DoD's AN/SSQ-125 Contract Awarded to ERAPSCO for $71.8M, Lacking Competition

Contract Overview

Contract Amount: $71,801,600 ($71.8M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2020-07-15

End Date: 2023-02-14

Contract Duration: 944 days

Daily Burn Rate: $76.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SSQ-125 (FY20)

Place of Performance

Location: COLUMBIA CITY, WHITLEY County, INDIANA, 46725

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $71.8 million to ERAPSCO for work described as: AN/SSQ-125 (FY20) Key points: 1. Significant contract value of $71.8 million for sonar systems. 2. Sole-source award to ERAPSCO raises concerns about price discovery. 3. Potential for higher costs due to lack of competitive bidding. 4. The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector.

Value Assessment

Rating: questionable

The contract's value of $71.8 million is substantial. Without competitive benchmarking, it's difficult to assess if this price is reasonable compared to similar sonar system procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning ERAPSCO was the only vendor considered. This significantly limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The lack of competition may result in taxpayers paying more than necessary for these critical sonar systems.

Public Impact

Impacts naval operations and readiness by procuring essential sonar equipment. Potential for increased defense spending due to non-competitive award. Highlights a reliance on a single supplier for a key defense component.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Potential for overpricing

Positive Signals

Essential defense procurement
Firm fixed price contract

Sector Analysis

This contract is within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is critical for national security, but competitive sourcing is vital to ensure cost-effectiveness.

Small Business Impact

The data provided does not indicate any specific involvement or benefit to small businesses in this sole-source contract award.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure the Department of Defense obtained the best possible value and that proper justification for non-competition was documented.

Related Government Programs

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

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited transparency in price discovery

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.8 million to ERAPSCO. AN/SSQ-125 (FY20)

Who is the contractor on this award?

The obligated recipient is ERAPSCO.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $71.8 million.

What is the period of performance?

Start: 2020-07-15. End: 2023-02-14.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair pricing?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of viable alternatives. Without this specific justification, it's challenging to assess the fairness of the pricing. Further review of the contract file is needed to understand the rationale and any price negotiation strategies employed by the Department of Defense.

What is the long-term risk associated with relying on a single supplier for AN/SSQ-125 systems?

The long-term risk includes potential price escalation as the supplier faces no competitive pressure. It also creates a vulnerability if the supplier experiences production issues, financial instability, or decides to discontinue the product line. This reliance could also stifle innovation in sonar technology if alternative solutions are not explored.

How does the firm fixed price structure mitigate risk in a sole-source environment?

A firm fixed price (FFP) contract aims to transfer risk to the contractor by establishing a ceiling price. While FFP is generally beneficial, in a sole-source situation, the 'fixed' price might still be inflated due to the lack of competition. Therefore, while it protects the government from cost overruns, it doesn't guarantee the initial price was the most competitive achievable.

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

Solicitation ID: N0001919R0001

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4868 EAST PARK 30 DR, COLUMBIA CITY, IN, 46725

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $71,801,600

Exercised Options: $71,801,600

Current Obligation: $71,801,600

Actual Outlays: $19,198,380

Subaward Activity

Number of Subawards: 37

Total Subaward Amount: $16,433,005

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001919D0032

IDV Type: IDC

Timeline