DoD awards $237.9M for AGM-88G AARGM-ER missiles, a sole-source contract for guided missile manufacturing

Contract Overview

Contract Amount: $237,857,555 ($237.9M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2023-11-28

End Date: 2028-02-29

Contract Duration: 1,554 days

Daily Burn Rate: $153.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AGM-88G AARGM-ER LRIP LOT 3

Place of Performance

Location: NORTHRIDGE, LOS ANGELES County, CALIFORNIA, 91324

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $237.9 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: AGM-88G AARGM-ER LRIP LOT 3 Key points: 1. Contract awarded to Alliant Techsystems Operations LLC for advanced anti-radiation guided missiles. 2. This contract represents a significant investment in advanced missile technology for the Navy. 3. The firm fixed-price structure aims to control costs for this complex defense procurement. 4. The duration of the contract extends over four years, indicating a long-term need. 5. Manufacturing is concentrated in California, impacting the regional defense industrial base. 6. The absence of competition suggests unique capabilities or limited market availability for this specific missile variant.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The total award of $237.9 million for 153061 units (based on the provided 'br' value, though unit count is not explicitly stated for this lot) suggests a per-unit cost of approximately $1,555. Without comparable contract data or market research, it's difficult to definitively assess if this price represents excellent value for money. However, the firm fixed-price type contract is generally favorable for the government in managing cost certainty.

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. This typically occurs when only one responsible source is available or when a compelling justification for other than full and open competition exists. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from a wider range of suppliers.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without competing bids, there is less assurance that the government is receiving the best possible price for these advanced missiles.

Public Impact

The U.S. Navy benefits from the acquisition of advanced air-to-ground missiles, enhancing its combat capabilities. This contract supports the production of guided missiles, a critical component of national defense. The geographic impact is concentrated in California, where the manufacturing will take place, supporting local jobs and the defense industrial base. The contract sustains employment within the aerospace and defense manufacturing sector, particularly for Alliant Techsystems Operations LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential innovation.
High per-unit cost, if not benchmarked against similar advanced missile systems, could indicate a value concern.
Long contract duration may tie government resources to a specific technology without flexibility.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established defense contractor suggests reliability in production.
Focus on advanced missile technology addresses critical military needs.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, long product development cycles, and significant government procurement. The manufacturing of guided missiles falls under the 'Guided Missile and Space Vehicle Manufacturing' industry (NAICS 33414). This contract is a specific procurement within a larger defense spending category, likely related to tactical aviation or strike capabilities. Comparable spending benchmarks would involve analyzing other major missile system procurements by the DoD.

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. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal, though Alliant Techsystems Operations LLC may engage small businesses as subcontractors in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The Inspector General's office may conduct audits or investigations into contract performance and cost management. Transparency is facilitated through contract databases like FPDS, though the specifics of sole-source justifications may have limited public disclosure.

Related Government Programs

AGM-158 JASSM
AIM-120 AMRAAM
Advanced Precision Kill Weapon System (APKWS)
Missile Defense Systems

Risk Flags

Sole-source award
Lack of competitive benchmarking
Potential for cost overruns without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $237.9 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. AGM-88G AARGM-ER LRIP LOT 3

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 $237.9 million.

What is the period of performance?

Start: 2023-11-28. End: 2028-02-29.

What is the specific capability enhancement provided by the AGM-88G AARGM-ER compared to previous versions?

The AGM-88G AARGM-ER (Advanced Anti-Radiation Guided Missile - Extended Range) is an upgrade to the existing Advanced Anti-Radiation Guided Missile (AARGM). The 'ER' designation signifies an extended range capability, likely achieved through aerodynamic improvements, a more powerful propulsion system, or a combination of both. This enhanced range allows aircraft to engage threats from a safer distance, increasing survivability and effectiveness. It also incorporates an improved seeker and warhead for greater lethality against a wider spectrum of enemy air defense systems. The specific Lot 3 award likely pertains to a particular production phase or configuration update of this missile system.

Why was this contract awarded on a sole-source basis, and what are the implications for future procurements?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, or when there is an urgent need that cannot be met through competitive procedures. For advanced defense systems like the AGM-88G AARGM-ER, this could be due to proprietary technology, unique manufacturing capabilities held by Alliant Techsystems Operations LLC, or the need for rapid fielding of an essential capability. The implication for future procurements is that competition may remain limited for this specific missile system unless alternative solutions emerge or the government actively seeks to broaden the supplier base through technology insertion or different acquisition strategies. This can lead to higher unit costs over the program's life cycle compared to a competitive environment.

How does the $237.9 million award for LRIP LOT 3 compare to previous lots or similar missile procurements?

Without specific data on previous lots (e.g., Lot 1 or Lot 2) of the AGM-88G AARGM-ER or comparable missile systems, a direct comparison is difficult. However, the award amount of $237.9 million for Lot 3 suggests a significant production run. Low Rate Initial Production (LRIP) lots are typically smaller than full-rate production lots and often carry higher per-unit costs due to initial production inefficiencies and setup. To assess value, this figure would need to be compared against the unit costs of previous lots, the total program cost projections, and the unit costs of other advanced air-to-ground missiles with similar capabilities and complexity, considering factors like technology maturity and production volume.

What are the potential risks associated with a sole-source contract for a critical defense system?

The primary risks associated with a sole-source contract for a critical defense system like the AGM-88G AARGM-ER include reduced price competition, potentially leading to higher costs for taxpayers. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, limiting flexibility and bargaining power. Innovation may be stifled as there is less incentive for the sole provider to invest in significant improvements if competition is absent. Furthermore, supply chain disruptions or performance issues with the single contractor can have a more severe impact on program delivery and national security readiness.

What is the expected delivery timeline for the missiles procured under this contract?

The contract has a stated start date of November 28, 2023, and an end date of February 29, 2028. This provides a duration of approximately 51 months, or about 4.25 years. This timeline covers the period for the Low Rate Initial Production (LRIP) Lot 3. The specific delivery schedule for the individual missiles within this lot would be detailed in the contract's delivery orders or statement of work, but the overall period indicates when production and delivery activities are expected to be completed.

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: N0001922R0039

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

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: $237,924,290

Exercised Options: $237,857,555

Current Obligation: $237,857,555

Subaward Activity

Number of Subawards: 90

Total Subaward Amount: $45,107,126

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline