Naval Surface Warfare Center contract for magneto-inductive systems awarded to Magneto-Inductive Systems Limited for over $248 million

Contract Overview

Contract Amount: $17,008,089 ($17.0M)

Contractor: Magneto-Inductive Systems Limited

Awarding Agency: Department of Defense

Start Date: 2003-09-25

End Date: 2008-09-30

Contract Duration: 1,832 days

Daily Burn Rate: $9.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE)

Sector: R&D

Official Description: 200312!030968!1700!BW12A !NAVAL SURFACE WARFARE CENTER, DD!N6133103C0057 !A!N! !N! !20030925!20060925!248038408!248038408!248038408!N!MAGNETO-INDUCTIVE SYSTEMS LIMI!610 MYERS POINT ROAD !HEAD JEDDORE !CA!* !* !* !CA!* !* !CANADA !+000008770511!N!N!000000000000!5895!MISCELLANEOUS COMMUNICATION EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !2000!NOT DISCERNABLE OR CLASSIFIED !541710!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1A!Z!Y!Z!B !CA!N!L!N! ! ! ! ! !A!A!000!A!B!N! ! ! ! ! !DAAE30!0001! !

Plain-Language Summary

Department of Defense obligated $17.0 million to MAGNETO-INDUCTIVE SYSTEMS LIMITED for work described as: 200312!030968!1700!BW12A !NAVAL SURFACE WARFARE CENTER, DD!N6133103C0057 !A!N! !N! !20030925!20060925!248038408!248038408!248038408!N!MAGNETO-INDUCTIVE SYSTEMS LIMI!610 MYERS POINT ROAD !HEAD JEDDORE !CA!* !* !* !CA!* !* … Key points: 1. Contract awarded for miscellaneous communication equipment, specifically magneto-inductive systems. 2. The contract was not competed, raising questions about potential price discovery. 3. Long contract duration of over 5 years suggests a need for sustained support or development. 4. The North American Industry Classification System (NAICS) code 541710 indicates a focus on Research and Development. 5. The award was made by the Naval Surface Warfare Center, indicating a defense-related need. 6. The contract value is substantial, exceeding $248 million over its life.

Value Assessment

Rating: questionable

The contract value of $248,038,408 for magneto-inductive systems over approximately five years is substantial. Without specific performance metrics or comparable contract data for similar specialized systems, it is difficult to definitively benchmark value for money. The lack of competition, however, limits the ability to assess if the pricing reflects a competitive market. Further analysis would require understanding the unique nature of magneto-inductive systems and the contractor's capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source or not-competed basis. This means that only one vendor, Magneto-Inductive Systems Limited, was solicited for this requirement. While sole-source awards can be justified for unique capabilities or urgent needs, they bypass the competitive process, which typically drives down prices and encourages innovation. The lack of competition here means there's no direct market comparison to assess if the awarded price was the best achievable.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of a competitive bidding process. This could potentially lead to higher costs for the government and, consequently, for taxpayers.

Public Impact

The primary beneficiary is the U.S. Navy, which receives specialized magneto-inductive systems for its operations. The contract supports the development and provision of miscellaneous communication equipment, crucial for naval communication capabilities. The geographic impact is primarily within the United States, with the contractor located in California, though the ultimate use is by the Navy globally. The contract likely supports a specialized workforce within Magneto-Inductive Systems Limited, contributing to the high-tech sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price benchmarking and potential for cost savings.
Long contract duration without clear performance benchmarks raises concerns about sustained value.
The specialized nature of the equipment may limit the pool of potential contractors, potentially justifying sole-source, but requires scrutiny.
No clear indication of small business subcontracting plans.

Positive Signals

Award to a specialized company suggests access to unique technology or expertise.
The contract supports a critical defense capability for the U.S. Navy.
The contractor is based in the U.S. (California), potentially supporting domestic industry.

Sector Analysis

This contract falls within the Research and Development sector, specifically related to electronics and communication equipment. The NAICS code 541710 covers R&D in physical, engineering, and life sciences. The defense industry heavily relies on specialized R&D for technological advancement. Comparable spending benchmarks are difficult to establish without knowing the specific technological niche of magneto-inductive systems, but R&D contracts can range significantly in value depending on complexity and duration.

Small Business Impact

There is no explicit indication of small business set-asides or subcontracting goals within the provided data. As a sole-source award to Magneto-Inductive Systems Limited, the direct impact on the broader small business ecosystem is unclear. It is possible that the prime contractor may engage small businesses for subcontracting, but this is not specified. Further investigation into the contractor's subcontracting practices would be needed to assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Naval Surface Warfare Center and the Department of the Navy's contracting and program management offices. Inspector General (IG) oversight is standard for Department of Defense contracts, providing an avenue for investigating fraud, waste, and abuse. Transparency is limited by the sole-source nature of the award, but contract award data is generally available through federal procurement databases.

Related Government Programs

Naval Communication Systems
Defense Research and Development
Electronic Warfare Systems
Specialized Communication Equipment

Risk Flags

Lack of Competition
Potential for Cost Overruns
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to MAGNETO-INDUCTIVE SYSTEMS LIMITED. 200312!030968!1700!BW12A !NAVAL SURFACE WARFARE CENTER, DD!N6133103C0057 !A!N! !N! !20030925!20060925!248038408!248038408!248038408!N!MAGNETO-INDUCTIVE SYSTEMS LIMI!610 MYERS POINT ROAD !HEAD JEDDORE !CA!* !* !* !CA!* !* !CANADA !+000008770511!N!N!000000000000!5895!MISCELLANEOUS COMMUNICATION EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !2000!NOT DISCERNABLE OR CLASSIFIED !541710!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is MAGNETO-INDUCTIVE SYSTEMS LIMITED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $17.0 million.

What is the period of performance?

Start: 2003-09-25. End: 2008-09-30.

What is the specific technological application of magneto-inductive systems in naval operations?

Magneto-inductive systems are a type of technology that utilizes magnetic fields to transmit or receive signals, often for communication or sensing purposes. In naval operations, such systems could potentially be used for secure, low-probability-of-intercept communications, underwater communication where radio waves are ineffective, or for specialized sensor applications. The exact application within the Navy for this specific contract is not detailed in the provided data, but it falls under 'Miscellaneous Communication Equipment,' suggesting a role in enhancing or providing communication capabilities. The R&D classification further implies that this contract may involve the development, testing, or refinement of these systems for naval use.

Why was this contract awarded on a sole-source basis?

The data indicates the contract was 'NOT COMPETED,' which typically signifies a sole-source award. Sole-source awards are generally justified when only one responsible source is available or capable of meeting the government's needs. This could be due to unique proprietary technology, specialized expertise, critical urgency, or a lack of other qualified vendors. Without further documentation from the awarding agency (Naval Surface Warfare Center), the specific justification for awarding this contract solely to Magneto-Inductive Systems Limited remains undisclosed. Such justifications are usually detailed in a Justification and Approval (J&A) document.

How does the contract value of over $248 million compare to similar R&D contracts in the defense sector?

Comparing the $248 million contract value requires context regarding the specific technology and duration. R&D contracts in the defense sector can vary enormously. Contracts for basic research might be in the millions, while advanced development and prototyping for complex systems like aircraft, ships, or advanced electronics can easily reach hundreds of millions or even billions of dollars over several years. Given that this contract spans over five years and is for specialized communication equipment, the value is substantial but not necessarily outside the norm for significant defense R&D efforts. However, without knowing the specific technological maturity and scope, a precise comparison is challenging.

What are the potential risks associated with a long-term, sole-source R&D contract?

A primary risk with long-term, sole-source R&D contracts is the potential for cost overruns and a lack of competitive pressure to innovate or maintain efficiency. Without competition, the contractor may have less incentive to control costs or deliver the most advanced solution within budget. There's also a risk that the technology developed might become obsolete before the contract concludes or that the government becomes locked into a single vendor, limiting future options. Furthermore, the lack of transparency inherent in sole-source awards can obscure potential inefficiencies or performance issues.

What is the historical spending pattern for Magneto-Inductive Systems Limited with the U.S. government?

The provided data only pertains to this single contract awarded in 2003. To understand the historical spending pattern for Magneto-Inductive Systems Limited, one would need to access broader federal procurement databases (like FPDS or USASpending) and search for all contracts awarded to this entity across all agencies and years. This would reveal the volume, value, types of services/products procured, and the competition levels of their past government engagements. Without this broader search, we can only analyze this specific award.

What is the significance of the PSC code '5895' (Miscellaneous Communication Equipment)?

The Product and Service Code (PSC) '5895' signifies 'Miscellaneous Communication Equipment.' This broad category covers a wide range of communication devices and systems that do not fit into more specific PSC categories. For this contract, it indicates that the magneto-inductive systems procured are intended for communication purposes but are specialized enough not to be classified under standard radio, telephone, or data transmission equipment codes. This often points towards niche or developmental communication technologies crucial for specific operational requirements, such as those found in defense or intelligence applications.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE) (2)

Contractor Details

Parent Company: Undersea Sensor Systems Inc (UEI: 349084822)

Address: 610 MYERS POINT ROAD, HEAD JEDDORE

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline