ITT Corporation received over $79M for AIDEWS systems over 10 years, a sole-source award

Contract Overview

Contract Amount: $79,118,816 ($79.1M)

Contractor: ITT Corporation

Awarding Agency: Department of Defense

Start Date: 2007-03-30

End Date: 2017-06-30

Contract Duration: 3,745 days

Daily Burn Rate: $21.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AIDEWS INSTALL, TEST AND SUPPORT SYSTEMS

Place of Performance

Location: CLIFTON, PASSAIC County, NEW JERSEY, 07014

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $79.1 million to ITT CORPORATION for work described as: AIDEWS INSTALL, TEST AND SUPPORT SYSTEMS Key points: 1. The contract value of $79.1M over a decade suggests a significant investment in AIDEWS technology. 2. Sole-source awards can limit price competition, potentially leading to higher costs for taxpayers. 3. The long duration of the contract (over 10 years) indicates a sustained need for these systems. 4. The firm fixed-price contract type provides cost certainty for the government, shifting risk to the contractor. 5. The absence of small business set-asides or subcontracting plans warrants further investigation into broader economic impacts. 6. The contract's focus on search, detection, and navigation systems aligns with critical defense capabilities.

Value Assessment

Rating: fair

The total award of $79.1 million over more than 10 years for AIDEWS installation, testing, and support is difficult to benchmark without comparable sole-source contracts. However, the duration suggests a substantial, long-term commitment. The firm fixed-price nature of the contract provides cost predictability for the government, but the lack of competition inherent in a sole-source award raises concerns about whether the government achieved the best possible value. Without competitive bids, it's challenging to assess if the pricing is aligned with market rates or if it reflects a premium due to the lack of alternatives.

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. This typically occurs when only one responsible source is available or authorized by statute. The lack of competition means there were no other bidders to compare against, and therefore, no direct price discovery through a bidding process. This approach can be justified for specialized systems or when a specific contractor possesses unique capabilities, but it bypasses the standard competitive procurement process designed to ensure optimal pricing and innovation.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that competitive bidding typically generates. The government may pay a higher price than if multiple companies had vied for the contract.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, which receives advanced AIDEWS systems. The services delivered include installation, testing, and ongoing support for critical defense systems. The geographic impact is primarily within New Jersey, where the contractor is located, but the systems themselves have national defense implications. Workforce implications include specialized technical roles for installation, testing, and maintenance of these complex systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
The long contract duration without re-competition could lead to complacency or reduced incentive for innovation from the contractor.
Absence of small business participation or subcontracting goals may limit opportunities for smaller businesses in the defense supply chain.

Positive Signals

Firm fixed-price contract provides budget certainty for the government, mitigating cost overrun risks.
The sustained award over a decade indicates a critical and ongoing need for the AIDEWS systems, suggesting their importance to national security.
The contractor, ITT Corporation, likely possesses specialized expertise required for these complex systems, ensuring a level of technical proficiency.

Sector Analysis

The contract falls within the aerospace and defense sector, specifically focusing on electronic warfare and navigation systems. The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' indicates a market for specialized defense instrumentation. Spending in this area is often characterized by high R&D costs, long product development cycles, and significant government procurement. Comparable spending benchmarks are difficult to establish for sole-source awards, but the overall defense electronics market is substantial, with significant portions dedicated to advanced sensor and guidance technologies.

Small Business Impact

This contract does not appear to have included small business set-asides, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting plans. This suggests that opportunities for small businesses to participate in this specific contract may have been limited. Without a focus on subcontracting, the broader impact on the small business ecosystem within this sector is likely minimal for this particular award. Future analysis could explore if ITT Corporation engages in broader small business outreach or subcontracting on other contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight. The firm fixed-price nature shifts financial risk to the contractor, simplifying some aspects of cost oversight. Transparency is limited by the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but the specific mechanisms for ongoing performance and value oversight are not detailed in the provided data.

Related Government Programs

Defense Advanced GPS Receiver (DAGR)
Advanced Tactical Data Links (ATDL)
Electronic Warfare Systems
Navigation and Guidance Systems Manufacturing
Aerospace and Defense Instrumentation

Risk Flags

Sole-source award limits competition
Potential for overpricing due to lack of competition
Long contract duration without re-competition
No explicit small business subcontracting goals identified

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $79.1 million to ITT CORPORATION. AIDEWS INSTALL, TEST AND SUPPORT SYSTEMS

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 $79.1 million.

What is the period of performance?

Start: 2007-03-30. End: 2017-06-30.

What is the specific nature of the AIDEWS (Air Defense Integrated Electronic Warfare System) and its criticality to Air Force operations?

The AIDEWS, or Air Defense Integrated Electronic Warfare System, is a critical component for modern air defense operations. While specific details are often classified, these systems typically involve the integration of various electronic warfare capabilities designed to detect, identify, and counter airborne threats. This includes radar warning receivers, jammers, and electronic support measures. Their criticality lies in providing aircrews with situational awareness of the electromagnetic spectrum, enabling them to avoid or neutralize enemy radar and missile systems. For the Air Force, AIDEWS enhances survivability and mission effectiveness in contested airspace, playing a vital role in maintaining air superiority and protecting forces.

Why was this contract awarded on a sole-source basis, and what are the implications for cost?

The contract was awarded on a sole-source basis, indicating that the Department of Defense determined ITT Corporation was the only responsible source capable of providing the required AIDEWS installation, testing, and support. This could be due to proprietary technology, unique expertise, or specific integration requirements that only ITT could meet. The primary implication for cost is the absence of competitive pressure. In a competitive environment, multiple bidders would vie for the contract, driving down prices through innovation and efficiency. A sole-source award removes this pressure, potentially leading to higher costs for the government as there is no direct comparison to gauge value for money. Taxpayers may bear a premium for this lack of competition.

How does the firm fixed-price contract type affect risk and cost management for this AIDEWS system?

The firm fixed-price (FFP) contract type shifts the majority of the cost risk from the government to the contractor, ITT Corporation. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides the government with significant budget certainty, as the total cost is known upfront. However, it also means that if ITT Corporation experiences cost overruns due to unforeseen issues, inefficiencies, or rising material prices, their profit margin will be reduced, or they may incur a loss. Conversely, if they manage the project efficiently and keep costs below the agreed-upon price, their profit will increase. This structure incentivizes the contractor to control costs and manage the project effectively.

What is the historical spending trend for AIDEWS systems or similar electronic warfare/navigation systems procured by the Air Force?

Analyzing historical spending trends for AIDEWS or similar systems requires access to detailed procurement databases beyond the provided data. However, the $79.1 million awarded to ITT Corporation over approximately 10 years (from 2007 to 2017) suggests an average annual expenditure of roughly $7.9 million. This figure represents a sustained, moderate level of investment in these specific systems. Broader trends in defense electronics and electronic warfare show consistent government investment, often increasing during periods of heightened geopolitical tension or technological advancement. The Air Force, in particular, invests heavily in advanced avionics, electronic warfare suites, and navigation systems to maintain its technological edge. Without specific comparative data, it's difficult to definitively state if this spending is high or low relative to the market, especially given the sole-source nature of this award.

What are the potential risks associated with a sole-source award for critical defense systems like AIDEWS?

Sole-source awards for critical defense systems like AIDEWS carry several potential risks. Firstly, the lack of competition can lead to inflated prices, meaning the government may pay more than necessary, thus representing a poorer value for taxpayer money. Secondly, without the pressure of competing bids, the contractor may have less incentive to innovate, improve efficiency, or offer superior customer service. Thirdly, reliance on a single source can create vulnerabilities. If the contractor faces financial difficulties, operational issues, or decides to exit the market, the government could face significant disruption in acquiring or maintaining these essential systems. Finally, sole-source awards can sometimes be perceived as lacking transparency, potentially raising concerns about fairness and the integrity of the procurement process, even if legally justified.

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: 77 RIVER RD, CLIFTON, NJ, 07014

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $79,118,816

Exercised Options: $79,118,816

Current Obligation: $79,118,816

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline