DoD spent $84.5M on AN/SSQ-36B SONOBUOYS, with a benchmarked unit cost of $77K

Contract Overview

Contract Amount: $84,487,420 ($84.5M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2014-12-04

End Date: 2017-12-04

Contract Duration: 1,096 days

Daily Burn Rate: $77.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SSQ-36B SONOBUOYS

Place of Performance

Location: COLUMBIA CITY, WHITLEY County, INDIANA, 46725

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $84.5 million to ERAPSCO for work described as: AN/SSQ-36B SONOBUOYS Key points: 1. The contract value of $84.5M for sonobuoys represents a significant investment in naval defense capabilities. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. The firm fixed-price contract type generally transfers risk to the contractor, promoting cost certainty. 4. Delivery orders under this contract suggest ongoing needs and potential for follow-on work. 5. The manufacturing NAICS code (334511) places this contract within the specialized defense electronics sector. 6. The contract duration of 1096 days allowed for sustained supply over a multi-year period.

Value Assessment

Rating: good

The total contract value of $84.5M for AN/SSQ-36B SONOBUOYS appears reasonable given the specialized nature of the equipment. The per-unit cost benchmark of $77,087 is a key indicator of value. Without direct comparisons to identical systems procured under similar market conditions, a definitive value assessment is challenging. However, the firm fixed-price structure suggests the government secured predictable costs.

Cost Per Unit: $77,087

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit offers. The number of bidders is not specified, but a full and open process generally fosters a competitive environment, which can lead to better pricing and innovation. This approach is favored for maximizing taxpayer value when feasible.

Taxpayer Impact: A full and open competition provides the best opportunity for taxpayers to receive competitive pricing and ensures that the government is not unduly limiting its options, potentially leading to cost savings.

Public Impact

Naval forces benefit from a reliable supply of AN/SSQ-36B SONOBUOYS, crucial for anti-submarine warfare. The services delivered include the manufacturing and supply of advanced acoustic detection equipment. The geographic impact is primarily national, supporting U.S. Navy operations globally. Workforce implications include employment in specialized manufacturing and engineering roles within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future procurements if competition diminishes.
Dependence on a single system may pose risks if obsolescence or supply chain issues arise.

Positive Signals

Firm fixed-price contract structure provides cost certainty.
Full and open competition suggests a healthy market for this type of equipment.
Delivery orders indicate consistent demand and successful performance.

Sector Analysis

The defense electronics manufacturing sector is highly specialized, characterized by stringent quality requirements and significant R&D investment. The AN/SSQ-36B SONOBUOY falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' category. Spending in this sector is driven by national security needs, with significant government procurement. Comparable spending benchmarks would involve other sonar and acoustic systems procurements within the DoD.

Small Business Impact

This contract does not appear to have been specifically set aside for small businesses, nor is there information indicating significant subcontracting opportunities for small businesses. The prime contractor, ERAPSCO, is likely a larger entity specializing in defense systems. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract, requiring delivery of specified goods. Transparency is generally maintained through contract award databases, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud or mismanagement.

Related Government Programs

Naval Sonar Systems
Anti-Submarine Warfare Equipment
Defense Electronics Manufacturing
Naval Systems Procurement

Risk Flags

Potential for obsolescence
Supply chain vulnerability
Performance variability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $84.5 million to ERAPSCO. AN/SSQ-36B SONOBUOYS

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 $84.5 million.

What is the period of performance?

Start: 2014-12-04. End: 2017-12-04.

What is the track record of ERAPSCO in delivering defense systems, particularly sonobuoys?

ERAPSCO (Electro-Optical Systems) has a history of providing various defense systems, including sonobuoys, to the U.S. military. Their experience often involves complex manufacturing processes and adherence to strict military specifications. While specific performance details for this particular contract are not detailed here, their presence as a supplier suggests a capacity to meet the demanding requirements of naval defense procurement. Further investigation into past performance reviews and any reported issues would provide a more comprehensive understanding of their track record.

How does the $77,087 per-unit cost compare to similar sonobuoy systems or previous procurements?

The benchmarked per-unit cost of $77,087 for the AN/SSQ-36B SONOBUOY provides a reference point. However, a precise comparison requires data on similar sonobuoy models (e.g., AN/SSQ-53, AN/SSQ-62) procured around the same period, under similar contract types (firm fixed-price), and with comparable competition levels. Without this granular data, it's difficult to definitively state if $77,087 is high or low. Factors like technological sophistication, quantity ordered, and specific performance characteristics significantly influence unit costs in this specialized market.

What are the primary risks associated with this contract, and how were they mitigated?

Key risks for this contract could include technological obsolescence of the sonobuoy system, supply chain disruptions for critical components, and potential performance issues. The firm fixed-price contract type mitigates financial risk for the government by locking in costs. The full and open competition aims to ensure a robust supply base, reducing reliance on a single source. Mitigation of technological risk would depend on the system's design lifecycle and the contractor's ability to upgrade or adapt. Supply chain risks are managed through contractor oversight and potentially by requiring the contractor to maintain buffer stock.

How effective has the AN/SSQ-36B SONOBUOY system been in supporting naval operations?

The AN/SSQ-36B SONOBUOY is a critical component for naval anti-submarine warfare (ASW) operations, designed for detecting underwater acoustic signatures. Its effectiveness is tied to its reliability, range, and accuracy in identifying potential threats. While specific operational success metrics are often classified, the continued procurement and use of this system by the Department of the Navy suggest it meets operational requirements. Its role in enhancing situational awareness and enabling rapid response to underwater threats is vital for fleet security.

What are the historical spending patterns for sonobuoys by the Department of the Navy?

Historical spending on sonobuoys by the Department of the Navy has been substantial and consistent, reflecting the ongoing need for ASW capabilities. This $84.5M contract is part of a larger, multi-year investment in acoustic detection systems. Annual spending can fluctuate based on fleet modernization programs, specific operational demands, and the lifecycle of different sonobuoy models. Analyzing trends over the past decade would reveal patterns of demand, shifts in technology, and the average cost per unit across various procurements, indicating a sustained commitment to this capability.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0042113R0070

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4868 EAST PARK 30 DR, COLUMBIA CITY, IN, 46725

Business Categories: Category Business, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations

Financial Breakdown

Contract Ceiling: $84,487,420

Exercised Options: $84,487,420

Current Obligation: $84,487,420

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042114D0025

IDV Type: IDC

Timeline