DoD's $43.7M AN/SSQ-62F & 36B contract awarded to ERAPSCO, a sole-source procurement

Contract Overview

Contract Amount: $43,710,840 ($43.7M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2020-12-03

End Date: 2024-02-15

Contract Duration: 1,169 days

Daily Burn Rate: $37.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SSQ-62F & 36B (FY21)

Place of Performance

Location: COLUMBIA CITY, WHITLEY County, INDIANA, 46725

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $43.7 million to ERAPSCO for work described as: AN/SSQ-62F & 36B (FY21) Key points: 1. The contract value of $43.7 million represents a significant investment in naval systems. 2. ERAPSCO, the sole awardee, suggests a lack of broader market competition for these specific systems. 3. The firm-fixed-price contract type aims to provide cost certainty for the government. 4. The contract duration of 1169 days indicates a long-term need for these systems. 5. The procurement falls under the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing NAICS code. 6. The contract was awarded as a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) or similar vehicle.

Value Assessment

Rating: questionable

Benchmarking the value of this $43.7 million contract is challenging without more specific details on the AN/SSQ-62F & 36B systems and their quantities. However, the sole-source nature of the award raises concerns about potential overpricing compared to a competitive environment. Without comparative bids or market analysis, it's difficult to definitively assess value for money. The firm-fixed-price structure offers some cost control, but the absence of competition limits the government's ability to leverage market forces for better pricing.

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 standard competitive bidding process. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities, urgent needs), they typically result in less price discovery and potentially higher costs for the government compared to full and open competition. The lack of multiple bidders means the government did not benefit from the competitive pressure that drives down prices.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competition. Without competing offers, there is less assurance that the price reflects the best possible value achievable in the market.

Public Impact

The Department of the Navy is the primary beneficiary, receiving critical naval systems. The contract supports the operational readiness and technological capabilities of naval forces. The geographic impact is primarily within the Department of Defense's operational theaters. The contract likely supports specialized manufacturing and technical roles within ERAPSCO and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for vendor lock-in due to specialized nature of systems.
Limited visibility into the specific performance metrics and quality assurance for these systems.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Long contract duration suggests a sustained need and potential for stable supply.
Award to a known entity (ERAPSCO) may indicate a pre-existing relationship and understanding of requirements.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. This is a specialized niche within the broader defense industrial base, often characterized by high technological barriers to entry and significant R&D investment. Companies operating in this space typically supply critical components and systems for military platforms. Comparable spending benchmarks are difficult to establish without knowing the exact nature and quantity of the systems procured, but investments in advanced sensor and navigation technology are generally substantial within defense budgets.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. As a sole-source award to ERAPSCO, the direct impact on the small business ecosystem is likely minimal unless ERAPSCO has established subcontracting relationships with small businesses for the fulfillment of this contract. Further investigation into ERAPSCO's subcontracting practices would be needed to assess any indirect benefits to small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Accountability measures are inherent in the firm-fixed-price contract type, which holds the contractor responsible for delivering goods or services at the agreed-upon price. Transparency is limited by the sole-source nature of the award; however, contract award data is generally made public. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Systems Procurement
Defense Electronics Manufacturing
Search and Navigation Systems
Aeronautical and Nautical Instruments
Department of the Navy Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for higher costs
Limited market transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.7 million to ERAPSCO. AN/SSQ-62F & 36B (FY21)

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 $43.7 million.

What is the period of performance?

Start: 2020-12-03. End: 2024-02-15.

What is the specific nature and function of the AN/SSQ-62F & 36B systems being procured?

The AN/SSQ-62F and AN/SSQ-36B are sonobuoy systems used by naval aviation for anti-submarine warfare (ASW). The AN/SSQ-62F is a directional frequency-agile sonobuoy, while the AN/SSQ-36B is a bathythermograph sonobuoy that measures water temperature and depth. These systems are critical for detecting and tracking submarines, providing vital intelligence for naval operations. Their deployment from aircraft allows for wide-area surveillance of oceanic environments, contributing significantly to maritime security and force protection.

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

ERAPSCO (E.R. Applied Physics Company) has a history of contracting with the Department of Defense, primarily for sonobuoy systems and related services. They are a significant supplier in this niche market. Their track record includes numerous awards for various sonobuoy types, often under sole-source or limited competition scenarios due to the specialized nature of the technology and established relationships. While specific performance metrics for past contracts are not detailed here, their continued awards suggest a satisfactory performance history in meeting DoD requirements for these critical ASW components.

How does the $43.7 million contract value compare to historical spending on similar sonobuoy systems?

Comparing the $43.7 million value requires looking at historical spending on sonobuoys, particularly the AN/SSQ-62F and AN/SSQ-36B series, and similar systems. Sonobuoy procurements can vary significantly based on quantity, technological sophistication, and contract type. Given that this is a sole-source award over a period of nearly four years (1169 days), the annual spending averages around $11 million. Historical data from sources like USASpending.gov or FPDS might show similar or higher values for large-scale sonobuoy buys, especially when considering multi-year contracts or larger quantities. However, without specific quantity breakdowns for this award, a precise comparison is difficult. The sole-source nature also implies that the price might be higher than if it were competitively bid.

What are the primary risks associated with this sole-source procurement?

The primary risk associated with this sole-source procurement is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government has less leverage to negotiate the best possible price. Another risk is vendor lock-in; if ERAPSCO is the sole provider of these specific, critical systems, the DoD may become dependent on them, limiting future flexibility and potentially facing higher prices in subsequent procurements. There's also a risk of reduced innovation if the sole provider faces no market pressure to improve their offerings. Finally, the justification for sole-sourcing needs to be robust to ensure it's truly necessary and not simply a matter of convenience.

What is the expected program effectiveness or outcome based on this contract?

The expected outcome of this contract is the continued availability and deployment of AN/SSQ-62F and AN/SSQ-36B sonobuoys, which are essential for the U.S. Navy's anti-submarine warfare (ASW) capabilities. Effective deployment of these systems enhances the Navy's ability to detect, classify, and track submarines, thereby maintaining maritime situational awareness and deterring potential adversaries. The firm-fixed-price contract aims to ensure reliable delivery of these systems within budget, supporting ongoing naval operations and training exercises. Ultimately, the effectiveness hinges on the quality and timely delivery of the sonobuoys and their successful integration into naval platforms.

Are there any alternative systems or potential future procurements that could introduce competition?

The market for advanced sonobuoys is relatively specialized, with a limited number of manufacturers capable of producing systems like the AN/SSQ-62F and AN/SSQ-36B to military specifications. While ERAPSCO is a primary supplier, other defense contractors may develop or offer competing technologies in the future, potentially through research and development initiatives or by adapting commercial off-the-shelf (COTS) solutions. The Department of Defense may also issue Broad Agency Announcements (BAAs) or solicit proposals for next-generation sonobuoy technology. However, transitioning to new systems involves significant testing, qualification, and integration efforts, meaning competition for these specific legacy systems is unlikely in the short term.

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: $43,710,840

Exercised Options: $43,710,840

Current Obligation: $43,710,840

Subaward Activity

Number of Subawards: 100

Total Subaward Amount: $38,073,031

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