DoD's $204.6M Sonobuoy Order to ERAPSCO Raises Questions on Competition and Value

Contract Overview

Contract Amount: $204,636,765 ($204.6M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2020-03-11

End Date: 2023-04-28

Contract Duration: 1,143 days

Daily Burn Rate: $179.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY20 PRODUCTION SONOBUOYS ORDER

Place of Performance

Location: COLUMBIA CITY, WHITLEY County, INDIANA, 46725

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $204.6 million to ERAPSCO for work described as: FY20 PRODUCTION SONOBUOYS ORDER Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The firm fixed-price contract type offers some cost certainty but doesn't guarantee optimal value without competition. 3. The duration of the contract (over 3 years) suggests a sustained need for these critical defense components. 4. The specific product code is missing, hindering detailed analysis of the goods procured. 5. The award to ERAPSCO, a known defense contractor, indicates a reliance on established suppliers for specialized equipment. 6. The lack of small business set-aside or subcontracting suggests this award did not directly benefit smaller enterprises.

Value Assessment

Rating: questionable

Benchmarking the value of this $204.6 million contract is challenging due to the sole-source award and missing product details. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The firm fixed-price structure provides some cost control, but the absence of competition means taxpayers may not be receiving the best possible price for these sonobuoys. Further analysis would require comparing unit costs to similar procurements or industry benchmarks, which are not readily available in the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, ERAPSCO, was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. While sole-source awards can be justified for unique capabilities or urgent needs, the lack of competition here raises concerns about potential overpayment and reduced taxpayer value. The absence of multiple bidders means there was no market pressure to ensure the most cost-effective solution was secured.

Taxpayer Impact: The sole-source nature of this award means taxpayers did not benefit from the price reductions typically achieved through a competitive bidding process. This could result in higher overall spending for these essential defense items.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Navy, who receive critical sonobuoy systems for naval operations. These sonobuoys are essential for underwater surveillance, anti-submarine warfare, and intelligence gathering. The geographic impact is national, supporting naval readiness across various operational theaters. The contract supports the manufacturing workforce within the defense industrial base, likely in Indiana where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may lead to inflated prices.
Sole-source award limits transparency in pricing and value assessment.
Absence of small business participation means missed opportunities for economic inclusion.
Missing product code hinders detailed analysis of the specific items procured.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established contractor suggests reliability in supply.
Sustained contract duration indicates a consistent need for the equipment.

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 defense industrial base, characterized by high technological requirements and often limited suppliers. The market size for such specialized components is driven by defense spending priorities. Comparable spending benchmarks would typically be found within other naval procurement contracts for similar surveillance or detection equipment.

Small Business Impact

The data indicates no small business set-aside (sb: false) and no indication of subcontracting opportunities for small businesses (ss: false). This suggests that the prime contract was not specifically targeted to encourage small business participation. Consequently, the award did not directly contribute to the small business ecosystem through prime contracting. Any involvement of small businesses would likely be through ERAPSCO's own supply chain, the details of which are not provided.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified goods at an agreed price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Sonar Systems Procurement
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Equipment
Undersea Warfare Systems
Naval Aviation Support Systems
Defense Manufacturing Contracts

Risk Flags

Sole-source award
Lack of competition
Missing Product Service Code (PSC)
Potential for overpricing due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $204.6 million to ERAPSCO. FY20 PRODUCTION SONOBUOYS ORDER

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 $204.6 million.

What is the period of performance?

Start: 2020-03-11. End: 2023-04-28.

What is ERAPSCO's track record with the Department of Defense, particularly for sonobuoy systems?

ERAPSCO (Electro-Optical Systems) is a known entity within the defense sector, often involved in providing various electronic and electro-optical systems. While specific details on their sonobuoy production history are not provided in this data snippet, their role as a sole-source provider for this significant contract suggests a pre-existing relationship and likely a demonstrated capability to meet the Navy's requirements. Further investigation into historical contract awards, performance reviews, and past performance questionnaires (PPQs) from the DoD would be necessary to fully assess their track record. However, being selected for a sole-source award of this magnitude implies a level of trust and established performance, though it doesn't inherently guarantee optimal value.

How does the $204.6 million value compare to similar sonobuoy procurements by the DoD?

Direct comparison of the $204.6 million total award value to similar sonobuoy procurements is difficult without more specific data points, such as the number of units procured, the specific types of sonobuoys, and the contract duration for comparable awards. The provided data indicates a contract duration of 1143 days (approximately 3.1 years) and a firm fixed-price structure. To benchmark effectively, one would need to identify other DoD contracts for sonobuoys awarded within a similar timeframe, ideally through competitive processes, and analyze their total value, unit costs, and scope. The sole-source nature of this ERAPSCO award makes direct value-for-money comparisons challenging, as competitive dynamics are absent.

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

The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing due to the lack of competition. Without competing bids, the government loses the leverage to negotiate the best possible price, potentially leading to overspending. Another risk is reduced innovation, as the sole provider may have less incentive to improve products or processes. Furthermore, a sole-source award can create vendor lock-in, making it difficult and costly to switch suppliers in the future if performance issues arise or better alternatives become available. There's also a risk that the government might not be aware of more cost-effective or technologically superior solutions available elsewhere in the market.

How effective are firm fixed-price contracts in ensuring value for money in defense procurements like this one?

Firm fixed-price (FFP) contracts are generally considered effective in controlling costs for the government when the scope of work is well-defined and risks are understood. They shift the cost risk to the contractor, who is obligated to deliver the specified goods or services at the agreed-upon price, regardless of their actual costs. This provides budget certainty. However, the effectiveness in ensuring *value for money* is significantly diminished when FFP contracts are awarded without adequate competition. In a competitive environment, FFP drives contractors to be efficient and offer competitive pricing. In a sole-source scenario, while the price is fixed, it may be fixed at a higher-than-necessary level, thus compromising overall value for money.

What are the historical spending patterns for sonobuoys within the Department of the Navy?

Historical spending patterns for sonobuoys within the Department of the Navy would reveal the frequency, volume, and value of past procurements. Analyzing this data could indicate whether this $204.6 million award represents a typical, increased, or decreased level of investment in sonobuoy technology. It could also highlight trends in contract types (e.g., competitive vs. sole-source), key suppliers over time, and the evolution of pricing. Without access to historical contract databases or specific reports on naval procurement, it's impossible to detail these patterns. However, sustained spending in this area typically reflects ongoing operational requirements for anti-submarine warfare and maritime surveillance.

What are the implications of the missing Product Service Code (PSC) for this contract?

The absence of a Product Service Code (PSC) for this $204.6 million contract is a significant data gap that hinders comprehensive analysis. PSCs are standardized codes used by the federal government to categorize the goods and services being procured. This specific code (currently blank) would normally provide crucial details about the exact nature of the sonobuoys being purchased (e.g., specific types, capabilities, or components). Without it, it's harder to accurately classify this spending within broader defense categories, benchmark it against similar items, identify potential alternative suppliers, or track the evolution of specific technologies over time. This lack of specificity reduces transparency and analytical depth.

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: $204,636,765

Exercised Options: $204,636,765

Current Obligation: $204,636,765

Actual Outlays: $19,741,584

Subaward Activity

Number of Subawards: 305

Total Subaward Amount: $251,471,419

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