DoD awards $497M Delta IV launch services contract to United Launch Services, LLC

Contract Overview

Contract Amount: $496,726,059 ($496.7M)

Contractor: United Launch Services, LLC

Awarding Agency: Department of Defense

Start Date: 2008-01-24

End Date: 2013-04-30

Contract Duration: 1,923 days

Daily Burn Rate: $258.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELTA IV LAUNCH SERVICE CONTRACT-

Place of Performance

Location: CENTENNIAL, ARAPAHOE County, COLORADO, 80112

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $496.7 million to UNITED LAUNCH SERVICES, LLC for work described as: DELTA IV LAUNCH SERVICE CONTRACT- Key points: 1. Contract awarded as a sole-source, definitive contract, raising questions about competition and potential cost savings. 2. Long contract duration of 1923 days suggests a significant, long-term need for launch services. 3. The contract's firm fixed-price nature provides cost certainty for the government, but may limit flexibility. 4. Awarded to a single entity, United Launch Services, LLC, indicating a concentrated market or specific capability requirement. 5. The contract falls under Guided Missile and Space Vehicle Manufacturing, a critical defense sector. 6. No small business set-aside was included, suggesting the primary contractor is expected to handle the entire scope.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without comparable sole-source launch service agreements. However, the firm fixed-price structure aims to control costs. The total award amount of $496.7 million over approximately five years suggests a substantial investment in space launch capabilities. Further analysis would require comparing unit costs for similar launch services or assessing the contractor's historical pricing trends for comparable missions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or when urgency dictates a direct award. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is less pressure on the contractor to offer the most competitive pricing. It also limits opportunities for new or smaller companies to enter the market.

Public Impact

The primary beneficiaries are the Department of Defense and its associated agencies requiring secure and reliable space launch capabilities. Services delivered include the launch of critical assets, likely satellites for intelligence, communication, or navigation purposes. The geographic impact is national, supporting defense operations and potentially contributing to the U.S. position in space. Workforce implications include employment within the aerospace and defense sectors, particularly at United Launch Services, LLC and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing for taxpayers.
Sole-source nature limits opportunities for innovation from a broader market.
Long-term contract duration could lead to vendor lock-in.
Dependence on a single provider for critical launch services poses a strategic risk.

Positive Signals

Firm fixed-price contract provides budget certainty for the government.
Award to an established provider suggests a focus on reliability and proven capability.
Contract duration indicates a sustained commitment to essential space-based defense assets.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and a strong reliance on government contracts. This contract for Delta IV launch services fits within the 'Guided Missile and Space Vehicle Manufacturing' sub-sector. The market for launch services is concentrated, with a few key players dominating. Government spending in this area is crucial for national security and maintaining technological superiority in space.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature and scale of space launch services, it is likely that the prime contractor, United Launch Services, LLC, will manage the majority of the work. Subcontracting opportunities for small businesses may exist within specific components or support services, but the overall contract structure does not prioritize small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. Accountability measures are embedded within the firm fixed-price contract structure, which holds the contractor responsible for delivering services within the agreed-upon price. Transparency is generally limited for sole-source defense contracts, with details often classified or restricted due to national security concerns.

Related Government Programs

Space Launch Services
National Security Space Launch (NSSL)
Satellite Deployment
Missile Manufacturing
Aerospace Defense Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Dependency on a single provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $496.7 million to UNITED LAUNCH SERVICES, LLC. DELTA IV LAUNCH SERVICE CONTRACT-

Who is the contractor on this award?

The obligated recipient is UNITED LAUNCH SERVICES, 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 $496.7 million.

What is the period of performance?

Start: 2008-01-24. End: 2013-04-30.

What is the historical spending pattern for Delta IV launch services by the Department of Defense?

Historical spending on Delta IV launch services by the Department of Defense would likely show a consistent investment in this platform prior to and during the contract period (2008-2013). The Delta IV, operated by United Launch Services (ULA), has been a workhorse for national security space missions. Analyzing spending would involve looking at previous contracts awarded to ULA for Delta IV missions, potentially including research and development, production, and launch operations. This contract represents a significant portion of that investment, reflecting the cost associated with developing, manufacturing, and launching heavy-lift rockets for critical defense payloads. Understanding past expenditures helps contextualize the $497 million awarded here and assess trends in launch service costs over time.

How does the pricing of this contract compare to other government launch service contracts during the same period?

Direct price comparison for this $497 million Delta IV launch service contract is complex due to its sole-source nature and the specific capabilities of the Delta IV rocket. However, during the 2008-2013 period, the government was also investing in other launch vehicles and services, including those from competitors like SpaceX. Benchmarking would involve comparing the cost per launch, payload capacity, and mission assurance levels. Sole-source contracts, by definition, lack competitive bidding, which can lead to higher prices than if the contract were competed. Analysis would need to consider the specific technical requirements and the limited number of providers capable of meeting them at that time, as well as the firm fixed-price structure which shifts risk to the contractor.

What are the primary risks associated with a sole-source award for critical launch services?

The primary risks associated with a sole-source award for critical launch services like the Delta IV contract include potential overpricing due to lack of competition, reduced incentive for innovation from the sole provider, and increased dependency on a single vendor. If the contractor faces production issues, financial instability, or strategic shifts, the government has limited alternative options for fulfilling its launch needs, potentially jeopardizing national security missions. Furthermore, the absence of a competitive bidding process means taxpayers may not be receiving the best possible value for their investment. This can also stifle the growth of emerging competitors in the space launch market.

What was the contractor's track record prior to and during this contract award?

United Launch Services, LLC (ULA), a joint venture of Boeing and Lockheed Martin, had a strong track record in providing reliable launch services for the U.S. government prior to and during this contract period. ULA was formed specifically to consolidate launch capabilities and reduce costs for national security space missions. The Delta IV and Atlas V rockets were their primary platforms, known for their high success rates. Their experience spanned decades through their parent companies, making them a trusted provider for complex and critical space launches. This established performance was likely a key factor in the sole-source award, indicating a high degree of confidence in their ability to execute the contract successfully.

How effective was the Delta IV launch system in meeting the DoD's mission requirements during this contract period?

The Delta IV launch system, operated by United Launch Services, LLC, was generally considered highly effective in meeting the Department of Defense's mission requirements during the 2008-2013 contract period. The Delta IV is a heavy-lift rocket capable of deploying large and complex payloads into various orbits, essential for national security satellites used for intelligence, surveillance, reconnaissance, and communications. Its high reliability and proven performance record made it a preferred choice for critical missions where mission success was paramount. While specific mission details are often classified, the continued reliance on the Delta IV platform by the DoD during this era underscores its effectiveness in fulfilling demanding launch requirements.

Industry Classification

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

Product/Service Code: SPACE VEHICLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: United Launch Alliance, L.L.C (UEI: 601307601)

Address: 9100 E MINERAL CIR, CENTENNIAL, CO, 80112

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $508,731,945

Exercised Options: $508,731,945

Current Obligation: $496,726,059

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline