DoD awards $257M for guided missile production, raising questions about competition and value

Contract Overview

Contract Amount: $257,201,380 ($257.2M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2015-09-03

End Date: 2019-02-28

Contract Duration: 1,274 days

Daily Burn Rate: $201.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AGM-88E AARGM ALL UP ROUND (AUR)

Place of Performance

Location: NORTHRIDGE, LOS ANGELES County, CALIFORNIA, 91324

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $257.2 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: AGM-88E AARGM ALL UP ROUND (AUR) Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant investment in guided missile technology, indicating a focus on advanced defense capabilities. 3. Contract duration of over three years suggests a long-term need for these munitions. 4. The awardee has a substantial history in defense contracting, implying established expertise. 5. Lack of competition raises concerns about whether the government secured the best possible price. 6. The fixed-price contract type aims to control costs, but sole-sourcing can undermine this.

Value Assessment

Rating: questionable

The contract value of $257 million for AGM-88E AARGM ALL UP ROUND (AUR) missiles is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The sole-source nature of this award means that the government did not have the opportunity to solicit multiple bids, which is a standard practice for ensuring value for money. The awarded amount represents a significant investment in a specific defense system, and the absence of competition makes a definitive value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances, such as when only one vendor possesses the required technology or capability, it significantly limits price discovery and negotiation leverage for the government. The lack of competition here means taxpayers may not have benefited from the cost savings that a competitive environment could have generated.

Taxpayer Impact: The sole-source award means taxpayers did not benefit from the potential cost reductions that typically arise from a competitive bidding process. This could result in a higher overall expenditure for these guided missiles.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, who will receive advanced guided missile systems. The contract supports the production of AGM-88E AARGM missiles, enhancing the offensive capabilities of U.S. military aircraft. The contract is associated with California (SN: CALIFORNIA), suggesting potential workforce and economic impacts in that region. The manufacturing of guided missiles likely involves a skilled workforce in specialized engineering and production roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process due to the absence of competitive bidding.
Dependence on a single contractor for critical defense components can create supply chain risks.

Positive Signals

Awardee has established expertise in defense contracting, suggesting reliable execution.
Fixed-price contract type provides some cost certainty for the government.
The contract supports the modernization of critical defense assets.

Sector Analysis

The defense industry, particularly the guided missile and space vehicle manufacturing sector (NAICS: 336414), is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. This contract falls within a critical segment of defense procurement, focusing on advanced air-to-ground munitions. Spending in this sector is heavily influenced by geopolitical factors and military modernization priorities. Comparable spending benchmarks are difficult to establish without competitive data, but the scale of this award indicates a significant procurement for a specialized weapon system.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The awardee, Alliant Techsystems Operations LLC, is a large defense contractor. The absence of small business set-asides or explicit subcontracting goals means that the direct economic benefit to the small business ecosystem from this specific contract may be limited, although the prime contractor might engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations, managed by agencies like the Defense Contract Management Agency (DCMA). The Inspector General's office within the DoD is responsible for investigating fraud, waste, and abuse. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the pricing and justification more challenging. Accountability relies on the contractor's adherence to the contract terms and the government's contract administration.

Related Government Programs

AGM-114 Hellfire Missile Program
AIM-120 AMRAAM Program
JDAM (Joint Direct Attack Munition) Program
Advanced Precision Kill Weapon System (APKWS)

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency in procurement justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $257.2 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. AGM-88E AARGM ALL UP ROUND (AUR)

Who is the contractor on this award?

The obligated recipient is ALLIANT TECHSYSTEMS OPERATIONS 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 $257.2 million.

What is the period of performance?

Start: 2015-09-03. End: 2019-02-28.

What is the track record of Alliant Techsystems Operations LLC in delivering similar defense contracts?

Alliant Techsystems Operations LLC, now part of Northrop Grumman, has a long and extensive history of performing complex defense contracts for the U.S. military. They are known for their expertise in aerospace and defense systems, including munitions, propulsion, and advanced materials. Their track record includes the development and production of various missile systems, electronic warfare systems, and other critical defense hardware. While specific performance metrics for past contracts are not detailed here, their continued success in securing large government awards suggests a generally positive performance history. However, like any large contractor, they may have faced challenges or criticisms on specific programs, which would require a deeper dive into contract performance reports and oversight findings.

How does the awarded price compare to similar guided missile contracts, considering the sole-source nature?

Direct price comparison for this $257 million contract is challenging due to its sole-source award. Competitive procurements allow for benchmarking against multiple bids, revealing market-driven pricing. In a sole-source scenario, the government negotiates with a single provider, and the price is influenced by the contractor's cost structure, profit margins, and the government's negotiation leverage. Without competitive data, it's difficult to ascertain if the price represents optimal value. Historical data on similar, but not identical, missile systems might offer some context, but the unique specifications of the AGM-88E AARGM and the specific production run would influence its cost. The absence of competition inherently limits the ability to definitively state if the price is favorable.

What are the primary risks associated with a sole-source award for critical defense components like guided missiles?

The primary risks associated with a sole-source award for critical defense components include potential overpayment due to lack of price competition, reduced incentive for the contractor to innovate or improve efficiency, and increased vulnerability to supply chain disruptions if the sole provider faces issues. Taxpayers may bear a higher cost than necessary. Furthermore, sole-source awards can stifle competition in the long run, potentially limiting the number of capable suppliers for future needs. Dependence on a single entity for essential military hardware also poses a strategic risk, as it can limit the government's options and flexibility in procurement and sustainment.

What is the expected program effectiveness and impact of the AGM-88E AARGM ALL UP ROUND (AUR) missiles?

The AGM-88E Advanced Anti-Radiation Guided Missile (AARGM) is designed to counter enemy air-defense systems. The 'ALL UP ROUND' (AUR) configuration means the missile is fully assembled and ready for immediate use, simplifying logistics and deployment. Its effectiveness lies in its ability to home in on and destroy enemy radar emitters, thereby suppressing or destroying enemy air defenses (SEAD/DEAD). This capability is crucial for enabling friendly aircraft to operate more safely in contested airspace. The program's impact is significant, enhancing the survivability of strike packages and increasing the effectiveness of air power by neutralizing threats that would otherwise pose a danger to aircrews and aircraft.

How has federal spending on guided missile manufacturing evolved over the past five years?

Federal spending on guided missile manufacturing has generally remained robust, driven by ongoing military modernization efforts and geopolitical tensions. While specific figures for the AGM-88E AARGM program are available for this contract period (2015-2019), overall spending across the DoD for missile systems fluctuates based on strategic priorities, new program starts, and sustainment needs for existing fleets. Trends often show increased investment in hypersonic missiles, counter-drone capabilities, and advanced air-to-air and air-to-ground munitions. The total outlays for this specific sub-sector can reach billions of dollars annually, reflecting the critical role these weapons play in national defense strategy. Detailed historical spending patterns would require analysis of broader DoD budget appropriations and contract award databases.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001915R0057

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 9401 CORBIN AVE, NORTHRIDGE, CA, 91324

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: $269,607,577

Exercised Options: $257,201,380

Current Obligation: $257,201,380

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $44,551,574

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline