DoD's $370M All Up Round missile contract awarded to Alliant Techsystems raises concerns about competition and value
Contract Overview
Contract Amount: $370,008,784 ($370.0M)
Contractor: Alliant Techsystems Operations LLC
Awarding Agency: Department of Defense
Start Date: 2017-08-31
End Date: 2021-10-31
Contract Duration: 1,522 days
Daily Burn Rate: $243.1K/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
Plain-Language Summary
Department of Defense obligated $370.0 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: AGM-88E AARGM ALL UP ROUND (AUR) Key points: 1. Significant contract value of $370M for advanced missile systems. 2. Sole-source award to Alliant Techsystems limits competitive pricing. 3. Potential for overpayment due to lack of competition. 4. Missile manufacturing falls under the Guided Missile and Space Vehicle Manufacturing sector.
Value Assessment
Rating: questionable
The contract's firm fixed price structure is standard, but the lack of competition makes it difficult to assess if the $370M price represents fair value. Benchmarking against similar missile systems is challenging without competitive bids.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Alliant Techsystems Operations LLC. This significantly limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The absence of competition likely results in a higher price than a competed contract, impacting taxpayer funds negatively.
Public Impact
Taxpayers may be overpaying for advanced missile technology due to a lack of competitive bidding. The Department of Defense relies on this specific missile system, creating a potential dependency. The long contract duration (over 4 years) means sustained potential for inflated costs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- High contract value
- Limited transparency on pricing justification
Positive Signals
- Firm fixed price contract type
- Definitive contract award
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical area for defense spending. Benchmarks for similar sole-source missile contracts are scarce, making direct comparison difficult.
Small Business Impact
The contract was awarded to Alliant Techsystems Operations LLC, a large business. There is no indication of subcontracting opportunities for small businesses within the provided data.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure the government is receiving fair value. Accountability for the pricing justification is crucial given the lack of competitive pressure.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award limits competitive pricing.
- Potential for inflated costs due to lack of competition.
- High contract value increases financial risk.
- Limited transparency on price justification.
- Dependency on a single supplier.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $370.0 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 (Department of the Navy).
What is the total obligated amount?
The obligated amount is $370.0 million.
What is the period of performance?
Start: 2017-08-31. End: 2021-10-31.
What is the justification for awarding this contract sole-source, and how was the price determined to be fair and reasonable without competition?
The justification for a sole-source award typically involves unique capabilities or proprietary technology. However, without competitive bids, the government must rely on detailed cost proposals and independent government cost estimates to determine price reasonableness. The absence of competition inherently raises questions about whether the final price truly reflects market value or includes a premium.
What are the risks associated with relying on a single supplier for critical missile components like the AGM-88E AARGM?
The primary risk is supply chain vulnerability; any disruption at Alliant Techsystems could impact national security readiness. Furthermore, the lack of competition allows the sole supplier to dictate terms and pricing, potentially leading to escalating costs over time without recourse for the government. This dependency can also stifle innovation from other potential manufacturers.
How effective is the firm fixed price contract type in ensuring value for money when awarded sole-source for advanced defense systems?
While a firm fixed price contract aims to cap costs for the buyer, its effectiveness in ensuring value for money is diminished in a sole-source scenario. The government bears the risk of cost overruns if the initial price is too high, and the supplier has less incentive to control costs when competition is absent. True value is best achieved through competitive processes.
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: N0001916R0053
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: $372,742,266
Exercised Options: $370,008,784
Current Obligation: $370,008,784
Actual Outlays: $38,424,162
Subaward Activity
Number of Subawards: 102
Total Subaward Amount: $98,911,828
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-08-31
Current End Date: 2021-10-31
Potential End Date: 2021-10-31 00:00:00
Last Modified: 2021-02-23
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