Navy awards $35.1M for Expeditionary Ship Interdiction System, a sole-source contract

Contract Overview

Contract Amount: $35,158,949 ($35.2M)

Contractor: Kongsberg Defence & Aerospace AS

Awarding Agency: Department of Defense

Start Date: 2025-07-08

End Date: 2027-09-08

Contract Duration: 792 days

Daily Burn Rate: $44.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NAVY MARINE EXPEDITIONARY SHIP INTERDICTION SYSTEM

Plain-Language Summary

Department of Defense obligated $35.2 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: NAVY MARINE EXPEDITIONARY SHIP INTERDICTION SYSTEM Key points: 1. Contract awarded to a single vendor suggests potential lack of competitive pricing. 2. Fixed-price contract type shifts risk to the contractor, potentially impacting final cost. 3. Long contract duration of 792 days may indicate complex integration or development. 4. The system is crucial for maritime security operations. 5. Spending on this specialized defense system aligns with national security priorities.

Value Assessment

Rating: questionable

The contract value of $35.1 million for the Expeditionary Ship Interdiction System is difficult to benchmark without comparable sole-source awards. However, the absence of competition raises concerns about whether the government secured the best possible price. The firm fixed-price structure is generally favorable for cost control, but the lack of competitive bids means there's no market validation of the pricing. Further analysis would require understanding the specific technological components and their market costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This approach is typically used when a unique capability is required, or when only one responsible source exists. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competed procurement. The solicitation details would need to be reviewed to understand the justification for this sole-source award.

Taxpayer Impact: Sole-source awards limit taxpayer value by preventing competitive bidding that could drive down prices. This means taxpayers may be paying a premium for the specialized capabilities provided by this system.

Public Impact

The U.S. Navy benefits from enhanced capabilities for ship interdiction. This system will support maritime security and force protection operations. The geographic impact is global, wherever naval operations are conducted. Workforce implications may include specialized training for Navy personnel operating the system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in the justification for sole-source award.
Potential for cost overruns if market prices for components increase significantly.

Positive Signals

Firm fixed-price contract type provides cost certainty.
Award to an established defense contractor with relevant expertise.
System addresses a critical national security need.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized area within the defense industry. Companies in this sector often possess unique technological capabilities and intellectual property. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish due to the niche nature of such systems, but this contract represents a significant investment in advanced defense capabilities.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of the Expeditionary Ship Interdiction System and the sole-source award, it is unlikely that subcontracting opportunities for small businesses will be mandated or significant, unless the prime contractor voluntarily engages them for specific components or services.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which incentivizes the contractor to manage costs. Transparency may be limited due to the sole-source nature of the award, but contract modifications and performance reports would be subject to standard government oversight and potentially Inspector General review.

Related Government Programs

Naval Surface Warfare
Missile Systems Procurement
Maritime Security Technologies
Expeditionary Warfare Systems

Risk Flags

Sole-source award may limit price competition.
Long contract duration increases risk of obsolescence or requirement changes.
Lack of publicly available details on system capabilities and performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.2 million to KONGSBERG DEFENCE & AEROSPACE AS. NAVY MARINE EXPEDITIONARY SHIP INTERDICTION SYSTEM

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 Navy).

What is the total obligated amount?

The obligated amount is $35.2 million.

What is the period of performance?

Start: 2025-07-08. End: 2027-09-08.

What is the specific technological capability of the Expeditionary Ship Interdiction System?

The Expeditionary Ship Interdiction System (ESIS) is designed to provide the U.S. Navy with a capability to detect, identify, and potentially neutralize or deter hostile maritime threats. While specific technical details are often classified, it is understood to involve advanced sensor technology, targeting systems, and potentially non-lethal or lethal effectors. Its 'expeditionary' nature suggests it is designed for deployment in forward operating areas, possibly from smaller vessels or shore-based platforms, offering a flexible and responsive solution for maritime interdiction operations. The system aims to enhance situational awareness and provide commanders with options to control maritime traffic and respond to asymmetric threats in littoral and open-ocean environments.

What is the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award typically stems from a determination that only one responsible source can provide the required supplies or services. For the Expeditionary Ship Interdiction System, this could be due to unique proprietary technology developed by Kongsberg Defence & Aerospace, specialized manufacturing capabilities, or prior investment in research and development that makes them the only viable provider. The Department of the Navy would have conducted a market research effort to confirm the lack of alternatives or issued a Justification and Approval (J&A) document outlining the specific reasons why full and open competition was not feasible. This often involves considerations of technical compatibility, existing infrastructure, or urgent need where developing alternatives would be impractical or excessively costly.

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

A firm fixed-price (FFP) contract type means that the contractor, Kongsberg Defence & Aerospace, is obligated to complete the work for a predetermined price, regardless of the actual costs incurred. This shifts the primary cost risk from the government to the contractor. For the Navy, this provides a high degree of cost certainty, as the total expenditure is known upfront, assuming no contract modifications. The contractor is incentivized to manage their own costs efficiently to maximize profit. However, if the contractor underestimated costs or faces unforeseen challenges, they bear the financial burden. This contract structure is generally preferred for well-defined requirements where technical risks are manageable.

What is the historical spending trend for similar ship interdiction systems within the Navy?

Historical spending on ship interdiction systems within the Navy is varied and depends on the specific technology and platform. Investments in maritime surveillance, electronic warfare, and weapon systems that contribute to interdiction capabilities have been consistent priorities. For instance, spending on guided missile systems, electronic countermeasures, and advanced radar and sonar technologies often runs into billions of dollars annually across various programs. Specific programs focused on integrated interdiction solutions, like the Expeditionary Ship Interdiction System, represent targeted investments. Analyzing past budgets for programs like the Littoral Combat Ship's weapon modules, or various patrol boat enhancements, could provide context, though direct comparisons are challenging due to the unique nature and sole-source award of this particular system.

What are the potential risks associated with the long contract duration (792 days)?

A contract duration of 792 days (approximately 2 years and 2 months) for the Expeditionary Ship Interdiction System introduces several potential risks. Firstly, there's the risk of technological obsolescence; defense technology evolves rapidly, and a system developed over this period might be less advanced by its delivery date compared to emerging alternatives. Secondly, economic risks, such as inflation or fluctuations in raw material costs, could impact the contractor's ability to maintain the fixed price, potentially leading to requests for equitable adjustments or performance issues if margins become too thin. Thirdly, program management risks increase with duration; maintaining focus, managing personnel, and ensuring consistent quality over an extended period requires robust oversight. Finally, there's the risk that the operational requirements or threat landscape may change during the contract period, potentially rendering the system less relevant or requiring costly modifications.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: M6785425R1006

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: KIRKEGAARDSVEIEN 45, KONGSBERG

Business Categories: Category Business, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $47,387,518

Exercised Options: $37,400,179

Current Obligation: $35,158,949

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline