DoD's $35.8M Counter UAS Contract with ELTA North America Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $35,806,685 ($35.8M)

Contractor: Elta North America Inc.

Awarding Agency: Department of Defense

Start Date: 2017-11-24

End Date: 2023-04-30

Contract Duration: 1,983 days

Daily Burn Rate: $18.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: LETTER CONTRACT TO PURCHASE COUNTER UNMANNED AERIAL SYSTEM SUPPLIES.

Place of Performance

Location: ANNAPOLIS JUNCTION, HOWARD County, MARYLAND, 20701

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $35.8 million to ELTA NORTH AMERICA INC. for work described as: LETTER CONTRACT TO PURCHASE COUNTER UNMANNED AERIAL SYSTEM SUPPLIES. Key points: 1. Significant spending on counter-unmanned aerial system (C-UAS) technology. 2. Sole-source award to ELTA North America raises competition concerns. 3. Long contract duration (1983 days) suggests potential for cost overruns. 4. The 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector is critical for defense modernization.

Value Assessment

Rating: questionable

The contract value of $35.8M for counter-UAS supplies is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar systems or potential alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The lack of competition in this sole-source award means taxpayers may have paid a premium for these C-UAS supplies, as there was no incentive for the contractor to offer the lowest possible price.

Public Impact

Enhances military capabilities in detecting and countering aerial threats. Supports the Department of the Air Force's modernization efforts. Potential for technology advancements in the C-UAS domain. Impacts the defense industrial base, particularly in specialized electronics manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Long contract duration
Sole-source award

Positive Signals

Addresses critical defense need (C-UAS)
Supports a specific military branch (Air Force)

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a key area for defense technology. Spending in this sector is often high due to the advanced nature of the required systems.

Small Business Impact

The data indicates this contract was not awarded to small businesses (sb: false). Further analysis would be needed to determine if subcontracting opportunities were provided to small businesses.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight to ensure the government is receiving fair value and that the technology meets all specified requirements. Accountability for the procurement decision is crucial.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition
Sole-source award
Long contract duration
Potential for inflated pricing
Risk of technological obsolescence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.8 million to ELTA NORTH AMERICA INC.. LETTER CONTRACT TO PURCHASE COUNTER UNMANNED AERIAL SYSTEM SUPPLIES.

Who is the contractor on this award?

The obligated recipient is ELTA NORTH AMERICA INC..

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 $35.8 million.

What is the period of performance?

Start: 2017-11-24. End: 2023-04-30.

What specific factors justified the sole-source award for this counter-UAS system, and were alternatives thoroughly explored?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. For this C-UAS contract, the Department of Defense would need to provide documentation detailing why ELTA North America was the only source capable of meeting the requirements. This could involve proprietary technology or specific integration needs. A thorough review of market research and alternative solutions is essential to ensure the sole-source decision was indeed the most appropriate and cost-effective path.

How does the $35.8M contract value compare to industry benchmarks for similar counter-UAS systems, especially considering the lack of competitive bidding?

Without competitive bidding, directly benchmarking the $35.8M against similar contracts is challenging. However, industry analysts can compare the system's capabilities, features, and intended operational scope against publicly available data for other C-UAS solutions. If comparable systems were procured competitively for significantly less, it would raise concerns about the value received. The long contract duration also suggests potential for cost escalation, making pre-award and post-award cost analysis critical.

What are the potential risks associated with a long-duration, sole-source contract for advanced defense technology like counter-UAS systems?

Risks include potential cost overruns due to the absence of competitive pressure, technological obsolescence if the system doesn't keep pace with evolving threats, and vendor lock-in. The extended period also increases the likelihood of unforeseen issues arising without the flexibility to renegotiate terms based on market changes. Furthermore, a sole-source award can stifle innovation within the broader defense industrial base by limiting opportunities for other companies to develop and offer competing solutions.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Israel Aerospace Industries Ltd.

Address: 8955 HENKELS LANE STE 508, ANNAPOLIS JUNCTION, MD, 20701

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

Financial Breakdown

Contract Ceiling: $44,308,671

Exercised Options: $35,806,685

Current Obligation: $35,806,685

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline