Navy's $47M contract for AN/SSQ-125 systems awarded without competition, raising value concerns

Contract Overview

Contract Amount: $47,033,689 ($47.0M)

Contractor: Erapsco

Awarding Agency: Department of Defense

Start Date: 2012-06-11

End Date: 2015-04-15

Contract Duration: 1,038 days

Daily Burn Rate: $45.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY12-13 AN/SSQ-125

Place of Performance

Location: DE LEON SPRINGS, VOLUSIA County, FLORIDA, 32130

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $47.0 million to ERAPSCO for work described as: FY12-13 AN/SSQ-125 Key points: 1. The contract was awarded on a sole-source basis, limiting opportunities for competitive pricing. 2. The duration of the contract (1038 days) suggests a significant, ongoing need for these systems. 3. The absence of competition may have led to higher costs than if multiple vendors had bid. 4. The contract's value of $47 million indicates a substantial investment in naval systems. 5. The specific system, AN/SSQ-125, likely relates to sonar or acoustic systems for naval applications. 6. The award to ERAPSCO suggests a pre-existing relationship or specialized capability. 7. The firm-fixed-price contract type shifts some risk to the contractor. 8. The contract was awarded by the Department of the Navy, a major defense spender.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more detailed cost breakdowns or comparisons to similar sole-source awards. The lack of competition inherently limits the ability to assess if the price represents fair market value. Given the significant dollar amount, a competitive process would typically be expected to yield better pricing for the government. The firm-fixed-price structure provides some cost certainty, but the initial price negotiation is critical in a sole-source scenario.

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 is typically used when a unique capability is required, or when only one source is available. The lack of competition means there was no opportunity for multiple bidders to propose prices, potentially leading to a less competitive price than if the contract had been open to all qualified vendors.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, it's difficult to ensure the government received the best possible price for these critical naval systems.

Public Impact

The primary beneficiaries are the U.S. Navy personnel who will utilize the AN/SSQ-125 systems. The contract delivers essential equipment for naval operations, likely related to sonar or acoustic detection. The geographic impact is primarily within Florida, where the contract was awarded. The contract supports specialized manufacturing jobs within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs.
Lack of competition raises questions about the necessity of a sole-source justification.
Contract duration of over 1000 days warrants scrutiny for potential cost overruns or scope creep.
Absence of small business subcontracting goals is noted.

Positive Signals

Firm-fixed-price contract type provides cost certainty to the government.
Award to a single, potentially specialized vendor may indicate unique technical requirements.
The contract supports critical naval defense capabilities.

Sector Analysis

The AN/SSQ-125 system falls under the broader defense manufacturing sector, specifically focusing on naval systems and instrumentation. This sector is characterized by high technological complexity, stringent quality requirements, and significant government investment. Comparable spending benchmarks are difficult to establish without knowing the exact system specifications, but naval electronics and sonar systems represent a substantial portion of the Department of Defense's procurement budget. The market for such specialized systems is often limited to a few key contractors.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit mention of subcontracting goals for small businesses. This suggests that the primary contractor, ERAPSCO, is expected to fulfill the contract requirements directly or through larger partners, potentially limiting opportunities for small businesses to participate in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting command and potentially the Department of Defense's Inspector General. Transparency is limited due to the sole-source nature of the award. Accountability measures would be tied to the firm-fixed-price contract terms, requiring ERAPSCO to deliver the specified systems within the agreed-upon cost and schedule. Further oversight would depend on the specific reporting requirements outlined in the contract.

Related Government Programs

Naval Sonar Systems Procurement
Defense Electronics Manufacturing
Department of the Navy Contracts
Sole-Source Defense Acquisitions

Risk Flags

Sole-source award without clear justification
Potential for non-competitive pricing
Lack of transparency in award process

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.0 million to ERAPSCO. FY12-13 AN/SSQ-125

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 $47.0 million.

What is the period of performance?

Start: 2012-06-11. End: 2015-04-15.

What is the specific function and technical capability of the AN/SSQ-125 system?

The AN/SSQ-125 is a component of the AN/SQQ-89 Integrated Undersea Warfare (USW) system, which is the primary sonar system used on U.S. Navy surface ships. It is designed for detecting, classifying, and tracking submarines and other underwater threats. The system utilizes advanced acoustic processing and signal analysis to provide situational awareness in the underwater domain. Its capabilities are crucial for anti-submarine warfare (ASW) operations, contributing to the Navy's ability to maintain maritime security and project power.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's requirements. For the AN/SSQ-125, this could be due to proprietary technology, unique manufacturing capabilities held by ERAPSCO, or a determination that competition would not be in the government's best interest at the time of award. Detailed justifications for sole-source procurements are usually documented but may not always be publicly accessible in full detail. The specific rationale would be found in the Justification and Approval (J&A) document.

How does the $47 million contract value compare to historical spending on similar systems?

Comparing this $47 million contract value to historical spending on similar systems is challenging without more specific data on the quantity of units procured and the exact system configuration. However, the AN/SQQ-89 program, of which the AN/SSQ-125 is a part, has seen significant investment over many years. Previous contract awards for components or upgrades of this system have also been in the millions of dollars. The value reflects the complexity and critical nature of advanced naval sonar technology. A comprehensive comparison would require analyzing multiple past awards for the AN/SQQ-89 system and its subcomponents.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risk with a sole-source contract of this magnitude is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible value. Other risks include vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility and innovation. There's also a risk that the sole-source justification might not have been as robust as it could have been, potentially overlooking viable alternative sources or solutions. Ensuring rigorous oversight and performance management becomes even more critical in sole-source situations.

What is ERAPSCO's track record with the Department of the Navy and similar contracts?

ERAPSCO (Electro-Radar Products, Inc.) has a history of contracting with the Department of Defense, particularly for naval systems and components. They have been involved in providing various electronic and radar products. Their track record with the Navy likely includes previous awards related to sonar systems, electronic warfare, and other specialized equipment. A deeper dive into contract databases would reveal the full scope and performance history of ERAPSCO's awards, including any past issues or commendations related to delivery, quality, or cost.

What are the implications of the firm-fixed-price contract type for this sole-source award?

A firm-fixed-price (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience. For this sole-source award, the FFP structure provides the government with cost certainty, meaning the total price will not exceed the agreed-upon amount, barring any contract modifications. However, the initial negotiation of that fixed price is crucial. If the price was set too high due to the lack of competition, the government is locked into that higher cost. The contractor bears the risk of cost overruns, incentivizing efficient performance, but the initial price must be fair.

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: N0042110R1053

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4868 EAST PARK 30 DR, COLUMBIA CITY, IN, 03

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

Financial Breakdown

Contract Ceiling: $47,033,689

Exercised Options: $47,033,689

Current Obligation: $47,033,689

Contract Characteristics

Cost or Pricing Data: YES

Timeline