DoD's $24.9M contract for navigation systems awarded to Elbit America raises questions on competition and value
Contract Overview
Contract Amount: $24,917,000 ($24.9M)
Contractor: Elbitamerica, Inc.
Awarding Agency: Department of Defense
Start Date: 2011-09-30
End Date: 2013-05-31
Contract Duration: 609 days
Daily Burn Rate: $40.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: WAC
Place of Performance
Location: TALLADEGA, TALLADEGA County, ALABAMA, 35160
State: Alabama Government Spending
Plain-Language Summary
Department of Defense obligated $24.9 million to ELBITAMERICA, INC. for work described as: WAC Key points: 1. The contract's value of $24.9 million was awarded without competition, suggesting potential for overpayment and limited market validation. 2. A single award for navigation systems indicates a lack of robust market engagement and potentially missed opportunities for cost savings. 3. The fixed-price contract type offers some cost certainty but doesn't mitigate the risks associated with a non-competitive award. 4. The duration of 609 days for this delivery order suggests a significant operational need for these navigation systems. 5. The contract's focus on navigation systems places it within a critical segment of defense logistics and operational readiness. 6. The absence of small business involvement raises concerns about broader economic impact and equitable distribution of federal funds.
Value Assessment
Rating: questionable
Benchmarking the value of this $24.9 million contract is challenging due to the lack of competitive bids. Without comparison to other offers or market rates for similar navigation systems, it's difficult to ascertain if the price paid represents fair market value. The fixed-price nature provides some cost control, but the non-competitive award means the government did not benefit from price discovery through market forces. Further analysis would require understanding the specific technical requirements and comparing them to industry standards for similar equipment.
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 Defense Logistics Agency likely justified this approach based on specific requirements or a lack of available alternatives. The absence of competition limits the government's ability to leverage market dynamics to secure the best possible pricing and terms. This approach can sometimes be necessary for specialized equipment or urgent needs, but it warrants scrutiny to ensure it was the most appropriate method.
Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no competitive pressure to drive down costs. This can lead to higher overall spending for the government.
Public Impact
The primary beneficiaries are likely military units relying on advanced navigation systems for operational effectiveness. The contract delivers essential navigation system components and potentially related services to support defense operations. The geographic impact is likely concentrated where the Defense Logistics Agency operates and deploys these systems, potentially globally. Workforce implications may include specialized technical roles for installation, maintenance, and operation of the navigation systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated prices and reduced value for taxpayer money.
- Sole-source awards can limit innovation by not engaging a broader range of potential suppliers.
- Without competitive benchmarking, assessing the true cost-effectiveness of the navigation systems is difficult.
- The contract's duration and value suggest a significant reliance on this specific vendor, potentially creating vendor lock-in.
Positive Signals
- The fixed-price contract type offers some predictability in cost, protecting against cost overruns if the scope remains unchanged.
- Awarding to Elbit America, a known defense contractor, suggests a degree of confidence in their capability to deliver the required systems.
- The contract addresses a critical need for navigation systems, contributing to the operational readiness of defense forces.
Sector Analysis
The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized area within aerospace and defense manufacturing. This industry is characterized by high technological barriers to entry, stringent quality requirements, and significant government procurement. Market size is substantial, driven by defense spending globally. Comparable spending benchmarks are difficult to establish without more specific technical details, but navigation systems are a critical component of military platforms, with significant investment allocated to their development and procurement.
Small Business Impact
The contract details indicate that small business participation was not a stated requirement or outcome (ss: false, sb: false). This sole-source award did not include a small business set-aside. Consequently, there are no direct subcontracting opportunities for small businesses stemming from this specific award. This lack of inclusion means that the economic benefits of this federal spending are not being channeled to the small business ecosystem, potentially missing opportunities to foster growth and innovation within that sector.
Oversight & Accountability
Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA) and potentially the Department of Defense's Inspector General. DLA has established procurement regulations and oversight mechanisms to ensure contract compliance. Transparency is limited due to the sole-source nature, making public scrutiny of the award process and pricing more challenging. Accountability rests with DLA contracting officers to ensure the terms of the fixed-price contract are met and that the delivered systems conform to specifications.
Related Government Programs
- Defense Logistics Agency Procurement
- Navigation and Guidance Systems
- Aeronautical and Nautical Instruments
- Sole-Source Defense Contracts
- Fixed-Price Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for price inflation
- Limited transparency in procurement
Tags
defense, logistics-agency, elbit-america, sole-source, firm-fixed-price, navigation-systems, search-detection-navigation-guidance-aeronautical-nautical-system-and-instrument-manufacturing, delivery-order, alabama, non-competitive
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $24.9 million to ELBITAMERICA, INC.. WAC
Who is the contractor on this award?
The obligated recipient is ELBITAMERICA, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $24.9 million.
What is the period of performance?
Start: 2011-09-30. End: 2013-05-31.
What is Elbit America's track record with the Defense Logistics Agency and similar navigation system contracts?
Elbit America, Inc. has a history of contracting with the Department of Defense, including the Defense Logistics Agency. While specific details on their track record for navigation systems require deeper database analysis, their presence as a defense contractor suggests familiarity with government procurement processes and military specifications. However, the sole-source nature of this particular $24.9 million contract (awarded September 30, 2011, ending May 31, 2013) for navigation systems means that direct comparisons of their performance against competitors on this specific project are unavailable. Further investigation into past performance reviews and other contracts awarded to Elbit America for similar systems would be necessary to fully assess their track record.
How does the $24.9 million contract value compare to market rates for similar navigation systems?
Directly comparing the $24.9 million contract value to market rates for similar navigation systems is difficult without knowing the precise technical specifications and quantities involved. As a sole-source award, there was no competitive bidding process to establish a market-driven price. To benchmark effectively, one would need to identify comparable systems procured competitively by the DoD or other government agencies, or consult industry price lists for off-the-shelf navigation equipment. Given the specialized nature of military-grade navigation systems, prices can vary significantly based on features, accuracy, environmental hardening, and integration requirements. The fixed-price nature of this contract suggests a negotiated price, but the absence of competition raises concerns about whether it represents optimal value for the government.
What are the primary risks associated with awarding a $24.9 million contract on a sole-source basis for navigation systems?
The primary risks associated with a sole-source award of $24.9 million for navigation systems include: 1. **Price Inflation:** Without competition, the contractor may not have had sufficient incentive to offer the lowest possible price, potentially leading to overpayment. 2. **Limited Innovation:** The government misses out on potential innovations or alternative solutions that other qualified vendors might offer. 3. **Vendor Lock-in:** Relying on a single source can create dependency, making future procurements or upgrades more difficult and potentially more expensive. 4. **Reduced Transparency:** The justification for the sole-source award and the negotiation process are less transparent to public scrutiny. 5. **Potential for Suboptimal Performance:** While Elbit America is a known entity, the lack of competitive pressure might indirectly affect the drive for exceptional performance compared to a competed contract.
What was the historical spending pattern for navigation systems by the Defense Logistics Agency prior to this contract?
Analyzing historical spending patterns for navigation systems by the Defense Logistics Agency (DLA) prior to this $24.9 million contract (awarded in 2011) would require access to detailed procurement data over several preceding years. DLA's role is primarily in logistics support, so their spending on navigation systems could fluctuate based on specific military branch needs, inventory management strategies, and the lifecycle of existing equipment. Without specific historical data, it's difficult to ascertain if this contract represented a significant increase or decrease in spending for such systems. Generally, defense spending on navigation technology is driven by modernization efforts, operational tempo, and the introduction of new platforms requiring advanced guidance and positioning capabilities.
How does the fixed-price contract type (PT: FIRM FIXED PRICE) mitigate or exacerbate risks in this sole-source scenario?
The Firm Fixed Price (FFP) contract type in this sole-source scenario offers a degree of risk mitigation for the government concerning cost overruns. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This means Elbit America assumes the risk of cost increases during performance. For the government, this provides budget certainty. However, in a sole-source context, the FFP does not guarantee that the initial negotiated price was the best possible price achievable through competition. The risk is that the 'firm' price might have been set at a higher margin to account for the lack of competitive pressure. Therefore, while FFP protects against cost overruns, it doesn't inherently ensure value-for-money in a non-competitive award.
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: ELECTRICAL/ELECTRONIC EQPT COMPNTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Elbit Systems Ltd (UEI: 514421098)
Address: 108 ALLEN ST, TALLADEGA, AL, 35160
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: $24,917,000
Exercised Options: $24,917,000
Current Obligation: $24,917,000
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: SPRHA411D0002
IDV Type: IDC
Timeline
Start Date: 2011-09-30
Current End Date: 2013-05-31
Potential End Date: 2026-09-30 00:00:00
Last Modified: 2019-11-21
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