DoD's $28.3M HTV 2A contract awarded to Orbital Sciences LLC for guided missile and space vehicle manufacturing

Contract Overview

Contract Amount: $28,282,479 ($28.3M)

Contractor: Orbital Sciences LLC

Awarding Agency: Department of Defense

Start Date: 2006-11-08

End Date: 2008-12-31

Contract Duration: 784 days

Daily Burn Rate: $36.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: HTV 2A

Place of Performance

Location: CHANDLER, MARICOPA County, ARIZONA, 85286

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $28.3 million to ORBITAL SCIENCES LLC for work described as: HTV 2A Key points: 1. Value for money assessed through fixed-price incentive contract type, aiming to align contractor and government interests. 2. Competition dynamics indicate a full and open competition, suggesting a robust market for these specialized services. 3. Risk indicators include the complexity of space vehicle manufacturing and the fixed-price incentive structure which can shift risk. 4. Performance context is tied to the development and manufacturing of advanced aerospace components. 5. Sector positioning within Guided Missile and Space Vehicle Manufacturing highlights a critical defense capability.

Value Assessment

Rating: fair

The contract's fixed-price incentive structure suggests an attempt to control costs while incentivizing performance. Benchmarking against similar complex aerospace manufacturing contracts is challenging due to the specialized nature of the HTV 2A program. The total award value of $28.3 million over approximately two years requires careful scrutiny of deliverables and milestones to ensure value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This approach generally fosters competitive pricing and encourages innovation. The number of bidders is not specified, but the open competition suggests a healthy market for guided missile and space vehicle manufacturing services.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it is expected to drive down costs through market forces and encourage a wider pool of qualified contractors.

Public Impact

The primary beneficiaries are the Department of Defense, which receives advanced aerospace technology. Services delivered include the manufacturing of components for the HTV 2A program, a hypersonic test vehicle. Geographic impact is primarily within Arizona, where the contractor is located. Workforce implications include employment for skilled engineers, technicians, and manufacturing personnel in the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Fixed-price incentive contracts can lead to cost overruns if not managed tightly.
The specialized nature of hypersonic vehicle manufacturing presents inherent technical risks.
Long-term sustainment and operational costs of the HTV 2A program are not detailed in this award.

Positive Signals

Awarded under full and open competition, suggesting competitive pricing.
Fixed-price incentive contract type aims to control costs and reward performance.
Contract supports critical defense research and development in advanced aerospace technology.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and capital-intensive industry, critical for national defense and space exploration. This contract falls within a niche segment focused on advanced aerospace components. Comparable spending benchmarks are difficult to establish without more specific program details, but investments in this area are typically substantial due to high R&D costs and stringent quality requirements.

Small Business Impact

The contract was awarded to Orbital Sciences LLC and does not indicate any specific small business set-aside provisions. Analysis of subcontracting opportunities for small businesses would require further investigation into the contractor's subcontracting plan, if applicable. The direct award to a large entity suggests limited immediate direct impact on the small business ecosystem for this specific contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms and performance standards. Accountability measures are embedded in the fixed-price incentive structure, linking payment to performance and cost targets. Transparency is facilitated through contract award databases, though detailed program-specific oversight reports may not be publicly available.

Related Government Programs

Hypersonic Weapons Development Programs
Advanced Missile Technology Contracts
Space Vehicle Manufacturing
Department of Defense Research and Development

Risk Flags

Potential for cost overruns due to fixed-price incentive structure.
Technical risks associated with advanced hypersonic vehicle development.
Dependence on a single contractor for specialized manufacturing capabilities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 million to ORBITAL SCIENCES LLC. HTV 2A

Who is the contractor on this award?

The obligated recipient is ORBITAL SCIENCES 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 $28.3 million.

What is the period of performance?

Start: 2006-11-08. End: 2008-12-31.

What is the historical spending pattern for Orbital Sciences LLC with the Department of Defense?

Orbital Sciences LLC, prior to its merger with Alliant Techsystems to form Orbital ATK (and subsequent acquisition by Northrop Grumman), had a significant history of contracts with the Department of Defense across various programs. Their work often involved satellite development, launch services, and missile defense components. Analyzing their historical spending patterns reveals a consistent role as a key contractor in defense and space initiatives. Specific to guided missile and space vehicle manufacturing, their portfolio would include numerous contracts similar in nature to the HTV 2A, reflecting their expertise in this high-technology domain. Federal procurement data indicates substantial cumulative award values over the years, underscoring their importance to DoD's technological advancement.

How does the fixed-price incentive (FPI) contract type compare to other contract types for similar aerospace projects?

Fixed-Price Incentive (FPI) contracts are a hybrid type, offering a middle ground between firm-fixed-price (FFP) and cost-plus-incentive-fee (CPIF) contracts. For complex, high-risk aerospace projects like the HTV 2A, FPI is often chosen to balance cost control with the need for contractor flexibility and innovation. Unlike FFP, FPI allows for price adjustments based on performance against targets, sharing the risk and reward between the government and contractor. Compared to CPIF, where the government bears more risk and the contractor has less incentive to control costs beyond a target, FPI places more cost responsibility on the contractor. This structure aims to achieve a balance, encouraging efficiency while accommodating the inherent uncertainties in advanced technology development.

What are the key performance indicators (KPIs) typically associated with guided missile and space vehicle manufacturing contracts?

Key performance indicators (KPIs) for guided missile and space vehicle manufacturing contracts are multifaceted, focusing on technical, schedule, and cost aspects. Technical KPIs often include adherence to design specifications, material quality, system reliability, and successful integration of components. Schedule KPIs revolve around meeting key milestones, on-time delivery of prototypes or production units, and overall project completion within the contracted timeframe. Cost KPIs are critical, especially under incentive contracts, focusing on performance against target costs, cost savings achieved, and efficient resource utilization. For programs like HTV 2A, specific KPIs would also relate to the successful testing and validation of advanced technologies, such as hypersonic flight capabilities.

What is the typical profit margin for contractors in the guided missile and space vehicle manufacturing sector?

Profit margins in the guided missile and space vehicle manufacturing sector can vary significantly based on contract type, program complexity, competition level, and the specific company's overhead and efficiency. For fixed-price contracts, including fixed-price incentive types like the HTV 2A award, profit is built into the price and is realized if costs are managed effectively. Historically, profit margins for defense contractors in this specialized sector have ranged from around 7% to 15% on average, though this can be higher for highly innovative or sole-source contracts and lower for highly competitive bids. The incentive structure in an FPI contract allows for potential profit increases if performance targets are exceeded, but also carries the risk of reduced profit if targets are missed or costs escalate beyond agreed-upon limits.

How does the geographic location of contract performance (Arizona) impact oversight and logistics for this contract?

The geographic location of contract performance in Arizona has several implications for oversight and logistics. For oversight, the Defense Contract Management Agency (DCMA) has field offices that can provide on-site quality assurance, inspection, and progress monitoring. However, the distance from major DoD procurement centers might necessitate more reliance on remote monitoring tools and scheduled site visits. Logistically, performance in Arizona could influence supply chain management, requiring coordination with regional suppliers and transportation networks. It may also affect labor costs and availability compared to other regions. The specific location within Arizona could also play a role in terms of proximity to relevant testing facilities or specialized industrial infrastructure necessary for aerospace manufacturing.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 1575 SOUTH PRICE RD, CHANDLER, AZ, 85286

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $29,922,744

Exercised Options: $29,922,744

Current Obligation: $28,282,479

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F0470103D0202

IDV Type: IDC

Timeline