Every day the Department of Defense (DoD) posts 1000’s of solicitations for spare parts and a percentage of these solicitations go unanswered for several reason, we’ll look at two of them. NAICS size standards and lack of approved sources.
There is currently an open solicitation for push switches used with a communication headset; in fact it’s been open over a month past its original close date. Harris Corporation, stock ticker HRS is the manufacturer of the complete item and the switch is a spare part. It’s the type of headset that a crewman on a flight deck would use. The manufacturer calls the switch a “Push to Talk (PTT) switch assembly”. In addition to the open solicitation the Defense Logistics Agency (DLA) is actively searching for new manufacturers of this item NSN 5930-01-513-6693. Harris Corporation is currently the only approved source.
Source Approval Request (SAR)
When a new system is purchased by DoD the Original Equipment Manufacturer (OEM) producing the system typically provides the complete systems and all associated parts. As time goes by, parts of the system are either repaired or replaced. These parts otherwise known as “spares” are either provided by the OEM or possibly the subcontractors that actually produced the part for the OEM in the first place.
DoD system support includes reviewing prices, finding competition and seeking new sources. One becomes a new source through a process known as a Source Approval Requests or SAR.
NAICS Size Standards
DoD associates a NAICS size standard to solicitations they post, this restricts those who can submit bids. When the size standard of an OEM is larger than the size standard posted on the solicitation it basically prohibits the OEM from bidding. This is a great time for new manufacturers to become approved sources for items they’ve never produced. Many DoD systems cost Billions of dollars, are used by 1000’s of troops and remain in use for many years. Time spent becoming a new approved source for a single item can result in millions of dollars in sales for many years.
DoD is always seeking new sources and wants competition. The item mentioned above currently used by DLA has a demand quantity of 462 per year. With the current DLA acquisition costs in the $200 plus range, potential annual revenue could be over $100,000.00 per year for this item for a new manufacturer.
This situation is NOT an anomaly, I look at DoD contracts and solicitations data every day and I’m astounded how many items the government buys constantly that have only one manufacturer.
BidLink is a provider of DoD procurement research tools and has been a leading provider of industry marketing data relating to DoD procurement and solicitations for the past 18 years. Find defense contracts and research competition. Learn more at www.bidlink.net
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