Category: Industry News

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

Imagine a military without fasteners, it would just fall apart.

Fasteners are an integral part of the U.S. Military; in fact every soldier’s daily life depends on the availability and reliability of them.  Each time a military unit deploys they pack up a myriad of equipment and supplies for the purpose of not only supporting the mission at hand but to provide every imaginable item to support daily life.  These supplies and equipment are completely consumed, maintained, repaired or reused and many of them would not exist without fasteners.

Lets look at the different ways the Defense Department consumes fasteners.

Repair and Maintenance

Every piece of equipment has a lifetime which may be extended with scheduled maintenance.  This maintenance can be performed by the military or through an appointed government contractor.  Billions of dollars worth of government equipment are in some state of repair or overhaul at any given time. Repair or maintenance can occur on site, at local depots, or be shipped to one of the 20 major DOD repair depots in the U.S.

Figure 1.  This diagram (part of a much larger technical manual) is used to illustrate the parts breakdown for a very specific piece of equipment. Each labeled item has a very specific set of rules, such as which are to be repaired or replaced.  There are 24 unique fasteners listed in this illustration which are used on other assemblies.  The NSN 5305-00-725-2317 in this list is used on 15 other vehicles including the HMMWV model M1045A1.  General guidance for maintenance and repair of military equipment are described in technical manuals.

When items are overhauled, parts are either refurbished or replaced.  One way the military supplies parts is in kit form.  For example the NSN 2590-01-305-2166 is a parts kit for a winch, it contains 9 different types of screws, 6 different nuts and washers and two different types of cotter pins.  The kit sells for $7,350 each.  Repairs at military depots may use these kits or pull from a much larger local stock of fasteners kept in their stock bins.

Department of Defense

The four major agencies operating under the Department of Defense have a constant need for hardware such as screws, nuts, bolts, washers and rivets.  Agencies included are the Defense Logistics Agency, Air Force, Army and Navy (which includes the Marines).  There are currently 1,438 contracting offices which issue solicitations through these 4 agencies.

The  Defense Logistics Agency (DLA) is the top agency for purchasing fasteners, issuing the majority of the solicitations.  Typically DLA buys are shipped to one of their 25 distribution sites located around the world or direct to the end user.  Repair depots (the actual consumers of these items) can then replenish their stock by sending requisitions to the DLA pulling from these distribution centers.  Sometimes the depot or base will create and post a solicitation for the item.

To find DLA solicitations, set up searches using standard classifications such as the Federal Supply Class (FSC) .  Classes of interest for fasteners are 5305, 5306, 5307, 5310, 5325, which are screws, bolts, studs, nuts & washers and fastening devices respectively.

Prime Manufacturers

Although the Defense Department issues millions of solicitations direct to vendors for needed parts, for major systems they prefer to buy through prime manufacturers. These companies will subcontract to thousands of vendors, that supply the parts needed to make and support aircraft, engines, ships, tanks, vehicles and communications equipment.  Familiar names like, Boeing, Lockheed, Motorola and Pratt & Whitney are all prime defense contractors.

These companies are prime targets for people who wish to sell to the defense department, but abhor the bureaucracy of government sales.  Prudent contractors can search DOD procurement history to find systems that contain components which they can supply.  Vendors can contact prime contractors directly and offer their products.  Many fastener suppliers already possess skills and familiarity with specifications of hardware used in major military systems or equipment.

Some companies who sell through prime contractors may also sell spares directly to the military.  A company may have produced a screw for Lockheed, who in turn used that screw in an end item sold to the military.  When the Defense Department orders more of that screw, it may appear under a Lockheed part number, not the original manufacturer’s.  This is useful information when searching for solicitations to sell directly to the DOD.

Direct Sales to End User

There are military bases everywhere, and sometimes demand for items arise, which must be purchased immediately.  These are designated as a emergency buys.  There are currently over three million government/military personnel who possess a government credit card which allow them the ability to purchase items without issuing a public solicitation under the right circumstances.

How They Buy

There are a number of ways parts can be purchased by the military.

Direct Procurement – The Defense Department issues a request for competitive quotes directly from manufacturers.  This can be issued through the Defense Logistics Agency, or from the individual agency with the requirement. Contractors can search for these solicitations, determine if they can manufacture the parts competitively and submit a bid.

Prime Contracts – Parts are purchased through the prime contractors, which are often supplied by subcontractors.

Credit Card – For urgent purchases, agencies can use a credit card to buy parts directly from manufacturers or distributors.

Knowing who and how they buy is the first step toward selling to the Defense Department.  Companies can register to sell directly to the DOD, or sell to companies who have already won defense contracts.  Either way, the government can be a consistent source of business for U.S. companies.

Other Sales Opportunities

Foreign Military Sales (FMS) is a program where U.S. Defense systems and services are sold to ‘friendly’ countries.  Brokers both foreign and domestic are constantly sourcing items (part numbers /NSN’s) for many of these older legacy systems.  Seeking out these suppliers or advertising your capabilities can also help increase your fasteners sales.

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

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.

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/

Tweet

Companies that manufacture batteries for the U.S. Defense Department are experiencing some good times.  In 2010, the Defense Logistics Agency purchased  $127.59 million worth of batteries, 14.4% more than in 2009.  Currently, the military purchases 7,208 different types of batteries from 226 companies.

At BidLink, we have been mining over 500 million records of defense industry data looking for trends of interest for defense contractors,  and are finding that there is money to be made supplying seemingly common items.  While attention is generally directed toward big ticket buys like aircraft and weapons systems, the Department of Defense (DOD) is spending quite a bit of money on replacement parts called spares. We draw attention to this because there is opportunity for U.S. companies, who might be struggling during the Great Recession.  With retail sales in decline, the DOD can provide some stability for vendors. This week, we focus on the battery industry.

With portable technology as the foundation of the modern military, batteries have become an essential, recurring need.  From AAA to D, fuel cells to rechargeable, the defense department runs on batteries.  We examined several supply classes (FSC) for this study:

TOP SUPPLIERS

The leader in battery sales by number of contracts is Exide Technologies with 2,468.  Exide technologies is a for profit corporation located in Milton, Georgia and manufactures batteries as well as motor vehicle supplies.  They have over 1,500 employees and  annual sales of approximately $2.4 Billion. They were followed closely by Enersys Energy Products with 1,924 contracts.

As for sales volume, Enersys Energy Products is the clear leader with almost $32 Million in annual battery sales to the Defense Department for 2010.  Their most popular item by far was a storage battery used on vehicles including COUGAR and MRAP, National Stock Number 6140-01-485-1472, of which they sold 1,830 to DOD at  $305 each.  Most of their sales were through long term contracts, where the defense department agrees to purchase a quantity over time.  Once won by competitive bid, these contracts can sometimes last for years. The defense department issues periodic delivery orders against the contract when they need more supplies.  Armed with the right information, prudent contractors can win these contracts 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.

The U.S. Defense Department has been steadily increasing its purchases of fasteners and hardware.  At BidLink, we have studied government buying activity for screws, bolts, studs, nuts, washers, nails & rivets over the past five years and found that hardware is a growth industry.  In 2009, the Defense Logistics Agency, the primary procurement arm of the Defense Department purchased $233 Million worth of fasteners.

Although all of the numbers are not in yet, we predict 2010 will be down slightly, closer to $200 million.  Even in the face of major cuts to defense spending, purchases for fasteners are still strong.   Recent austerity measures at the defense department are slashing major purchases of new systems. This creates a growing need to support existing equipment with replacement parts.  As we study various industries, we are seeing a familiar pattern.  U.S. companies that make common items like batteries, safety equipment, electric motors, and hardware can make a lot of money selling to the government.

An analysis of the competition in this industry reveals that Herndon Products has won the most contracts with almost 6,000 in 2009.   The company supplied 3,310 different types of items to the defense department in that year.  The most popular was a National Stock Number 5310-01-097-8010, NUT,PLAIN,ASSEMBLED with 49 delivery orders in 2009.  These purchases were made through a long-term contract (see delivery order) , where once they win the bid, the defense department requests regular orders against the contract.   The above delivery order  for $9,126.02 is #575 against the master contract.  These types of contracts can last many years, but when they expire, prudent contractors can win them.

By sales, the winner is Columbia Nut and Bolt, with almost $17 Million in 2009.  Their headquarters is in Moonachie, New Jersey.   They are a wholesaler of hardware 500-750 employees, which primarily sells to the government. They are followed closely by Herndon Products with nearly $16 Million.

The Defense Logistics Agency buys over 185,000 different kinds of fasteners, screws, nuts, bolts and rivets.  The total number of contracts in 2009 jumped 15% over the 2008 tally to 51,150.

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.

(Exculsive article to the American Fastener Journal)