DOD awards $39.3M contract for rocket motor parts, raising questions about competition and value

Contract Overview

Contract Amount: $39,298,500 ($39.3M)

Contractor: Aerojet Rocketdyne Inc

Awarding Agency: Department of Defense

Start Date: 2009-02-27

End Date: 2012-01-30

Contract Duration: 1,067 days

Daily Burn Rate: $36.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MOTOR,ROCKET PART NUMBER: 10242870

Place of Performance

Location: RANCHO CORDOVA, SACRAMENTO County, CALIFORNIA, 95670

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $39.3 million to AEROJET ROCKETDYNE INC for work described as: MOTOR,ROCKET PART NUMBER: 10242870 Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of the contract (1067 days) suggests a long-term need for these critical parts. 3. The contractor, Aerojet Rocketdyne Inc., is a major player in the aerospace and defense sector. 4. Lack of competition may indicate a specialized or proprietary nature of the rocket motor parts. 5. The contract's value, while substantial, needs benchmarking against similar specialized defense components. 6. Performance context is limited without specific delivery or quality metrics provided.

Value Assessment

Rating: questionable

The contract value of $39.3 million for rocket motor parts requires careful benchmarking. Without competitive bidding, it is difficult to definitively assess if this price represents fair market value. Comparing this to similar specialized aerospace components, especially those with sole-source awards, is crucial. The absence of a competitive process means that the government did not benefit from potential cost savings that multiple bidders might have offered. Further analysis of the contractor's historical pricing for similar items and the specific technical requirements of the parts is needed to fully evaluate value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Aerojet Rocketdyne Inc., was solicited. This approach is typically used when a product or service is unique, proprietary, or when only one source is capable of meeting the government's requirements. The lack of competition means that the government did not have the opportunity to explore pricing from multiple vendors, which could lead to higher costs compared to a competitively bid contract. The justification for a sole-source award would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less incentive for the contractor to offer the lowest possible price, potentially leading to less efficient use of public funds.

Public Impact

The Department of Defense benefits from the acquisition of critical rocket motor parts necessary for national security operations. The contract supports the manufacturing and supply chain for advanced aerospace and defense systems. The geographic impact is primarily centered around the contractor's facilities in California. The contract likely supports a specialized workforce within the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may result in higher costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for contractor lock-in given the specialized nature of the parts.
Limited insight into the specific technical specifications and performance requirements driving the cost.

Positive Signals

Ensures supply of critical components for defense systems.
Contract awarded to an established entity with expertise in aerospace manufacturing.
Firm Fixed Price contract type provides cost certainty once awarded.

Sector Analysis

This contract falls within the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector, a specialized niche within the broader aerospace and defense industry. This sector is characterized by high technological barriers to entry, significant R&D investment, and often involves complex supply chains. Spending in this area is driven by defense procurement needs, space exploration initiatives, and national security priorities. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition awards for similar high-value, specialized components within the defense industrial base.

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 to a large prime contractor, there are likely limited direct subcontracting opportunities for small businesses specifically tied to this contract's solicitation. However, the prime contractor may engage small businesses in their broader supply chain for components or services not directly covered by this specific award. The impact on the small business ecosystem is likely indirect, depending on the prime's overall subcontracting strategy.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and negotiation process would be subject to scrutiny. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. The firm fixed price contract type offers some cost control, but oversight would focus on ensuring delivery of specified parts and adherence to contract terms.

Related Government Programs

Guided Missile Parts
Space Vehicle Parts
Rocket Motor Components
Defense Procurement
Aerospace Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.3 million to AEROJET ROCKETDYNE INC. MOTOR,ROCKET PART NUMBER: 10242870

Who is the contractor on this award?

The obligated recipient is AEROJET ROCKETDYNE INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $39.3 million.

What is the period of performance?

Start: 2009-02-27. End: 2012-01-30.

What is the specific nature of the 'MOTOR,ROCKET PART NUMBER: 10242870' and why is it only available from Aerojet Rocketdyne Inc.?

The specific nature of 'MOTOR,ROCKET PART NUMBER: 10242870' refers to a unique component essential for rocket propulsion systems, likely a critical part of a missile or space launch vehicle. The sole-source award to Aerojet Rocketdyne Inc. suggests that this part is either proprietary to their design, requires highly specialized manufacturing processes only they possess, or is integrated into a system where only they can provide the necessary modifications or support. Without further technical documentation or justification from the contracting agency, the exact technical specifications and the precise reasons for the sole-source designation remain undisclosed. This lack of transparency makes it difficult to independently verify the necessity of a single supplier.

How does the $39.3 million contract value compare to historical spending on similar rocket motor parts by the Department of Defense?

Comparing the $39.3 million contract value for these specific rocket motor parts to historical spending requires access to detailed procurement databases and analysis of similar sole-source or limited-competition awards for specialized aerospace components. Publicly available data often aggregates spending by broader categories, making direct comparisons challenging. However, given the specialized nature of rocket motor components and the sole-source award, this value could be within the expected range for high-technology defense systems. A thorough analysis would involve identifying contracts for comparable parts, noting their award types (competitive vs. sole-source), contract values, and the specific defense platforms they support to establish a relevant benchmark.

What are the potential risks associated with a sole-source contract for critical defense components like rocket motor parts?

Sole-source contracts for critical defense components like rocket motor parts carry several potential risks. Firstly, the absence of competition can lead to inflated prices, as the government lacks the leverage to negotiate the best possible deal. Secondly, it creates a dependency on a single supplier, which can be problematic if that supplier faces financial difficulties, production issues, or decides to discontinue the product. This dependency can also hinder technological advancement, as there is less incentive for the sole source to innovate or for alternative suppliers to enter the market. Finally, the lack of transparency in the procurement process can raise concerns about fairness and the efficient use of taxpayer funds.

What is the track record of Aerojet Rocketdyne Inc. in delivering complex aerospace components to the Department of Defense?

Aerojet Rocketdyne Inc. has a long-standing and significant track record in the aerospace and defense industry, particularly in the development and manufacturing of rocket propulsion systems, power units, and other critical components for space and defense applications. They have been a key supplier for numerous government programs, including missile defense systems, space launch vehicles, and tactical missiles. While generally recognized for their technical expertise, like many large defense contractors, they may have faced scrutiny or performance issues on specific contracts over the years. A comprehensive assessment of their track record would involve reviewing past performance evaluations, on-time delivery rates, and any disputes or contract modifications related to their previous work with the Department of Defense.

What are the implications of the contract's duration (1067 days) for program stability and future procurement needs?

The contract duration of 1067 days (approximately 2.9 years) suggests a stable, long-term requirement for these specific rocket motor parts. This extended period implies that the parts are integral to ongoing defense programs or platforms that are expected to remain operational for the foreseeable future. For program stability, this provides assurance of supply, allowing for consistent production and readiness of the associated defense systems. From a future procurement perspective, this duration might indicate that the government anticipates continued demand, potentially leading to future sole-source or limited-competition awards if the market conditions remain unchanged. It also suggests that the lead time for manufacturing or qualifying alternative suppliers is substantial.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W911N209R0026

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Aerojet Rocketdyne Holdings, Inc. (UEI: 001316330)

Address: HWY 50 & AEROJET RD., RANCHO CORDOVA, CA, 90

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: $39,298,500

Exercised Options: $39,298,500

Current Obligation: $39,298,500

Contract Characteristics

Cost or Pricing Data: NO

Timeline