DoD's $31.9M contract for parachute systems awarded to PARANETICS TECHNOLOGY, INC. shows potential value concerns

Contract Overview

Contract Amount: $31,927,500 ($31.9M)

Contractor: Paranetics Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-08-12

End Date: 2012-08-29

Contract Duration: 383 days

Daily Burn Rate: $83.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 4518711111!PARACHUTE,LOW-VELOC

Place of Performance

Location: SAN LUIS, YUMA County, ARIZONA, 85349

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $31.9 million to PARANETICS TECHNOLOGY, INC. for work described as: 4518711111!PARACHUTE,LOW-VELOC Key points: 1. The contract's value appears high relative to the number of units procured, suggesting a need for further cost analysis. 2. Limited public data on comparable parachute systems makes a precise value-for-money assessment challenging. 3. The contract was awarded under full and open competition after exclusion of sources, indicating a specific reason for excluding other potential bidders. 4. The duration of the contract (383 days) is relatively short for a complex defense procurement. 5. The procurement falls under the 'All Other Miscellaneous Textile Product Mills' NAICS code, which may not fully capture the specialized nature of parachute systems. 6. The contract's fixed-price nature shifts risk to the contractor, but the unit price warrants scrutiny.

Value Assessment

Rating: fair

The awarded amount of $31,927,500 for 314,999 units results in a per-unit cost of approximately $101.35. Without detailed specifications for the parachute systems, it is difficult to benchmark this price against similar contracts. However, the relatively high unit cost, especially considering the 'Textile Product Mills' NAICS code, suggests that the pricing may be on the higher side. Further investigation into the specific technical requirements and materials used would be necessary for a more definitive value assessment.

Cost Per Unit: $101.35 per unit

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This procurement method implies that while the competition was intended to be open, specific sources were excluded, possibly due to unique capabilities, prior performance, or specific technical requirements that only a limited number of entities could meet. The exact reasons for excluding other sources are not detailed, which limits the understanding of the true competitive landscape.

Taxpayer Impact: The exclusion of sources, even within an open competition framework, may have limited the potential for price reduction through broader market engagement, potentially impacting taxpayer savings.

Public Impact

This contract directly supports the Department of Defense's operational readiness by providing essential parachute systems. Personnel involved in airborne operations, including military members, are the primary beneficiaries of reliable parachute equipment. The contract's performance is likely concentrated within the supply chain for defense logistics, potentially involving specialized manufacturing facilities. The procurement contributes to the defense industrial base, particularly in the niche area of aerial delivery systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for overpricing due to limited competition after source exclusion.
Lack of transparency regarding the specific reasons for excluding other potential bidders.
Unit cost appears high without detailed technical specifications for comparison.
The broad NAICS code may obscure the specialized nature and associated costs of the procured items.

Positive Signals

Awarded under a competitive process, indicating an attempt to secure a vendor.
Fixed-price contract shifts cost overrun risk to the contractor.
Contract awarded to a single entity, potentially simplifying logistics and oversight for this specific item.

Sector Analysis

The procurement of parachute systems falls within the broader aerospace and defense manufacturing sector, specifically related to aerial delivery equipment. This sector is characterized by high technical specifications, stringent quality control, and often long lead times. While the NAICS code 'All Other Miscellaneous Textile Product Mills' is broad, parachute systems require specialized materials, design, and testing beyond typical textile manufacturing. Comparable spending benchmarks are difficult to establish without specific contract details, but defense logistics procurements for safety-critical equipment often involve significant investment.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of parachute systems for defense applications, it is likely that the primary contractors or their major subcontractors possess advanced manufacturing capabilities. The impact on the small business ecosystem would depend on whether small businesses are involved in the supply chain for materials or components, which is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the relevant contracting activity within the Defense Logistics Agency (DLA). Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited by the exclusion of sources, but the contract award itself is a matter of public record. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Procurement
Aerial Delivery Systems
Military Parachutes
Textile Manufacturing for Defense

Risk Flags

Potential for high unit cost
Limited transparency on source exclusion
Broad NAICS code may not reflect specialized nature
Lack of detailed technical specifications for benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.9 million to PARANETICS TECHNOLOGY, INC.. 4518711111!PARACHUTE,LOW-VELOC

Who is the contractor on this award?

The obligated recipient is PARANETICS TECHNOLOGY, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.9 million.

What is the period of performance?

Start: 2011-08-12. End: 2012-08-29.

What specific type of parachute systems were procured under this contract, and what are their intended uses?

The provided data indicates the procurement of 'PARACHUTE,LOW-VELOC' systems. This designation suggests parachutes designed for low-velocity descent, likely intended for personnel or cargo requiring a controlled and relatively slow landing. These could include main parachutes for paratroopers, reserve parachutes, or specialized cargo drop systems. The exact intended use would dictate the specific design, materials, and testing requirements, which are crucial for understanding the unit cost. Without further details on the technical specifications, it's challenging to ascertain the precise application and associated cost drivers.

What were the specific reasons for excluding other sources in this 'full and open competition after exclusion of sources' award?

The contract type 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' implies that while the solicitation was broadly advertised, certain potential offerors were deemed ineligible or were not considered for reasons specified in the solicitation or preceding market research. Common reasons for excluding sources include unique capabilities, proprietary technology, specific security clearances, or prior performance issues. Without access to the contract file or justification documents, the precise rationale for excluding other sources remains unknown. This lack of transparency limits the ability to assess whether the exclusion was justified and if it potentially stifled competition, thereby impacting price discovery.

How does the unit cost of approximately $101.35 compare to industry benchmarks for similar low-velocity parachute systems?

Benchmarking the unit cost of $101.35 for these parachute systems is challenging without detailed technical specifications. Parachute systems can vary significantly in complexity, materials (e.g., ripstop nylon, specialized harnesses, deployment mechanisms), and testing requirements. Basic personnel parachutes might fall within this range, but more advanced or specialized systems could be considerably more expensive. The NAICS code 'All Other Miscellaneous Textile Product Mills' is very broad and doesn't specifically capture the high-performance, safety-critical nature of military-grade parachutes. A more accurate comparison would require knowledge of the specific performance standards, materials, and certifications required for these 'low-veloc' systems.

What is the track record of PARANETICS TECHNOLOGY, INC. in supplying defense-related textile products or parachute systems?

Information regarding PARANETICS TECHNOLOGY, INC.'s specific track record in supplying defense-related textile products or parachute systems is not detailed in the provided data. The contract award itself indicates they were selected for this specific procurement. Further research into their past performance history, other government contracts, and certifications related to aerospace or defense manufacturing would be necessary to fully assess their capabilities and reliability in this domain. Their presence as a contractor suggests they met the minimum requirements for this award, but a deeper dive is needed for a comprehensive understanding of their experience.

What is the historical spending pattern for similar parachute systems by the Department of Defense or the Defense Logistics Agency?

The provided data does not include historical spending patterns for similar parachute systems. To analyze this, one would need to query federal procurement databases (like FPDS or USASpending) for contracts awarded by the DoD or DLA for parachute systems, potentially filtering by PSC codes related to parachutes and aerial delivery equipment, and by relevant NAICS codes. Examining past contract values, quantities, and awardees would reveal trends in pricing, competition, and the types of contractors involved. This historical context is crucial for determining if the $31.9 million awarded to PARANETICS TECHNOLOGY, INC. represents an increase, decrease, or continuation of previous spending levels for comparable items.

What are the potential risks associated with a firm-fixed-price contract for specialized textile products like parachutes?

While firm-fixed-price (FFP) contracts are generally preferred for their cost certainty, they can present risks for specialized products like parachutes. If the contractor underestimates the costs associated with materials, labor, or complex testing required to meet stringent military specifications, they may face financial losses. Conversely, if the initial price was set too high due to inadequate competition or flawed cost estimation, the government might overpay. For the government, the primary risk with FFP is ensuring the contractor has the capability and incentive to deliver high-quality, compliant products without cutting corners to protect their profit margin, especially when dealing with safety-critical items like parachutes.

Industry Classification

NAICS: Manufacturing › Other Textile Product Mills › All Other Miscellaneous Textile Product Mills

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2301 N MAIN ST, SAN LUIS, AZ, 03

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Labor Surplus Area Firm, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,927,500

Exercised Options: $31,927,500

Current Obligation: $31,927,500

Contract Characteristics

Cost or Pricing Data: NO

Timeline