DoD's $10.2M EDO Reconnaissance System Contract Awarded Without Competition

Contract Overview

Contract Amount: $10,188,696 ($10.2M)

Contractor: EDO Reconnaissance and Surveillance Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-07-05

End Date: 2010-03-31

Contract Duration: 1,000 days

Daily Burn Rate: $10.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ALR-95(V)X FOR BMUP

Place of Performance

Location: MORGAN HILL, SANTA CLARA County, CALIFORNIA, 95037

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $10.2 million to EDO RECONNAISSANCE AND SURVEILLANCE SYSTEMS, INC. for work described as: ALR-95(V)X FOR BMUP Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and lack of market pressure. 2. The contract's duration of 1000 days suggests a significant, long-term need for the specified reconnaissance systems. 3. Awarded to EDO Reconnaissance and Surveillance Systems, Inc., highlighting potential concentration in specialized defense contracting. 4. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code indicates a focus on components rather than complete systems. 5. A Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely monitored. 6. The absence of small business participation raises concerns about equitable distribution of federal contracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific, potentially niche, nature of the reconnaissance systems. Without competitive bids, it's difficult to ascertain if the $10.2 million represents a fair market price. The CPFF structure also introduces risk, as contractor profit is tied to costs, potentially leading to less incentive for cost efficiency compared to fixed-price contracts. Further analysis would require understanding the specific capabilities and market alternatives for these systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific vendor possesses unique capabilities, proprietary technology, or when urgent needs preclude a competitive process. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium for these systems due to the absence of competitive bidding. Without competing offers, the government lacked the leverage to negotiate the lowest possible price.

Public Impact

The Department of the Navy benefits from the acquisition of specialized reconnaissance systems for its operations. The contract supports the development and delivery of advanced surveillance and reconnaissance capabilities. The geographic impact is primarily within the United States, likely involving EDO's facilities in California. The contract may have implications for a specialized segment of the aerospace and defense workforce involved in surveillance technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Cost Plus Fixed Fee contract type can incentivize higher spending if not managed rigorously.
Lack of small business participation may indicate a concentrated market or missed opportunities for smaller firms.

Positive Signals

Award to a specialized company suggests access to critical, potentially unique, technological capabilities.
The contract addresses a specific need within the Department of Defense for reconnaissance systems.

Sector Analysis

The aerospace and defense sector is characterized by high technological barriers to entry and significant government procurement. Contracts for specialized surveillance and reconnaissance systems fall within this domain, often involving complex engineering and manufacturing. The market for such systems can be concentrated among a few key players due to the specialized knowledge and security clearances required. Spending in this area is driven by national security requirements and technological advancements.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating subcontracting opportunities for small businesses. The sole-source nature of the award further limits the potential for small business involvement. This suggests that the primary contractor, EDO Reconnaissance and Surveillance Systems, Inc., is likely a larger entity, and the specialized nature of the equipment may not lend itself to broad subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Given the CPFF structure, rigorous financial oversight and auditing would be crucial to ensure costs are reasonable and allocable. Transparency regarding the justification for the sole-source award and the contractor's performance metrics would be key accountability measures. Inspector General involvement would be possible if specific allegations of fraud, waste, or abuse arise.

Related Government Programs

Defense Intelligence Agency (DIA) procurements
Naval Air Systems Command (NAVAIR) contracts
Intelligence, Surveillance, and Reconnaissance (ISR) systems
Aerospace manufacturing contracts

Risk Flags

Sole-source award
Cost-reimbursable contract type (CPFF)
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.2 million to EDO RECONNAISSANCE AND SURVEILLANCE SYSTEMS, INC.. ALR-95(V)X FOR BMUP

Who is the contractor on this award?

The obligated recipient is EDO RECONNAISSANCE AND SURVEILLANCE SYSTEMS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $10.2 million.

What is the period of performance?

Start: 2007-07-05. End: 2010-03-31.

What specific reconnaissance capabilities does the ALR-95(V)X system provide, and why was it deemed necessary to procure it on a sole-source basis?

The ALR-95(V)X is a threat warning system designed to detect and identify radar signals, providing situational awareness to aircrews. Its sole-source procurement likely stems from proprietary technology developed by EDO Reconnaissance and Surveillance Systems, Inc., or a determination that no other vendor could meet the specific technical requirements within the necessary timeframe. Such systems are critical for survivability and mission effectiveness in contested airspace. The specific details of its capabilities are often classified due to national security implications, making public disclosure limited.

How does the Cost Plus Fixed Fee (CPFF) contract structure for this $10.2 million award potentially impact cost control and taxpayer value?

A Cost Plus Fixed Fee (CPFF) contract guarantees the contractor will be reimbursed for all allowable costs plus a predetermined fixed fee representing profit. While it allows for flexibility in scope and can be used for research and development where costs are uncertain, it inherently shifts cost risk to the government. The contractor has less incentive to control costs aggressively because their profit is fixed, regardless of the final cost. Effective oversight, detailed cost accounting, and clear performance metrics are essential to mitigate potential cost overruns and ensure value for taxpayers under a CPFF arrangement.

What is the typical market for specialized reconnaissance and surveillance systems, and how does EDO Reconnaissance and Surveillance Systems, Inc. fit within it?

The market for specialized reconnaissance and surveillance systems is a niche segment within the broader aerospace and defense industry. It is often characterized by high barriers to entry due to technological complexity, intellectual property, and stringent security requirements. Key players are typically established defense contractors with specialized R&D capabilities. EDO Reconnaissance and Surveillance Systems, Inc. appears to be a significant provider in this specialized area, evidenced by this sole-source award. The market is driven by government demand for advanced intelligence gathering and situational awareness capabilities.

Given the $10.2 million value and sole-source nature, what are the primary risks associated with this contract for the Department of the Navy?

The primary risks associated with this sole-source CPFF contract include potential cost overruns due to the inherent structure of the contract, which incentivizes spending rather than cost savings. There's also the risk of suboptimal performance if the lack of competition leads to complacency. Furthermore, reliance on a single source can create supply chain vulnerabilities and limit future flexibility if the technology landscape evolves rapidly. The government also risks paying a non-competitive price for the systems. Robust contract management and oversight are critical to mitigating these risks.

What historical spending patterns exist for similar reconnaissance systems within the Department of Defense, and how does this contract compare?

Historical spending on reconnaissance and surveillance systems within the DoD is substantial, often running into billions of dollars annually across various platforms and technologies. Specific spending patterns for niche systems like the ALR-95(V)X are harder to track publicly due to classification and the specialized nature of the equipment. However, contracts for electronic warfare and threat detection systems typically involve significant investment. This $10.2 million award, while substantial for a single system, represents a fraction of the overall DoD budget for intelligence and surveillance capabilities. Its sole-source nature makes direct comparison to competitively bid programs difficult.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: ITT Corporation (UEI: 001216845)

Address: 18705 MADRONE PKWY, MORGAN HILL, CA, 95037

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $10,188,696

Exercised Options: $10,188,696

Current Obligation: $10,188,696

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N6833506G0016

IDV Type: IDC

Timeline