DoD's $23.4M contract for test equipment awarded to RAM-SYSTEM GMBH faces scrutiny over limited competition

Contract Overview

Contract Amount: $23,358,144 ($23.4M)

Contractor: Ram-System Gmbh

Awarding Agency: Department of Defense

Start Date: 2021-09-22

End Date: 2032-01-30

Contract Duration: 3,782 days

Daily Burn Rate: $6.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELAY LINE CCA AND OTHER TEST EQUIPMENT

Plain-Language Summary

Department of Defense obligated $23.4 million to RAM-SYSTEM GMBH for work described as: DELAY LINE CCA AND OTHER TEST EQUIPMENT Key points: 1. The contract's value, while significant, requires further benchmarking against similar test equipment procurements. 2. Limited competition raises concerns about potential overpricing and reduced value for taxpayer funds. 3. The extended performance period suggests a long-term need for these specialized test capabilities. 4. The contract falls under Guided Missile and Space Vehicle Manufacturing, a critical defense sub-sector. 5. Performance metrics and delivery timelines will be key indicators of contractor success. 6. The absence of small business set-asides warrants examination of subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the $23.4 million award for test equipment is challenging without specific details on the 'other test equipment' included. However, the duration of the contract (over 10 years) suggests a substantial investment. The lack of competitive bidding means a direct price comparison is unavailable, making it difficult to assess if the pricing reflects market value or if taxpayers are receiving optimal value for money. Further analysis of the specific technical requirements and the contractor's proposed pricing structure is needed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicated as 'NOT AVAILABLE FOR COMPETITION'. This means that only one vendor, RAM-SYSTEM GMBH, was considered for this procurement. The rationale for this limited competition is not provided, but it typically suggests unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. The lack of multiple bidders limits price discovery and potentially reduces the government's leverage in negotiating favorable terms.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. The government may pay a premium when competition is absent, as the selected contractor faces less pressure to offer the most competitive price.

Public Impact

The primary beneficiaries are likely entities within the Department of the Navy requiring specialized test equipment for guided missile and space vehicle programs. The contract will deliver essential test equipment, crucial for the development, testing, and maintenance of advanced defense systems. The geographic impact is likely concentrated around naval facilities and defense contractor sites involved in missile and space vehicle manufacturing. This contract supports specialized technical roles within the defense industrial base, potentially impacting engineers and technicians involved in testing and quality assurance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition restricts price discovery and potentially leads to higher costs for taxpayers.
The long contract duration (ending in 2032) increases the risk of cost overruns or obsolescence if not managed effectively.
Lack of transparency regarding the sole-source justification makes it difficult to assess the necessity of this approach.
The specific nature of 'other test equipment' is vague, potentially masking broader or less critical needs.
No small business participation is indicated, potentially missing opportunities to support smaller enterprises in the defense supply chain.

Positive Signals

Ensures availability of critical test equipment for vital defense programs.
Long-term contract provides stability for the supplier and ensures sustained support for the equipment.
Award to a specific company suggests they possess unique or essential capabilities for the Navy's needs.
Firm Fixed Price contract type helps manage cost certainty for the government.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical segment of the defense industrial base. This sector is characterized by high R&D investment, stringent quality control, and often relies on proprietary technologies. Spending in this area is driven by national security imperatives and the continuous development of advanced weaponry. Comparable spending benchmarks are difficult to establish due to the unique nature of test equipment, but overall defense spending on missile systems runs into billions annually.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or set-aside for this procurement (ss: false, sb: false). This suggests that the primary contractor, RAM-SYSTEM GMBH, is likely a larger entity, and there is no explicit mandate for subcontracting to small businesses. This could mean missed opportunities for small businesses to contribute to the defense supply chain and benefit from this contract. Further investigation into subcontracting plans would be necessary to understand the full impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the delivery of specified test equipment and adherence to the firm fixed price terms. Transparency is limited due to the sole-source nature of the award and the lack of publicly available justification. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Test and Evaluation Equipment
Naval Aviation Systems
Missile Defense Systems

Risk Flags

Sole-source award
Long contract duration
Lack of competition justification
Potential for price escalation
Risk of technological obsolescence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.4 million to RAM-SYSTEM GMBH. DELAY LINE CCA AND OTHER TEST EQUIPMENT

Who is the contractor on this award?

The obligated recipient is RAM-SYSTEM GMBH.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $23.4 million.

What is the period of performance?

Start: 2021-09-22. End: 2032-01-30.

What is the specific nature of the 'DELAY LINE CCA AND OTHER TEST EQUIPMENT' being procured, and what are its critical functions?

The 'DELAY LINE CCA' likely refers to a Component Control Assembly or similar electronic module used in testing. Delay lines are electronic circuits that delay a signal, often used in radar, signal processing, and communications systems. The 'other test equipment' is broadly defined, suggesting a suite of specialized tools required for testing components or systems related to guided missiles and space vehicles. These could range from diagnostic equipment to calibration tools. The critical function is to ensure the reliability, performance, and compliance of sensitive defense hardware with stringent military specifications before deployment.

What is the justification for awarding this contract on a sole-source basis to RAM-SYSTEM GMBH?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification for this sole-source determination is not detailed in the provided data. Typically, sole-source awards are made when only one responsible source is available to meet the government's needs. This could be due to proprietary technology, unique capabilities possessed by the contractor, urgent and compelling requirements where competition is impractical, or if the item is a follow-on to a previously competed contract where only the original source can provide compatible equipment. Without further documentation, the precise reason remains unknown.

How does the $23.4 million contract value compare to similar procurements for specialized defense test equipment?

Direct comparison of the $23.4 million contract value is difficult without knowing the exact specifications and quantity of the 'DELAY LINE CCA AND OTHER TEST EQUIPMENT.' Specialized test equipment for defense applications, particularly for guided missiles and space vehicles, can be exceptionally expensive due to the advanced technology, precision engineering, and rigorous testing requirements involved. However, a contract of this magnitude, spanning over 10 years, suggests a significant investment. Benchmarking would require access to databases of similar sole-source or competitively awarded contracts for comparable test systems within the defense sector, considering factors like technological sophistication and performance requirements.

What are the potential risks associated with a sole-source contract of this duration (over 10 years)?

A sole-source contract of over 10 years carries several risks. Firstly, the lack of competition means the government may not be achieving the best possible price, potentially leading to cost overruns or reduced value for money. Secondly, the extended duration increases the risk of technological obsolescence; the equipment procured might become outdated before the contract ends, especially in rapidly evolving fields like missile technology. Thirdly, there's a risk of contractor performance degradation over time due to complacency, as there's no competitive pressure to maintain high standards. Finally, dependency on a single supplier can create supply chain vulnerabilities if the contractor faces financial difficulties or operational issues.

What oversight mechanisms are in place to ensure the effective performance and value for money of this long-term sole-source contract?

Oversight for this contract would primarily be managed by the Department of the Navy's program and contracting offices. Key oversight mechanisms would include regular performance reviews, monitoring of delivery schedules, quality assurance inspections, and financial audits. Given the sole-source nature and long duration, robust contract management is crucial. This involves ensuring that the contractor meets all technical specifications and delivery milestones, and that the pricing remains fair and reasonable throughout the contract's life. The Government Property Administrator may also oversee government-furnished property, and the Defense Contract Audit Agency (DCAA) might be involved in auditing costs if applicable.

What is the historical spending pattern for similar test equipment procurements by the Department of the Navy?

Historical spending patterns for 'DELAY LINE CCA AND OTHER TEST EQUIPMENT' by the Department of the Navy are not readily available in the provided data. However, the Navy, as a major branch of the DoD, consistently invests heavily in advanced systems, including guided missiles and space vehicles. This necessitates significant spending on specialized testing and evaluation equipment. Past procurements in this niche area are likely characterized by high unit costs, long lead times, and often limited competition due to the specialized nature of the technology. Analyzing historical spending would require access to broader federal procurement databases and filtering for similar Product Service Codes (PSCs) and contract types.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: DAIMLERSTR. 11, OTTOBRUNN

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $23,358,144

Exercised Options: $23,358,144

Current Obligation: $23,358,144

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002418G5440

IDV Type: BOA

Timeline