DoD awards $27M for infrared flares, with limited competition and potential for cost overruns

Contract Overview

Contract Amount: $27,016,286 ($27.0M)

Contractor: ATK Launch Systems LLC

Awarding Agency: Department of Defense

Start Date: 2014-10-29

End Date: 2018-06-30

Contract Duration: 1,340 days

Daily Burn Rate: $20.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AWARD OF 9572 EACH LUU-19B/B INFRARED ILLUMINATION FLARES

Place of Performance

Location: CORINNE, BOX ELDER County, UTAH, 84307

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $27.0 million to ATK LAUNCH SYSTEMS LLC for work described as: AWARD OF 9572 EACH LUU-19B/B INFRARED ILLUMINATION FLARES Key points: 1. The contract value of $27 million for flares suggests a significant procurement, but the per-unit cost needs careful benchmarking. 2. Limited competition raises concerns about price discovery and potential for inflated costs. 3. The firm-fixed-price contract type offers some cost certainty, but the duration of the award period could still lead to unforeseen expenses. 4. The contractor, ATK Launch Systems LLC, has a track record that should be reviewed for performance and past issues. 5. The procurement falls under 'All Other Miscellaneous Chemical Product and Preparation Manufacturing,' indicating a specialized industrial sector. 6. The contract's duration of 1340 days warrants scrutiny for potential scope creep or changes in market conditions.

Value Assessment

Rating: fair

The award of $27 million for 9,572 flares results in a per-unit cost of approximately $2,800. Without specific details on the flare's capabilities and technological sophistication, it is difficult to benchmark this price against similar contracts. However, given the quantity, this unit price appears high and warrants further investigation into the specific requirements and market comparables. The firm-fixed-price nature provides some cost control, but the long performance period could expose the government to price increases if market conditions change significantly.

Cost Per Unit: Approximately $2,800 per unit. This figure should be compared against industry benchmarks for similar infrared illumination flares, considering technological specifications and quantity discounts.

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning ATK Launch Systems LLC was the only vendor considered. This lack of competition significantly limits the government's ability to ensure the best possible price and value. Without competing the requirement, it is impossible to know if other manufacturers could have offered a similar product at a lower cost or with superior features. The justification for a sole-source award should be thoroughly reviewed to understand why full and open competition was not feasible.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This can result in less efficient use of public funds.

Public Impact

The primary beneficiaries are Department of Defense (DoD) units requiring infrared illumination capabilities for tactical operations. The services delivered are the manufacturing and supply of LUU-19B/B infrared illumination flares. The geographic impact is likely concentrated within military installations and operational theaters where these flares are deployed. Workforce implications may include specialized manufacturing jobs within ATK Launch Systems LLC and related supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
The long contract duration (1340 days) increases the risk of cost escalation due to market fluctuations or unforeseen production challenges.
Lack of detailed technical specifications in the provided data makes it difficult to assess the value proposition and compare unit costs effectively.
The 'All Other Miscellaneous Chemical Product and Preparation Manufacturing' category is broad, and specific cost drivers for these flares are not immediately apparent.

Positive Signals

Firm-fixed-price contract type provides a degree of cost certainty for the government.
The award is for a specific, defined product (LUU-19B/B flares), indicating a clear requirement.
The contractor, ATK Launch Systems LLC, is likely an established entity in defense manufacturing, suggesting potential for reliable delivery.

Sector Analysis

The procurement of infrared illumination flares falls within the broader defense manufacturing sector, specifically related to ordnance and pyrotechnics. This sector is characterized by specialized production processes, stringent quality control, and often relies on a limited number of qualified suppliers due to technical expertise and security requirements. The market size for such specialized defense components can be substantial, driven by ongoing military operations and modernization efforts. Benchmarking spending in this area would involve comparing unit costs and total contract values for similar pyrotechnic or illumination devices across different defense agencies and allied nations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award, there would be no subcontracting opportunities generated through a competitive bidding process. The impact on the small business ecosystem is therefore minimal, as no specific provisions for small business participation were mandated within this contract's award structure. Future procurements of similar items should explore opportunities for small business involvement, potentially through set-asides or by encouraging prime contractors to utilize small business subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and quality standards. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver the specified goods within the agreed-upon price. Transparency could be enhanced by making the justification for the sole-source award publicly available and by providing more detailed performance metrics upon contract completion. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Pyrotechnics
Illumination Flares
Defense Ammunition Procurement
Chemical Product Manufacturing
Tactical Equipment Supply

Risk Flags

Sole-source award
Long contract duration
Potentially high unit cost
Lack of detailed technical specifications

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.0 million to ATK LAUNCH SYSTEMS LLC. AWARD OF 9572 EACH LUU-19B/B INFRARED ILLUMINATION FLARES

Who is the contractor on this award?

The obligated recipient is ATK LAUNCH SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $27.0 million.

What is the period of performance?

Start: 2014-10-29. End: 2018-06-30.

What is the specific technical capability and intended use of the LUU-19B/B infrared illumination flare?

The LUU-19B/B is an infrared (IR) illumination flare designed to provide a source of IR light. This type of flare is typically used in military operations for signaling, target illumination for night vision devices, or to create decoys that can confuse enemy IR-guided sensors. Its specific spectral output, duration of illumination, and operational temperature range are critical technical parameters that influence its effectiveness and cost. Understanding these details is crucial for assessing whether the unit price of approximately $2,800 is justified by the flare's performance characteristics and its role in enhancing situational awareness or operational security for the warfighter.

What was the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award typically stems from a determination that only one responsible source is capable of providing the required supplies or services. This could be due to unique technical capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or the existence of a long-term, highly specialized production relationship. For the LUU-19B/B flares, the justification might relate to specific performance requirements that only ATK Launch Systems LLC can meet, or perhaps existing tooling and expertise that would make transitioning to another supplier prohibitively expensive or time-consuming. A thorough review of the official sole-source justification document is necessary to understand the specific rationale.

How does the unit cost of $2,800 compare to similar infrared illumination flares in the defense market?

Benchmarking the unit cost of $2,800 for the LUU-19B/B flare requires access to detailed market intelligence and comparative contract data. Factors influencing the price include the flare's infrared spectrum, intensity, duration, environmental resistance, and any specialized features. Without this comparative data, it's challenging to definitively state if $2,800 is high or low. However, for context, standard military signaling flares can range from a few hundred to a couple of thousand dollars, depending on their complexity and intended use. Advanced IR illumination or specialized pyrotechnics could command higher prices. A formal cost analysis or review of publicly available contract awards for similar items would be needed for a precise comparison.

What are the potential risks associated with the 1340-day contract duration?

A contract duration of 1340 days (approximately 3.7 years) introduces several potential risks. Firstly, the firm-fixed-price nature, while offering initial cost certainty, may not adequately account for significant inflation or fluctuations in raw material costs over such an extended period, potentially squeezing contractor margins or leading to requests for equitable adjustments. Secondly, technological advancements in infrared illumination could render the LUU-19B/B obsolete before the contract expires, leading to the procurement of outdated technology. Thirdly, the long duration increases the likelihood of changes in military requirements or operational needs, which might necessitate contract modifications or lead to the acquisition of unneeded inventory. Finally, contractor performance issues or supply chain disruptions are more probable over a longer timeframe.

What is ATK Launch Systems LLC's track record with similar defense contracts?

ATK Launch Systems LLC, now part of Northrop Grumman's defense sector, has a long history of producing propulsion systems, ordnance, and other defense-related products. Their track record includes significant work on solid rocket motors for space launch vehicles and various missile programs, as well as munitions and energetic materials. While specific details on their performance for LUU-19B/B flares would require a deeper dive into contract performance databases (e.g., CPARS - Contractor Performance Assessment Reporting System), their general experience suggests they possess the technical and manufacturing capabilities required for this type of product. However, past performance on other contracts, including any quality issues, delivery delays, or cost overruns, should be reviewed to assess their suitability for this specific award.

Industry Classification

NAICS: Manufacturing › Other Chemical Product and Preparation Manufacturing › All Other Miscellaneous Chemical Product and Preparation Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W52P1J13R0041

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 9160 N HWY 83, CORINNE, UT, 84307

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: $27,016,286

Exercised Options: $27,016,286

Current Obligation: $27,016,286

Subaward Activity

Number of Subawards: 27

Total Subaward Amount: $4,153,103

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline