DoD's $44M contract for navigation systems awarded to KRANZE TECHNOLOGY SOLUTIONS INC

Contract Overview

Contract Amount: $44,106,975 ($44.1M)

Contractor: Kranze Technology Solutions Inc

Awarding Agency: Department of Defense

Start Date: 2017-12-20

End Date: 2024-03-31

Contract Duration: 2,293 days

Daily Burn Rate: $19.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MANGL

Place of Performance

Location: PROSPECT HEIGHTS, COOK County, ILLINOIS, 60070

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $44.1 million to KRANZE TECHNOLOGY SOLUTIONS INC for work described as: MANGL Key points: 1. Value for money appears fair given the 7-year duration and cost-plus-fixed-fee structure. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators include the cost-plus-fixed-fee pricing type, which can incentivize cost overruns. 4. Performance context is tied to the manufacturing of navigation systems for the Navy. 5. Sector positioning is within the defense industrial base, specifically for aeronautical and nautical instruments.

Value Assessment

Rating: fair

The contract's total value of $44,106,975 over approximately 7 years suggests a moderate annual spend. The cost-plus-fixed-fee (CPFF) structure means the government pays for all allowable costs plus a fixed fee, which can be less predictable than fixed-price contracts. Benchmarking against similar contracts for navigation system manufacturing is difficult without more specific details on the systems procured and their complexity. However, the fixed fee component provides some cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The number of bidders is not specified, but a full and open process generally promotes a wider range of proposals and potentially more competitive pricing. This approach is intended to ensure the government receives the best value by leveraging the broadest possible market.

Taxpayer Impact: A full and open competition process is favorable for taxpayers as it maximizes the potential for competitive bids, which can drive down costs and lead to better overall value for the government's investment.

Public Impact

The Department of the Navy benefits from the acquisition of essential navigation systems. Services delivered include the manufacturing and potential support of critical aeronautical and nautical navigation instruments. The geographic impact is primarily within Illinois, where KRANZE TECHNOLOGY SOLUTIONS INC. is located. Workforce implications include employment opportunities at the contractor's facility in Illinois.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to higher final costs if not closely managed.
Lack of specific performance metrics makes it difficult to assess efficiency.
Long contract duration could introduce risks related to technological obsolescence.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
Contractor is based in Illinois, potentially supporting regional economic activity.
The fixed fee component provides a degree of cost predictability for the contractor's profit.

Sector Analysis

The defense sector, particularly the manufacturing of specialized electronic equipment like navigation systems, is characterized by high R&D costs, stringent quality requirements, and long product lifecycles. This contract falls within the broader category of defense electronics manufacturing, which is a significant segment of the industrial base. Comparable spending benchmarks would depend on the specific type and quantity of navigation systems procured, but the total value suggests a substantial procurement.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to KRANZE TECHNOLOGY SOLUTIONS INC., a company likely of significant size to handle a $44M contract, suggests that the primary focus was on large business capabilities. This means the direct impact on the small business ecosystem through this specific contract is likely minimal.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including reporting requirements and the fixed-fee structure. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Navigation Systems Procurement
Defense Electronics Manufacturing
Aeronautical and Nautical Instrument Manufacturing
Department of Defense Supply Chain Management

Risk Flags

Cost-Plus-Fixed-Fee pricing structure carries inherent cost overrun risks.
Lack of specific performance metrics makes objective assessment challenging.
Long contract duration could lead to technological obsolescence concerns.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.1 million to KRANZE TECHNOLOGY SOLUTIONS INC. MANGL

Who is the contractor on this award?

The obligated recipient is KRANZE TECHNOLOGY SOLUTIONS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $44.1 million.

What is the period of performance?

Start: 2017-12-20. End: 2024-03-31.

What is the specific type of navigation system being manufactured under this contract, and what are its key functionalities?

The contract data indicates the procurement of 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' under NAICS code 334511. However, the specific type of navigation system is not detailed in the provided data. These systems are critical for military operations, enabling precise positioning, course plotting, and situational awareness for naval vessels and aircraft. Key functionalities likely include GPS integration, inertial navigation, radar-based positioning, and potentially advanced guidance capabilities for various platforms. Without further details, it's challenging to pinpoint the exact technological specifications or primary use cases beyond general navigation and guidance.

How does the $44 million total contract value compare to historical spending on similar navigation systems by the Department of the Navy?

Comparing the $44 million total contract value to historical spending requires access to detailed historical procurement data for similar navigation systems. The provided data indicates this is a single delivery order with a duration extending to March 2024, suggesting it might be a significant portion of a larger indefinite delivery/indefinite quantity (IDIQ) contract or a standalone procurement. To establish a benchmark, one would need to analyze past contracts for comparable navigation systems, considering factors like system complexity, quantity, technological generation, and the specific naval platforms they are intended for. Without this comparative data, it's difficult to definitively state whether $44 million represents high, low, or average spending for such procurements.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) pricing structure for this contract?

The primary risk associated with the Cost Plus Fixed Fee (CPFF) pricing structure is the potential for cost overruns. Under CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. While the fixed fee provides some incentive for the contractor to control costs (as their profit is capped), it does not directly link cost savings to increased profit. This can lead to less stringent cost management compared to fixed-price contracts. The government bears the risk of cost increases, and effective oversight is crucial to ensure costs remain reasonable and allowable. There's also a risk that the contractor might prioritize scope expansion to increase billable hours, even if not strictly necessary, as their fee is fixed regardless of the total cost.

What performance metrics or key performance indicators (KPIs) are likely being used to evaluate KRANZE TECHNOLOGY SOLUTIONS INC.'s performance on this contract?

While specific performance metrics are not detailed in the provided data, contracts for manufacturing navigation systems typically include KPIs related to quality, delivery timeliness, and technical performance. Quality metrics might involve defect rates, adherence to specifications, and successful testing results. Delivery timeliness would be assessed against the schedule outlined in the contract, particularly for the delivery orders issued. Technical performance could include factors like the accuracy, reliability, and operational effectiveness of the manufactured systems once integrated or tested. Compliance with contractual terms, including reporting requirements and documentation, would also be a key aspect of performance evaluation.

How does the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' category (NAICS 334511) typically perform in terms of contract competition and pr

The 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' category (NAICS 334511) often involves specialized, high-technology products, particularly within the defense sector. Competition can vary significantly; while some components might be commoditized, advanced systems often have fewer specialized manufacturers, potentially leading to less robust competition. Pricing is typically influenced by R&D intensity, complexity, and stringent quality/reliability requirements. Contracts in this space can range from fixed-price for well-defined products to cost-reimbursement for developmental or highly customized systems. Full and open competition is ideal, but the specialized nature of some systems may lead to sole-source or limited competition awards if only a few entities possess the necessary technical capabilities.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6893614R0027

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lasoski Kranze Associates Inc

Address: 742 PINECREST DR, PROSPECT HEIGHTS, IL, 60070

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $44,106,975

Exercised Options: $44,106,975

Current Obligation: $44,106,975

Actual Outlays: $826,180

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6893617D0012

IDV Type: IDC

Timeline