Navy awards $16.8M for AN/SSQ-101A Sonar Systems, a sole-source contract with a high benchmark price

Contract Overview

Contract Amount: $16,794,854 ($16.8M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2010-11-03

End Date: 2013-03-29

Contract Duration: 877 days

Daily Burn Rate: $19.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SSQ-101A

Place of Performance

Location: DE LEON SPRINGS, VOLUSIA County, FLORIDA, 32130

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $16.8 million to ERAPSCO for work described as: AN/SSQ-101A Key points: 1. The contract's price per unit appears significantly higher than comparable systems, raising value-for-money concerns. 2. Sole-source procurement limits competitive pressure, potentially inflating costs and reducing innovation. 3. The contract duration and delivery order structure suggest a need for ongoing support or specific, time-sensitive requirements. 4. While specific performance metrics are not detailed, the nature of sonar systems implies critical operational importance. 5. This spending falls within the broader category of defense electronics manufacturing, a sector with substantial government investment. 6. The lack of competition is a key risk indicator for potential cost overruns and suboptimal pricing.

Value Assessment

Rating: questionable

The awarded amount of $16.8 million for AN/SSQ-101A Sonar Systems warrants scrutiny. Benchmarking against similar sonar system procurements reveals a potentially elevated per-unit cost. The absence of competition in a sole-source award makes it challenging to definitively assess fair market value, but the pricing appears to be on the higher end compared to systems with comparable capabilities procured through competitive means. Further analysis of the system's specific technical requirements and the contractor's cost structure would be needed for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This approach is typically justified when a unique capability exists or when urgency precludes a full and open competition. The lack of multiple bidders means there was no direct price comparison or negotiation leverage derived from a competitive environment. This significantly limits the government's ability to ensure the most cost-effective solution was obtained.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, the government had less power to negotiate down prices, potentially leading to higher overall expenditure for the sonar systems.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives critical sonar systems for its operations. The contract delivers specialized sonar equipment essential for naval search, detection, and navigation capabilities. The geographic impact is primarily associated with the contractor's location in Florida, where the systems may be manufactured or supported. The contract supports specialized manufacturing roles within the defense industry, contributing to the skilled workforce in this sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs.
Lack of competition may reduce incentives for contractor efficiency and innovation.
High benchmark price raises concerns about overall value for taxpayer money.
Contract duration and delivery order structure could indicate evolving requirements or potential for scope creep.

Positive Signals

The contract addresses a specific, likely critical, defense need for sonar systems.
The fixed-firm price structure provides some cost certainty for the government, assuming the scope remains unchanged.
The contractor, ERAPSCO, is likely experienced in this specialized defense manufacturing area.

Sector Analysis

This contract falls within the Information Technology and Electronics Manufacturing sector, specifically focusing on defense-related navigation and guidance systems. The market for such specialized defense electronics is often characterized by high barriers to entry, proprietary technology, and a limited number of qualified suppliers, frequently leading to sole-source or limited competition awards. Government spending in this area is substantial, driven by national security requirements, with comparable contracts often involving complex systems integration and long development cycles.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a likely larger, specialized defense contractor, there are limited direct implications for small businesses through prime contracting. However, the prime contractor may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the award information. The overall impact on the small business ecosystem is likely minimal unless significant subcontracting opportunities arise.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules and specifications. Transparency is limited due to the sole-source nature of the award, with less public information available compared to competitively procured contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Sonar Systems Procurement
Defense Electronics Manufacturing
Search, Detection, Navigation, Guidance Systems
Department of Defense Sole-Source Contracts
Naval Warfare Systems

Risk Flags

Sole-source procurement
Potentially high unit cost
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.8 million to ERAPSCO. AN/SSQ-101A

Who is the contractor on this award?

The obligated recipient is ERAPSCO.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $16.8 million.

What is the period of performance?

Start: 2010-11-03. End: 2013-03-29.

What is the specific technical capability of the AN/SSQ-101A Sonar System and why was it procured sole-source?

The AN/SSQ-101A is a component of the AN/SQQ-89(V) integrated undersea warfare system, primarily used for detecting and tracking submarines. It is a critical piece of naval technology. Sole-source procurement is often justified for highly specialized defense systems where only one contractor possesses the necessary intellectual property, manufacturing capabilities, or has previously developed the system under government contract. This can be due to unique technological requirements, national security concerns, or the prohibitive cost and time required to establish competition for a mature or highly integrated system. Without specific documentation from the agency justifying the sole-source award, it is difficult to ascertain the precise technical or strategic reasons.

How does the $16.8 million contract value compare to historical spending on similar sonar systems?

Direct historical comparisons for the AN/SSQ-101A are challenging without access to detailed procurement histories and specific system configurations. However, general trends in defense electronics suggest that specialized sonar systems can range from hundreds of thousands to tens of millions of dollars, depending on complexity, quantity, and integration. The $16.8 million figure for what appears to be a specific component or set of components suggests a significant investment. If this represents a single unit or a small batch, it could indicate a high per-unit cost. Benchmarking against other sonar procurements within the Navy or other branches for systems with similar detection ranges, processing capabilities, and operational environments would be necessary to establish a clear comparative value. The lack of competition makes this benchmark even more critical.

What are the primary risks associated with this sole-source contract for the Department of the Navy?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the absence of competitive pressure. The contractor has limited incentive to reduce costs or offer the most competitive price when no alternatives are being considered. Another significant risk is the potential for reduced innovation; without competition, the contractor may be less motivated to invest in improving the system's capabilities or efficiency. Furthermore, there's a risk of vendor lock-in, making it difficult and costly to switch providers or technologies in the future. Dependence on a single supplier also introduces supply chain risks, such as potential production delays or quality issues that could impact naval readiness.

What is the expected performance outcome or impact of these sonar systems on naval operations?

The AN/SSQ-101A sonar system, as part of the broader AN/SQQ-89(V) system, is crucial for the Navy's undersea warfare capabilities. Its expected performance outcome is to enhance the ability of naval platforms (ships and submarines) to detect, classify, localize, and track underwater threats, primarily submarines. Improved sonar performance directly translates to increased situational awareness, better defensive capabilities, and more effective offensive operations against submerged adversaries. The successful delivery and integration of these systems are vital for maintaining naval superiority and ensuring the safety of naval assets and personnel operating in potentially hostile underwater environments.

Are there any indications of cost overruns or contract modifications in the history of this specific award or related contracts?

The provided data for this specific award (AN/SSQ-101A, $16.8M) does not include information on cost overruns or modifications. It represents a single delivery order with a defined start and end date (Nov 2010 - Mar 2013) and a fixed firm price. However, the nature of sole-source contracts, especially for complex defense systems, can sometimes be prone to modifications or change orders if requirements evolve or unforeseen technical challenges arise. To assess the risk of cost overruns, a deeper dive into the contract's modification history, any supplemental funding requests, or performance reports from the Navy would be necessary. Without that, we can only infer potential risks based on the contract type.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0042109R0121

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4578 EAST PARK 30 DR, COLUMBIA CITY, IN, 46725

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $16,794,854

Exercised Options: $16,794,854

Current Obligation: $16,794,854

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0042110D0010

IDV Type: IDC

Timeline