace Component Manufacturing
Electro-Mechanical Systems
Sole-Source Defense Contracts
Electronic Component Procurement

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to limited competition.
Extended contract duration requires vigilant oversight.
Need for robust market research to validate value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.6 million to BEAVER AEROSPACE & DEFENSE, INC.. 8506421415!ACTUATOR,ELECTRO-ME

Who is the contractor on this award?

The obligated recipient is BEAVER AEROSPACE & DEFENSE, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $9.6 million.

What is the period of performance?

Start: 2019-04-16. End: 2025-11-11.

What is the track record of Beaver Aerospace & Defense, Inc. in fulfilling similar government contracts?

Assessing the track record of Beaver Aerospace & Defense, Inc. is crucial for understanding their reliability and past performance. While the provided data does not detail their history, a comprehensive review would involve examining past contract awards, on-time delivery rates, quality performance metrics, and any past performance evaluations or disputes. Agencies typically maintain databases (like the Contractor Performance Assessment Reporting System - CPARS) to document contractor performance. A history of successful contract completion and adherence to specifications would bolster confidence in this award, whereas a pattern of delays, quality issues, or cost overruns would raise significant concerns about the current contract's execution and value.

How does the $9.5 million contract value compare to industry benchmarks for similar electro-mechanical actuators?

The $9.5 million contract value for electro-mechanical actuators requires comparison against industry benchmarks to assess its reasonableness. Without competitive bidding, it's challenging to determine if this price is optimal. A thorough analysis would involve researching market prices for comparable actuators, considering factors like technical specifications, volume, and manufacturer. If this contract price significantly exceeds average market rates or prices paid by other government agencies for similar components, it suggests potential overpayment. Conversely, if it aligns with or is below market rates, it might indicate a fair, albeit unproven, value. The sole-source nature, however, inherently limits the ability to definitively confirm value without further market research or comparative data.

What are the specific risks associated with awarding a sole-source contract for defense components?

Sole-source contracts for defense components carry inherent risks. Primarily, the lack of competition can lead to inflated prices as the contractor faces no pressure to offer the most competitive bid. This reduces the overall value for taxpayer money. Secondly, it can stifle innovation, as potential competitors are not incentivized to develop or offer alternative solutions. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future flexibility and negotiation power. Furthermore, without the scrutiny of multiple bids, there's a higher chance of accepting suboptimal technical specifications or quality if not rigorously evaluated. Ensuring the sole-source justification is robust and that the selected contractor is truly the only viable option is paramount to mitigate these risks.

How effective are fixed-price contracts in managing costs for specialized defense components like actuators?

Fixed-price contracts, like the one awarded here, are generally effective in managing costs for specialized defense components by shifting the primary cost-risk to the contractor. The contractor is obligated to deliver the specified actuators at the agreed-upon price, regardless of their actual costs incurred. This provides budget certainty for the government. However, the effectiveness hinges on the initial price negotiation. If the fixed price is set too high due to lack of competition or inadequate market research, the government may still overpay. Conversely, if set too low, the contractor might cut corners on quality or performance to maintain profitability. For specialized components, ensuring the fixed price accurately reflects the technical requirements and market conditions is critical for cost management.

What is the historical spending pattern for electro-mechanical actuators by the Department of Defense?

Analyzing historical spending patterns for electro-mechanical actuators by the Department of Defense is essential for context. This involves examining previous contract awards for similar components, including their values, durations, competition levels, and the contractors involved. Understanding whether this $9.5 million award represents an increase or decrease in spending, and whether it aligns with trends in competitive bidding or sole-source awards, provides valuable insight. Significant year-over-year increases in spending for such components, especially without clear justification like increased demand or technological upgrades, could signal potential inefficiencies or pricing issues. Conversely, consistent spending within a competitive landscape might suggest market stability.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: SPE4A618R0832

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11850 MAYFIELD, LIVONIA, MI, 48150

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Manufacturer of Goods, Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $9,581,810

Exercised Options: $9,581,810

Current Obligation: $9,581,810

Actual Outlays: $986,363

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline