DoD awards $39.6M for TACAN Beacon Kits to Thales USA, Inc. under a sole-source contract

Contract Overview

Contract Amount: $39,582,350 ($39.6M)

Contractor: Thales USA, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-05-28

End Date: 2025-11-30

Contract Duration: 2,378 days

Daily Burn Rate: $16.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AWARD OF TACAN BEACON KIT

Place of Performance

Location: WEST VALLEY CITY, SALT LAKE County, UTAH, 84119

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $39.6 million to THALES USA, INC. for work described as: AWARD OF TACAN BEACON KIT Key points: 1. Contract awarded for essential navigation equipment, indicating a critical need within the Navy's operations. 2. Sole-source award suggests limited market availability or specific technical requirements met only by Thales. 3. Long contract duration (over 6 years) implies sustained operational reliance on this equipment. 4. Firm Fixed Price contract type provides cost certainty for the government. 5. The award falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code. 6. No small business set-aside was applied, suggesting the contractor's size or the nature of the requirement.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized equipment. Without competitive bids, it's difficult to ascertain if the $39.6 million represents optimal value for money. The firm fixed price offers predictability, but the absence of competition raises questions about potential overpricing. Further analysis would require comparing the unit cost of these TACAN beacon kits to similar systems procured competitively or through other government channels.

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 typically occurs when only one responsible source can provide the required supplies or services, often due to unique capabilities, proprietary technology, or urgent needs. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there's less assurance that the price reflects the lowest possible cost for this essential navigation equipment.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense branches relying on TACAN navigation systems. The contract delivers TACAN beacon kits, crucial for aircraft navigation, particularly in environments where GPS may be unreliable or unavailable. Geographic impact is likely global, wherever Navy aviation assets operate and require TACAN-based navigation support. Workforce implications are primarily for Thales USA, Inc., who will be responsible for manufacturing and delivering the kits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in pricing due to no competitive bidding process.
Long-term contract duration could lock the government into a specific technology or vendor.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to an established company (Thales USA, Inc.) suggests potential for reliable delivery.
Essential equipment for military aviation navigation ensures operational capability.

Sector Analysis

The market for aeronautical navigation systems, including TACAN (Tactical Air Navigation) equipment, is specialized. This sector is characterized by high technological barriers to entry and often involves a limited number of established defense contractors. Spending in this area is driven by military readiness requirements and the need for robust, reliable navigation solutions. Comparable spending benchmarks would involve analyzing other procurements of similar navigation systems by the DoD or allied nations.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to Thales USA, Inc., a large defense contractor, suggests that the primary focus was on meeting the technical requirements of the TACAN beacon kits. This means the direct economic benefit to the small business ecosystem from this specific award is likely minimal, though Thales may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the contract terms, particularly the firm fixed price and delivery schedules. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

DoD Navigation Systems Procurement
Naval Aviation Support Equipment
Aeronautical Instrument Manufacturing
Sole-Source Defense Contracts
Tactical Air Navigation Systems

Risk Flags

Sole-source award raises concerns about price competition and potential overpayment.
Long contract duration increases risk of technological obsolescence or supplier dependency.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.6 million to THALES USA, INC.. AWARD OF TACAN BEACON KIT

Who is the contractor on this award?

The obligated recipient is THALES USA, 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 $39.6 million.

What is the period of performance?

Start: 2019-05-28. End: 2025-11-30.

What is the specific technical capability or reason that necessitated a sole-source award for these TACAN beacon kits?

Sole-source awards are typically justified when only one vendor possesses the necessary technical expertise, proprietary technology, or meets unique specifications that cannot be replicated by others. For TACAN beacon kits, this could stem from specific performance requirements, compatibility with existing military platforms, or unique certifications required for operational use. The Department of the Navy would have conducted a Justification and Approval (J&A) process to document why Thales USA, Inc. was the only viable source. Without access to the J&A documentation, the precise technical or operational reasons remain unspecified, but it implies a critical dependency on Thales's specific offering for the Navy's navigation infrastructure.

How does the $39.6 million award compare to historical spending on similar TACAN equipment by the Department of the Navy?

Comparing this $39.6 million award to historical spending requires access to detailed procurement data for similar TACAN beacon kits over time. The provided data indicates this is a single award for one contract vehicle. To assess if this amount is consistent, one would need to analyze previous contracts for TACAN systems, considering factors like quantity, specific model, contract type (fixed-price vs. cost-plus), and the number of bidders. If previous procurements were competed and resulted in significantly lower total costs or unit prices, it might suggest this sole-source award is less cost-effective. Conversely, if similar sole-source awards or specialized systems historically commanded comparable prices, it could indicate market norms.

What are the key performance indicators (KPIs) and delivery milestones associated with this contract, and how is Thales USA, Inc. being held accountable?

The provided data specifies the contract award date (2019-05-28) and estimated completion date (2025-11-30), indicating a performance period of over six years. Key performance indicators would likely revolve around the timely delivery of the TACAN beacon kits, adherence to technical specifications, and potentially reliability or performance metrics once installed. Accountability is primarily managed through the contract's terms, including the Firm Fixed Price (FFP) structure, which obligates Thales to deliver the specified goods at the agreed-upon price. Failure to meet delivery schedules or technical requirements could result in penalties, contract modifications, or termination, depending on the specific clauses within the contract.

What is the potential risk associated with relying on a single supplier (Thales USA, Inc.) for such critical navigation equipment over an extended period?

Relying on a single supplier like Thales USA, Inc. for critical TACAN beacon kits over a six-year period presents several risks. Firstly, there's a risk of supply chain disruptions if Thales encounters production issues, financial instability, or faces geopolitical challenges affecting its manufacturing capabilities. Secondly, the lack of competition means the government has limited leverage to negotiate price reductions or demand innovation during the contract's life. Thirdly, if Thales's technology becomes obsolete or is surpassed by competitors, the Navy might be locked into using less advanced systems. Finally, dependence on one supplier can reduce overall market resilience for essential defense equipment.

Are there any provisions within the contract for technology refresh or upgrades to ensure the TACAN systems remain current throughout their operational life?

The provided data does not explicitly detail provisions for technology refresh or upgrades within this specific contract. However, given the long duration (over six years) and the nature of technological advancement, such contracts often include options for modernization or future enhancements. These might be structured as separate contract line items (CLINs), follow-on contracts, or require specific modifications. The absence of explicit mention suggests that either these provisions are not included, or they are detailed in separate agreements or contract modifications not reflected in the summary data. The Navy would need to proactively manage the technology lifecycle of these systems.

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

Solicitation ID: N0001917R0116

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 10950 EL MONTE ST STE 110, OVERLAND PARK, KS, 66211

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

Financial Breakdown

Contract Ceiling: $40,773,185

Exercised Options: $39,582,350

Current Obligation: $39,582,350

Actual Outlays: $5,469,800

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $1,640,782

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline