DoD's $181M AN/SSQ-53G/125 Sonobuoy Contract Awarded to ERAPSCO Raises Value Concerns

Contract Overview

Contract Amount: $181,449,510 ($181.4M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2021-03-03

End Date: 2024-12-31

Contract Duration: 1,399 days

Daily Burn Rate: $129.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SSQ-53G AND AN/SSQ-125 (FY21)

Place of Performance

Location: COLUMBIA CITY, WHITLEY County, INDIANA, 46725

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $181.4 million to ERAPSCO for work described as: AN/SSQ-53G AND AN/SSQ-125 (FY21) Key points: 1. The contract's value is significant, representing a substantial investment in naval defense capabilities. 2. Competition dynamics are limited, with a 'NOT COMPETED' status raising questions about price discovery. 3. Risk indicators include the lack of competition and potential for cost overruns in a sole-source award. 4. Performance context is tied to the ongoing need for advanced sonobuoy systems in naval operations. 5. Sector positioning places this contract within the critical defense manufacturing industry, specifically naval systems. 6. The contract duration of nearly four years suggests a long-term commitment to these specific systems.

Value Assessment

Rating: questionable

The award of $181.4 million to ERAPSCO for sonobuoys, without open competition, warrants scrutiny. Benchmarking this price against similar contracts or market rates is challenging due to the sole-source nature. However, the absence of competitive bidding suggests a potential lack of downward pressure on pricing, which could lead to less favorable value for the government compared to a competed procurement. The firm-fixed-price contract type offers some cost certainty, but the overall value proposition is weakened by the limited competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The specific reasons for this determination are not provided in the data, but it typically implies that only one source was capable of meeting the requirement, or that the urgency of the need precluded full and open competition. The lack of multiple bidders means there was no direct price comparison or negotiation against alternative suppliers, potentially impacting the government's ability to secure the best possible price.

Taxpayer Impact: Taxpayers may be paying a premium for these sonobuoys due to the absence of competitive pressure. Without competing the requirement, there is a reduced likelihood of achieving cost savings that typically result from a robust bidding process.

Public Impact

The primary beneficiaries are the U.S. Navy, which receives critical anti-submarine warfare (ASW) capabilities. The services delivered include the supply of AN/SSQ-53G and AN/SSQ-125 sonobuoys, essential for detecting and tracking submarines. The geographic impact is national, supporting naval operations across various theaters of operation. Workforce implications include sustained employment within ERAPSCO and its supply chain, likely concentrated in Indiana.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competed contract.
Sole-source awards can reduce transparency and accountability in government spending.
Dependence on a single supplier could create supply chain vulnerabilities.
The long contract duration without re-competition limits opportunities for innovation or cost reduction.
The specific justification for 'NOT COMPETED' is not detailed, leaving room for potential concerns about procurement process adherence.

Positive Signals

The contract is firm-fixed-price, providing cost certainty for the government.
The award supports critical national defense capabilities, ensuring operational readiness.
The contractor, ERAPSCO, is an established supplier in this domain.
The contract duration ensures a stable supply of essential equipment for an extended period.
The award is made to a domestic manufacturer, supporting the U.S. industrial base.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on electronic and navigation equipment. The market for sonobuoys is specialized, primarily serving naval anti-submarine warfare (ASW) needs. Given the critical nature of ASW, the market is likely dominated by a few key players capable of meeting stringent military specifications. Comparable spending benchmarks are difficult to establish without more data on unit costs and specific system configurations, but defense electronics procurement often involves significant investment due to R&D and specialized manufacturing requirements.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no specific mention of subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem appears minimal for this particular award. However, the prime contractor, ERAPSCO, may engage small businesses within its supply chain, though this is not explicitly detailed. The lack of a small business set-aside suggests that the requirement was not deemed suitable or feasible for competition among small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management oversight mechanisms. The Inspector General's office for the Department of the Navy and the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is limited by the sole-source nature of the award, as public visibility into the justification and pricing negotiations is reduced. Accountability rests with the contracting officers and program managers to ensure performance and adherence to contract terms.

Related Government Programs

Naval Anti-Submarine Warfare (ASW) Systems
Defense Electronics Manufacturing
Naval Aviation Support Equipment
Search and Detection Systems
Military Communications Equipment

Risk Flags

Lack of Competition
Potential for Inflated Pricing
Limited Transparency
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $181.4 million to ERAPSCO. AN/SSQ-53G AND AN/SSQ-125 (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 $181.4 million.

What is the period of performance?

Start: 2021-03-03. End: 2024-12-31.

What is the historical spending pattern for AN/SSQ-53G and AN/SSQ-125 sonobuoys by the Department of Defense?

Analyzing historical spending requires access to detailed contract databases beyond the provided data. However, the current award of $181.4 million in FY21 suggests a significant and ongoing investment in these sonobuoy systems. Typically, such systems are procured through multi-year contracts or annual awards, reflecting sustained operational needs. Without prior data, it's difficult to ascertain if this $181.4 million represents an increase, decrease, or stable level of spending compared to previous years. Factors influencing historical spending would include technological upgrades, fleet size, geopolitical threats, and budget allocations for naval warfare capabilities. Further investigation into historical contract awards for these specific NSNs (National Stock Numbers) or similar sonobuoy types would be necessary to establish a comprehensive spending trend.

What specific capabilities do the AN/SSQ-53G and AN/SSQ-125 sonobuoys provide to the Navy?

The AN/SSQ-53G and AN/SSQ-125 are passive and active sonobuoys, respectively, crucial components of the U.S. Navy's anti-submarine warfare (ASW) arsenal. The AN/SSQ-53G is a passive sonobuoy that detects underwater acoustic signals, primarily used for identifying and tracking submarines by listening for their noise signatures. The AN/SSQ-125 is an active sonobuoy that emits sound pulses (pings) and analyzes the returning echoes to determine the location, depth, and characteristics of submerged objects, including submarines. Together, these sonobuoys provide naval forces with essential capabilities for situational awareness, threat detection, and engagement in the underwater domain, supporting maritime security and power projection.

What is the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED' (ct: NOT COMPETED), signifying a sole-source award. The specific justification for this determination is not detailed in the data. Common reasons for sole-source awards in defense procurement include: 1) Only one responsible source is available or capable of meeting the requirement (e.g., unique technology, proprietary design). 2) A critical urgency of need exists, and full competition cannot be achieved in time. 3) The contract is a follow-on to a previously competed contract, and only the original contractor can provide the necessary sustainment or upgrades. Without further information from the contracting agency (Department of the Navy), the precise rationale remains unknown, but it implies that competitive bidding was deemed impractical or impossible for this specific procurement.

How does the firm-fixed-price (FFP) contract type mitigate risks for the government in this procurement?

The firm-fixed-price (FFP) contract type offers significant risk mitigation for the government in this $181.4 million sonobuoy procurement. Under an FFP contract, the contractor (ERAPSCO) assumes most of the risk associated with cost overruns. The agreed-upon price is fixed, regardless of the contractor's actual costs incurred during performance. This provides the government with budget certainty and predictability, as the total expenditure is known upfront. While the government benefits from cost certainty, the contractor is incentivized to manage its costs efficiently to maximize profit. This contract type is generally preferred when the scope of work is well-defined and technical risks are understood, as is often the case with established systems like sonobuoys.

What are the potential implications of a sole-source award on the long-term availability and innovation of sonobuoy technology?

A sole-source award, like the one to ERAPSCO for $181.4 million, can have mixed implications for long-term availability and innovation. On the positive side, it ensures a consistent and reliable supply of critical technology from a known provider, which is vital for maintaining naval operational readiness. However, the lack of competition can stifle innovation. Without the pressure of competing for future contracts, a sole-source provider may have less incentive to invest heavily in research and development or to adopt more cost-effective manufacturing processes. This can lead to technological stagnation and potentially higher long-term costs for the government if alternative, more advanced, or cheaper solutions are not explored or developed by other entities. It also concentrates critical technological expertise within a single company.

Are there any specific performance metrics or key performance parameters (KPPs) associated with this contract that are publicly available?

The provided data does not include specific performance metrics or Key Performance Parameters (KPPs) associated with this contract. Typically, such details are outlined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS), which are not publicly disclosed in this data summary. For defense procurements, KPPs often relate to reliability (e.g., Mean Time Between Failures - MTBF), operational effectiveness (e.g., detection range, accuracy), environmental survivability (e.g., depth rating, temperature tolerance), and delivery schedules. The firm-fixed-price nature suggests that performance standards are likely defined, and failure to meet them could result in contract remedies, but the exact parameters are not specified here.

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: $181,449,510

Exercised Options: $181,449,510

Current Obligation: $181,449,510

Subaward Activity

Number of Subawards: 167

Total Subaward Amount: $116,826,970

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