Archives for February 2011 | BidLink Defense Industry News

tubing_2010_contracts — 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.

: DLA tubing and piping purchases by number of contracts (source:bidlink.net)

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.

tubing_2010_sales — 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/

The U.S. Military is a reliable source of revenue, purchasing almost a quarter Billion dollars of fasteners last year.

Readers asked us how to get started with defense contracting, how to search for bids and look for specifications. Although working with the Defense Department may seem foreign at first, it is actually a very structured process that’s easy to understand.

fastener_drawing_small — Military Standard Drawing

The CAGE code

Companies that wish to sell directly to the Department of Defense (DOD) must register with the government. As of February 2011, there are 600,119 active registrants in the Central Contractor Registry (CCR). This is the central database where you register your company to do business with the DOD. This step is easy; simply go to www.ccr.gov and choose “Central Contractor Registration”. Fill in your company details and in three to five days, you’re registered. They will issue a CAGE code; a five character alphanumeric sequence that is used to identify your company to the DOD.

What’s nice about the U.S. Military is that they have a database for everything. There is a database of companies, a database of awarded contracts, solicitations, part numbers, military specifications and on and on. When you combine these databases you can do some pretty powerful things. Since the CCR database contains a list of all companies registered to sell to DOD, you can easily find all of your competition. They are even broken down by industry using FSC or NAICS codes. By combining the CCR database with procurement history, you could look at all of the contracts awarded to your competition and analyze pricing for previous bids. This can be used to determine a competitive price that undercuts your competition while maximizing profit.

Finding Bids

The Department of Defense issues open solicitations (Bids) for fasteners using some basic categories. Knowledge of how these categories are structured and classified can greatly increase your chances finding and winning the bids for items that you supply.

In this example we will examine the fastener industry. The Federal Supply Class (FSC) and item name categories are accurate ways to search for bids. Fasteners are categorized under 7 basic FSC’s, they are:

5305 – Screws
5306 – Bolts
5307 – Studs
5310 – Nuts and Washers
5315 – Nails, Machine Keys, and Pins
5320 – Rivets
5325 – Fastening Devices

Information such as the National Stock Number (NSN), part number, specification(s), preferred manufacturers, and item names are commonly listed in a solicitation. Searching for open solicitations using classifications such as the FSC or the item name (or combination of both) can greatly increase the accuracy of your search and decrease the amount of time you spend searching.

The National Stock Number is the official label for items the military repeatedly purchases. It is a 13-digit number consisting of basically a Federal Supply Class (FSC) (the first 4 digits), a country code (the next 2 digits) and a unique serial number (the remaining 7 digits). The important one to remember is the FSC. For example if the NSN listed in the solicitation is 5305-00-071-2078 you know it is some type of screw because the first 4 digits are 5305.

When searching for bids, it is advantageous to have multiple types of searches. For example, a Federal Supply Class search for 5305, plus an item name search for “Screw, Cap” would produce solid results. You could also use the NSN lookup to search for competitor’s part numbers and add that to your search.

Item Names and Specifications

Each NSN has a title, officially known as the item name. The item name is very specific word or group of words used to describe the NSN. The item name contains a basic name and possibly a modifier such as “Screw,Cap”, the basic name is “Screw” and the modifier is “Cap” describing the type of screw.

The NSN 5305-00-071-2078 is assigned the item name “screw,cap,hexagon head”. If you wanted to search for bids on hexagon head cap screws you could try the item name “screw,cap,hexagon head” and would get accurate results. If you searched on the word “cap screws” you would return little or no results as that’s not how the government classifies screws. If you tried simply the item name “screw,cap” you would see many results including both hexagon head, socket head, etc. When using the official government item name your results will be plentiful and accurate. By searching the government’s item name database you can find all item names pertaining to your products.

Every NSN will have at least one or more reference numbers associated to it. These reference numbers can either be a manufacturers’ part number, military specification/standard, commercial specification/standard (such as ASME) or a combination of all. These reference numbers may be listed in either the solicitation or in the part number cross reference (MCRL / MCRD) of the military NSN database.

Part number Cross Reference — Part and specification cross reference

The above example is BidLink’s NSN lookup display for the NSN described above. It shows a list of company part numbers registered with the Government, which relate to the NSN, as well as two specifications. Control Flow and Bosch both have their own unique part/reference number. Their manufacturers’ numbers are listed in the left column. The other two rows pertain to the ANSI and Military standards, so you can figure out if this is something you can supply. The Defense Department is moving away from using Military standards by allowing commercial standards bodies to define and manage the standards. If you wanted to make this part, you would start by acquiring the ANSI and Military standards to determine if this is something you can produce competitively.

This article was written exclusively for Fastener Journal. http://fastenerjournal.com/

Month: February 2011

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

Beginner’s guide to defense contracting