DoD awarded $139.5M for communications equipment, with Ericsson Inc. receiving the sole-source contract

Contract Overview

Contract Amount: $19,843,275 ($19.8M)

Contractor: Ericsson Inc

Awarding Agency: Department of Defense

Start Date: 2003-09-08

End Date: 2011-07-27

Contract Duration: 2,879 days

Daily Burn Rate: $6.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200312!025901!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0703CJ808 !A!N! !N! !20030908!20031205!139557425!878983378!353957491!N!ERICSSON INC !6300 LEGACY DRIVE !PLANO !TX!75024!61796!085!48!RICHARDSON !COLLIN !TEXAS !+000003221879!N!N!000000000000!5895!MISCELLANEOUS COMMUNICATION EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !1000!NOT DISCERNABLE OR CLASSIFIED !334290!E! !3! ! ! ! ! !99990909!B! ! !N!B!D!U!J!1!001!N!6A!Z!N!Z! ! !Y!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: PLANO, COLLIN County, TEXAS, 75024

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $19.8 million to ERICSSON INC for work described as: 200312!025901!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0703CJ808 !A!N! !N! !20030908!20031205!139557425!878983378!353957491!N!ERICSSON INC !6300 LEGACY DRIVE !PLANO !TX!75024!61796!085!48!RICHARDSON !COLLI… Key points: 1. Contract awarded for miscellaneous communication equipment, indicating a need for specialized hardware. 2. The contract was not competed, raising questions about potential cost savings and market fairness. 3. A significant duration of nearly 8 years suggests a long-term need for these communication assets. 4. The award to a single vendor may limit opportunities for innovation and competitive pricing. 5. The contract's value of $139.5M represents a substantial investment in defense communication infrastructure. 6. The North American Industry Classification System (NAICS) code 334290 points to a specific segment of the communications equipment manufacturing sector.

Value Assessment

Rating: questionable

The contract value of $139.5 million over a period of almost 8 years (2879 days) for miscellaneous communication equipment warrants scrutiny. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition suggests that the government may not have secured the best possible price or value. Further analysis would be needed to determine if the awarded amount aligns with industry standards for similar equipment and services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one vendor, Ericsson Inc., was solicited. The data indicates that the contract was not competed, which can occur for various reasons, such as a lack of available sources, urgent and compelling needs, or specific technical requirements. However, a sole-source award typically results in less price discovery and potentially higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process. This could lead to a higher overall expenditure for the required communication equipment.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical communication equipment. The services delivered include the provision of miscellaneous communication equipment, essential for military operations. The contract is geographically focused within Texas, where Ericsson Inc. is located, but the equipment's use is likely global for defense purposes. The contract supports jobs within Ericsson Inc. and potentially its supply chain, contributing to the technology manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer dollars.
Sole-source awards can stifle innovation by not encouraging multiple vendors to propose solutions.
The long contract duration could mean the technology becomes outdated before the contract ends.
Absence of competitive benchmarking makes it hard to assess if the price is fair market value.

Positive Signals

Award to a known entity, Ericsson Inc., suggests a potentially reliable supplier.
The contract specifies a clear product category (miscellaneous communication equipment), indicating defined needs.
The firm fixed-price contract type provides cost certainty for the government.

Sector Analysis

The contract falls within the 'Other Communications Equipment Manufacturing' sector, classified under NAICS code 334290. This sector encompasses establishments primarily engaged in manufacturing communication equipment, excluding those focused on specific types like telephone apparatus or radio and television broadcasting equipment. The total value of $139.5 million over nearly eight years suggests a significant procurement within this niche, potentially indicating a specialized or high-volume need for advanced communication hardware within the defense sector. Benchmarking this spending would require comparing it to other large government procurements of similar communication systems or to the overall market size of specialized defense communication equipment manufacturers.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'ss': false and 'sb': false. Consequently, there are no explicit provisions for small business participation or subcontracting goals directly tied to this award. The sole-source nature of the award further limits opportunities for small businesses to compete for this specific contract. The impact on the small business ecosystem is likely minimal unless Ericsson Inc. voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and administration processes, potentially involving the Defense Contract Management Agency (DCMA). As a sole-source award, the justification for this procurement method would be subject to review. Transparency is limited due to the lack of a competitive process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

Defense Communications Systems
Tactical Communication Equipment
Electronic Warfare Systems
Network Centric Warfare Programs
Military Satellite Communications

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may lead to technology obsolescence.
Limited transparency due to non-competitive nature.
Potential for higher costs compared to a competed contract.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.8 million to ERICSSON INC. 200312!025901!2100!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0703CJ808 !A!N! !N! !20030908!20031205!139557425!878983378!353957491!N!ERICSSON INC !6300 LEGACY DRIVE !PLANO !TX!75024!61796!085!48!RICHARDSON !COLLIN !TEXAS !+000003221879!N!N!000000000000!5895!MISCELLANEOUS COMMUNICATION EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !1000!NOT DISCERNABLE OR CLASSIFIED !334290!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is ERICSSON INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $19.8 million.

What is the period of performance?

Start: 2003-09-08. End: 2011-07-27.

What is the specific type of 'miscellaneous communication equipment' procured under this contract?

The provided data identifies the product service code (PSC) as 'A7' and the NAICS code as '334290' (Other Communications Equipment Manufacturing). While 'miscellaneous communication equipment' is broad, these codes suggest the procurement likely involves specialized hardware for data transmission, signal processing, or network connectivity tailored for defense applications. Without further details in the data, it's difficult to pinpoint the exact nature of the equipment, but it could range from secure radios and modems to specialized antennas or network interface devices critical for military operations. The contract's sole-source nature means the specific technical requirements were likely defined by the DoD, and Ericsson Inc. was the chosen provider to meet those needs.

Why was this contract awarded on a sole-source basis instead of being competed?

The data explicitly states the contract type as 'NOT COMPETED' and indicates it was awarded to a single vendor. Common justifications for sole-source awards include urgent and compelling needs where competition is not feasible, the unavailability of adequate sources, or when a specific contractor possesses unique capabilities or proprietary technology essential for the requirement. Without additional documentation or context beyond the provided data, the precise reason for the sole-source award remains unknown. However, the lack of competition means that the government did not explore potential cost savings or alternative solutions that a competitive bidding process might have yielded.

How does the contract value of $139.5 million compare to similar procurements for communication equipment?

Comparing the $139.5 million contract value requires context regarding the specific type and quantity of 'miscellaneous communication equipment' procured, as well as the contract's duration (nearly 8 years). As a sole-source award, direct price comparisons are challenging. However, for large-scale defense procurements of communication systems, this value is substantial but not unprecedented. To benchmark effectively, one would need to analyze historical DoD spending on similar communication hardware, considering factors like technological sophistication, volume, and contract type. The absence of competitive bids makes it difficult to ascertain if this represents a fair market price or if potential savings were forgone.

What is Ericsson Inc.'s track record with the Department of Defense for similar contracts?

Ericsson Inc. is a well-established global telecommunications company. While this specific data point highlights a significant sole-source award for miscellaneous communication equipment, Ericsson has a history of providing telecommunications infrastructure and services to various government entities, including defense organizations. Their track record typically involves supplying network equipment, mobile technology, and related services. The DoD likely awarded this contract based on Ericsson's existing capabilities, technological offerings, and potentially prior performance. However, the provided data does not detail specific past performance metrics or the history of their relationship with the DoD beyond this single contract.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risks associated with a sole-source contract of $139.5 million over nearly 8 years include potential overpricing due to the lack of competition, reduced incentive for the contractor to innovate or provide exceptional value, and the risk of technological obsolescence over the long contract term. Taxpayers may bear a higher cost than necessary. Furthermore, reliance on a single vendor can create supply chain vulnerabilities. The government also misses opportunities to foster a broader base of suppliers and potentially discover more cost-effective or advanced solutions through competition. Ensuring robust oversight and clear performance metrics becomes crucial to mitigate these risks.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 6300 LEGACY DRIVE, PLANO, TX, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline