Air Force's $61.6M NGIFF B-KITS Production contract awarded to Telephonics Corporation raises value concerns

Contract Overview

Contract Amount: $61,556,208 ($61.6M)

Contractor: Telephonics Corporation

Awarding Agency: Department of Defense

Start Date: 2012-09-19

End Date: 2019-05-06

Contract Duration: 2,420 days

Daily Burn Rate: $25.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NGIFF B-KITS PRODUCTION

Place of Performance

Location: FARMINGDALE, SUFFOLK County, NEW YORK, 11735

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $61.6 million to TELEPHONICS CORPORATION for work described as: NGIFF B-KITS PRODUCTION Key points: 1. The contract's value proposition is questionable given the lack of competition and the firm-fixed-price structure, which may not fully incentivize cost savings. 2. Sole-source awards can limit price discovery and potentially lead to higher costs for the government. 3. The duration of the contract (2420 days) suggests a long-term need, but the lack of competitive bidding over this period is a risk indicator. 4. Performance context is limited due to the sole-source nature, making it difficult to benchmark against other providers. 5. This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized area within defense. 6. The absence of small business set-asides or subcontracting requirements warrants further investigation into potential impacts on smaller enterprises.

Value Assessment

Rating: questionable

The total award of $61.6 million for NGIFF B-KITS Production, awarded on a firm-fixed-price basis, lacks a clear benchmark for value. As a sole-source contract, direct comparisons to similar offerings or competitive bids are not available. The extended duration of the contract (over 6 years) without competitive re-evaluation raises questions about whether the government secured the best possible pricing and value over the life of the award. Without competitive data, assessing the fairness of the price and the overall value for money is challenging.

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. This indicates that only one vendor, Telephonics Corporation, was considered for this requirement. The lack of competition means there was no opportunity for other qualified companies to bid, which can limit price discovery and potentially result in higher costs for the government compared to a competitively awarded contract. The rationale for the sole-source award is not provided in the data.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there's less certainty that the price reflects the lowest achievable cost for the required goods or services.

Public Impact

The primary beneficiary is the Department of the Air Force, which receives the NGIFF B-KITS Production systems. The contract delivers essential systems for search, detection, navigation, guidance, and related aeronautical/nautical functions. The geographic impact is primarily within the United States, specifically New York where Telephonics Corporation is located, but the end-use of the systems could be global. The contract supports specialized manufacturing jobs within the aerospace and defense sector, likely benefiting skilled engineers and technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing over the contract's long duration.
Firm-fixed-price contract with a sole-source award offers limited flexibility for cost reduction if market conditions change.
Extended contract period without re-competition raises concerns about sustained value for money.
Absence of small business participation requirements could limit opportunities for smaller firms in the supply chain.

Positive Signals

The contract is for a specific, likely critical, defense system (NGIFF B-KITS Production), indicating a potentially high-value capability.
Telephonics Corporation is a known entity in the defense sector, suggesting a degree of established capability and reliability.
The firm-fixed-price structure, while potentially lacking competitive pressure, does provide cost certainty for the government once awarded.

Sector Analysis

This contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry, a niche within the broader aerospace and defense sector. This sector is characterized by high technological complexity, significant R&D investment, and stringent quality requirements. Comparable spending in this specific sub-sector can be difficult to pinpoint due to its specialized nature, but overall defense spending on systems and instrumentation is substantial, often involving multi-year, high-value contracts. The market is typically dominated by a few large, established defense contractors and specialized technology firms.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no explicit mention of subcontracting requirements (sb: false). This suggests that opportunities for small businesses to participate in this contract, either as prime contractors or subcontractors, may be limited. Without specific subcontracting plans or set-aside goals, the direct impact on the small business ecosystem for this particular award is likely minimal, potentially concentrating the value with the prime contractor.

Oversight & Accountability

Oversight mechanisms for this contract are not detailed in the provided data. However, as a Department of Defense contract, it would typically fall under the purview of the Department of Defense's Inspector General (IG) for audits and investigations. Accountability measures would be driven by the contract terms, including performance standards and payment schedules. Transparency is generally limited for sole-source defense contracts, with details often classified or restricted due to national security concerns.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) programs
Naval Air Systems Command (NAVAIR) contracts
Air Force Materiel Command (AFMC) procurements
Aeronautical Systems Division contracts
Intelligence, Surveillance, and Reconnaissance (ISR) systems

Risk Flags

Sole-source award lacks competitive justification.
Long contract duration without re-competition.
Potential for suboptimal pricing due to lack of market pressure.
Limited transparency on specific system capabilities and justification for sole-source.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.6 million to TELEPHONICS CORPORATION. NGIFF B-KITS PRODUCTION

Who is the contractor on this award?

The obligated recipient is TELEPHONICS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $61.6 million.

What is the period of performance?

Start: 2012-09-19. End: 2019-05-06.

What is the specific function and importance of the NGIFF B-KITS Production system?

The NGIFF B-KITS Production system is associated with the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' category. While the exact 'NGIFF B-KITS' designation is not publicly detailed, it likely refers to a critical component or suite of systems used by the Air Force for operational missions. These systems are fundamental for aircraft navigation, target detection, and situational awareness, playing a vital role in mission success and safety. The substantial award amount suggests a significant capability or a large quantity of these specialized instruments are being procured.

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

The provided data indicates the contract was 'NOT COMPETED' and awarded as 'sole-source'. Specific justifications for sole-source awards typically include factors such as unique capabilities possessed by only one vendor, urgent and compelling needs where competition is impractical, or when the cost of competition would outweigh the benefits. Without further documentation from the Department of the Air Force, the precise reason for bypassing the competitive bidding process for the NGIFF B-KITS Production remains unclear. This lack of competition is a key factor in assessing the contract's overall value and potential cost-effectiveness.

How does the firm-fixed-price (FFP) contract type impact risk and value for this sole-source award?

A firm-fixed-price (FFP) contract shifts most of the risk to the contractor, as the price is set regardless of the contractor's actual costs. For the government, this provides cost certainty. However, in a sole-source scenario, the 'fixed' price might not be the most competitive price achievable. While the FFP protects the government from cost overruns, the lack of competition means there's less assurance that the initial fixed price represents optimal value for money. The contractor has less incentive to reduce costs if they know they are the only option.

What is Telephonics Corporation's track record with the Department of Defense?

Telephonics Corporation is a known defense contractor, specializing in advanced communication, radar, and electronic systems. Their history with the Department of Defense likely includes numerous contracts for similar systems, indicating established expertise and capability in this domain. While this specific data point doesn't detail their past performance on other contracts, their continued awards suggest a satisfactory performance history or a unique position in supplying certain defense technologies. Further investigation into their contract performance ratings and past delivery records would provide a more comprehensive view.

What are the potential risks associated with a contract lasting over 6 years (2420 days) without competition?

A long-duration, sole-source contract like this presents several risks. Firstly, the government is locked into a single supplier for an extended period, potentially missing out on technological advancements or cost reductions offered by competitors. Secondly, without periodic re-competition, there's a reduced incentive for the incumbent contractor to innovate or aggressively manage costs, as their position is secured. Thirdly, market conditions, material costs, or technological relevance could change significantly over six years, making the original pricing less favorable to the government as time progresses.

Are there any comparable spending benchmarks for similar navigation and guidance systems within the DoD?

Finding direct spending benchmarks for highly specialized systems like the NGIFF B-KITS Production can be challenging due to the proprietary nature of defense technology and the unique specifications of each contract. However, broader spending categories within 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' can be examined. Publicly available reports from defense agencies or industry analyses might provide average contract values or cost-per-unit metrics for similar classes of equipment. Without specific details on the B-KITS system's capabilities, precise benchmarking is difficult, but the $61.6 million total award over approximately six years suggests a significant investment per year.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: TTM Technologies, Inc.

Address: 815 BROADHOLLOW RD, FARMINGDALE, NY, 11735

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: $89,074,193

Exercised Options: $64,945,667

Current Obligation: $61,556,208

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline