DoD's $31.3M Sonobuoy Purchase: A Sole-Source Acquisition Raising Value Questions

Contract Overview

Contract Amount: $31,316,120 ($31.3M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2009-05-15

End Date: 2011-07-31

Contract Duration: 807 days

Daily Burn Rate: $38.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SSQ-101A SONOBUOYS

Place of Performance

Location: COLUMBIA CITY, WHITLEY County, INDIANA, 46725

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $31.3 million to ERAPSCO for work described as: AN/SSQ-101A SONOBUOYS Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure and potentially impacting price. 2. The fixed-price contract type offers some cost certainty but doesn't guarantee optimal value without competition. 3. The duration of the contract (807 days) suggests a significant need for these sonobuoys. 4. The procurement falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code. 5. The contract was managed by the Defense Contract Management Agency. 6. The absence of small business set-aside flags indicates this was not specifically targeted for small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this $31.3 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the price reflects a fair market value. The fixed-price structure provides some cost control for the government, but the lack of competition means there's less incentive for the contractor to offer the most cost-effective solution. Further analysis would require comparing this award to similar sole-source sonobuoy procurements or exploring the justification for the sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, ERAPSCO, was solicited. The justification for this approach is not provided in the data. Sole-source procurements typically occur when only one responsible source can fulfill the requirement. However, this lack of competition limits the government's ability to explore alternative solutions and potentially secure lower prices through a bidding process.

Taxpayer Impact: Taxpayers may have paid a premium for these sonobuoys due to the absence of competitive bidding. The government missed an opportunity to leverage market forces to drive down costs.

Public Impact

The primary beneficiaries are the U.S. Navy and other Department of Defense entities requiring anti-submarine warfare capabilities. The contract delivers AN/SSQ-101A SONOBUOYS, critical components for detecting submarines and other underwater threats. The geographic impact is national, supporting naval operations across various theaters. The contract supports jobs within the defense manufacturing sector, specifically related to sonar and detection equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value for money.
Lack of transparency regarding the justification for sole-source award.
Fixed-price contract, while offering cost certainty, may not incentivize the lowest possible price without competition.

Positive Signals

The contract is for a critical defense capability (sonobuoys).
Fixed-price contract type provides budget predictability.
The award is managed by the Defense Contract Management Agency, suggesting established oversight processes.

Sector Analysis

The defense industry, particularly the segment focused on naval warfare systems, is characterized by high technological sophistication and significant government investment. Sonobuoys are a specialized component within this sector, essential for maritime surveillance and anti-submarine warfare. The market for such systems can be concentrated, sometimes leading to sole-source or limited competition awards when specific technological capabilities are required. Comparable spending benchmarks would involve analyzing other procurements of similar acoustic detection systems for naval applications.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This suggests that the primary contractor, ERAPSCO, is likely a larger entity, and the procurement did not prioritize direct opportunities for small businesses within the federal contracting ecosystem for this specific award. The impact on the small business ecosystem is neutral to negative, as opportunities were not intentionally created through this sole-source award.

Oversight & Accountability

Oversight for this contract would fall under the purview of the Department of Defense, likely managed by the Defense Contract Management Agency (DCMA). DCMA is responsible for ensuring contract compliance, quality, and timely delivery. Transparency regarding the sole-source justification would be a key area for oversight. Inspector General (IG) investigations could be initiated if any improprieties or waste were suspected. Accountability measures are inherent in contract performance clauses and payment schedules.

Related Government Programs

Naval Sonar Systems
Anti-Submarine Warfare Equipment
Defense Procurement
Acoustic Detection Systems
Department of Defense Contracts

Risk Flags

Sole-source award
Potential lack of price competition
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.3 million to ERAPSCO. AN/SSQ-101A SONOBUOYS

Who is the contractor on this award?

The obligated recipient is ERAPSCO.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $31.3 million.

What is the period of performance?

Start: 2009-05-15. End: 2011-07-31.

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

The provided data does not include the specific justification for the sole-source award of the AN/SSQ-101A SONOBUOYS contract to ERAPSCO. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available, or in cases of urgent and compelling need. Without this justification, it is difficult to assess whether the sole-source decision was appropriate and if it truly represented the best value for the government. Further investigation into the contract file or agency justifications would be necessary to understand the rationale behind bypassing a competitive bidding process.

How does the unit cost of these AN/SSQ-101A SONOBUOYS compare to similar systems procured competitively by the DoD?

Direct comparison of the unit cost for these AN/SSQ-101A SONOBUOYS is not possible with the provided data, especially given the sole-source nature of this $31.3 million award. Competitive procurements generally lead to lower prices due to market forces. To assess value, one would need to identify comparable sonobuoy systems (e.g., different models or those procured by other services) that were acquired through full and open competition. Analyzing the price per unit from those competitive contracts and comparing it to the implied unit price of this sole-source award (total award amount divided by the number of units, if known) would provide a benchmark. However, without knowing the exact quantity purchased, even this calculation is an estimate. The lack of competition here suggests the price may be higher than what could have been achieved through bidding.

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

ERAPSCO (E.R.A.P.S. Co.) is a known entity within the defense sector, often associated with the production and supply of sonobuoys. Their track record with the Department of Defense would typically involve reviewing past contracts, performance evaluations, and any history of quality issues or delivery delays. As a sole-source provider in this instance, it implies a certain level of established capability or a unique position in the market for this specific sonobuoy variant. A comprehensive review of their contract history, including on-time delivery rates, adherence to specifications, and overall performance ratings from previous DoD engagements, would be necessary to fully assess their reliability and past performance.

What are the potential risks associated with relying on a sole-source provider for critical defense equipment like sonobuoys?

Relying on a sole-source provider for critical defense equipment like sonobuoys presents several risks. Firstly, it can lead to higher costs due to the lack of competitive pressure, potentially resulting in less value for taxpayer money. Secondly, it creates a dependency on a single supplier, which can be problematic if that supplier experiences production issues, financial instability, or decides to exit the market. This dependency can also limit the government's ability to adopt newer, potentially superior technologies if they are not offered by the sole source. Furthermore, without competition, there may be less incentive for the sole-source provider to innovate or improve efficiency. Finally, it can reduce strategic flexibility in procurement and supply chain management.

How has historical spending on sonobuoys by the DoD trended over the past decade, and does this contract align with those trends?

Analyzing historical spending on sonobuoys by the DoD over the past decade would require access to comprehensive procurement databases. Such an analysis would reveal trends in total spending, the number of contracts awarded, the types of sonobuoys procured, and the prevalence of competitive versus sole-source awards. Without that specific historical data, it's difficult to definitively state whether this $31.3 million contract aligns with past trends. However, given the ongoing need for anti-submarine warfare capabilities, consistent spending on sonobuoys is expected. The key trend to examine would be the proportion of sole-source versus competitive awards, as a rise in sole-source contracts for such items could indicate potential issues with market competition or increasing reliance on specific suppliers.

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: N0042109R0009

Offers Received: 1

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, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,316,120

Exercised Options: $31,316,120

Current Obligation: $31,316,120

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline