Category: Industry News

By Tom Gerbe – Defense Information Analyst – BidLink.net

Small businesses have an uphill battle when trying to compete with big companies for defense contracts. Government officials know that small business participation not only helps local economies, but increases competition therefore reducing costs for the military.  Undersecretary of Defense, Dr. Ashton Carter recently stated that, “Real competition is the single most powerful tool available to the department to drive productivity”.  A number of initiatives are in place to promote “Real Competition”.

Twelve memoranda have been issued over the last three years from the president on down, outlining rules and methods for increasing competition in defense contracting.  All of this is designed to deliver better value to the taxpayer and warfighter by improving the way the department does business.  At a time when all departments are cutting expenses to reduce the deficit, program managers throughout DOD have a real motivation to act on these initiatives.

PROMOTE REAL COMPETITION

The following are recommendations from Dr. Ashton Carter on how to promote competition:

• Present a competitive strategy at each program milestone
• Remove obstacles to competition
• Allow a reasonable time to bid
• Require non-certified cost and pricing data on single offers
• Require open system architectures and set rules for acquisition of technical data
• Increase dynamic small business role in defense marketplace

Government buyers have a responsibility to promote competition wherever possible.  If you know the rules, they can be convinced to un-bundle contracts, consider alternative suppliers and even set-aside contracts exclusively for small business.  The key is understanding the Federal Acquisition Regulations (FAR) and how they can be used to benefit your company.

BUNDLED CONTRACTS

In some cases, your company may produce a part which is often included in larger, long-term contracts. The Small Business Reauthorization Act of 1997 defines contract bundling as “consolidating two or more procurement requirements for goods or services previously provided or performed under separate, smaller contracts into a solicitation of offers for a single contract that is unlikely to be suitable for award to a small business concern.”

The act requires that each federal agency, to the maximum extent practicable:

1. structure contracting requirements to facilitate competition by and among small business concerns, taking all reasonable steps to eliminate obstacles to their participation; and
2. avoid unnecessary and unjustified bundling of contract requirements that may preclude small business participation in procurements as prime contractors.

In some cases, requirements are bundled together for years even though buyers are supposed to re-evaluate the market on a periodic basis.  At the time of the initial requirement by the Government there may have been only one supplier for a part, while years later a number of small business may be able to compete.  As a potential bidder on a contract, it is your responsibility to advise the buyer that you would like to compete for this business.  If you are successful, buyers may un-bundle a long-term contract for many items and solicit them separately in order to promote more small business competition.  The Government is required to justify contract bundling and this justification can be challenged by a prospective bidder.

COMPETITION ADVOCATE

When all else fails, each program provides a competition advocate.  According to FAR 6.502 Competition advocates are responsible for  promoting the acquisition of commercial items, promoting full and open competition, challenging requirements that are not stated in terms of functions to be performed. They are also responsible for challenging barriers to the acquisition of commercial items and full and open competition such as unnecessarily restrictive statements of work, unnecessarily detailed specifications, and unnecessarily burdensome contract clauses.  A memorandum from the Office of the Undersecretary of Defense states a commitment to, “Reinvigorate and expand the role of the competition advocate and reinforce the importance of competition to everyone involved in the acquisition process”.

We encourage you to study the Federal Acquisition Regulations and learn your rights as a contractor.  Many initiatives have been put in place to help small contractors compete.   Understanding the rules is the first step toward bringing Government business to your business.

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 search and notification services, competition analysis as well as part number (NSN) lookup to many military activities and thousands of private companies around the world.

For the news and tools to compete in the defense industry, go to www.bidlink.net.

By Tom Gerbe – Defense Information Analyst – BidLink.net

Ahead of the sequester, the Defense Department has already implemented significant cuts in defense spending. Defense spending dropped $15.1 Billion from FY 2011 to 2012 and this is before the eight percent across the board cuts are implemented starting March 1.  Unlike the sequester, the reduction of spending in 2012 was not evenly distributed through the top four major procurement agencies.  Data from the procurement history database at BidLink.net shows that the departments of the Army and Navy saw a reduction of $ 18.5 billion and $ 9.9 Billion respectively, while the Air Force and Defense Logistics Agency saw increases of $4.1 Billion and $7 Billion.

A significant increase in spending for airframe structural components (Federal Supply Class 1560) was noticed, rising $3.3 Billion, $4.8B and $5.5B for 2010, 2011 and 2012.  Many large contracts were awarded to prime contractors including Boeing (NYSE: BA), Lockheed Martin (NYSE: LMT), EADS North America, McDonNell Douglass, Northrop Grumman (NYSE: NOC) and MD Helicopter.  Boeing received the largest contract for this supply class in 2012, through a modification to contract number N0001909C0022 for the purchase of eleven P-8A Multi-Mission Maritime Aircraft.  This modification for $1.9 Billion was issued in September of 2012 to be completed by May 2015.  Eighty Six percent of this contract will be executed in the United States in areas including Seattle, Washington; Baltimore, Maryland;  McKinney, Texas; Greenlawn and North Amityville, New York.

There was a surge of spending in the third quarter of 2012, followed by a twenty two percent drop in the fourth quarter according to the Bureau of Economic Analysis.  Some of the quarterly decline is a cyclical drop due to the fiscal year ending in September, but much of the annual drop is a decrease in spending.  This reduction in defense spending is primary cause of the almost 1.3% decline in GDP.

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 search and notification services, competition analysis  as well as part number (NSN) lookup to many military activities and thousands of private companies around the world.

For the news and tools to compete in the defense industry, go to www.bidlink.net.

By Tom Gerbe – Defense Information Analyst – BidLink.net

I have spent the last year sifting through about sixty million records of Government contract data from hundreds of different sources in an attempt to build a more comprehensive database of Defense Department buying activity.  At BidLink, we consolidate information from many sources because often times a single source does not offer a complete picture.  In some cases agencies will refuse to disclose pricing, some Government sources are missing huge swaths of data and some provide inaccurate information. By comparing data from many sources we are able to paint a more accurate picture of Government buying activity.

This data overhaul was finished just in time for the Top 10 Fastener Defense contractors of 2012.  Looking at fastener buying activity by the Defense Department over the past four years we can clearly see a significant decline.  This is due to  the Government’s reduction in overall defense spending which started in 2009.  According to the Bureau of Economic Analysis, the Pentagon cut defense spending by a staggering 22% in the fourth quarter of 2012.  Some of the quarterly decline is a cyclical drop due to the fiscal year ending in September, but much of the annual drop is a decrease in spending.  This reduction in defense spending is primary cause of the almost 1.3% decline in GDP.

An analysis of the competitive climate reveals that Herndon Products, Inc. is still the top fastener supplier to the Department of Defense (DOD) with a significant lead over the second place contender.  Herndon Products based in O’Fallon Missouri generates $42 Million in revenue with approximately 85 employees.  The Small Business Size Standard for Hardware Merchant Wholesalers, naics code 423710 is 100 employees.  This is the threshold for small business designation which provides a competitive advantage over large companies.  

The largest fastener contract won by Herndon Products is long term contract # SPM5AZ09D0004, which was awarded on 10/20/2008; It covers an array of bolts, screws, rings, nuts and washers.  There were fourteen competitive bids for this contract.  Not unexpectedly, many of the top companies are aerospace suppliers including Raytheon, a new addition to the top 10 list.

Examining total sales,  Herndon Products (CAGE code: 3G1W3) is in the number one spot with almost $12 Million in contracts to the Defense Logistics Agency (DLA). Columbia Nut and Bolt has been displaced by Wesco Aircraft Hardware as the second place winner with just over $7 Million in sales.

Adept Fasteners moved up four spaces to the #6 position from last year.  New to the list for 2012 are Goodrich Corporation, Dialogic Fasteners and Sikorsky Aircraft.  In 2011, the top contractor sold $13.8 Million in fasteners to DOD while the #10 position earned $3.6 million, as compared to $11.8 Million and $2.7 Million in 2012.

Although the decline in defense spending is dramatic, some of this is in preparation for the upcoming sequester which was supposed to take effect in January 2013.  This could mean stabilization in defense spending going forward. While discussing the Pentagon’s effect on GDP in an e-mail release, Paul Ashworth from Capital Economics called it “The best-looking contraction in US GDP you’ll ever see”, expecting that this may be a one-time blip due to the impending belt tightening.

Another reason according to Michael O’Hanlon at the Brookings Institution is that Congress was late in setting the defense budget for 2012.  The budget was finally pieced together through continuing resolutions passed in the winter.  For a significant part of the year, the Pentagon did not know exactly how much it could spend.  

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 search and notification services, procurement history 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 Fastener Journal.  Comments? Send them to news@bidlink.net.

by Tom Gerbe – Defense Information Analyst – BidLink.net

With the fiscal cliff rapidly approaching, defense contractors will need to become more competitive as defense budgets shrink.  BidLink recently analyzed defense spending by competition from 2003-2012 and discovered that almost half of the contracts awarded from the Defense Department were not competed.

This pattern varied by industry with makers of large systems including aircraft dominating markets, while manufacturers of clothing, refrigeration equipment and replacement parts experience a more competitive environment.

Competitive initiatives taking hold

The Defense Department is committed to increasing competition by delivering more contracts to small businesses.

By Tom Gerbe – Defense Information Analyst, BidLink.net

Defense cuts are not bad for everybody.  Recently, we analyzed sales statistics for a broad base of industries including aerospace, tubing and piping, fasteners, safety equipment and more, looking at companies who win the most business.   Industry by industry there is a distinct pattern, where large companies are trouncing the little guy by winning the lions share of contracts. For example, in an analysis of the top 10 suppliers of Tubing and Piping to the defense department only two companies, Rudy & Associates and BB&G Enterprises are small businesses.

When a company registers to sell to the Government, they must declare the company size in number of employees and annual sales.  The Government uses this number to classify companies as small or large business.  According to the Small Business Administration, small businesses account for about 50% of GDP.  As a result, they want to support small business as much as possible.

Cutting Defense Spending

Small business competition may help the Defense Department achieve their goal of $487 billion in cuts over the next 10 years.  DOD is so dedicated to promoting small business development that many Government buying centers have their own SBA offices.  The stated goal of the DOD small business representative is “To create maximum opportunities for small businesses within DoD acquisitions.” Many contracts are awarded to large corporations that are the sole suppliers of billions in parts and services to DOD.  Competition from small businesses can help reduce the cost of acquisition.

To provide support for the small business community, the Defense Department sets aside a percentage of overall contracting opportunities to companies under certain size. These contracts are often called, “Small Business Set-Asides”, because they are reserved for companies under a certain size.  The Department of Defense has a stated goal of awarding at least 22% of contracts to small businesses in 2012, with the intent to increase that number each subsequent year.  Each solicitation will specify the small business size, often 500 or 1,000 employees, under which the company must qualify in order to win a small business set-aside contract.

Winning Small Business Contracts

If a solicitation is set-aside, small business are chosen over large businesses, even if the large business submits a lower bid.  In the case where the solicitation does not explicitly state a small business requirement, contractors can request the solicitation be re-classified if they qualify.  This can be accomplished by contacting the small business representative for the agency that offered the solicitation.

If a small business is competing against a large company, a little known regulation can be used to your advantage:

48 C.F.R. 19.502-2 Total small business set-asides. (a) Each acquisition of supplies or services that has an anticipated dollar value exceeding $3,000, but not over $100,000 is automatically reserved exclusively for small business concerns and shall be set aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery.

If the contracting officer receives only one acceptable offer from a responsible small business concern in response to a set-aside, the contracting officer should make an award to that firm. If the contracting officer receives no acceptable offers from responsible small business concerns, the set-aside shall be withdrawn and the requirement, if still valid, shall be resolicited on an unrestricted basis.

Essentially any small business could take contracts from a large business as long as two or more small businesses compete.   It might be worth while to notify one of your small business competitors about a contract just to take it from a big fish.  At least two small companies may be on equal footing, whereas the large company can buy huge, discounted quantities or open factories overseas.

Small businesses have quite a bit of leverage against large companies when competing for Government business.  By locating the right resources and knowing the rules, prudent contractors can find opportunities and win contracts.  Small business is the backbone of the American economy.  With the right tools and talent there are opportunities everywhere.

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 search and notification services, procurement history as well as part number (NSN) lookup to many military activities and thousands of private companies around the world.

Comments? Send them to news@bidlink.net.

By Thomas Gerbe, Defense Information Analyst, BidLink.net

As we approach the one year anniversary of the 2011 Debt ceiling debate, the House of Representatives recently passed H.R. 4310: National Defense Authorization Act for Fiscal Year 2013.  The total allotment for FY 2013 is $687 Billion, down $31.8 Billion from FY 2012.  Part of this reduction was accomplished by streamlining procurement operations and cutting overhead.  I.T. Resources are being consolidated, and the DOD’s reliance on outside contractors is being reduced.

One stated goal is to promote “real competition” whenever possible to drive productivity.  Although the DOD issues millions of individual solicitations each year, a large amount of the defense budget goes to “prime contractors”.  These are large companies including Lockheed Martin, Honeywell, Northrop Grumman, Pratt & Whitney, Raytheon and many others.  They hold exclusive, long-term contracts for complex systems which last for years.  Due to the nature of these systems, it is unlikely that any small business could compete for such contracts.  However, DOD wants small business participation, which is accomplished by requiring large contractors to provide a “small business subcontracting plan” (FAR 19.7).  This requires that large businesses subcontract a portion of the contract value to the small business community on contracts over $500,000 that have subcontracting possibilities.

According to HR 4310 section 1631, “The Governmentwide goal for participation by small business concerns shall be established at not less than 25 percent of the total value of all prime contract awards for each fiscal year and 40 percent of the total value of all subcontract awards for each fiscal year”.  Small business concerns include companies owned and controlled by service-disabled veterans, socially and economically disadvantaged individuals and women, as well as businesses under a specified number of employees or annual income.  Size limits vary depending on commodity class, but the threshold is usually less than 500 employees.  The Government is committed to expanding participation by small businesses by increasing the percentage of contracts offered to small businesses each year.  Each Government program has a small business representative who can assist companies with obtaining contracts.

Small businesses that want to compete against large companies have additional leverage.  If a large company is regularly awarded contracts on a particular part and two or more small businesses submit offers on an upcoming solicitation, they can ask to have the solicitation “set-aside” exclusively for small business.  According to a BidLink study in December 2011, 28% of defense contracts for fasteners are awarded as sole source, meaning that only one company submitted an offer.  This is exactly what the Government is trying to avoid.

ONE BIG BOLT

For Fastener Journal readers, I always like to find a recent order for a part that might be interesting.  This month we will cover a part sold to DLA Aviation by Columbia Nut and Bolt, LLC (CAGE code 51792).  The company is a large business with a reported 700 employees earning $20,000,000 annually.  Columbia nut and bolt, based in Moonachie, NJ has a number of long-term contracts that provide a regular flow of business from the military.

This one is a prevailing torque, double hexagon, self-locking nut made from cobalt alloy.  It has a height of 0.675 inches and an outside diameter of 0.950″.  It has a surface treatment in compliance with MIL-C-8837 TY 2 and a dry film lubricant.  The bolt is used on the Apache AH-64, and AH-64-D Longbow helicopter, and sells to DOD for a whopping $52.24 ea.  This part was ordered using  long-term contract SPM5AZ-08-D-0022, which the company won on July 29, 2008 and extends through July 2013. There was only one competing bid.   The most recent delivery order was on May 10, 2012 for 303 units totalling $15,828.72.  The Defense Department projects that it will purchase 4,691 units in 2012 and almost the same amount in 2013.

CONTRACT BUNDLING

It is a common practice for the Government to bundle lists of items into a single contract.  Although bundling can potentially reduce costs or improve performance for federal agencies, it can also limit opportunities for small businesses to receive federal prime contracts. As a result, there have been a number of initiatives to limit contract bundling including the Small Business Act (P.L. 111-240) as well as a number of bills from the 112th congress.  These initiatives include expanding the power of SBA to work with contracting agencies to restructure bundled requirements.

Even if your shop cannot produce a 1″ diameter double hex bolt, you may find other opportunities that are part of a bundled requirement.  If you do, try contacting the buyer and locating the small business representative for that particular agency, and ask them if the part can be ordered separately.  The SBA has increasing power and can be surprisingly helpful in changing requirements to support small business.

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.  Try our new full-text Government document search engine.

If you would like to see a video demonstrating how we found this part, and how you might find other parts of interest, scan the code below using your cell phone or tablet. Already reading this on a tablet? Then click here.

Comments? Send them to news@bidlink.net.

This article was written exclusively for “Fastener Journal” magazine.

http://fastenerjournal.com/

One of our readers responded to an article commenting, “I know much more, but if  I could just win some of these contracts we would be golden”.  The fastener industry is competitive.  Recently, we added a tally of number of competitors to our contract award display at BidLink, which is yielding some interesting results. An analysis of defense contracts awarded to the fastener industry over the last few years reveals a high number of competitors, even for some relatively small contracts.

The highest number of competitors for a fastener contract in 2011 was for contract no. SPM5A211M2084, where forty one (41) companies submitted bids. The contract was only valued at $10,270 and was awarded to Quality Socket Screw Corporation (cage  code: 5N116) for 2,600 steel studs.  The winning price was $3.95ea.  Quality Socket Screw Corporation in Englewood, FL has 22 registered NSNs with the Defense Department and have received over 9,000 contracts and delivery orders.

There were twenty two (22) competitors for  SPM5AY10D0113, a long-term contract awarded to Columbia Nut and Bolt (cage code: 51792) on 9/30/2010. The contract covers 29 stock numbers for studs, close tolerance screws, self-locking nuts and quick release pins.  Several delivery orders against this contract are for large quantities of self-locking nuts, NSN 5310-01-011-3085.  The Defense Department has ordered over 185,000 of these against this contract for $1.13ea. That’s over $200,000 in sales on this one part.  Columbia Nut and Bolt has $20 million in annual sales with 700 employees.

The key to winning these contracts is knowing the competition by using online resources to research before you bid. Start by exploring existing contracts to see who is winning and at what price. The Government is moving away from small orders and toward the use of long-term contracts to streamline the process of procurement.  In stead of issuing an RFQ for each order, they are consolidating many requirements into a single contract, then issuing delivery orders against that contract.  The window of opportunity for competitors is when these contracts expire.  The contract above expires on 9/29/2012.

Knowing when these contracts expire, the winning price, and how many competitors are participating can put you in a good position to compete for the next award.  Also, the Defense Department is required to award a certain percentage of contracts to small businesses.  The target for 2011 was 23%, or $12 Billion in small business awards.  Each contract is designated as small business or large business.

If  a contract is for small business, companies below a certain size (usually < 500 employees) will get certain advantages.  If a small business and large business are competing and offer the same price, the small business will likely win the contract.  Solicitations can be re-classified as small business by contacting the the buyer who issued the contract, and proving that you can supply the parts.  To learn more about small business set-asides, check out sba.gov.  Of course, you can always search BidLink for contracts that are small-business set-aside.

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.

Comments? Send them to news@bidlink.net.

This article was written exclusively for “Fastener Journal” magazine .

http://fastenerjournal.com/

The defense department is about to enter an age of austerity like it hasn’t seen in decades. Even the downsizing of the Military during the Clinton years pales in comparison to the cuts that must be made to the defense budget in order to comply with the debt ceiling agreement. A twelve member committee has to find $1.8 trillion in cuts or a package of automatic cuts will go into effect that would total $1.8 trillion slashing medicare and defense spending equally. The defense department has to start cutting costs, and fast.

 

To make matters worse, some of these big suppliers try to further confuse competitors by providing part numbers to the military that are different than their similar off-the-shelf parts.  A competitor attempting to acquire a sample from one of these companies may be told that the particular part is only sold to the military.  If a company cannot acquire the part, then there is nothing to reverse engineer. One way to circumvent this strategy is to contact the buyer directly, or try to locate the supply depot that stores the item.  BidLink’s procurement history tool can help companies locate this vital information.

Once a company wins a long-term sole source contract, they can just count the money.   These contracts can last for years, and have thousands of delivery orders.  A reliable flow of business that can help offset the weak consumer and commercial markets.  The government evaluates sole source items and attempts to apply an estimate of what it would cost to acquire that item from a different source.  This includes the cost of creating the required technical documentation as well as any implementation requirements.

Sole searching

Finding sole source contracts is easy.  Our Procurement History tool searches 60 million contracts and line items, and can be refined by number of offers.  For fastener companies, you could search the NSN database for something like FSC 5305 to locate stock numbers of interest, then submit these into the Procurement History tool with the “sole source” check box selected. This will display a list of all sole source contracts for the selected items.  Look at the company details to see if they are a manufacturer or distributor, and locate the buyer information.  You can contact the buyer directly to get started.

A recent example was contract # SPM4AX-07-D-9007 which was awarded on 09-09-2011.  The defense department ordered 10,000 units of NSN 5305-14-529-9082, a screw priced at $51.67 ea.  In 2011, they have issued 8 delivery orders for this item, totalling $1.49 Million dollars.  The sole vendor is Messier-Bugatti (CAGE code F6137).  There is very little public information relating to this item or how to make it.

Sell to the suppliers

Many of these large suppliers, especially in the fastener industry are simply giant distributors who are experts in finding and winning defense contracts. Companies like Kampi and Columbia Nut and Bolt are good examples. Manufacturers can skip the government quagmire entirely by approaching distributors and selling to them.  These companies are easy to locate by searching through procurement history and vendor databases.

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.

Comments? Send them to news@bidlink.net.

This article was written exclusively for “Fastener Journal” magazine .

http://fastenerjournal.com/

By Thomas Gerbe, Defense Information Analyst, BidLink.net

We compared the top 10 companies from the Fab 40 against our database of defense contracts and made a surprising discovery.  Most of the companies fabricate for the Government, but very few of them had any direct sales to the Defense Department.  Many companies had a registered CAGE code, which is required to sell to the Government, but quite a few were expired.  It is apparent that these companies must be selling through a third party, possibly a prime contractor instead of selling directly to the Department of Defense (DOD).  Is it possible that these companies tried to find defense contracts, but were unsuccessful?

So we asked ourselves why, and begun to speculate.  Could it be that these companies simply have no experience in dealing directly with the Government?  Are they lacking the required personnel to navigate the murky waters of defense contracting?  Is it simply easier to sell to a prime contractor, who then has to deal with the extensive documentation, government inspections, packaging requirements and other inconveniences?  Is it possible that companies have tried to find defense contracts, but were unsuccessful?

As with many industries that we analyze, the bulk of the defense contracts are awarded to a handful of large companies, who then subcontract to smaller companies.  This is the opposite of what the Defense Department is trying to encourage, which is greater competition.  In February of 2010, the Defense Department issued an interim rule to increase competition in major defense acquisition programs, in an effort to trim defense spending.  As a result, prime contractors are required to provide technical data packages that were once considered proprietary information, making it easier for smaller companies to produce the same goods.  This is part of an ongoing initiative at the Defense Department to increase competition for hard to find items.

MISSED OPPORTUNITIES

At BidLink, we speak with thousands of companies who are looking to do business with the Government, and have found some distinct patterns.  Unless the company has experience with Government sales, we often find that they are not classified correctly, or simply using the wrong terminology to search for Government bids. When searching for defense contracts, one has to think the way the Government thinks, which is not always intuitive to civilian contractors.

Buying agencies provide different information when submitting a Request for Quotation (RFQ), which can vary greatly from center to center.  Although the Fab 40 was based on companies who produce items under the NAICS subclass 332, not every agency includes a NAICS code in their solicitations.  Some reference Federal Supply Classes (FSC), military specifications or particular keywords to describe the requirement.  For example, NAICS 332116 has the title “Metal Stamping”, but contracts for this category can also be found under FSCs 9905, J038, 3445, 6625, 9640, 3426, 6160, 9910, 3442, 5335, 1560, 5365, 8140, 5340, 8115, 2510, 9520, 2590 and 5975.  A combination search for this FSC list and the keyword “Washer” or “Shim” would yield more accurate results.

The NAICS Classification System is an industry classification system, not a product classification system and therefore neither intended nor well suited for this purpose.  It was originally developed by the Office of Management and Budget (OMB) as the standard for use by Federal statistical agencies in classifying business establishments for the collection, tabulation, presentation, and analysis of statistical data describing the U.S. economy. The current classification system is the 2007 NAICS.  The initial classification system was a 4-digit code known as the Standard Industrial Classification (SIC) system and was replaced by the 6-digit code the NAICS in 1997.   Although NAICS is not perfect, it is an improvement over SIC.

The product classification system which the DOD utilizes is called the Federal Catalog Program and was established in 1952.  This system which is currently in use by the  Army, Navy, Air Force, Marine Corps, other DOD activities, civil agencies and foreign governments. The most important fact to remember is that the government buys things, they don’t buy manufacturing processes.  It classifies items of supply based on the characteristics of the item, answering the simple question,  “What is it?”  How it is manufactured is irrelevant.

Example:
PLATE, STRUCTUAL
NSN 1560-01-578-9126
BOEING P/N 30-2922

Within the technical characteristics, aluminum alloy 2024 is listed as the material. This item could be something that a fabricator is capable of machining or welding and could possibly produce. Solicitations do not list in the bid how the item is to manufactured (the process of manufacture) using words such as welding, machining or laser cutting. They list the basics such as the Item Name, part number and quantity.  Searching the technical characteristics is the key to finding bids like this.

A BETTER WAY

1. Set up bid searches using Federal Cataloging codes and terminology describing the item and not how it is manufactured. For example,  use the word “PLATE” instead of “welding”, or “stamping”.
2. When viewing the open bids quickly glance at the technical characteristics, and item name.
3. Look at past procurement pricing history / number of buys / quantities sold per order.
4. View the number of sources for a single item.

Once this data is reviewed you can decide to continue if certain criteria are met by your own checklist.  If you see that an item is repeatedly purchased or has only one supplier, then it may be worth investigating.  If you can compete, submit a bid and possibly win the business.

THE NUMBERS

Although there are better ways to find Government business, the Fab 40 was based on NAICS, so we examined sales to the Defense Department for three NAICS codes under the 332 group for the first half of 2011. What is interesting is that although some of the Fab 40 companies supply goods to the Government, none of them appear in this list.

332116 – Metal Stamping

332510 – Hardware Manufacturing

332992 – Small Arms Ammunition Manufacturing

The chart below is an analysis of suppliers of the above NAICS codes to the Defense Department.

Is it possible that business is being lost because fabricators are too focused on the NAICS classification system?

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.

Comments?  Send them to news@bidlink.net.

This article was written exclusively for “The Fabricator” magazine.

http://www.thefabricator.com

On March 19, 2011, The U.S. and allied forces launched 124 Tomahawk cruise missiles at more than 20 targets in Libya, followed by 38 additional missiles in the days to follow.  During the opening hours of the Gulf war, the U.S. had launched 288 Tomahawks toward Baghdad.  The Navy has more than 3000 Tomahawks in its arsenal and claims that the launched missiles will not be replaced.  Admiral Gary Roughead, chief of naval operations told reporters in Washington, “The Tomahawks that were shot are part of our current inventory; there are more than ample replacements for those, more than ample”.  The missiles launched were model Raytheon’s BMG-109, which is an older design.

However, according to the navy’s current five year budget plan, it intends to buy 980 of the newest missiles, the Tomahawk Block IV at $1.4 Million each.  The weapon is made at Raytheon Missile Systems (CAGE Code: 1F9H2) in Tucson, Arizona.  Raytheon has shipped over 2,000 of these missiles to the Navy.

Beyond missile launches, the U.S. used 19 aircraft to strike Libyan air defense targets including three bat-winged B-2 bombers that dropped 45 Boeing made 2,000 pound satellite guided JDAM bombs.  According to Air Force Global Strike Command, the bombers flew from Whiteman air force base in Missouri directly to Libya and back without landing.  Each B-52 required four refuelings to make the journey.

Also included in the arsenal were four Boeing F-15E and eight F-16CJ Air Force Fighter jets made by Lockheed Martin.  The navy also provided Boeing EA-18G Growler electronic jamming jets, while the Marines flew four AV-8B Harrier jets launched from the USS Kearsarge floating in the Mediterranean Sea.

SELF LOCKING HEX NUTS

For security purposes, Raytheon will not disclose the exact fasteners used in the Tomahawk missile.  Although the details are not classified, we respect their right to secrecy and speak in more general terms.  A fastener commonly used in missile production is the self-locking hex nut. Aerospace engineering poses several challenges with components being exposed to extreme shock,  vibration, G-force and thermal anxiety, repeatedly without tightening. A design is only as good as its weakest link, which is often a fastener. This is why self-locking hex nuts are used.

The defense department regularly orders fasteners directly through procurement, and any U.S. company with the capability to produce them can potentially become an approved supplier.  For most aerospace parts, vendors must be on the Qualified Suppliers List prior to selling to the defense department.  The company can submit sample parts to a government inspector to receive this approval.  The item below is also a “Critical Application Item” meaning that it is subjected to additional scrutiny, including a source inspection before being used.

There have been a number of recent high-dollar solicitations for self locking hex nuts, but one in particular caught our attention:

The exact nomenclature, in government-speak is:  NUT, SELF LOCKING, HEXAGON.  The nut is is 7/8-9UNC-3B made from nickel alloy with a plastic polyhexamethylene amide locking insert. Unfortunately, by the time you read this, the above contract will be closed, as it expires on 4/26/2010.   However, this is the second RFQ for this part in 2011, after DLA not ordering it since September of 2007.  It was last supplied by Aircraft Hardware West of Long Beach, CA (CAGE code: 3CUA9), and Triman Industries of New Jersey (0ZBE8) before that.

Two other solicitations of interest are for similar items, the first is a silver treated double hexagon self-locking nut, and the other is a smaller version of the hex nut described above.

These parts were supplied by Defense Support Services in Arlington, TX (1L3U4), and Kampi Components in Fairless Hills, PA (7Z016) respectively.  The key to finding solicitations of this type is to use multiple search terms.  We used Federal Supply Class 5310, combined with the keywords, “Nut” and “self locking”. Nomenclature is very important when searching for defense contracts, as the government uses very specific terms to describe items.

Another point of interest is that almost all of the recent contracts for self-locking hex nuts were awarded to distributors, not manufacturers.  It appears that a handful of distributors are winning a large percentage of the contracts.  Perhaps there is an opportunity for manufacturers to win more of these types of contracts through a direct relationship with the defense department.  BidLink will continue to highlight government buying activity for this industry and share it with the readers of Fastener Journal.

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 Fastener Journal.  http://www.fastenerjournal.com