DoD's $132.6M contract with ITT Corporation for navigation systems shows long-term commitment

Contract Overview

Contract Amount: $132,640,137 ($132.6M)

Contractor: ITT Corporation

Awarding Agency: Department of Defense

Start Date: 2003-12-22

End Date: 2017-06-30

Contract Duration: 4,939 days

Daily Burn Rate: $26.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: CLIFTON, PASSAIC County, NEW JERSEY, 07014

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $132.6 million to ITT CORPORATION for work described as: Key points: 1. Contract awarded for navigation systems, indicating a critical need for reliable guidance technology. 2. The firm-fixed-price structure suggests predictable costs for the government. 3. A long performance period of nearly 14 years implies a sustained requirement for these systems. 4. The contract's value of over $132 million points to a significant investment in aeronautical and nautical instrument manufacturing. 5. The sole-source nature raises questions about potential cost efficiencies and alternative solutions. 6. The absence of a small business set-aside suggests the scope may not have been suitable for smaller enterprises.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable sole-source procurements. The total award of $132.6 million over nearly 14 years averages to approximately $9.5 million annually, which may be reasonable for specialized defense systems. However, the lack of competition prevents a direct assessment of whether this represents the best possible value for taxpayer dollars.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. Reasons for sole-sourcing can include unique capabilities, proprietary technology, or urgent needs where only one vendor can fulfill the requirement. The lack of competition means there was no opportunity for multiple bidders to offer proposals, potentially limiting price discovery and the government's ability to secure the lowest possible price.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as competitive pressures are absent. Without a competitive bidding process, there's less assurance that the government is receiving optimal pricing for the goods and services procured.

Public Impact

The Department of the Air Force benefits from the acquisition of essential navigation systems. The contract supports the manufacturing and supply of critical aeronautical and nautical guidance instruments. The geographic impact is primarily in New Jersey, where ITT Corporation is located. This contract likely supports a specialized workforce within ITT Corporation involved in the design, manufacturing, and maintenance of these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Long contract duration could lead to vendor lock-in and reduced flexibility.
Sole-source awards warrant scrutiny to ensure fair pricing and necessity.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Sustained award indicates a long-term, critical need for the technology.
Significant investment suggests a commitment to maintaining essential defense capabilities.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. This is a specialized area within the broader aerospace and defense industry, focusing on technologies crucial for military operations. The market for such systems is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Comparable spending benchmarks would typically involve other large, sole-source or limited-competition contracts for advanced defense electronics and navigation equipment.

Small Business Impact

The contract data indicates that this was not set aside for small businesses (ss: false, sb: false). The nature of the specialized navigation systems and the substantial contract value likely made it unsuitable for small business participation as prime contractors. There is no information provided on subcontracting plans, so the extent to which small businesses may have been involved as subcontractors is unknown.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Given it's a definitive contract, it would be subject to standard auditing and review processes. The specific Inspector General jurisdiction would be that of the Department of Defense Inspector General, responsible for investigating waste, fraud, and abuse in DoD programs. Transparency is limited by the sole-source nature, but contract award details are generally publicly available.

Related Government Programs

Defense Navigation Systems Procurement
Aeronautical Instrument Manufacturing
Nautical System Manufacturing
ITT Corporation Defense Contracts
Department of Defense Sole-Source Awards

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may limit future flexibility.
Potential for cost overruns if not closely monitored.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $132.6 million to ITT CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is ITT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $132.6 million.

What is the period of performance?

Start: 2003-12-22. End: 2017-06-30.

What is the track record of ITT Corporation in delivering similar navigation systems to the government?

ITT Corporation, through its various divisions and historical acquisitions, has a long-standing presence in providing technology solutions, including for defense applications. While specific details on their track record for this particular navigation system contract are not provided in the abbreviated data, their extensive history in manufacturing and engineering suggests a capacity to meet complex requirements. Government contract databases often contain performance ratings and past performance information that would offer a more granular view of their reliability and quality in delivering similar systems. Without access to those detailed performance records, it's assumed the government's decision to award a sole-source contract implies a perceived capability and past success, or a unique technological advantage.

How does the $132.6 million award compare to other government spending on navigation systems?

Comparing the $132.6 million award requires context regarding the specific type of navigation systems, their complexity, and the duration of the contract. This award spans nearly 14 years, averaging approximately $9.5 million annually. This figure needs to be benchmarked against similar long-term, sole-source procurements for advanced defense navigation technology. General government spending on navigation systems can vary widely, from smaller, off-the-shelf purchases to multi-billion dollar programs for integrated platforms. The sole-source nature of this contract means direct price comparisons with competed contracts are not feasible. However, annual spending on critical defense components like advanced navigation systems can range from millions to tens of millions of dollars per system, depending on technological sophistication and quantity.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and the risk of vendor lock-in. Taxpayers may bear a higher cost than if the contract had been competed. Furthermore, if the contractor faces financial difficulties or operational issues, the government has limited alternative options for fulfilling the critical need for these navigation systems. There's also a risk that the government might not be aware of or have access to potentially superior or more cost-effective solutions available elsewhere in the market. Robust oversight and negotiation are crucial to mitigate these risks.

How effective are firm-fixed-price contracts in managing costs for specialized defense equipment?

Firm-fixed-price (FFP) contracts are generally considered effective in managing costs for specialized defense equipment when the scope of work is well-defined and the risks are understood. Under an FFP contract, the contractor assumes most of the cost and schedule risk, agreeing to a set price for the delivered goods or services. This provides cost certainty for the government, making budgeting more predictable. However, for highly complex or evolving technologies, an FFP contract might incentivize the contractor to cut corners on quality or scope if not carefully monitored. In sole-source situations, the effectiveness hinges heavily on the initial price negotiation and ongoing oversight to ensure the fixed price remains fair and reasonable throughout the contract's life.

What is the historical spending pattern for navigation systems by the Department of Defense?

Historical spending patterns for navigation systems by the Department of Defense are substantial and reflect the critical role these technologies play in military operations across air, land, and sea. The DoD consistently invests billions of dollars annually in various forms of navigation, guidance, and control systems, encompassing everything from basic GPS receivers to highly sophisticated inertial navigation units and integrated sensor suites. Spending can fluctuate based on modernization programs, new platform acquisitions, and the lifecycle of existing systems. Contracts like the one awarded to ITT Corporation represent a portion of this broader investment, often for specialized or legacy systems where specific capabilities are required, or where sole-source awards are deemed necessary due to unique technological requirements or existing infrastructure.

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: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 100 KINGSLAND ROAD, CLIFTON, NJ, 07014

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $132,640,137

Exercised Options: $132,640,137

Current Obligation: $132,640,137

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline