DoD's $14M contract for navigation systems awarded to SRCTEC, LLC, raises questions about competition and value

Contract Overview

Contract Amount: $13,999,000 ($14.0M)

Contractor: Srctec, LLC

Awarding Agency: Department of Defense

Start Date: 2023-09-08

End Date: 2026-03-17

Contract Duration: 921 days

Daily Burn Rate: $15.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SDAF TO

Place of Performance

Location: SYRACUSE, ONONDAGA County, NEW YORK, 13212

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $14.0 million to SRCTEC, LLC for work described as: SDAF TO Key points: 1. The contract's value appears high relative to the duration, suggesting potential for cost efficiencies. 2. Lack of competition is a significant risk indicator, potentially leading to inflated pricing. 3. The firm-fixed-price structure offers some cost certainty but doesn't mitigate the risk of overpayment due to limited bidding. 4. Performance context is limited without details on specific deliverables and success metrics. 5. This contract falls within the broader Defense sector, specifically instrument manufacturing. 6. The award to a single vendor warrants scrutiny regarding market dynamics and alternative solutions.

Value Assessment

Rating: questionable

The total award amount of $13,998,999.96 for a period of 921 days (approximately 2.5 years) suggests a significant per-day expenditure. Without specific details on the nature of the navigation systems and their complexity, it is difficult to benchmark against similar contracts. However, the lack of competition (sole-source award) inherently limits the ability to assess true value-for-money, as there was no market pressure to drive down costs. The firm-fixed-price contract type provides some cost control for the government, but the initial price may not reflect competitive market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. The data indicates 'NOT COMPETED' and an award type of 'DELIVERY ORDER' under a potentially existing contract, but the initial award mechanism was not open to full and open competition. This lack of competition means that the government did not explore the full range of available solutions or pricing from the market, potentially missing out on better value or innovative approaches.

Taxpayer Impact: Taxpayers may have paid a premium for these navigation systems due to the absence of competitive bidding. Without a competitive process, there is less assurance that the price reflects the lowest possible cost for the required goods or services.

Public Impact

The Department of Defense, specifically the Department of the Army, is the primary beneficiary, receiving critical navigation system components. The contract supports the manufacturing of search, detection, navigation, guidance, aeronautical, and nautical systems and instruments. The geographic impact is centered in New York (ST: NY, SN: NEW YORK), where the contractor is located. The contract likely supports a specialized workforce within the defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of transparency in the initial award process makes it difficult to assess the necessity of a sole-source justification.
The significant dollar value of the contract warrants a thorough review of performance metrics and deliverables.
Potential for vendor lock-in due to the non-competitive nature of the award.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government once awarded.
The contractor, SRCTEC, LLC, is operating within a specialized manufacturing sector relevant to defense needs.
The contract duration is clearly defined, allowing for planning and resource allocation.

Sector Analysis

This contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry (NAICS code 334511). This sector is crucial for national defense, providing essential technology for military operations. The market is often characterized by high barriers to entry due to specialized knowledge, R&D investment, and security clearances. Comparable spending benchmarks are difficult to ascertain without more specific details on the systems, but defense spending in advanced electronics and navigation technology is substantial.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (SS: false, SB: false). As a sole-source award, there were no subcontracting opportunities generated through a competitive bidding process. The impact on the small business ecosystem is neutral in this instance, as it was not specifically targeted for small business participation or subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight structures. As a delivery order, it might be part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a specific sole-source justification. Transparency is limited by the sole-source nature. Accountability would be managed through contract performance monitoring and reporting requirements, with potential oversight from the Department of Defense's Inspector General if performance issues or fraud are suspected.

Related Government Programs

Defense Logistics Agency (DLA) procurement of navigation systems
Naval Air Systems Command (NAVAIR) contracts for avionics
Army Futures Command research and development in sensor technology
Air Force Materiel Command acquisition of guidance systems

Risk Flags

Sole-source award raises concerns about fair pricing and market competition.
Lack of detailed performance metrics makes assessing value and effectiveness difficult.
Limited public information on contractor's past performance requires further investigation.
Potential for higher costs to taxpayers due to non-competitive procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.0 million to SRCTEC, LLC. SDAF TO

Who is the contractor on this award?

The obligated recipient is SRCTEC, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.0 million.

What is the period of performance?

Start: 2023-09-08. End: 2026-03-17.

What is the specific justification for awarding this contract on a sole-source basis to SRCTEC, LLC?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'DELIVERY ORDER'. A sole-source award typically requires a justification, such as the unique capability of a single contractor, urgent and compelling needs, or specific government-unique requirements that only one source can fulfill. Without access to the contract file or the specific justification document (e.g., a Justification and Approval for Other Than Full and Open Competition - J&A), the precise reason remains unknown. This lack of transparency is a key concern, as it prevents an independent assessment of whether competition was truly impossible or if alternative solutions were adequately explored. Understanding this justification is critical to evaluating the necessity and fairness of the award process.

How does the pricing of this contract compare to similar navigation system procurements by the Department of Defense?

Direct comparison of pricing is challenging without detailed specifications of the navigation systems procured under this $14 million contract and their intended use. The NAICS code 334511 covers a broad range of instruments. However, the fact that this was a sole-source award suggests that competitive pricing benchmarks were not established through a bidding process. To assess value, one would need to compare the per-unit cost or the cost of equivalent systems procured competitively by agencies like NAVAIR or Air Force Materiel Command. The absence of competition inherently raises concerns that the price may not be as favorable as it could have been in a more open market.

What are the key performance indicators (KPIs) and deliverables associated with this contract, and how will SRCTEC, LLC's performance be measured?

The provided data does not specify the key performance indicators (KPIs) or detailed deliverables for this contract. As a firm-fixed-price contract for navigation systems, typical deliverables would include the manufactured systems themselves, along with associated documentation, testing reports, and potentially training or maintenance support. Performance measurement would likely involve adherence to delivery schedules, meeting technical specifications and quality standards, and successful completion of any required testing or acceptance criteria. The effectiveness of oversight and accountability hinges on the clarity and rigor of these defined KPIs and deliverables within the contract's statement of work.

What is SRCTEC, LLC's track record with the Department of Defense, particularly in delivering navigation systems?

The provided data identifies SRCTEC, LLC as the contractor but does not offer details on their past performance or track record with the Department of Defense or other federal agencies. A comprehensive assessment would require reviewing contract histories, past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or contract modifications. Without this information, it's difficult to gauge SRCTEC, LLC's experience and reliability in delivering similar navigation systems or fulfilling complex defense contracts. This lack of readily available performance data is a gap in understanding the risk associated with this specific award.

What is the historical spending trend for navigation system manufacturing (NAICS 334511) within the Department of the Army?

The provided data focuses on a single contract award and does not offer historical spending trends for navigation system manufacturing (NAICS 334511) within the Department of the Army. To analyze historical spending, one would need access to broader federal procurement databases (like FPDS or SAM.gov) to track the total obligated amounts, number of contracts, and types of competition for this specific NAICS code over several fiscal years. Such an analysis would reveal whether spending in this category has been increasing or decreasing, the typical contract values, and the prevalence of competitive versus sole-source awards, providing crucial context for the current $14 million contract.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5801 E TAFT RD STE 7, SYRACUSE, NY, 13212

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $13,999,000

Exercised Options: $13,999,000

Current Obligation: $13,999,000

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $5,517,663

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56KGY23D0002

IDV Type: IDC

Timeline