Navy awards $155.9M for buoy orders, highlighting reliance on a single vendor for critical systems

Contract Overview

Contract Amount: $155,926,520 ($155.9M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2022-03-29

End Date: 2024-12-31

Contract Duration: 1,008 days

Daily Burn Rate: $154.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY22 LOT BUOY ORDERS FOR AN/SSQ-36B, AN/SSQ-53G, AND AN/SSQ-62F UNDER CONTRACT N0001919D0032.

Place of Performance

Location: COLUMBIA CITY, WHITLEY County, INDIANA, 46725

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $155.9 million to ERAPSCO for work described as: FY22 LOT BUOY ORDERS FOR AN/SSQ-36B, AN/SSQ-53G, AND AN/SSQ-62F UNDER CONTRACT N0001919D0032. Key points: 1. The contract's value suggests significant investment in naval detection and navigation systems. 2. Limited competition raises concerns about potential overpricing and reduced innovation. 3. The long performance period indicates a sustained need for these specialized buoys. 4. The sole-source nature of this award warrants scrutiny of its necessity and justification. 5. This spending supports the operational readiness of naval assets requiring advanced sensor technology.

Value Assessment

Rating: questionable

The total award of $155.9 million for buoy orders is substantial. Without specific unit costs or a breakdown of the items procured, a direct value-for-money assessment is difficult. However, the lack of competition suggests that the government may not have achieved the most favorable pricing. Benchmarking against similar sole-source procurements or market rates for comparable systems would be necessary to determine if this represents a fair price.

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 costs and encourages a wider range of solutions. The justification for a sole-source award would need to demonstrate why only ERAPSCO could fulfill the requirement, such as unique capabilities or existing infrastructure.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competition. Without competitive pressure, the vendor has less incentive to offer the lowest possible price, potentially leading to higher overall spending for the Navy.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives essential equipment for its operations. The services delivered include the provision of specialized buoys (AN/SSQ-36B, AN/SSQ-53G, and AN/SSQ-62F) crucial for search, detection, and navigation. The geographic impact is primarily within naval operational areas, supporting fleet readiness globally. Workforce implications are likely concentrated within the contractor's facilities and potentially supporting industries involved in the manufacturing of these specialized instruments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may stifle innovation and reduce options for future procurements.
The long duration of the contract could lead to vendor lock-in.
Absence of small business subcontracting opportunities if ERAPSCO does not engage them.

Positive Signals

Ensures a consistent supply of critical navigation and detection equipment for the Navy.
The award supports a known entity with potentially established production capabilities.
Firm Fixed Price contract type provides cost certainty for the government.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. This industry is characterized by high technological sophistication and often involves specialized components. Spending in this area is critical for national defense and maritime security. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for similar advanced sensor systems within the defense sector.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals. As a sole-source award to ERAPSCO, the direct impact on the small business ecosystem is likely minimal unless ERAPSCO voluntarily engages small businesses for subcontracting. Further investigation into ERAPSCO's subcontracting practices would be needed to assess the broader impact.

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 contract terms, particularly the Firm Fixed Price structure. Transparency is limited due to the sole-source nature of the award; public disclosure of the justification for sole-sourcing would be a key transparency indicator. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Sensor Systems Procurement
Maritime Navigation Equipment
Defense Research and Development
Specialized Instrument Manufacturing
Department of Defense Logistics

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $155.9 million to ERAPSCO. FY22 LOT BUOY ORDERS FOR AN/SSQ-36B, AN/SSQ-53G, AND AN/SSQ-62F UNDER CONTRACT N0001919D0032.

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 $155.9 million.

What is the period of performance?

Start: 2022-03-29. End: 2024-12-31.

What is the specific justification provided by the Department of the Navy for awarding this contract on a sole-source basis to ERAPSCO?

The provided data indicates the contract was 'NOT COMPETED'. A sole-source award typically requires a justification and approval (J&A) document, which must detail why full and open competition is not feasible. Common reasons include the existence of only one responsible source, urgent and compelling needs that preclude competition, or specific national security requirements. Without access to the J&A, the precise rationale remains unknown. However, for specialized systems like buoys critical for naval operations (AN/SSQ-36B, AN/SSQ-53G, AN/SSQ-62F), it's possible ERAPSCO possesses unique technical expertise, proprietary technology, or is the sole manufacturer of compatible components, necessitating a sole-source approach to ensure operational continuity and system integration.

How does the pricing of these buoy orders compare to similar procurements or market rates, given the sole-source nature of the award?

Directly comparing pricing is challenging without detailed unit cost data and market benchmarks for these specific buoy models (AN/SSQ-36B, AN/SSQ-53G, AN/SSQ-62F). However, sole-source contracts inherently carry a higher risk of inflated pricing because the government lacks the leverage of competitive bidding. ERAPSCO, as the sole provider, may not have the same incentive to minimize costs as they would in a competitive environment. To assess value, one would need to: 1) obtain the detailed delivery orders under this contract to understand the quantities and unit prices; 2) research historical sole-source awards for similar naval sensor systems; and 3) consult industry experts or market research reports on the cost of comparable technologies. Without this comparative data, it's difficult to definitively state if the $155.9 million represents fair market value.

What are the potential risks associated with awarding a contract of this magnitude ($155.9M) on a sole-source basis for an extended period (through Dec 2024)?

The primary risk of a sole-source award, especially for a significant value and duration, is the potential for paying above-market prices due to the lack of competition. This can lead to inefficient use of taxpayer funds. Another significant risk is vendor lock-in; the Navy becomes dependent on ERAPSCO, potentially limiting future flexibility and discouraging innovation from other potential suppliers. If ERAPSCO faces production issues, supply chain disruptions, or financial instability, it could directly impact the Navy's operational readiness, as there are no immediate alternative sources. Furthermore, the absence of competitive pressure might reduce the incentive for ERAPSCO to invest in process improvements or technological advancements, potentially leading to obsolescence over time.

What is ERAPSCO's track record with the Department of the Navy, particularly concerning the AN/SSQ series buoys?

ERAPSCO (Electronic Warfare Associates, Inc.) has a history of providing services and products to the U.S. military, including the Department of the Navy. The data indicates this contract (N0001919D0032) is for 'LOT BUOY ORDERS' related to specific AN/SSQ models. This suggests ERAPSCO has been a supplier for these or similar systems previously. A deeper dive into contract databases (like FPDS or SAM.gov) would reveal the extent and nature of their past performance, including previous awards for these buoy systems, their value, and any performance history (positive or negative). Their selection for this sole-source award implies a perceived capability and potentially a past performance record that the Navy deemed satisfactory, though the specifics of that record are not detailed in the provided summary.

How does this spending align with historical federal spending patterns for naval sensor and navigation systems?

The $155.9 million award for buoy orders represents a significant, albeit specific, investment within the broader category of naval sensor and navigation systems. Federal spending in this area is typically substantial, driven by the need for advanced technology to maintain maritime superiority and ensure operational effectiveness. Historical patterns show consistent, high-dollar investments in areas like sonar, radar, communication systems, and navigation aids. Awards for specialized components like these buoys, especially when sole-sourced, can fluctuate based on modernization cycles, specific fleet requirements, and geopolitical factors. While this single award is large, it should be viewed within the context of the Navy's overall annual budget for C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems, which often runs into billions of dollars.

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: $155,926,520

Exercised Options: $155,926,520

Current Obligation: $155,926,520

Subaward Activity

Number of Subawards: 191

Total Subaward Amount: $65,825,745

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