DoD awards $31M for mortar fuzes to Junghans Microtec, a sole-source procurement

Contract Overview

Contract Amount: $31,002,559 ($31.0M)

Contractor: Junghans Microtec Gmbh

Awarding Agency: Department of Defense

Start Date: 2017-09-22

End Date: 2019-01-31

Contract Duration: 496 days

Daily Burn Rate: $62.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF 60MM&81MM MORTAR FUZES, M772&M776 FROM JUNGHANS

Plain-Language Summary

Department of Defense obligated $31.0 million to JUNGHANS MICROTEC GMBH for work described as: PROCUREMENT OF 60MM&81MM MORTAR FUZES, M772&M776 FROM JUNGHANS Key points: 1. This contract represents a significant investment in critical ordnance components. 2. The sole-source nature raises questions about price discovery and potential cost savings. 3. Limited competition may indicate a specialized or unique capability held by the contractor. 4. The duration of the contract suggests a sustained need for these specific fuzes. 5. Performance context is crucial to understand if the fuzes met operational requirements. 6. The procurement falls within the broader defense manufacturing sector, specifically ammunition components.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive data. The raw dollar amount of $31 million for mortar fuzes suggests a substantial procurement. However, without comparable contracts or market data for similar fuzes, it's difficult to definitively assess if this represents good value for money. The lack of competition means there was no market pressure to drive down prices, potentially leading to a higher cost than if it had been competed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Junghans Microtec GmbH, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in situations where only one source is available. The absence of a competitive bidding process means that the government did not benefit from the price reductions and innovation that typically arise from multiple bidders vying for a contract.

Taxpayer Impact: Taxpayers may have paid a premium for these mortar fuzes due to the lack of competition. Without a competitive environment, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. military forces requiring 60mm and 81mm mortar fuzes for operational readiness. The services delivered are the manufacturing and supply of critical ammunition components. The geographic impact is primarily national, supporting defense logistics and readiness across various military installations. Workforce implications include supporting specialized manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in pricing due to no competitive bidding.
Dependence on a single supplier for critical components could pose supply chain risks.
Contract duration and value warrant scrutiny for efficiency and necessity.

Positive Signals

Ensures supply of specific, potentially specialized, mortar fuzes required by the DoD.
Contract awarded to an established manufacturer (Junghans Microtec GmbH) with presumed expertise.
Firm Fixed Price contract type provides cost certainty for the government.

Sector Analysis

The defense manufacturing sector, particularly the segment focused on ammunition and ordnance components, is characterized by high barriers to entry, stringent quality requirements, and often long-standing relationships between government and specialized suppliers. This contract for mortar fuzes fits within the 'Ammunition (except Small Arms) Manufacturing' industry code (NAICS 332993). Spending in this area is driven by military readiness requirements and modernization programs. Comparable spending benchmarks are difficult to ascertain without access to detailed market intelligence on similar fuzes and their production costs.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. The prime contractor, Junghans Microtec GmbH, is a foreign entity. Therefore, this procurement does not directly benefit the U.S. small business ecosystem through set-asides or prime contracting opportunities. Any impact on small businesses would likely be indirect, through potential lower-tier supply chain relationships if Junghans sources components domestically.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures, potentially involving the Defense Contract Management Agency (DCMA) given the SA field. Accountability measures would be tied to the contract's performance clauses, delivery schedules, and quality standards. Transparency is limited due to the sole-source nature and the lack of public competitive bidding details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Mortar Ammunition Procurement
Defense Ammunition Manufacturing
Ordnance Component Supply
Department of Defense Procurement

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for higher costs
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.0 million to JUNGHANS MICROTEC GMBH. PROCUREMENT OF 60MM&81MM MORTAR FUZES, M772&M776 FROM JUNGHANS

Who is the contractor on this award?

The obligated recipient is JUNGHANS MICROTEC GMBH.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.0 million.

What is the period of performance?

Start: 2017-09-22. End: 2019-01-31.

What is the track record of Junghans Microtec GmbH in supplying defense components to the U.S. military or other allied nations?

Junghans Microtec GmbH is a German company with a long history in manufacturing fuzes and other ordnance components. While specific details of their contract history with the U.S. Department of Defense beyond this sole-source award are not readily available in the provided data, their specialization suggests they are a recognized supplier in this niche market. Their experience likely extends to meeting stringent NATO and national military standards for safety, reliability, and performance. Further investigation into their past performance, including any awards, commendations, or past issues, would be necessary for a comprehensive assessment of their track record.

How does the unit cost of these M772 & M776 fuzes compare to similar fuzes procured competitively by the DoD or allied nations?

Direct comparison of unit costs is challenging without access to detailed pricing data from competitive procurements of similar fuzes. As this was a sole-source award, the government did not have the benefit of competitive bidding to establish a market-driven price. Typically, sole-source contracts may result in higher unit costs compared to competitively awarded ones due to the absence of price pressure. To benchmark effectively, one would need to identify comparable fuzes (e.g., similar caliber, functionality, and performance specifications) that have been procured competitively, analyze their unit prices, and then attempt to adjust for any differences in specifications, quantities, and contract terms. Without such data, assessing the value-for-money aspect of this specific procurement remains difficult.

What are the specific risks associated with relying on a sole-source supplier for critical mortar fuzes?

Relying on a sole-source supplier like Junghans Microtec GmbH for critical mortar fuzes presents several risks. Firstly, there's a risk of price escalation over time, as the supplier faces no competitive pressure to keep costs down. Secondly, supply chain disruptions are a significant concern; any issues at the supplier's facility, geopolitical instability affecting Germany, or logistical challenges could halt the supply of essential components, impacting military readiness. Thirdly, there's a risk of technological stagnation, as the lack of competition might reduce the incentive for the supplier to innovate or offer upgrades. Finally, dependence on a single source can limit the government's flexibility in adapting to changing requirements or seeking alternative solutions.

What is the historical spending pattern for mortar fuzes by the Department of Defense, and how does this $31M contract fit within that trend?

Historical spending on mortar fuzes by the DoD is likely to fluctuate based on operational tempo, inventory levels, and modernization efforts. Without specific historical data for this contract vehicle or similar procurements, it's difficult to place this $31 million award within a precise trend. However, given the nature of ordnance, consistent spending is expected to maintain readiness. This contract, awarded in late 2017 with an end date in early 2019, represents a significant, albeit finite, investment during that period. Analyzing prior and subsequent years' spending on similar components would reveal whether this contract was part of a larger sustainment effort, a surge in demand, or a one-time replenishment.

Were there any attempts made to develop alternative sources or foster competition for this type of mortar fuze prior to or during this contract's period?

The provided data indicates this contract was awarded as 'NOT COMPETED' (CT: NOT COMPETED), strongly suggesting that no formal competitive solicitation process was undertaken for this specific award. While the data doesn't detail pre-award market research or efforts to develop alternative sources, a sole-source justification would typically be required for such an award. Such justifications often outline why competition was not feasible, which could include proprietary technology, unique capabilities, or lack of existing alternatives. It is possible that the DoD explored or is exploring other avenues for competition or alternative sourcing strategies, but this particular contract was executed under a sole-source authority.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W52P1J16R0131

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: UNTERBERGENWEG 10, DUNNINGEN

Business Categories: Category Business, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $31,002,559

Exercised Options: $31,002,559

Current Obligation: $31,002,559

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline