DoD's $41.3M sole-source purchase of propeller profilers raises questions on competition and value

Contract Overview

Contract Amount: $41,275,039 ($41.3M)

Contractor: Starrag USA Inc

Awarding Agency: Department of Defense

Start Date: 2016-12-16

End Date: 2019-09-30

Contract Duration: 1,018 days

Daily Burn Rate: $40.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SOLE SOURCE REQUIREMENT TO PURCHASE 3 EA PROPELLER PROFILERS TO INCLUDE FOUNDATIONS, INSTALLATION, TRAINING, IUID TAG,REACH&ACCESS STUDY IAW PD VIBB 16-25-1039

Plain-Language Summary

Department of Defense obligated $41.3 million to STARRAG USA INC for work described as: SOLE SOURCE REQUIREMENT TO PURCHASE 3 EA PROPELLER PROFILERS TO INCLUDE FOUNDATIONS, INSTALLATION, TRAINING, IUID TAG,REACH&ACCESS STUDY IAW PD VIBB 16-25-1039 Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure and potentially impacting price. 2. The high value of the contract suggests a significant investment in specialized equipment. 3. The duration of the contract (over 1000 days) indicates a complex or lengthy deployment/installation process. 4. The lack of competition raises concerns about whether the government secured the best possible price. 5. The specific nature of 'propeller profilers' suggests a niche requirement within defense operations. 6. The inclusion of foundations, installation, and training points to a comprehensive service package beyond just the equipment.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized equipment. Without competitive bids, it's difficult to ascertain if the $41.3 million price represents fair market value. The inclusion of extensive services like foundations, installation, and training suggests a complex project, but the absence of comparative data makes a definitive value assessment difficult. The government may not have achieved optimal cost savings due to the lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor, STARRAG USA INC, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified for unique capabilities or urgent needs, they inherently reduce price competition and may lead to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium for this equipment and associated services due to the absence of competitive bidding. The lack of transparency in pricing negotiations typical of sole-source awards makes it harder to ensure taxpayer funds are used efficiently.

Public Impact

The Department of Defense is the primary beneficiary, acquiring specialized equipment for its operations. The contract delivers three propeller profilers, along with essential foundations, installation, and training. The geographic impact is not specified but likely relates to a specific military installation or operational theater. Workforce implications may include training for military personnel on the operation and maintenance of the new equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Lack of competition raises concerns about overall value for money.
Specialized nature of equipment may limit future resale or alternative use.
Contract duration and complexity could introduce unforeseen cost overruns.

Positive Signals

Comprehensive service package (installation, training) ensures operational readiness.
Specific equipment addresses a defined operational requirement.
Firm fixed-price contract provides cost certainty for the base equipment.

Sector Analysis

The contract falls under the Machine Tool Manufacturing sector (NAICS 333517). This sector is crucial for producing the machinery used in manufacturing various goods, including defense components. The market for highly specialized machinery like propeller profilers is often niche, with a limited number of manufacturers capable of producing such equipment. This specialization can contribute to sole-source procurements when unique capabilities are required.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, there is no information provided regarding subcontracting plans that would specifically benefit small businesses. The award to STARRAG USA INC, a likely larger entity given the contract value, suggests that small businesses were not directly involved in the primary fulfillment of this contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Defense Contract Management Agency (DCMA) likely played a role in contract administration. Transparency is limited due to the sole-source nature, and specific accountability measures beyond the contract terms themselves are not detailed. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency Procurement
Specialized Equipment Procurement
Sole-Source Defense Contracts
Machine Tool Manufacturing Contracts

Risk Flags

Sole-source award may indicate lack of competition.
High contract value warrants scrutiny for cost-effectiveness.
Specialized equipment procurement requires careful justification.
Contract duration exceeds typical equipment acquisition timelines.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.3 million to STARRAG USA INC. SOLE SOURCE REQUIREMENT TO PURCHASE 3 EA PROPELLER PROFILERS TO INCLUDE FOUNDATIONS, INSTALLATION, TRAINING, IUID TAG,REACH&ACCESS STUDY IAW PD VIBB 16-25-1039

Who is the contractor on this award?

The obligated recipient is STARRAG USA INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $41.3 million.

What is the period of performance?

Start: 2016-12-16. End: 2019-09-30.

What is the specific operational requirement that necessitates the purchase of these propeller profilers?

The provided data does not detail the specific operational requirement for the propeller profilers. The description 'PROPELLER PROFILERS TO INCLUDE FOUNDATIONS, INSTALLATION, TRAINING, IUID TAG,REACH&ACCESS STUDY IAW PD VIBB 16-25-1039' indicates the nature of the equipment and associated services. Propeller profilers are typically used for measuring the aerodynamic characteristics of propeller blades. In a defense context, this could relate to aircraft maintenance, development of new propeller technologies for naval vessels, or specialized testing facilities. Without access to the 'PD VIBB 16-25-1039' document or further context from the agency, the precise need remains unspecified.

Why was this contract awarded on a sole-source basis, and what alternatives were considered?

The contract was awarded on a sole-source basis because the requirement was likely deemed unique or only available from a single source, STARRAG USA INC. Justifications for sole-source awards typically involve factors such as proprietary technology, essential integration with existing systems, or a lack of adequate competition within a reasonable timeframe. The provided data does not specify the exact justification or detail any market research conducted to explore alternative sources. Standard procurement regulations require agencies to justify sole-source awards, often through documentation like a Justification and Approval (J&A) document, which would outline why competition was not feasible.

How does the $41.3 million price compare to similar procurements or market rates for propeller profilers?

Direct comparison of the $41.3 million price is difficult without knowing the exact specifications and capabilities of the three propeller profilers and their associated services. As this was a sole-source award, there are no competitive bids to benchmark against. Generally, specialized industrial machinery, especially when bundled with installation, foundations, and training, can command significant prices. However, the absence of competitive bids means it's impossible to definitively state if this price represents optimal value or is inflated compared to what could have been achieved through a competitive process. Market research reports or industry price lists for comparable, albeit potentially less complex, machinery might offer a very rough baseline, but are unlikely to capture the full scope of this procurement.

What are the key performance indicators (KPIs) or acceptance criteria for the delivered propeller profilers and services?

The provided data does not explicitly list the Key Performance Indicators (KPIs) or acceptance criteria for the propeller profilers and associated services. However, standard contract clauses and the nature of the deliverables imply certain expectations. Acceptance would likely be contingent upon the successful installation and functional testing of the three profilers, ensuring they meet specified technical performance standards outlined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS). Training completion and the successful delivery of all components, including foundations and IUID tags, would also be part of the acceptance process. The 'PD VIBB 16-25-1039' document, if accessible, would contain the detailed technical specifications and acceptance criteria.

What is STARRAG USA INC's track record with the Department of Defense or similar government contracts?

Information regarding STARRAG USA INC's specific track record with the Department of Defense or similar government contracts is not detailed in the provided data snippet. STARRAG Group is a known manufacturer of machine tools. To assess their track record, one would typically look at past performance evaluations (e.g., CPARS - Contractor Performance Assessment Reporting System), previous contract awards, and any history of contract disputes or issues. Without access to these broader databases or specific contract history, it's difficult to provide a detailed assessment of their performance on government contracts.

What is the expected lifespan and maintenance cost associated with these propeller profilers?

The provided data does not include information on the expected lifespan or ongoing maintenance costs for the propeller profilers. These details would typically be found in the technical specifications, manufacturer's documentation, or potentially within the contract's service and support clauses. The lifespan of such specialized industrial equipment can vary significantly based on usage, operating environment, and maintenance schedules. Maintenance costs are also highly variable, depending on the complexity of the machinery, availability of spare parts, and whether the government opts for extended service agreements or performs maintenance in-house. This information is crucial for a complete total cost of ownership analysis.

Industry Classification

NAICS: Manufacturing › Metalworking Machinery Manufacturing › Machine Tool Manufacturing

Product/Service Code: METALWORKING MACHINERY

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: SPM4A816R0002

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Starragheckert Holding AG (UEI: 480002005)

Address: 2379 PROGRESS DR, HEBRON, KY, 41048

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

Financial Breakdown

Contract Ceiling: $41,275,039

Exercised Options: $41,275,039

Current Obligation: $41,275,039

Contract Characteristics

Commercial Item: SUPPLIES OR SERVICES PURSUANT TO FAR 12.102(F)

Cost or Pricing Data: NO

Timeline