Army awards $22.7M for PAC-3 Missile Segment Enhancement, boosting air defense capabilities

Contract Overview

Contract Amount: $22,708,024 ($22.7M)

Contractor: Defense Systems and Solutions

Awarding Agency: Department of Defense

Start Date: 2022-07-26

End Date: 2025-11-30

Contract Duration: 1,223 days

Daily Burn Rate: $18.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PATRIOT ADVANCED CAPABILITY (PAC-3) MISSILE SEGMENT ENHANCEMENT (MSE)

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35808

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $22.7 million to DEFENSE SYSTEMS AND SOLUTIONS for work described as: PATRIOT ADVANCED CAPABILITY (PAC-3) MISSILE SEGMENT ENHANCEMENT (MSE) Key points: 1. Contract focuses on critical missile enhancements, directly supporting national defense objectives. 2. The award signifies continued investment in advanced air and missile defense systems. 3. Competition was conducted after excluding sources, suggesting specific technical requirements. 4. Performance period extends over two years, indicating a phased delivery approach. 5. This contract aligns with broader defense modernization efforts for the Army. 6. The firm-fixed-price structure aims to control costs and ensure predictable spending.

Value Assessment

Rating: good

The contract value of $22.7 million for PAC-3 MSE enhancements appears reasonable given the specialized nature of advanced missile components. Benchmarking against similar sole-source or limited-competition contracts for advanced defense systems would provide a more precise value assessment. However, the firm-fixed-price type suggests a commitment to cost control by the government, which is a positive indicator for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'full and open competition after exclusion of sources.' This typically means that while the initial solicitation might have been open, specific requirements or prior performance led to the exclusion of certain potential bidders, resulting in a limited pool of qualified offerors. The exact number of bidders is not specified, but the 'exclusion of sources' implies a more focused competition than a truly open one.

Taxpayer Impact: The limited competition, while potentially necessary for specialized defense technology, may result in less aggressive pricing than a fully open competition. Taxpayers benefit from ensuring the selection of highly qualified contractors for critical defense systems, but the potential for higher costs due to limited options warrants careful monitoring.

Public Impact

The U.S. Army benefits directly through the acquisition of enhanced missile capabilities. This contract supports the delivery of critical components for the PAC-3 missile system, enhancing air defense. The contract is associated with Alabama (ST='AL', SN='ALABAMA'), potentially impacting the local defense industrial base and workforce. Workforce implications include specialized engineering, manufacturing, and quality assurance roles within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition to impact overall cost-effectiveness.
Reliance on specific sources may create supply chain vulnerabilities if not managed proactively.
The complexity of advanced missile systems necessitates rigorous quality control and oversight.

Positive Signals

Focus on enhancing a critical defense asset (PAC-3 MSE) demonstrates strategic investment.
Firm-fixed-price contract type provides cost certainty for the government.
Long performance period allows for phased integration and testing of enhancements.

Sector Analysis

The defense sector, particularly missile manufacturing, is characterized by high barriers to entry due to technological complexity, stringent quality requirements, and significant R&D investment. Contracts like this are crucial for maintaining technological superiority in air and missile defense. Spending in this sub-sector is driven by geopolitical threats and the need for advanced defensive capabilities, with major players often holding specialized expertise and existing production lines.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting plans for this contract. Given the specialized nature of advanced missile systems, prime contractors often possess unique capabilities, potentially limiting opportunities for smaller businesses unless they are part of the established supply chain for specific components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price structure and the phased delivery schedule. Transparency is generally maintained through contract award databases, though specific technical details and performance metrics may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Patriot Missile System
Missile Defense Agency Programs
Air and Missile Defense Systems
Advanced Weapons Development

Risk Flags

Limited competition may impact price competitiveness.
Reliance on specific sources could pose supply chain risks.
Technical complexity requires rigorous oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.7 million to DEFENSE SYSTEMS AND SOLUTIONS. PATRIOT ADVANCED CAPABILITY (PAC-3) MISSILE SEGMENT ENHANCEMENT (MSE)

Who is the contractor on this award?

The obligated recipient is DEFENSE SYSTEMS AND SOLUTIONS.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $22.7 million.

What is the period of performance?

Start: 2022-07-26. End: 2025-11-30.

What is the historical spending trend for PAC-3 Missile Segment Enhancement (MSE) contracts awarded by the Department of the Army?

Analyzing historical spending for PAC-3 MSE contracts reveals a consistent and significant investment by the Department of the Army over several years. While specific figures fluctuate based on modernization needs and production cycles, the overall trend indicates a sustained commitment to enhancing this critical air defense capability. For instance, prior awards for PAC-3 MSE components and related services have often been in the tens to hundreds of millions of dollars annually. This particular $22.7 million award represents a segment of that ongoing investment, likely focused on specific technological upgrades or production runs. Understanding these patterns helps contextualize the current award within the broader lifecycle of the PAC-3 system and the Army's long-term air defense strategy.

How does the pricing of this PAC-3 MSE enhancement contract compare to similar advanced missile component procurements?

Directly comparing the pricing of this $22.7 million PAC-3 MSE enhancement contract to 'similar' procurements is challenging without access to detailed cost breakdowns and specific contract line item numbers (CLINs). However, given that the PAC-3 MSE is a highly sophisticated missile segment, the price point is likely within the expected range for advanced defense technology. Contracts for comparable missile systems or critical components often involve significant research, development, specialized manufacturing, and rigorous testing, leading to higher unit costs. The firm-fixed-price nature of this award suggests that the contractor has assumed the risk of cost overruns, which can sometimes lead to a slightly higher initial price compared to cost-plus contracts, but provides greater budget certainty for the government. Benchmarking against publicly available data for other advanced missile programs indicates that such investments are substantial and reflect the cutting-edge technology involved.

What are the primary risks associated with the performance of this PAC-3 MSE enhancement contract?

The primary risks associated with this PAC-3 MSE enhancement contract revolve around technical performance, schedule adherence, and supply chain management. Given the advanced nature of missile technology, there's a risk that the enhancements may encounter unforeseen technical challenges during development or integration, potentially impacting performance or requiring design modifications. Schedule risks are also present, as delays in component delivery or manufacturing can push back the overall completion date. Furthermore, the supply chain for specialized defense components can be complex and vulnerable to disruptions, whether from geopolitical events, raw material shortages, or the limited number of qualified suppliers. The 'exclusion of sources' in the competition might also indicate reliance on specific, potentially less redundant, supply chains. Robust government oversight, clear performance metrics, and proactive risk mitigation strategies are crucial to addressing these potential issues.

What is the expected impact of this contract on the overall effectiveness of the U.S. Army's air defense capabilities?

This contract is expected to have a positive and significant impact on the overall effectiveness of the U.S. Army's air defense capabilities. The PAC-3 Missile Segment Enhancement (MSE) is a crucial upgrade designed to improve the missile's range, lethality, and ability to intercept advanced threats, including ballistic missiles and cruise missiles. By investing in these enhancements, the Army is bolstering its ability to protect critical assets and personnel against evolving aerial and missile threats. The successful execution of this contract will ensure that the Army fields a more capable and resilient air defense system, contributing directly to national security and deterrence. This upgrade is part of a broader modernization effort aimed at maintaining air superiority and defending against sophisticated adversaries.

What does the 'full and open competition after exclusion of sources' designation imply about the contractor selection process and potential alternatives?

The designation 'full and open competition after exclusion of sources' implies a nuanced procurement process. Initially, the solicitation may have been broadly advertised, adhering to the principle of full and open competition. However, specific criteria or circumstances led to the exclusion of certain potential offerors before the final selection. This exclusion could be based on factors such as demonstrated past performance, unique technical capabilities, proprietary technology, or specific security clearances required for the project. While it aims to ensure the best value by considering multiple sources, the exclusion narrows the field, suggesting that only a select group of contractors met the stringent requirements. This implies that alternative contractors, while perhaps capable in other areas, were deemed unsuitable or unqualified for this particular specialized requirement, potentially limiting the breadth of price discovery compared to a truly unrestricted competition.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 631 DISCOVERY DR, HUNTSVILLE, AL, 35806

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, Minority Owned Business, Native American Owned Business, Partnership or Limited Liability Partnership, SBA Certified 8 a Joint Venture, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,708,024

Exercised Options: $22,708,024

Current Obligation: $22,708,024

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $10,657,658

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W58RGZ18D0001

IDV Type: IDC

Timeline