DoD's $87.8M Kongsberg contract for search and detection systems shows fair value with 4 bidders

Contract Overview

Contract Amount: $87,787,709 ($87.8M)

Contractor: Kongsberg Defence & Aerospace AS

Awarding Agency: Department of Defense

Start Date: 2008-09-09

End Date: 2012-08-19

Contract Duration: 1,440 days

Daily Burn Rate: $61.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CROWS ORDERING PERIOD 3

Place of Performance

Location: JOHNSTOWN, CAMBRIA County, PENNSYLVANIA, 15904

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $87.8 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: CROWS ORDERING PERIOD 3 Key points: 1. The contract's value appears reasonable given the specialized nature of the equipment. 2. Full and open competition suggests a healthy market for these advanced systems. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. Performance duration of 4 years provides a stable period for delivery and support. 5. This contract falls within the broader category of defense electronics manufacturing. 6. The number of bidders indicates a competitive landscape for this technology.

Value Assessment

Rating: good

The contract's total value of $87.8 million over four years suggests a per-year spend of approximately $21.95 million. Benchmarking against similar contracts for advanced search and detection systems is challenging due to the specialized nature of the equipment. However, the firm fixed-price structure implies that the contractor assumed the risk of cost fluctuations, which is generally favorable for the government. The presence of four bidders in a full and open competition also suggests that the pricing achieved is likely competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. Four bids were received, suggesting a moderate level of competition for this specialized defense system. While four bidders is not an exceptionally high number, it demonstrates that multiple companies possess the capability and interest to compete for such contracts, which is a positive sign for price discovery.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging innovation among contractors.

Public Impact

The Department of the Army benefits from advanced search and detection capabilities, enhancing operational effectiveness. The contract supports the development and delivery of critical navigation and guidance systems for military applications. The primary geographic impact is within the Department of Defense's operational theaters. The contract likely supports a specialized workforce in the defense manufacturing sector, particularly in areas related to electronics and systems integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if follow-on support requires proprietary knowledge.
Complexity of the technology could lead to unforeseen integration challenges.
Reliance on a single awardee for a critical system requires robust performance monitoring.

Positive Signals

Firm fixed-price contract limits the government's exposure to cost increases.
Full and open competition suggests a healthy market and potential for competitive pricing.
Multiple bidders indicate a degree of capability spread across the industry.
The contract duration allows for stable planning and execution.

Sector Analysis

This contract falls within the broader defense electronics and systems manufacturing sector, specifically focusing on search, detection, navigation, guidance, and related instruments. This is a highly specialized niche within the larger defense industry, characterized by high barriers to entry due to technological complexity and stringent quality requirements. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of the systems, but overall defense spending on advanced electronics and sensor technology runs into billions annually.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor is there explicit information regarding subcontracting plans for small businesses. Given the specialized and high-technology nature of the systems involved, it is possible that the prime contractor may rely on larger, specialized subcontractors. Further analysis would be needed to determine the extent of small business participation, if any, in the supply chain for this contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management office within the Department of the Army. Performance monitoring, quality assurance, and compliance with contract terms are standard oversight mechanisms. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) research programs
Naval Sea Systems Command (NAVSEA) procurements
Air Force Life Cycle Management Center (AFLCMC) contracts
Intelligence, Surveillance, and Reconnaissance (ISR) systems
Tactical Data Links

Risk Flags

Potential for technological obsolescence
Reliance on a single contractor for critical systems
Complexity of integration and testing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $87.8 million to KONGSBERG DEFENCE & AEROSPACE AS. CROWS ORDERING PERIOD 3

Who is the contractor on this award?

The obligated recipient is KONGSBERG DEFENCE & AEROSPACE AS.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $87.8 million.

What is the period of performance?

Start: 2008-09-09. End: 2012-08-19.

What is the specific type of search and detection system being procured, and what are its primary military applications?

The contract data indicates the North American Industry Classification System (NAICS) code 334511, which covers Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. While the specific system details are not provided in the summary data, this category typically includes advanced radar systems, sonar equipment, electronic warfare sensors, and sophisticated navigation aids. These systems are crucial for a wide range of military applications, including intelligence gathering, threat detection, situational awareness, target acquisition, and safe navigation for naval vessels, aircraft, and ground forces. The 'CROWS ORDERING PERIOD 3' designation suggests this is part of a larger, ongoing program to equip military assets with these critical capabilities.

How does the awarded price of $87.8 million compare to similar systems procured by the Department of Defense or other allied nations?

Direct price comparisons for highly specialized defense systems like those procured under this contract are often difficult due to proprietary information, varying technical specifications, and different procurement strategies. However, the total contract value of $87.8 million spread over a four-year period (approximately $21.95 million per year) appears to be within a reasonable range for advanced electronic warfare and sensor systems. The fact that it was awarded under full and open competition with four bidders suggests that the price achieved was likely competitive within the market for such niche technologies. Without access to detailed technical specifications and market research reports, a precise benchmark is not feasible, but the competitive award process provides some assurance of value.

What are the key performance indicators (KPIs) used to assess the success of this contract and the performance of Kongsberg Defence & Aerospace AS?

Key performance indicators for a contract of this nature would typically focus on technical performance, delivery schedules, and quality. For search and detection systems, KPIs might include detection range and accuracy, signal-to-noise ratio, reliability (mean time between failures), power consumption, environmental resilience (operating temperature, shock, vibration), and compliance with electromagnetic interference (EMI) standards. Delivery KPIs would involve on-time delivery of hardware and software, adherence to milestones, and successful integration testing. Quality KPIs would encompass defect rates, adherence to manufacturing standards (e.g., ISO 9001), and successful completion of acceptance testing. The government's contracting officer and technical representatives would monitor these KPIs throughout the contract's duration.

What is the historical spending trend for similar search, detection, and navigation systems within the Department of the Army over the last five years?

Analyzing historical spending trends for specific niche systems like those under NAICS 334511 requires access to detailed procurement databases. However, general trends in defense spending indicate a sustained and often increasing investment in advanced sensor and electronic warfare capabilities. The Army, in particular, has prioritized modernization efforts that include enhanced situational awareness, intelligence, surveillance, and reconnaissance (ISR) platforms. Therefore, it is plausible that spending on systems related to search, detection, and navigation has remained robust or grown over the past five years, driven by evolving threat landscapes and the need for technological superiority. This specific $87.8 million contract represents a portion of that broader investment.

What are the potential risks associated with relying on Kongsberg Defence & Aerospace AS for these critical systems, and what mitigation strategies are in place?

Potential risks include technological obsolescence, supply chain disruptions, performance deficiencies, and potential cost overruns if the fixed-price nature is circumvented by change orders. For a sole or primary supplier like Kongsberg, there's also the risk of vendor lock-in for future upgrades or maintenance. Mitigation strategies typically involve robust contract management, including stringent acceptance criteria, performance monitoring, and regular technical reviews. The government may also encourage or require Kongsberg to identify alternative suppliers for critical components or maintain detailed technical documentation to facilitate future competition or in-house support. Diversifying the supplier base for future procurements, if feasible, is another long-term mitigation strategy.

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: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN06R1409

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Kongsberg Gruppen ASA (UEI: 518910914)

Address: KIRKEG?RDSVEIEN 45, KONGSBERG

Business Categories: Category Business, Foreign Owned, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $87,787,709

Exercised Options: $87,787,709

Current Obligation: $87,787,709

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15QKN07D0018

IDV Type: IDC

Timeline