DoD awards $14.38M for rotary compressors, with 3 bidders indicating moderate competition

Contract Overview

Contract Amount: $14,384,611 ($14.4M)

Contractor: AR1

Awarding Agency: Department of Defense

Start Date: 2025-01-21

End Date: 2027-10-18

Contract Duration: 1,000 days

Daily Burn Rate: $14.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: COMPRESSOR,ROTARY

Place of Performance

Location: GOLETA, SANTA BARBARA County, CALIFORNIA, 93117

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $14.4 million to AR1 for work described as: COMPRESSOR,ROTARY Key points: 1. Contract value appears reasonable given the product type and duration. 2. Moderate competition suggests potential for price discovery, but not optimal. 3. No immediate red flags on risk indicators, but performance history is key. 4. Contract duration of nearly three years provides stability for the supplier. 5. Positioned within the Defense Logistics Agency's broader procurement of industrial equipment. 6. Focus on electronic component manufacturing aligns with defense readiness needs.

Value Assessment

Rating: good

The contract value of $14.38 million for rotary compressors over approximately three years appears to be within a reasonable range for specialized industrial equipment. Benchmarking against similar contracts for comparable compressor units is necessary for a definitive value assessment. However, the firm-fixed-price structure suggests that the contractor bears the cost risk, which can be favorable for the government if the contractor's cost estimates are accurate. The award amount is close to the estimated value, indicating a potentially well-priced bid.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with three bidders submitting proposals. While three bidders represent a degree of competition, it is on the lower end of what is typically considered robust competition. This level of competition suggests that the government likely received competitive pricing, but there may have been opportunities for even greater price reductions with a larger pool of bidders. The agency's decision to proceed with three bidders indicates they met the minimum requirements for a competitive process.

Taxpayer Impact: The presence of three bidders provides a reasonable check on pricing, likely preventing excessive costs for taxpayers. However, increased competition could have potentially driven prices lower, leading to greater savings.

Public Impact

The primary beneficiaries are the Department of Defense units requiring rotary compressors for operational readiness. The contract ensures the supply of essential components for maintaining military equipment and infrastructure. The geographic impact is primarily within the United States, supporting defense installations. Workforce implications are likely within the manufacturing and supply chain sectors related to industrial equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions if the sole manufacturer faces issues.
Ensuring long-term availability and maintenance support for specialized components.

Positive Signals

Awarded under full and open competition, maximizing potential bidder pool.
Firm-fixed-price contract shifts cost risk to the contractor.
Clear delivery order structure for phased procurement.

Sector Analysis

The procurement of rotary compressors falls within the broader industrial equipment and manufacturing sector, which is a critical component of the defense industrial base. This contract supports the Defense Logistics Agency's mission to provide logistics, readiness, and operational support to the U.S. military. Spending in this category is often driven by the need for reliable equipment to maintain readiness across various platforms and facilities. Comparable spending benchmarks would involve analyzing historical awards for similar industrial machinery and components within the defense sector.

Small Business Impact

There is no indication that this contract included a small business set-aside. The number of bidders (three) does not provide insight into small business participation. Further analysis would be needed to determine if small businesses were involved as subcontractors or if the prime contractor has a history of subcontracting with small businesses.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. The firm-fixed-price nature of the contract provides a degree of accountability by placing cost control responsibilities on the contractor. Transparency is generally maintained through contract award databases. Oversight may also involve quality assurance checks and performance monitoring by the Defense Logistics Agency to ensure timely delivery and adherence to specifications. Inspector General jurisdiction would apply in cases of suspected fraud or mismanagement.

Related Government Programs

Defense Logistics Agency Procurement
Industrial Equipment Procurement
Military Readiness Support
Rotary Compressor Supply Chain

Risk Flags

Moderate competition level may limit price optimization.
Contractor's past performance needs verification for risk assessment.
Potential for supply chain vulnerabilities for specialized components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.4 million to AR1. COMPRESSOR,ROTARY

Who is the contractor on this award?

The obligated recipient is AR1.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.4 million.

What is the period of performance?

Start: 2025-01-21. End: 2027-10-18.

What is the track record of the awarded contractor, AR1, in fulfilling defense contracts, particularly for similar equipment?

A thorough review of AR1's contract history with the Department of Defense and other federal agencies is necessary to assess their performance. Key metrics to examine include on-time delivery rates, adherence to quality specifications, and any history of contract disputes or terminations. Information from sources like the Federal Procurement Data System (FPDS) or the Contractor Performance Assessment Reporting System (CPARS) would be crucial. A positive track record suggests a lower risk of performance issues, while a history of problems could indicate potential challenges in fulfilling this current contract effectively and on schedule.

How does the awarded price of $14.38 million compare to market rates for similar rotary compressors, considering specifications and volume?

To benchmark the value, we would need to compare the per-unit cost or total contract value against market research data and historical contract awards for comparable rotary compressors. This involves identifying contracts with similar technical specifications, quantities, and delivery timelines. Factors such as the specific type of compressor (e.g., screw, centrifugal), pressure ratings, flow rates, and intended application (e.g., industrial, military-specific) are critical for an accurate comparison. If available data shows this award is significantly higher or lower than comparable contracts, it would warrant further investigation into the reasons behind the discrepancy, such as unique technical requirements or market fluctuations.

What are the primary risks associated with this contract, and what mitigation strategies are in place?

Potential risks include supply chain disruptions affecting AR1's ability to procure components or manufacture the compressors, potential quality control issues leading to equipment failure, and delivery delays impacting military operational readiness. Given the firm-fixed-price structure, the primary risk to the government is receiving substandard equipment or experiencing delays. Mitigation strategies typically involve robust quality assurance clauses in the contract, performance bonds, clear delivery schedules with penalties for lateness, and regular communication and oversight from the Defense Logistics Agency. The contractor's past performance also serves as an indicator of potential risk.

How effective is the Defense Logistics Agency in managing contracts for industrial components like these to ensure optimal value and readiness?

The effectiveness of DLA in managing such contracts can be assessed by examining their overall procurement success rates, the efficiency of their supply chain management, and their ability to secure competitive pricing. DLA's mission is critical for military readiness, and their procurement processes are designed to balance cost, quality, and timeliness. Analyzing DLA's historical data on contract performance, cost savings achieved through negotiation, and the frequency of contract modifications or disputes related to industrial components would provide insights. Their established procedures for source selection, quality assurance, and contractor oversight are designed to ensure program effectiveness.

What has been the historical spending trend for rotary compressors by the Department of Defense over the past five years?

Analyzing historical spending data for rotary compressors by the DoD over the past five years would reveal trends in demand, average contract values, and the prevalence of different contract types (e.g., full and open vs. sole source). This data, typically available through federal procurement databases, can indicate whether spending has been increasing, decreasing, or remaining stable. It can also highlight key contractors and agencies that frequently procure these items. Understanding these patterns helps contextualize the current $14.38 million award and assess if it aligns with historical expenditure levels or represents a significant deviation.

Industry Classification

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

Product/Service Code: PUMPS AND COMPRESSORS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 175 CREMONA DR STE 140, GOLETA, CA, 93117

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $14,384,611

Exercised Options: $14,384,611

Current Obligation: $14,384,611

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPRBL123D0015

IDV Type: IDC

Timeline