DoD's $82M contract for navigation systems awarded to Kongsberg Defence & Aerospace AS shows fair value and strong competition

Contract Overview

Contract Amount: $82,236,254 ($82.2M)

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: $57.1K/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 $82.2 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: CROWS ORDERING PERIOD 3 Key points: 1. The contract's value appears reasonable when benchmarked against similar procurements. 2. Full and open competition suggests a healthy market with multiple capable bidders. 3. The firm-fixed-price structure transfers risk to the contractor, indicating good financial management. 4. Performance was within the expected timeframe, aligning with project goals. 5. This contract positions Kongsberg as a key supplier in the defense navigation systems sector. 6. The use of a delivery order under an existing IDIQ contract streamlines procurement.

Value Assessment

Rating: good

The total award amount of $82.2 million for navigation systems appears to be within a reasonable range when compared to similar procurements for advanced defense electronics. The firm-fixed-price contract type suggests that pricing was established upfront, and the government secured a predictable cost. Benchmarking against industry standards for similar technological capabilities indicates that the pricing was competitive, reflecting the value of specialized navigation equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple potential bidders were solicited and allowed to compete. The presence of four bidders suggests a robust competitive environment for these specialized navigation systems. This level of competition is generally favorable for price discovery and ensures that the government receives offers from a range of qualified sources, potentially leading to better pricing and innovation.

Taxpayer Impact: Taxpayers benefit from a competitive process that drives down costs and ensures the government is not overpaying for critical defense technology. The availability of multiple bidders also increases the likelihood of selecting a contractor that offers the best combination of price, quality, and performance.

Public Impact

The Department of Defense benefits from the acquisition of advanced navigation systems essential for military operations. These systems enhance the capabilities of naval vessels and aircraft, improving mission effectiveness. The contract supports the operational readiness of the U.S. military. It contributes to the technological advancement within the defense sector. The contract indirectly supports jobs within the defense manufacturing and technology industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if this system becomes proprietary and difficult to integrate with future technologies.
Reliance on a single contractor for critical navigation components could pose supply chain risks.
Ensuring long-term supportability and maintenance of these specialized systems requires careful planning.

Positive Signals

The firm-fixed-price contract structure effectively manages cost risks for the government.
The use of an IDIQ contract with multiple delivery orders allows for flexibility and phased procurement.
Awarding to a known entity with defense experience suggests a lower performance risk.
The competitive nature of the award process indicates a strong market offering.

Sector Analysis

The defense navigation systems market is a specialized segment within the broader aerospace and defense industry, characterized by high technological barriers to entry and stringent performance requirements. Companies operating in this space often possess unique expertise in areas like sensor fusion, GPS/INS integration, and advanced signal processing. Spending in this sector is driven by military modernization efforts and the need for precise positioning, navigation, and timing (PNT) capabilities across various platforms. Comparable spending benchmarks would typically involve other large-scale procurements of advanced electronic warfare, radar, or communication systems.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have specific small business set-aside provisions. However, the prime contractor, Kongsberg Defence & Aerospace AS, may engage small businesses as subcontractors for specialized components or services. The extent of small business participation would depend on the prime contractor's subcontracting plan and the availability of small businesses capable of meeting the technical requirements.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency is facilitated by the public nature of contract awards, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Systems
Aerospace Electronics
Defense Procurement
Navigation Technology
Military Hardware

Risk Flags

Potential for cost overruns if contractor's estimates were inaccurate.
Risk of obsolescence if technology rapidly advances beyond the contracted system.
Dependence on a single supplier for critical components could create supply chain vulnerabilities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.2 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 $82.2 million.

What is the period of performance?

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

What is the track record of Kongsberg Defence & Aerospace AS in delivering similar navigation systems to the U.S. military?

Kongsberg Defence & Aerospace AS has a significant history of supplying defense systems, including navigation and communication equipment, to various international militaries and defense organizations. While specific details on past U.S. military contracts for navigation systems may require deeper research into defense procurement databases, the company's established presence in the defense sector suggests a level of experience and capability. Their portfolio often includes advanced solutions for maritime, air, and land-based platforms, indicating a broad understanding of military operational requirements. Evaluating past performance on similar contracts would involve reviewing delivery timelines, adherence to specifications, and any reported issues or successes in previous engagements.

How does the $82.2 million award compare to the total spending on navigation systems by the Department of the Army over the past five years?

To accurately compare the $82.2 million award to the Department of the Army's total spending on navigation systems over the past five years, one would need to aggregate data from various contract vehicles, including other IDIQ contracts, sole-source awards, and smaller procurements. This specific contract, awarded under the 'CROWS ORDERING PERIOD 3' IDIQ, represents a significant but not necessarily dominant portion of the Army's investment in navigation technology. Historical spending patterns reveal a consistent demand for advanced PNT (Positioning, Navigation, and Timing) solutions, driven by evolving threats and operational needs. A comprehensive analysis would involve identifying all contracts categorized under relevant NAICS codes (like 334511) and PSC codes related to navigation equipment awarded to the Army during the specified period.

What are the primary risks associated with the firm-fixed-price contract type for this navigation system procurement?

The primary risk associated with a firm-fixed-price (FFP) contract type for navigation systems is the potential for the contractor to cut corners on quality or performance to maximize profit if cost overruns occur. While FFP is generally advantageous for the government by fixing costs, it places the burden of cost control and unforeseen expenses on the contractor. If the contractor underestimates the complexity or cost of development and production, they may face financial losses, which could indirectly impact delivery schedules or product quality. However, for well-defined requirements like navigation systems, FFP is often preferred as it provides cost certainty. Mitigation strategies include robust technical specifications, stringent quality assurance, and clear performance metrics.

What is the expected impact of these navigation systems on the operational effectiveness of the platforms they are integrated with?

The integration of advanced navigation systems is expected to significantly enhance the operational effectiveness of military platforms. These systems provide precise and reliable positioning, velocity, and timing (PNT) data, which are critical for mission success in diverse operational environments, including GPS-denied or contested areas. Enhanced navigation capabilities improve situational awareness for operators, enable more accurate targeting, facilitate complex maneuvers, and reduce the risk of fratricide or navigational errors. For platforms like naval vessels and aircraft, accurate navigation is fundamental to mission planning, execution, and safe return, directly contributing to increased survivability and mission accomplishment rates.

How does the competition level (4 bidders) for this contract influence the potential for innovation in navigation technology?

A competition level involving four bidders suggests a healthy market where multiple companies are vying for the contract. This level of competition can foster innovation as companies strive to differentiate their offerings through superior technology, performance, or features to win the award. When multiple firms invest in research and development to meet or exceed the government's requirements, it can lead to advancements in navigation technology. The prospect of future contracts also incentivizes contractors to develop cutting-edge solutions. Conversely, if the requirements are highly prescriptive, the scope for innovation might be limited to incremental improvements within those defined parameters.

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: $86,366,254

Exercised Options: $86,366,254

Current Obligation: $82,236,254

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15QKN07D0018

IDV Type: IDC

Timeline