DoD's $106M Spider Production contract awarded to Alliant Techsystems Operations LLC for explosives manufacturing

Contract Overview

Contract Amount: $106,068,471 ($106.1M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2011-03-16

End Date: 2015-03-31

Contract Duration: 1,476 days

Daily Burn Rate: $71.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SPIDER PRODUCTION

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $106.1 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: SPIDER PRODUCTION Key points: 1. Value for money is difficult to assess without detailed cost breakdowns and performance metrics. 2. The contract was sole-sourced, limiting competitive dynamics and potentially impacting price discovery. 3. Risk indicators include the sole-source nature and the long duration, which can obscure performance issues. 4. Performance context is limited as specific deliverables and outcomes are not detailed in the provided data. 5. This contract falls within the Defense sector, specifically supporting explosives manufacturing for the Army. 6. The firm-fixed-price structure aims to transfer cost risk to the contractor.

Value Assessment

Rating: fair

Benchmarking the value of this $106 million contract is challenging without specific performance data or comparable sole-source awards. The firm-fixed-price (FFP) contract type suggests an attempt to control costs, but the absence of competition makes it difficult to ascertain if the pricing is optimal. Without details on the quantity, quality, or specific types of 'spider' munitions produced, a direct comparison to market rates or similar contracts is not feasible. The long duration of the contract (over 4 years) also raises questions about whether the pricing remained competitive throughout its lifecycle.

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 typically occurs when only one vendor possesses the unique capabilities, technology, or security clearances required for the specific good or service. The lack of competition means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process. This approach can lead to higher costs for taxpayers compared to a fully competed contract.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible prices, potentially resulting in higher expenditures for taxpayers. It also bypasses opportunities to foster a broader base of suppliers and encourage market competition.

Public Impact

The primary beneficiary of this contract is the Department of the Army, which receives essential explosives for its operations. The services delivered include the manufacturing of 'spider' munitions, critical for specific military applications. The geographic impact is primarily within Minnesota, where the contractor Alliant Techsystems Operations LLC is located. Workforce implications include job creation and maintenance within the defense manufacturing sector at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Long contract duration may obscure performance issues and prevent adaptation to new technologies.
Lack of transparency in the justification for sole-sourcing.
Potential for contractor lock-in due to specialized nature of 'spider' production.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Contract awarded to a known entity (Alliant Techsystems) potentially indicating established capabilities.
Specific National Stock Number (325920) suggests a defined and potentially critical need.

Sector Analysis

The defense manufacturing sector is characterized by high barriers to entry, specialized technologies, and significant government oversight. Contracts for explosives and munitions are a critical component of this sector, often involving complex supply chains and stringent safety regulations. The market size for such specialized defense goods can be substantial, but is largely driven by government procurement. This contract for 'spider' production fits within the niche of specialized ordnance manufacturing, where a limited number of contractors may possess the required expertise and facilities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, there is no explicit information provided regarding subcontracting plans or opportunities for small businesses. Without a small business subcontracting plan requirement or a competitive bidding process that encourages small business participation, the direct impact on the small business ecosystem for this specific contract is likely minimal, unless the prime contractor voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which incentivizes the contractor to meet cost and delivery targets. Transparency is limited due to the sole-source nature of the award, with the justification for this procurement method being a key area for scrutiny. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Ordnance Procurement
Explosives and Munitions Manufacturing
Army Combat Systems
Specialized Weaponry Development

Risk Flags

Sole-source award lacks competitive pricing pressure.
Long contract duration may obscure performance and cost efficiencies.
Lack of public detail on 'spider' munitions limits understanding of criticality and value.
Potential for contractor lock-in due to specialized nature of production.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $106.1 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. SPIDER PRODUCTION

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 Army).

What is the total obligated amount?

The obligated amount is $106.1 million.

What is the period of performance?

Start: 2011-03-16. End: 2015-03-31.

What is the specific nature and purpose of 'spider' munitions, and why was this contract sole-sourced?

The term 'spider' munitions is not a standard, publicly disclosed military designation. It likely refers to a specific type of ordnance or submunition with unique deployment characteristics, possibly related to area denial or specialized targeting. The sole-source justification would typically stem from proprietary technology, unique manufacturing capabilities, or a critical, urgent need where only one contractor could fulfill the requirement within the necessary timeframe. Without access to the contract's justification for other than full and open competition (J&A), the precise reasons remain speculative but would center on the unique nature of the product or the contractor's exclusive ability to produce it.

How does the $106 million contract value compare to historical spending on similar explosives manufacturing contracts by the Department of the Army?

Comparing this $106 million contract value requires identifying truly comparable contracts. 'Spider production' is a niche area, and the specific type of explosive or munition is not detailed. However, the Department of the Army procures a wide range of explosives and munitions, with annual spending often in the billions of dollars across various categories. A contract of this size for a specific, potentially specialized, item is significant but not extraordinary within the broader context of Army ordnance procurement. To provide a precise comparison, one would need to analyze historical spending on contracts with similar Product Service Codes (PSCs) or National Stock Numbers (NSNs) and similar contract types (e.g., firm-fixed-price) over comparable timeframes, while accounting for inflation and changes in operational tempo.

What are the key performance indicators (KPIs) or metrics used to assess the success of this 'spider production' contract?

Specific Key Performance Indicators (KPIs) for this contract are not publicly available. However, typical KPIs for munitions manufacturing contracts include: on-time delivery rates, defect rates (quality control), adherence to technical specifications, production yield, and cost performance against the fixed-price baseline. For a sole-source contract, the government might place additional emphasis on contractor responsiveness, proactive issue resolution, and potentially cost transparency measures, even within a fixed-price structure. The effectiveness of the 'spider' munitions in their intended operational role would be a higher-level program assessment, rather than a direct contract KPI.

What is the track record of Alliant Techsystems Operations LLC in fulfilling large defense manufacturing contracts, particularly for explosives?

Alliant Techsystems Operations LLC (now part of Northrop Grumman) has a long and extensive track record in defense manufacturing, including significant experience with energetics, propellants, and munitions. They have historically been a major supplier to the U.S. military across various platforms and weapon systems. Their involvement in large-scale production contracts is well-established. While specific performance details for every contract are not public, their continued role as a prime contractor for the Department of Defense suggests a generally reliable performance history in meeting production and quality requirements for complex defense materials, including explosives.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent contractor overcharging over the contract's duration?

While sole-source awards inherently limit price competition, several mechanisms aim to ensure fair pricing. These include: requiring certified cost or pricing data (if applicable thresholds are met), conducting should-cost analyses, using historical pricing data from previous contracts, and negotiating profit margins based on risk and complexity. The firm-fixed-price (FFP) structure itself places the onus on the contractor to manage costs efficiently to achieve their profit target. Furthermore, contract clauses related to economic price adjustments (EPAs) might be included to account for significant fluctuations in material costs, but these are negotiated and subject to government approval. Regular contract surveillance and performance reviews also help identify potential issues.

What is the potential impact of this contract on the broader defense industrial base, particularly concerning specialized explosives manufacturing?

This contract, by being sole-sourced to a single large prime, may have a limited positive impact on the broader industrial base by sustaining a specific capability within Alliant Techsystems. However, it does little to foster competition or encourage new entrants into the specialized explosives manufacturing sector. If 'spider' production requires unique materials or processes, it could potentially create demand for specific small businesses within Alliant's supply chain. Conversely, a sole-source award can sometimes signal a mature, consolidated market segment where competition is inherently difficult, potentially hindering innovation and diversification across the wider defense industrial base for this particular niche.

Industry Classification

NAICS: Manufacturing › Other Chemical Product and Preparation Manufacturing › Explosives Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W15QKN11RB001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Innovation Systems LLC

Address: 4700 NATHAN LN N, PLYMOUTH, MN, 55442

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $106,068,471

Exercised Options: $106,068,471

Current Obligation: $106,068,471

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $10,191,317

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline