Defense Department buys nearly $50 million worth of tubing and piping

Defense Department annual purchasing of Tubing and Piping (source:bidlink.net)

Despite a weak economy, U.S. Defense Department demand for tubing has been stable over the past five years with annual purchases totaling nearly $50 million.  Metallic tube and pipe is an integral part of the military and all its divisions.  Aircraft,  navy ships and vehicles would not exist without the use tube and pipe.  Construction of barracks, repair and maintenance of large and small equipment are also included. All types and sizes from simple dimensional stock to custom assemblies are consumed by the military. Numerous types of distributive systems on-board navy ships use piping everywhere to deliver drinking water, provide fire suppression, compressed air, steam, and hydraulic fluid. The typical aircraft carrier spans over 1000 feet in length and uses a lot of pipe.

An analysis of the competitive landscape exposes Sikorsky Aircraft as the top contractor by number of contracts with just shy of 1,480.  Several of the major players are aerospace suppliers, showing the importance of tubing and piping to the aerospace industry.  Sikorsky Aircraft is based out of Stratford, Ct with 17,457 employees and annual revenues of over $5 Billion.

Prime Manufacturer Sikorsky won the largest award in 2010, long-term contract # SPM4AX09D9404. It covered many parts including a 1/2 inch metal tube assembly (NSN: 4710-01-095-6934) made from aluminum alloy 5052.   The contract  was originally awarded to the company on July 8th 2005 under contract number SPM400-05-D-9413.  It has a base period of one year with options to extend (both bilateral and unilateral) for up to 10 years.  The total contract amount for the base period of one year was an estimated value of $74,805,917.23, and covered dozens of different parts.   It contains several National Stock Numbered items sole source to Sikorsky.  The contract is currently in its 5th year.  It also includes a performance fee which gives the contractor the ability to earn an extra 14% to 25% by exceeding the contract requirements for on time delivery during their evaluation period.

Prime manufacturers typically have subcontractors produce many of the components used in their end items, such as the Black Hawk helicopter manufactured by Sikorsky.  The U.S. Government is always searching for additional suppliers of items that they consume, especially items which have only one source or sometimes no source.  Companies interested in increasing their government sales will typically seek out these “sole source items” as the competition is limited, therefore potential profit margins could be high.  The process many companies use in becoming an additional source is as follows:  Determine which items are worth pursuing, obtain the actual part from the government or data if available, reverse engineer the item and become an approved source; possibly the only source.

DLA Purchases of tubing and piping by sales (source:bidlink.net -- click for larger image)

An analysis of annual sales reveals a different picture with GE Aviation taking the number one spot.  Much of this is awarded through long-term contracts, where a vendor will win a bid to supply a list of parts to the Defense Department over several years.  The Government will issue periodic delivery orders against these long-term contracts, reducing the need for a competitive bid every time they stock up.   Periodically, these contracts will expire, allowing prudent contractors to take the business for themselves.

BidLink.net is a provider of defense industry information for contractors worldwide.  This data includes millions of defense contracts, procurement history, part numbers and vendor details.  This unique combination of resources allows BidLink to monitor and extract important information for the defense contracting industry.  BidLink.net, based in Washington, D.C., provides bid consolidation, searching and notification services, as well as part number (NSN) lookup to many military activities and thousands of private companies around the world.

This article was written exclusively for TPJ – The Tube & Pipe Journal.

http://www.fma-communications.com/tpj/

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Sharp rise in Defense Department purchases of Antenna

Army Pfc. Paul Garland & Pfc. Sean McCall set up an antenna for voice and tactical communications. Photo by Chief Petty Officer Robert J. Fluegel.

The U.S. Defense Department purchased 22.2% more antennae in FY 2010 than in 2009.  The charts below analyze the  buying activity of the U.S. Defense Department’s Defense Logistics Agency for Antennas and Antenna equipment; Federal Supply Class 5985.  An analysis of  projected purchases for 2011 indicate demand similar to that of FY 2010.

Federal Supply Class 5985 includes Antennas, waveguides, and related equipment; Aerials; Masts; Tower Equipment; Attenuators; Couplers; Transmission Lines, but excludes Tower Structures.

Defense department antenna buying activity for 2006-2010

At BidLink.net, we have over 500,000,000 records of defense contracting data, including an archive of purchasing activity dating back to 1985.   For this study, we analyzed 2010 buying activity for Antennae by both total number of contracts and total sales volume.

By contract volume, the leader is Harris RF Communication (CAGE 14304), with 314 total contracts in 2010.  Harris RF Communication is a division of  Harris Corporation located in Rochester, NY.  The company is a manufacturer with over 1,500 employees.  Their primary focus is radio and television broadcasting equipment, communications equipment and electronic components including antennas.  They are certified to manufacture over 16,500 parts for the U.S. Military.

2010 Top 10 Antenna suppliers to U.S. Defense Department

By sales volume, Harris Corporation is the clear leader, with $9,666,106 in sales for 2010.  Aviatech corporation (CAGE code 54520) is in second place with less than half the sales of Harris at $4.2 million.  The largest antenna delivery order for Harris RF Communication in 2010 was SPM7M9-11-F-0001 awarded on October 7  for $512,000.  They produced a total quantity of 400 antennae, National Stock Number 5985-01-559-0074 at $1,280 each.  This is part of a larger GSA contract (GS-35F-0163N) which was awarded on December 9, 2002 and expires on December 8, 2012.  The GSA contract covers 555 different line items.

As with the other industries we have analyzed, many of these companies have long term contracts with the defense department.  This is where the defense department awards a contract to a single company, which may last for years.  The government issues periodic delivery orders against this contract award until it runs out.  This cuts down on the need to request quotes for every order, therefore reducing bureaucracy.  Prudent companies can monitor the expiration of these long term contracts, and with sufficient information they can submit competitive bids and possibly win the contract for themselves.

BidLink.net is an aggregator of defense industry information for contractors worldwide.  This data includes millions of defense contracts, procurement history, part numbers and vendor details.  This unique combination of resources allows BidLink to monitor and extract important information for the defense contracting industry.  BidLink.net, based in Washington, D.C., provides bid consolidation, searching and notification services, as well as part number (NSN) lookup services to many military activities and thousands of private companies around the world.

Welcome to BidLink Defense News

AH64-Apache kicks ass

Welcome to BidLink Defense News!

We are expanding our news area to provide in depth research and information about the defense contracting industry. BidLink has millions of rows of information, which we often mine for information that can help keep our clients informed. Our data team are constantly analyzing trends and studying data on a never ending quest to find something that can give our clients a competitive edge.

BidLink has hired a number of professional writers and employed a research team, which will provide up to the minute information on the defense industry.

We hope you enjoy BidLink Defense News.

- The BidLink Staff

Business Opportunities for Suppliers of Packing and Gaskets to US Government

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In an age of tightening defense budgets, suppliers are finding that replacement parts used to maintain existing equipment are good business. Even though purchase volume is down over the past few years, vendors are finding comfort in the consistent business of replacement parts. BidLink will periodically examine a particular industry segment in search for opportunities for our clients.  Today we examine one such industry segment, FSC 5330: Packing and Gasket Materials.

Over the past 10 years the Department of Defense, has purchased over 61,000 unique NSN’s from more than 3,000 different companies in the gasket industry according to data obtained by BidLink.net, a provider of defense industry information.

National Stock Numbers (NSN) are used by the government to categorize the items that they buy.   Items are classified in segments, indicated by the Federal Supply Class (FSC).

The segment -FSC 5330 – titled: “Packing and Gasket Materials” is defined as Seals, gaskets and packing are made from materials specifically designed and constructed to resist deterioration from the action of heat, gas, chemicals, liquids, and used to fill a cavity and create a tight seal.

They include items such as General Purpose Oil Grease, Air, Liquid, Gas, and chemical Seals; Oakum; Prefabricated Gaskets and Seals designed for a single specific application. Note-This FSC includes only seals and gaskets designed for standard use.

SALES VOLUME

Although belt tightening has reduced the volume of purchases for items under FSC 5330 over the past three years, annual volume is still close to $100 million.

In this segment, sixteen percent (16%) of these suppliers are women owned. Fifty Seven percent (57%) of these companies are listed as manufacturers where as Forty percent (40%) are categorized as non-manufacturers  including distributors and brokers. The last 3% categorized as NATO (or foreign companies). Eighty Seven percent (87%) of these 3,000+  companies are classified as small business, where the  company has employees ranging from 0 to 500 people.

Quantities sold to the Government range from a few pieces to over 300,000 pieces in a single purchase order. This specific NSN 5330-01-298-7343 was sold for $0.18 each a quantity of 300,000 for a single contract totaling $54,000 dollars- a nice contract and should keep the stamping machines running for awhile. Not all orders are this large in volume but prices range all the way up in the thousands of dollars each.

We are finding that a large amount of money spent by the defense department is for simple items that one might overlook, like batteries, gaskets, cookies and sunglasses.  Companies who can make these types of products will find the defense department as a huge potential customer for American made goods where private sector sales might be faltering.

BidLink.net provides vital information to defense contractors by mining its enormous and comprehensive database.  This data includes millions of defense contracts, procurement history, part numbers and vendor information.  This unique combination of resources allows BidLink to monitor and extract important information for the defense contracting industry.  BidLink.net, based in Washington, D.C., provides bid consolidation, searching and notification services, as well as part number (NSN) lookup services to many military activities and thousands of private companies around the world.

Knowledge & Features: NSN structure

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What is a National Stock Number (NSN)

The concept of the NSN was established by the U.S. Military more than 60 years ago. It gives the military services (Army, Navy, Air Force, Marines, etc.) the ability to accurately describe an item of supply using a common name and description. This standardization allows the services to share stock and accurately procure an item which is repeatedly used within their supply system using a single number “The NSN”.

NSN’s describe every imaginable item from the simple metal washer to complex military hardware and systems used in military aircraft and vehicles etc. There are millions of NSNs used within the current U.S. military supply system. Each NSN contains a set of data fields such as Item Name, part number, technical characteristics etc. Within the BidLink database you can look up any NSN by NSN, Part Number, etc. Go to the section labeled “NSN Lookup” to try.

The structure of an NSN can be thought of in two ways:

With three (3) distinct parts:

First four (4) numbers represent the Federal Supply Class (FSC)
5th and 6th numbers represent the Country of Origin – All US NSN’s will be either 00 or 01
Numbers 7 through 13 are sequentially assigned and are unique to each NSN

With two (2) distinct parts:

First four (4) numbers represent the Federal Supply Class (FSC)
Last nine (9) numbers represent the National Item Identification Number (NIIN)

For example take the NSN 5305-01-142-6280
Just by looking at the first four (4) numbers (the FSC) you can make a quick determination that this item is some kind of screw since the FSC 5305 is the code for Screws.

Try this yourself in the ‘NSN Lookup’ to see the kind of details a NSN can provide.
Look this number up by either the full NSN: 5305-01-142-6280 or the NIIN: 011426280.

After looking up the NSN or NIIN note all the data associated to this single NSN, you will see the Item Name, Part number cross-reference, Procurement history, NSN Status, Management data, Technical characteristics, Packaging data, Forecast data, etc.

The first block of data shows the “Item Name” for this specific NSN
It is labeled “SCREW,CAP,SOCKET HE”
Just by knowing the FSC for Screws is “5305” you have determined that this NSN is some sort of Screw, as that is the reason behind the FSC coding; giving the ability to categorize an item of supply with just 4 specific numbers. There are lookup tables in BidLink that will cross-reference FSC’s to their specific titles and descriptions, so use them.

The official Item Name, in this case is “SCREW,CAP,SOCKET HE”. This is how the Government describes this item using a name. You might find the commercial industry describing the same item it in a catalog something like this “Socket Head Cap Screw”. Remember, when looking at Government data either when searching for Bids or looking to source items – Be sure to use the Government terminology, such as Item Names and FSC’s. See the examples within the help section, other news articles or contact your BidLink representative for assistance when searching for Bids.

DLIS a division of the Defense Logistics Agency (DLA) is the agency responsible for the creation and management of NSN’s. They are the only organization authorized to assign NSN’s; requests for the creation of new NSN’s can only come from a military service, not a commercial company or individual. When a new product is introduced to the military, the military will initiate their own request from within, for the creation of new NSN’s. This process can take time as each item is carefully reviewed by the Cataloging department assigned to that specific classification of item.

Note: An official Item Name will be a maximum of 19 characters. Click on the INC code number to see the details and a short description for the Item Name, in this case click on the number “16282” in the first bock of information after looking up the NSN in “NSN Lookup”

http://www.dlis.dla.mil/PDFs/NSN.pdf

Source Approval Request & Alternate Offers for NSNs

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Basics about the NSN:

A National Stock Number is basically a number which identifies a specific item of supply that is repeatedly procured, stocked, stored, issued, and used throughout the federal supply system. Every NSN (National Stock Number) has at least one reference number/ logistics/ part number or specification associated to that specific NSN. That same NSN will also have at least one CAGE code associated to that specific NSN. The associated CAGE code(s) will represent either a manufacturer or non-manufacturing organization such as a Government agency. This information on all NSN’s is listed in BidLink.

When a single NSN is introduced to the Governments supply system there are many departments and agencies involved with the proper labeling and cataloging of the individual NSN. Since the introduction of the NSN over 50 years ago millions of NSN’s have been added to the supply system. The Government has sources for some of these NSN’s however some NSN’s have only one supplier known as a “Sole Source” and NSN’s are not available at all from any company known as a “zero source” (as the original manufacturer(s) are no longer in business). When the government has an NSN with no source or a sole source and the item is currently in use they have a reason to look for other sources. Also when an NSN has limited competition, is overpriced or low reliability there is reason to search for additional sources.

Many company’s say “there is too much competition selling to the Government” – Only if you are selling items with many manufacturers or multiple sources. There are close to a million NSN’s with zero or sole sources, go after those.

Your company has the opportunity submit an alternate offer for evaluation to be listed as an approved source for a NSN. Once your company has made the determination that your part (or item) you wish to supply is equivalent to a specific NSN you must create a TDP (Technical Data Package) which basically proves that your item is “equivalent” to the current part (NSN) the Government is buying.

One of the first criteria the Government looks at when evaluating if they should accept your Alternate Offer is a “Savings Threshold”. A savings threshold is the total dollars saved, comparing your proposed unit price to the Governments average price, for the armed services actual demands over a four quarter time period, updated quarterly.

Once proper analysis is made on a specific NSN by your company that you can supply the item then the process of creating a Source Approval Request, creating a TDP should be considered. It can be a lengthy process as well as a potentially profitable one in the long run.